Starwood European Real Estate Finance has expanded its lending business into Ireland and Denmark and expects to make its first loan in Spain or Italy later this year.
The fund provided £38.2m in new loans in the first six months of 2015, according to its half-year report to June 30, with DKK350.3 (£33.1m) of that secured on an industrial portfolio in Denmark – its first entry into the Danish market.
Starwood also made its first loan in Ireland, a €6.1m facility on a portfolio of retail and residential properties.
The fund, which invests in the core asset classes but so far only in the UK, Ireland, the Netherlands and Scandinavia, has now turned its sights on southern Europe to expand its lending base.
“We see the Spanish market as progressing very rapidly and very positively, particularly when they have over 3% GDP growth,” said Peter Denton, head of European debt at Starwood European Finance, which manages the fund and is owned by US private equity firm Starwood Capital. “There’s also been a pretty fundamental reorganisation of the banking system which is very positive and helpful.”
“Do I think it will account for a material proportion of the overall exposure for the company? No, but I think it’s a country that we feel comfortable adding to the places we’d like to lend,” added Denton.
Italy is also under consideration.
“Northern Italy is a very strongly improving area, but a lot of things have to happen over the coming years. But, I think it is a little further away as far as any material exposure to the company than Spain,” said Denton.
The fund’s recent activity has been made possible by the raising of an extra £24m and an £8m drawdown from its revolving credit facility.
It has invested £247.3m in 12 deals, £145.9m of it secured on London property, including £45m on Centre Point in the West End and £45m on Aldgate Tower in the City. It has just over £100m invested in Finland, the Netherlands, Denmark and Ireland.
The fund made an operating profit before tax of £7.9m for the first six months of the year, compared to £5m for the same period last year.