Deutsche Asset & Wealth Management (Deutsche AWM) has increased its real estate senior debt fund to €750m after raising €250m in extra capital from investors.
It has allocated €400m to acquire German debt assets and €350m to opportunities in France, Italy, Spain and the United Kingdom.
Deutsche AWM has already invested about half its German pool in three deals since January. It has just completed its first investment outside Germany, taking a £50m slice of a £277m Lloyds Bank and Citigroup loan made against the BBC’s north west headquarters, MediaCityUK.
Deutsche AWM is close to completing three other deals, two single asset and one portfolio, in Italy and Spain. The European pool will be about half-invested by the end of Summer.
“Obviously, we have different pricing between Germany and outside of Germany. It could be anything from 50-150bps,” said Andrea Vanni, head of European real estate debt investments at Deutsche AWM.
“In Germany 70-80bps is where the market is for the better assets and moderate leverage of around 55-60%. There are even situations where banks will go to 50-60bps. We will probably not follow that.”
Deutsche AWM had planned to invest about €500m in Germany after the fund’s first close in January but decided to reduce that amount to €400m.
“We certainly see investor appetite shifting from Germany to other European countries to benefit from more attractive risk return opportunities,” said Vanni.
The fund targets debt with loan-to-value ratios up to 60% secured against office, retail, residential and logistics assets. Loan maturities range from three to ten years. The fund is expected to be fully invested by the end of the year.
Deutsche AWM’s mezzanine fund, which had an initial close of €250m last year, is currently undergoing further fundraising. It recently closed a €15m mezzanine transaction in Germany and is in negotiations on deals in France, Italy and Spain.