Mayfair Capital Investment Management, manager of the Mayfair Capital Residential 1 Fund (MCR1), is undertaking a second closing following the successful commitment of the initial equity raised.
The fund, which has a target return of 15 per cent per annum, is designed to provide preferred equity with profit participation to developers in the central London market. It seeks to fill the gap between the maximum loan to value available from senior lenders at present compared with five years ago.
James Thornton (pictured), fund director of MCR1, says: “We do not see ourselves as mezzanine financiers but equity providers at a reduced annual coupon and participants in the profits arising from the development. Fundamentally, we are property investors and wish to participate in the upside of a project outcome.”
Initial investors in the fund include high net worth individuals, family offices and UK pension funds, and second closing investors are expected to be drawn from similar sources. The minimum investment is GBP500,000.
Although the fund is constituted with a five year life, investors’ equity is drawn down on a project by project basis and will only be deployed once. It is therefore taking a short to medium term opportunistic view on the central London market.
James Lloyd, business development director at Mayfair Capital, says: “Our model does not depend on rising prices in central London but on an active transactional market at the prime end. We see London as not just a dominant UK city but a global city and provided there are no ‘black swan’ events we believe in London’s ability to continue to attract investment from across the globe. We are focussed at the prime end of the market and have backed developers with strong track records in their individual market places.”
In terms of investments made, the fund has invested in an “off plan” purchase of a three bedroom apartment in Chelsea. MCR1 has also backed prime single dwelling properties in Bedford Gardens being developed by Balmuir Partners, and in Cresswell Place being developed by Albyns Limited. A further three projects are currently under offer involving developments in prime Battersea, Eaton Square and Kensington. In all, the fund will have exposure to circa GBP100m worth of developments and for risk diversification reasons assets comprise a mix of super prime houses and prime apartment schemes.
The directors of Mayfair Capital have co-invested in the fund and will be adding to their commitments at second close beyond the original minimum level.