Omni Partners has held the final close of its second secured lending fund, Omni Secured Lending Fund II (OSL II), with additional commitments of USD34 million, leaving total vintage II commitments at USD240 million.
OSL II provides its underlying investors with exposure to short-term loans secured against UK residential and commercial properties. Since inception in April 2015 the fund has delivered a net IRR of 11.1 per cent
OSL II enforces strict lending requirements: all loans, which vary in duration from 6 to 18 months, are asset backed (thus helping to minimise losses) and have a maximum Loan-to-Value (LTV) of 70 per cent. Loans are made to professional property investors and typically fund the acquisition of buy-to-let properties or fund refurbishment projects. Exit is predominantly achieved by the borrower securing long-term finance or selling the property.
The market opportunity for OSL II stems from traditional banks having tightened their underwriting requirements, resulting in an emphasis on standardised lending and increased loan approval times. In order to deliver risk-adjusted returns, OSL II focuses on the short-term lending market (estimated at GBP3.2 billion annually), where alternative lenders can obtain interest rate premiums and demand more security in return for speed and certainty of execution.
Omni’s Founder and Head of Risk, Steve Clark, says: “The USD240 million of investment we have raised for the second vintage of Omni Secured Lending is proof of investors’ continued interest in an unlevered lending strategy delivering attractive yields on assets of superior quality and short tenor. In order to continue to meet institutional investor demand and to take advantage of the ongoing opportunities left by traditional banks, we are launching the third vintage of Omni Secured Lending in April this year.”
