Brunswick targets €800m Nordic CRE debt fund

Stockholm-headquartered Brunswick Real Estate Capital is making preparations to launch a second debt fund focused on commercial property in the Nordic countries.

Stockholm-headquartered Brunswick Real Estate Capital is making preparations to launch a second debt fund focused on commercial property in the Nordic countries, Real Estate Capital’s sister title Private Debt Investor has reported.

The debt fund will target €800 million overall, split between a SKr compartment of €400 million and an equivalent euro compartment. The latter will focus on lending in Finland. A first close is expected during 2016.

Louise Richnau, chief executive officer at Brunswick Real Estate Capital Advisory, said that debt sentiment in the Nordics hit a low in December 2015, signalling that returns are on the up.

“It’s becoming more and more obvious that it’s not as easy to get debt financing. We’ve seen a very steep increase in returns in non-secured real estate bonds. Spreads have come up quite a bit during the fall,” she told PDI.

The Catella Real Estate Debt Indicator for December 2015 suggested that lenders and borrowers encountered increasingly difficult financing conditions in the three months prior.

“The financing market is going through a cooling down period, which is reflected in the number of preference share and bond issues during the second half of 2015,” according to the report.

Its main index showed its largest drop since September 2012. The survey concluded that the majority of participants, listed property companies and banks, are experiencing a more difficult financing situation and expect further weakening over the next three months.

The strategy of Brunswick is to extend senior loans of approximately SKr100 million-SKr400 million with terms of up to eight years at average loan-to-values of around 60 percent, with the possibility to go up to 70 percent.

Louise Richnau
Louise Richnau

Richnau said: “Nordic real estate continues to deliver very strong returns as an asset class, as well as providing high levels of liquidity. These factors, coupled with restrictive lending terms from traditional sources of capital, means we have seen a real demand from investors for low risk, low volatile investment alternatives as well as from borrowers seeking a greater choice of funding providers. As a result we are making plans to launch our second Nordics debt fund.”

Brunswick’s next real estate debt fund will be AIFMD-compliant. Its first fund attracted investors from across the Nordics. Among deals the firm provided last year was a financing for Revcap’s acquisition of two retail properties in Stockholm.

Brunswick has officially renamed its first real estate debt fund, changing it from Leimdörfer Real Estate Capital I to Brunswick Real Estate Capital I.

Peter Leimdörfer, chief executive and founding partner of Brunswick Real Estate, said: “Following the unification of our services as Brunswick Real Estate earlier last year and to avoid any confusion with investment bank Leimdörfer, it made sense to bring our debt financing arm – which is a very important part of our offering to clients – in line with our international brand.”

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