Europa Capital has launched a debt vehicle with commitments of £100 million (€110 million) to invest in UK commercial real estate, with a focus on regional markets.
The fund will avoid London, where competition is hitting pricing, and will instead concentrate on the UK regions, where it sees most demand, Real Estate Capital understands.
The vehicle will follow the same investment strategy as the firm’s Europa Mezzanine Fund, which closed in December 2016, but will provide both whole loans and mezzanine financing up to 85 per cent loan-to-value.
Through the new fund, Europa Capital intends to bring to the market various UK debt products as it seeks to expand its debt platform in response to “strong investor demand”, the London-based real estate fund manager said.
The firm recently appointed David Hardcastle and Chris Swarbrick as origination consultants to broaden its network in the UK regional market.
Hardcastle, who is based in Leeds, and Swarbrick, based in Manchester, have joined from Barclays where they were responsible for real estate lending across the north of England.
“Over the last four years we have provided around £200 million of loans secured against over 6 million square feet of property,” said Michael Birch, chief executive of the firm’s UK debt subsidiary.
“During this period, the UK regional debt market has undergone significant changes due to increased regulation imposed after the global financial crisis and further tightening post-Brexit. As a result, there are now a limited number of senior lenders who are prepared to finance transactions with more complex portfolios, with multiple properties and tenants, located across the UK,” Birch added.
Europa Capital declined to comment further than its announcement.