Maslow Capital announces its debut Loan Book Liquidity Fund
Maslow was founded in 2009 at the height of the Global Financial Crisis. At that time there was a severe contraction in the availability of liquidity and a widespread moratorium on the allocation of funding for the completion of property developments. Maslow’s first fund focused on partnering with banks where we provided the financing to ensure developments reached practical completion. Maslow’s facilities protected the lenders’ exposures by enabling the properties to be completed and brought to market without being distressed or significantly discounted.
Over the past decade we have seen the emergence of many new specialist lenders, whilst banks have focused on the provision of more traditional credit. Each of these specialist lenders have their own unique funding sources such as open and closed ended funds, listed equity vehicles, peer to peer funding, bond issuance programmes, warehouse funding and syndications. The current climate will present these funding models with their biggest ever test.
We have started to see some of these funding models come under intense pressure creating opportunities for Maslow to work in partnership with lenders to find pragmatic liquidity solutions, whilst avoiding the risks of exposing fundamentally sound assets to a cautious market. To this end, Maslow are pleased to announce the launch of its debut Loan Book Liquidity Fund which will assist in broadening its balance sheet capabilities. The Fund’s objective is to work with existing development finance providers and borrowers to undertake the following core activities:
- Acquire existing portfolios of loans
- Provide cost to complete facilities
- Refinance existing loans
The Fund is backed by long-dated institutional capital and will focus on opportunities from €60m (or with the potential of achieving €60m in aggregate through a series of loans).
We are seeing funding requirements in the following distinct areas:
Closed-Ended Funds:
These structures have a fixed date of maturity and whilst the specific fund rules usually allow a certain number of extensions, the maturity dates cannot be amended in perpetuity. Delays in underlying loan redemptions mean that fund managers need to seek alternative sources of liquidity from which to return investor funds.
Open-Ended Funds:
These funds offer investors regular liquidity which are usually met from loan repayments or funding lines secured on the fund’s assets. Some fund managers may face investor redemption requests that cannot be met because of the lack of liquidity of the underlying loans or having fully utilised available fund liquidity.
Other structures:
Many of the treasury models we have seen depend on a steady flow of loan redemptions or inward flow of new investor money in order to continue to fund live developments. We have witnessed a slowdown in loan redemptions due to site closures, supply chain disruption and a lack of buyer demand caused by the current crisis, along with a curtailment in mortgage availability.
In all these cases we have solutions that can provide liquidity, allowing a return of funds to investors, whilst also alleviating cash flow pressures arising from lenders being contractually bound to fully fund live developments through to completion.
Whilst we will continue to originate and finance the delivery of ground up developments, the launch of the Maslow Liquidity Fund will help broaden the range of transactions we can support. The pandemic has caused companies to relook at their business models and our view is that in our development funding niche, existing lenders and borrowers will be seeking alternative ways of de-risking and generating liquidity, whilst protecting asset values by ensuring developments reach practical completion. The core objectives of our debut Liquidity Fund is to do precisely that.Ellis Sher, Co-Founder & CEO
To discuss any opportunities with the team, please visit Maslow Capital’s specialist contact page.
