New firm will co-run £300m European Real Estate Debt Fund with Duet
Duet’s real estate mezzanine team have set up an independent debt investment advisory business called DRC Capital. The new company continues to jointly manage the £300m European Real Estate Debt Fund with Duet Private Equity. DRC Capital, led by Dale Lattanzio, Rob Clayton and Cyrus Korat, is 100% owned by its staff.
Duet’s European property debt fund raised capital from investors in North America and Europe between late 2009 and a final closing last summer, including £76m from a listed feeder fund, Duet Real Estate Finance (DREF).
The fund’s investment period ends in June, but there is an option to extend. The master fund was 53% invested with 11 deals in the pipeline totalling £250m, according to DREF’s maiden 2011 results, published on 10 April.
DRC Capital believes European debt investment opportunities are greater than they thought three years ago when the fund was launched, so a follow-on fund is likely to be set up once the first fund is fully invested.
The fund is on course to hit its 7% income distribution and 15% minimum IRR targets. At the year end, DREF had received £1.7m in distributions from the master fund and paid two 1p-per-share dividends. A further 1p dividend was paid in March, reflecting an annualised 4% yield on the issue price. Dividends are expected to rise as remaining commitments of limited partners are invested.