DRC Capital closes third mezzanine fund on £600m – Exclusive

The vehicle has exceeded its initial £500m target, with new investors accounting for 40% of commitments.

DRC Capital has closed its third mezzanine and whole loan fund on £600 million (€682 million).

The firm said the DRC European Real Estate Debt Fund III capital-raising was oversubscribed and exceeded its initial £500 million target.

DRC ERED III raised its capital from an investor base consisting primarily of public and private pension funds and insurance investors across Europe, North America and the Middle East. New investors constituted around 40 percent of the commitments, the firm said.

The fund will originate mezzanine and whole loan investments across the UK and Western Europe and across all major commercial real estate asset classes.

DRC Capital has maintained a consistent investment pace throughout the capital-raising period of the vehicle, deploying a “significant” percentage of the fund’s capital by final close.

The firm declined to disclose the volume of capital deployed, but said it will be able to maintain its current deployment pace well into the new year based on its “strong” pipeline.

“We are very pleased to close DRC ERED III which successfully raised capital during a challenging period of Brexit and macro-economic uncertainty,” said Dale Lattanzio, managing partner for DRC Capital.

Through its third fund, DRC Capital is taking advantage of the market opportunity presented by the banking sector’s need to de-lever due to ongoing regulatory reform, the firm said.

“We continue to fulfil the ongoing demand for alternative debt in the European real estate sector,” Lattanzio added.

Evercore acted as exclusive global placement agent for the fundraising.

DRC ERED III is the third fund in DRC Capital’s high-yield debt strategy, which has raised approximately £1.4 billion since its inception. It is the firm’s seventh fund across its three core real estate debt strategies – senior, high yield and whole loans – and takes DRC Capital’s total capital raised to more than £2.3 billion.