The second real estate debt fund raised by AEW Europe and the asset management arm of French bank Natixis has provided a €35 million participation a French portfolio financing.
The deal is the fourth to be written by Senior European Loan Fund II, which has already invested €105 million of its capital raised.
The senior loan finances the Ambassadeurs portfolio, comprising 11 retail assets in Paris, Lyon, Marseille, Cannes and St Tropez. The assets are leased to luxury fashion brands including Dior, Prada, Yves Saint Laurent and Chanel.
Arnaud Heck, co-head of the real estate finance platform, said that the loan reflects an average loan-to-value on the portfolio of around 60 percent and an interest cover ratio of more than 300 percent.
“Ambassadeurs is our second investment in the retail sector and our second in France. We are targeting a sustained investment program that will create a significant diversified portfolio for the fund based on our current pipeline,” said Heck.
“We consider that Ambassadeurs is a rare opportunity to invest in a funding that covers a high quality retail portfolio with prestigious locations, strong tenants and an adequate financing structure. We believe that risk adjusted returns are attractive for our investors and in line with the targeted returns of SELF II of over 2 percent,” added Cyril Hoyaux, co-head of the platform.
By January 2017, AEW Europe and Natixis had raised more than €400 million for SELF II at its second close. Commitments were raised from French and other international institutional investors. A third close is expected to occur during the first half of 2017 with a target to reach total commitments of €750 million.
The senior fund targets core assets across the main European markets, with core office, retail, logistics and hotel properties preferred. The fund is understood to have a €20-50 million sweet spot for loans. The first three investments were made in France, Germany and Italy totalling €75 million.
The partners’ first fund, SELF I, was launched in 2012 and raised €323 million. SELF I was fully invested by July 2015.