ARA restructures European property lending business

Singaporean investment management firm ARA Asset Management is looking to separate its European residential and commercial property lending activities through a reorganisation of its real estate debt businesses.

The firm will move its commercial real estate lending business from ARA Venn, its private real estate debt subsidiary, to ARA Europe, its European real estate investment management platform.

Speaking to Real Estate Capital Europe, Beatrice Dupont, partner at ARA Venn, said the shift means all commercial lending-focused personnel and its commercial real estate debt funds will be moved to ARA Europe.

As part of the plan, ARA Asset Management created a new platform in February to house the commercial property lending business within ARA Europe, called ARA Europe Commercial Real Estate Debt.

Dupont explained ARA Venn is predominantly active in the residential lending space while ARA Europe has so far been active in the European commercial real estate equity market.

She added “synergies” reasons drove the decision to rehouse the commercial property lending business within ARA Europe. First, the real estate equity team at ARA Europe is active in similar markets to the commercial real estate lending team, allowing for the sharing of information.

“ARA Europe has extensive experience and investments across broader asset classes including industrial, office, hotel, residential and alternative property sectors. This permits the CRE debt team to gain market intelligence across the same asset classes and geographies where the equity team are active; while allowing ARA Venn to concentrate on the residential sector.”

In addition, she added the other benefit is: “ARA Europe is a fiduciary manager across a number of discretionary investment funds in the firm’s real estate equity offer and as such shares a number of functions that are also used by the CRE debt funds business which can be combined to bring efficiencies and an enhanced offering to investors.”

ARA Europe operates a real estate equity fund series called ARA Europe Active Real Estate. In July last year, this arm of the business acquired a portfolio of five French logistics assets from Hermann Freres et Fils Immeubles, a family office. The €30 million investment was made on behalf of ARA Europe Active Real Estate Fund IV, which is now fully invested.

ARA Venn manages a real estate debt fund series called Venn Commercial Real Estate which targets mainly whole loans secured by assets with strong fundamentals in France, Germany, Ireland, the Netherlands, Spain and the UK.

The firm believes its series takes advantage of valuation repricing and the continued withdrawal of traditional lenders by investing in compelling opportunities where there is a gap between capital demand and supply.

Dupont said the firm’s latest commercial property debt fund, Venn Commercial Real Estate Fund II, is “largely deployed”. The firm’s historical vehicles will maintain the Venn branding, while the successor fund in the series will be named ARA Real Estate Debt Fund III – the firm will start fundraising for this vehicle later this year, she added.

ARA Venn was formed in March 2020, when ARA Asset Management took a majority equity stake in London-based alternative lending firm Venn Partners, and replaced Siem Industries as its corporate partner.

Since then, ARA Venn has focused predominantly on residential lending following the launch of its partnership with the UK government in a £3 billion (€3.4 billion) affordable housing guarantee scheme in October 2020. Its role is to originate, underwrite and manage loans to registered providers in England. This programme is used to fund lower-cost long-term fixed rate loans of up to 30 years.

This month, the firm provided three new 30-year loans to UK housing associations Coastline Housing, Stonewater and Torus to support the development of over 1,500 new affordable homes. The combined value of the loans was £250 million from the issuance of £350 million bonds. The £100 million balance of the bond issuance will be retained to fund other successful loan applications currently being processed.