Starwood finances M7’s central Europe fund

Starwood Capital’s listed European property loan fund has provided a €68.5 million senior debt facility to M7 Real Estate’s recently-closed central European fund.

Starwood European Real Estate Finance Limited (SEREFL) has provided the floating-rate loan to M7 Central European Real Estate Fund I (M7 CREF I) with an initial three-year term.

The loan will fund a recently-completed investment by the M7 fund, plus a remaining €65.5 million of pipeline deals to take place in the next few weeks which will see the fund fully-invested. The fund targets both core-plus and high-yielding regional opportunities across major cities in the Czech Republic, Croatia and Hungary, Poland and Slovakia.

In an announcement, SEREFL said that €26.5 million of the facility has already been committed.

M7 CREF I is M7’s first central European fund for third party investors. The firm announced that it has reached its final close, reaching its target raise of €60 million. A €35 million first close had been reached in October 2016.

M7 CEREF I has already acquired the 64,600 square metres Aerozone Logistics Park in Budapest, Hungary from CA Immo Group and Union Invest, close to Budapest airport.

“Having put our first tranche of investor capital to work in October, the additional investor capital raised, together with the senior debt facility with Starwood will allow us to proceed with the deals identified and to have the fund fully invested during the next 4-6 weeks,” said M7 chief executive Richard Croft. “We have a number of asset management initiatives planned in order to drive value across the portfolio and deliver exceptional returns to our investors.”

In addition to the M7 deal, SEREFL also announced additional deals this week. The debt provided is being used in each case to facilitate an acquisition.

SEREFL has provided €18.85 million in a three-year floating-rate whole loan to facilitate the acquisition of an office development in Dublin, Ireland. The loan has been provided to borrower Barry O’Callaghan. The building development will be converted for educational use following its acquisition.

The fund has also provided financing for a Spanish-based acquisition; a €46 million four-year floating-rate loan facility enabling the acquisition of a Barcelona-based hotel. The borrower, unnamed in the company announcement, is described as a partnership of institutional investors with experience investing in hotels.

SEREFL had its highest lending total in 2016 since the fund’s launch in 2013. The fund originated £175.9 million (€206 million, $219 million) of debt last year, attributed largely to greater than usual loan repayments.