Cohort Capital has completed a £20 million senior loan secured against a prime luxury serviced apartment building in Soho, highlighting a growing trend of specialist lenders replacing traditional private banks as their lending appetite evolves.

The 24-month bridging facility refinances an existing private bank loan and provides additional equity release against a freehold comprising 22 luxury serviced apartments at 37 Golden Square, Soho.

The sponsor – a high-net worth individual – required a refinancing after the incumbent private bank determined the asset no longer met its lending criteria, despite the property’s strong operational performance. The transaction reflects an increasingly common dynamic across the UK debt market, where private banks are tightening lending policies and retrenching from operational real estate, raising minimum assets-under-management (AUM) requirements for borrowing clients.

For specialist lenders such as Cohort Capital, these shifts are creating opportunities to provide certainty of capital for experienced sponsors with high-quality assets.

The borrower acquired the property in 2015 before undertaking a comprehensive redevelopment to create a luxury serviced apartment scheme. The freehold property is arranged over eight floors and includes 22 apartments together with a triplex penthouse spanning the sixth to eighth floors, featuring two private terraces and dedicated lift access.

The asset has been demonstrating strong operational performance supported by institutional-quality management. Cohort’s financing provides the sponsor with time to arrange long-term debt while releasing capital to support wider business activities.

The transaction also reflects Cohort’s increasing focus on operational real estate, particularly serviced apartments and hospitality assets, where the firm sees attractive long-term lending opportunities.

As regulatory changes continue to reshape the UK’s traditional buy-to-let market, investors are increasingly allocating capital towards professionally managed operational real estate sectors capable of generating resilient cashflows through active asset management.

“Increasingly, we are seeing private banks step away from high-quality assets because their lending criteria have changed or because they’re focusing lending on clients with larger assets under management. This dynamic is generating significant demand for gap capital among experienced borrowers looking for certainty at refinancing, despite owning assets that are performing strongly.

“Serviced apartments and hospitality assets have demonstrated strong fundamentals and are managed by increasingly sophisticated operators. At the same time, parts of the traditional buy-to-let market are becoming more challenging as regulation evolves, creating opportunities for professionally managed operational assets.

“This is an area where we expect to deploy significantly more capital over the coming years, recognising that underwriting operational real estate requires specialist expertise to properly evaluate underlying performance and forward business plans”

Matt Thame — Co-Founder and CEO of Cohort Capital

Year-to-date Cohort Capital has originated £208m across 35 transactions with a forward pipeline in excess of £400m. Recent transactions include a £40m equity release against a Grade II-listed freehold with consent for a luxury private members’ club and hotel use on St. James’s Street; a £22m cross-collateralised bridge facility over four residential assets in prime central London and Surrey, and a £9m acquisition and VAT bridge in Edinburgh.