Europe’s debt fund market has expanded, report shows

The 2018 INREV Debt Funds Universe report reveals eight more vehicles than last year, recording a total target gross asset value of €33bn – up from €30.2bn in 2017.

The number of debt vehicles in the European non-listed real estate market has expanded progressively in the past three years, the latest update of the INREV Debt Funds Universe shows.

This year’s Universe release includes 67 vehicles, eight more than last year, recording a total target gross asset value of €33 billion – up from €30.2 billion in 2017.

“There hasn’t been a surge in [real estate] debt funds being launched, rather steady growth,” Henri Vuong, INREV’s director of research and market information, told Real Estate Capital.

“[Debt funds] may not have become the ubiquitous source of capital that might have been expected post-financial crisis, but they offer important benefits as a diversified source of capital. And this may be particularly relevant as we approach the cusp of a market downturn,” Vuong added.

Jeff Rupp, INREV’s director of public affairs, noted debt funds launched since 2016 are now active in the market and accommodating a “significant” share of borrower demand.

“Debt fund lending and bank lending are now complementary, so banks have also been active in the market and are lending at competitive rates, especially in the senior debt space, where most debt funds are also active,” Rupp explained.