Luxembourg-based investment firm Aeriance has launched a £100 mln (EUR 120 mln) closed-ended specialist debt fund to provide bridging loans for residential property transactions in London. Aeriance said that the fund, OREL, was created to capitalise on the dislocation in short-term real estate lending in the UK.

The vehicle will provide two-to-three-year financing to experienced property entrepreneurs and high-net-worth individuals for senior and junior financings in the London area. Typical assets will include high-end residential properties in prime locations such as Belgravia, Knightsbridge and Mayfair, which can command values of around £20 mln. Aeriance said these types of property have shown resilience throughout the economic downturn.

Aeriance is anticipating growing the unleveraged fund to about £200 mln with commitments from a range of UK and international investors, and is expecting to deliver a net return of between 10-12% per annum.

The investment firm has underwritten over EUR 700 mln of real estate loans in the last three years through a trio of funds. AMREF 1 and AMREF 2 are unleveraged junior debt funds which are invested in prime European real estate. Another vehicle, ASTREL, offers senior tranches of real estate debt, also for prime European property.