Cheyne closes real estate credit fund at $770m

Real estate lender Cheyne Capital Management has closed the Cheyne Real Estate Credit Holdings Fund III (CRECH III) after raising $770 million from investors.

Real estate lender Cheyne Capital Management has closed the Cheyne Real Estate Credit Holdings Fund III (CRECH III) after raising $770 million from investors, according to Real Estate Capital’s sister title Private Debt Investor.

The final total beat the firm’s $650 million target by 18 percent. So far, 85 percent of the fund has been deployed and the rest is expected to be lent by the summer. The latest round of fundraising began in January 2014.

It focuses predominantly on direct real estate loans. The targeted net internal rate of return for Fund III is 10–12 percent. Fund II delivered net returns of 16.1 percent.

CRECH III was set up to target lending in the European real estate markets, particularly the UK and Germany. Its latest fund in the series aims at deals between £10 million ($14 million; €12.6 million) and £75 million.

Ravi Stickney, head of real estate for Cheyne, declined to disclose how much ‘skin in the game’, he and his partners had invested in the fund, but said they were “substantially invested”.

logoStickney said more opportunities are likely to open up for private lenders in the European real estate market as the regulatory pressures on banks become more “onerous”. Banks instead are increasingly focusing on asset disposals and recapitalisation, the investment firm said.

Cheyne expects to launch its fourth fund later this year and Stickney said that the risk profile of this fund will come down as Fund IV will focus more on senior debt than mezzanine loans, he told PDI.

In December, PDI reported that Cheyne’s investment partner Graham Emmett left the firm to join HIG’s Bayside Capital as a managing director of the real estate team.

Cheyne’s first real estate credit fund was launched in 2009. UK-based Cheyne was established in 2000 by Jonathan Lourie and Stuart Fiertz. The firm invests across the corporate structure from senior debt to the equity of corporates and real estate. It manages investments on behalf of pension funds, insurance companies, sovereign wealth funds and other financial institutions.

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