Hermes Real Estate Senior Debt Fund has provided a £42 million financing on two UK shopping centres: the Kirkgate Centre in Bradford and Kennet Shopping Centre in Newbury.
The investment management company provided the five-year loan to an affiliate of the equity investment firm H.I.G. Capital.
The financing brings the total amount the Hermes Real Estate Senior Debt fund has invested in the UK senior debt market to £300 million across nine loans. The fund aims to generate net returns exceeding three-month LIBOR plus 2 percent margin by investing in loans with equivalent risk to corporate bonds rated A- or BBB.
“Fundamentals in the UK real estate senior debt market are strong, with occupier demand remaining at healthy levels despite a moderate slowdown in investment activity in the sector,” said Vincent Nobel, head of real estate debt at Hermes, in a statement. “We still see a good supply of low risk deals offering our investors an income return that is compelling on a risk-adjusted basis.”
He added that in 2015 the firm observed more than 146 loan opportunities worth in excess of £10 billion, and the company expects to make further deployments this year.
Riccardo Dallolio, managing director at H.I.G. in London, noted that the firm focuses on retail assets in the UK regions with strong occupier demand, and that the deal follows the firm’s purchase of the Grosvenor Centre in Chester.
Hermes manages assets across equities, fixed income, alternatives and real estate, with £24.1 billion assets under management as of 31 March 2016. H.I.G. Capital is a global alternative assets investment firm with €18 billion of equity capital under management.