Real estate debt
This strategy aims to capitalise on a significant financing gap in the real estate lending market, as banks continue to cut back from real estate backed commercial lending due to increased regulatory and capital constraints.
Bank lending in the sector declined from £23.9 billion in 2008 to £14 billion in 2017.
This funding gap creates an investment opportunity that can deliver attractive risk-adjusted returns across a diversified loan pool. The Newstead team has overseen £800m of deployment into bridging and development finance and small balance CRE in the UK and Ireland, partnering at early stages with originating platforms who continued on a successful growth trajectory.
This strategy focuses on providing funding to specialty finance companies to grow their lending business secured by granular loan portfolios or providing acquisition finance to sponsors. As bank finance is retrenching from many areas, European markets are seeing an increase in specialty lenders who are dependent on third party funders and capital markets.
The Newstead team has experience in lending against loan portfolios with varying underlying collateral including real estate, SME, receivables, secured and unsecured consumer loans and across the capital structure (Senior, Mezzanine and Equity).
The Team has executed many funding solutions to enhance investor returns with efficient term structures.
Whole Loan acquisition
This strategy focuses on acquiring loans via forward flow agreements from specialty finance companies and non-bank lenders. Since 2014, the team has acquired and securitised over £3bn of consumer and SME loans, invoice receivables and mortgages in the UK and USA.
The strategy may also involve acquiring existing portfolios to capitalise on situations where a lender may be facing balance sheet constraints or deleveraging pressure. Based on its portfolio analytics and valuation capabilities, Newstead is able to select pools with good risk-reward prospects and offer competitive bids for the sellers.
The Newstead team focuses on niche asset classes rather than widely marketed and overbid markets.
The Newstead team predominantly focuses on delivering superior returns by accessing illiquid private markets. However, in some market conditions, even liquid asset classes may offer attractive risk adjusted returns.
In these circumstances, the Team would look to invest in asset-backed securities and high yield bonds.