Key Takeaways
- • FDC (part of Mercia Asset Management) has launched a £100 million debt fund providing secured development financing to UK property developers, with individual loan capacity up to £7.5 million and a target fund size of £500 million.
- • The fund targets industrial and logistics projects with a circa 10% net IRR, average 2.5-year loan duration, and first-charge security structure—positioning development debt as a private credit strategy rather than real estate equity.
- • FDC demonstrates a ten-year track record with zero credit losses since 2016 and has previously managed £400 million+ in property finance while regenerating 216 acres of brownfield land and creating 3.5 million square feet of commercial floorspace.
- • The fund focuses on mid-sized UK industrial and logistics assets (20,000–100,000 sq ft) underpinned by structural e-commerce demand and supply-chain reconfiguration, with capital deployment only after planning approval and developer equity commitment.
- • The investment structure employs a five-year investment period with revolving capital recycling rather than lock-up, with loans drawn against incurred costs to ensure developer alignment throughout the facility lifecycle.
Summary
FDC, operating as part of Mercia Asset Management and headquartered in Birmingham, has opened a £100 million debt fund targeting UK property developers and trading businesses. The fund represents the initial tranche of a broader £500 million fundraising effort and offers individual loans ranging from £1 million to £7.5 million to support development activity across the UK. This capital deployment addresses a specific gap in the mid-market commercial real estate finance sector.
The fund's investment thesis centers on industrial and logistics development—specifically mid-sized assets between 20,000 and 100,000 square feet—which FDC identifies as structurally undersupplied and underpinned by e-commerce acceleration and supply-chain reshoring. The fund targets a circa 10% net internal rate of return and operates on first-charge secured debt principles, with capital only deployed once planning permission is in place and developers have committed their own equity ahead of the first drawdown. Loans are drawn incrementally against incurred costs rather than as bullet payments, creating alignment between lender and borrower throughout the development cycle.
FDC's operational track record underpins investor confidence. The firm reports a ten-year history with zero credit losses since 2016 and has previously managed over £400 million in property finance. Its development portfolio has regenerated 216 acres of brownfield land and created 3.5 million square feet of commercial floorspace. The fund structure emphasizes short-duration private credit mechanics rather than real estate equity characteristics, with an average loan duration of 2.5 years and a five-year investment period that allows capital recycling rather than extended lock-up periods. This discipline around capital structure and execution risk control is designed to drive returns through contracted interest rather than property market appreciation.
The launch reflects continued institutional demand for structured development finance in the UK commercial real estate sector, particularly in logistics and industrial subsectors where occupier demand remains robust and supply constraints persist.
The fund's investment thesis centers on industrial and logistics development—specifically mid-sized assets between 20,000 and 100,000 square feet—which FDC identifies as structurally undersupplied and underpinned by e-commerce acceleration and supply-chain reshoring. The fund targets a circa 10% net internal rate of return and operates on first-charge secured debt principles, with capital only deployed once planning permission is in place and developers have committed their own equity ahead of the first drawdown. Loans are drawn incrementally against incurred costs rather than as bullet payments, creating alignment between lender and borrower throughout the development cycle.
FDC's operational track record underpins investor confidence. The firm reports a ten-year history with zero credit losses since 2016 and has previously managed over £400 million in property finance. Its development portfolio has regenerated 216 acres of brownfield land and created 3.5 million square feet of commercial floorspace. The fund structure emphasizes short-duration private credit mechanics rather than real estate equity characteristics, with an average loan duration of 2.5 years and a five-year investment period that allows capital recycling rather than extended lock-up periods. This discipline around capital structure and execution risk control is designed to drive returns through contracted interest rather than property market appreciation.
The launch reflects continued institutional demand for structured development finance in the UK commercial real estate sector, particularly in logistics and industrial subsectors where occupier demand remains robust and supply constraints persist.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.