Property company aims for 15% return or more from fund with £25m spending power.
A property company set up in the teeth of the downturn has raised equity for an innovative fund that aims to outperform by providing certainty on deals to vendors.
C2 Capital today held a closing for the fund, the C2 Capital Two Limited Partnership, which involved around £13m of equity raised, giving it £25m to spend including debt.
The limited partnership is the only fund in the market to look at using underwriting to increase the returns it can achieve.
Underwriting is where a party guarantees to pay a set price for an asset at a set time. The property is then marketed more widely and, if a better price can be achieved, the original vendor and the underwriter share the overage.
It is common in the auction market, but C2 aims to underwrite deals in the investment market as well.
It will target portfolios in particular, where a vendor receives certainty of receiving a set price for a group of assets, and can then try to break the portfolio up and sell it for more.
If a better price cannot be found for assets, C2 will asset manage them before selling them on.
It hopes to achieve a return for the fund of 15% or more, with a strategy of improving properties and selling them after asset management boosted by deals where a quick return is made by underwriting a deal and selling it for a higher price.
It will have a two‐year commitment period, and a three‐year period in which it will manage and ell the assets. C2 Capital was founded in 2009 by Julian Carey and Laura Montgomery. Carey previously worked at Jones Lang LaSalle, initially in the auction and private investment team, before moving to LaSalle Investment Management in 2005 to work on their leveraged opportunity funds.
Montgomery worked in the real estate finance department of Berwin Leighton Paisner, before becoming managing director of the Ellis Campbell Group, a 130‐year‐old family‐owned residential and commercial property investment office.
They were joined in 2011 by Max Slade, son of Helical Bar chief executive Mike Slade, who previously worked as a solicitor at Ashurst.
“The funds raised shall enable us to build on the momentum from the first partnership [which raised £5m in 2010] and continue to develop underwriting into an investment tool which is widely available to sellers of real estate.”
C2 Capital Two was promoted by Jones Lang LaSalle Corporate Finance, which will also be the Financial re Services Authority‐regulated operator.