Katch Launches Real Estate Lending Fund

Private Debt Boutique

KATCHING OPPORTUNITIES

Katch Investment Group is an asset management company dedicated to liquid, senior-secured private debt, focusing on investment strategies where capital is scarce with relatively high and stable returns.

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  • After the success of its Global Lending Opportunities Fund, which offers globally diversified exposure to the liquid private debt space, the group decided to strengthen its foothold in this booming investment area with the launch of the Katch Real Estate Lending Fund.
  • The new fund focuses on bridging opportunities in the dynamic UK Real Estate lending market It targets a 9% total return net of fees and quarterly liquidity for investors.
  • The fund allocates capital to residential projects in the UK that need short-term funding. The target loan duration is between 3 and 18 months.

Katch Investment Group is a dynamic asset management boutique with more than USD 100 M assets under management, that focuses on short-term private lending opportunities. After the impressive success of its Global Lending Opportunities Fund, which offers globally diversified exposure to the liquid private debt space, the group decided to strengthen its foothold in this booming investment area with the launch of the Katch Real Estate Lending Fund.

Quotes Pascal Rohner, CIO:  “The current low-yield environment has further increased investors’ appetite for private lending opportunities that offer high single-digit returns with very strong guarantees.”

Katch entered a joint-venture with REIM Capital, a real estate backed short-term private lender and investment company in the UK with an experienced management team with over 3 years of a track record of successful bridge financing investments. The new fund focuses on bridging opportunities in the dynamic UK Real Estate lending market It targets a 9% total return net of fees and quarterly liquidity for investors.

Quote Stephane Prigent, CEO: “The UK is a fantastic example for the traditional banks’ retreat from lending to smaller companies following the Great Financial Crisis. 82% of SMEs in the UK declare no longer using banks as a source of capital and turned themselves to alternative sources of funding. Borrowers are willing to pay relatively high-interest rates and offer strong guarantees, given the scarce capital supply”.

The fund allocates capital to residential projects in the UK that need short-term funding. The target loan duration is between 3 and 18 months. “The low duration not only enables us to provide liquidity to investors, but it also makes the fund more resilient against a potential economic downturn. We typically have a 1st lien charge on a residential property outside London that is worth 130% of the loan value. The risk of a sharp devaluation in such a short period of time is extremely low, much lower compared to multi-year mortgages”.

Fundamentally, the UK offers many advantages compared to other bridge-loan markets. First, the private lending market is sizeable, well-developed and relatively liquid. The dynamic private-lending cultures make it possible to give short-term loans without holding too much cash on the fund level. Second, the UK is experiencing a severe housing crisis due to the lack of investments in the last years. The housing supply has not met the rising demand coming from population growth. Third, and most importantly, the UK has a strong legal framework that incentives and protects private lending. Typically, loans are fully secured with an independent, FCA-regulated security trustee. Also, there are best-in-class valuation companies that ensure a fair, current appraisal of the properties.

“In private lending, the most important part of the analyses centers around assessing the quality of collaterals and the legal framework that enables a quick taking of possession if necessary. This reduces the default risk substantially”.

The new Katch Real Estate Lending Opportunities Fund was launched as a second sub-fund of the group’s Luxembourg SICAV umbrella fund and is now ready for subscriptions.