Gresham to fund property developers needing stretch debt

The investment banking and advisory group Gresham has launched a $400 million institutional-backed fund that will provide debt to property developers.

The Gresham Property Fund No.5 will offer an innovative "stretch senior" debt product which mixes senior debt that banks usually provide with mezzanine debt which second tier financiers usually provide.

It is because the banks are resistant to mezzanine debt but developers often require the funding.

The joint managing directors Ami Simon and Mike Burley said Gresham’s latest fund had a focus on providing flexible and timely responses to the property industry’s funding needs.

"The purpose of the Fund is to provide a solution for borrowers whose funding needs cannot be fully satisfied by the banks.” 

The Gresham fund will be targeting investments in the $20 million to $100 million range, with pricing based on the benchmark bank swap rate but will include slightly higher margins than the banks due to the extra risk.

The chairman of the fund's investment committee Tony Berg said the new fund gave Gresham the opportunity to build on its recognised capabilities in property finance.

The funds would be available for property development, value-add and investment opportunities across all stages of a property development or investment lifecycle.

A number of offshore and domestic institutions who invested in the fund were introduced by Stratos Capital. 

Stratos has placed $750 million of warehouse and public market transactions into the institutional fixed-income market.

Gresham was established in 1985, now with three key business activities units – corporate advisory, property and asset finance. 

Since its establishment in 2001, Gresham Property has invested capital in separate transactions with an end project value in excess of $3.5 billion. 

While Gresham Property has offices located in Sydney and Melbourne, the Flexi-Capital Fund will maintain a nationwide focus.