CBRE Investment Management is aiming to provide senior loans against core, income-producing real estate through a new fund, Real Estate Capital Europe can reveal.
The New York-headquartered investment manager has launched the UK Senior Credit Fund, structured as an evergreen vehicle.
Through the fund, which will be managed by the firm’s London-based EMEA credit strategies team, it intends to provide loans of between £7.5 million (€8.9 million) and £30 million for durations of two to seven years. Loans, which will be secured by high-quality, stabilised real estate, will be provided up to 65 percent loan-to-value.
Alexandra Lanni, chief investment officer and co-head of EMEA credit strategies at CBREIM, said the firm sees strong market appetite for “efficient decision-making and execution” in the UK senior loans market. The fund is designed to provide competitively priced senior loans, she explained.
Lanni told Real Estate Capital Europe the decision to launch an evergreen vehicle was due to the “permanent opportunity” CBREIM sees in senior lending. “We have a long track record in this space and can demonstrate to investors why this is a core, recurring, stable part of the market to be invested in,” she explained.
“We’re looking for high-quality properties in very core locations which have good income stability. This is a much more senior and stable proposition than our whole loan fund which is generally supporting more core-plus or value-add business plans.”
Recent years have seen several alternative lenders expand their senior lending capabilities, in part due to banks reducing their activity in parts of the market.
In the US, CBREIM has operated a debt strategy since 2010. Its European strategy is more recent. In November 2019, it entered the European market through the acquisition of Laxfield Capital, a London-based debt manager and adviser. In addition to the new senior fund, CBREIM’s European real estate debt activities currently include a whole loan strategy and the management of an invested European whole loan and mezzanine vehicle. The company is also actively exploring a focused strategy designed to fund borrowers to create energy-efficient real estate.
In a March 2020 interview with Real Estate Capital Europe, Emma Huepfl, co-founder of Laxfield, now managing director and co-head of EMEA credit strategies at CBREIM, said much of the investor demand for real estate debt was coming from fixed-income investors looking for an uplift from low-yielding corporate and government bonds.
She added: “We’re also seeing requirements for debt from the real estate side of some institutions. It can be seen as a defensive strategy, where the outlook for property values is less clear in the current economic environment, and so debt may be a sensible way to de-risk their real estate allocation.”