What’s happening?
Here comes the sun
As we explored in a deep-dive piece this month [read it in full here], real estate owners face the need to invest substantially in their assets to ensure they meet sustainability standards. For lenders, it means ascertaining collateral value when considering new loans is tough, given current values often do not reflect growing climate risk. This week, there was a significant example of a property owner taking measures to improve its assets’ sustainability. CTP, the Amsterdam-based logistics developer, secured a €200 million, 10-year unsecured loan from the European Investment Bank to fund a solar panel installation programme across its European business park portfolio. CTP said the loan will accelerate its energy transition and strengthen the security of its power supply. Read more here.
Blackstone looks to take more credit
It is all about the credit space these days at New York-based private markets mega-manager Blackstone. Chairman and chief executive officer Stephen Schwarzman posted on LinkedIn last week how he expected the firm’s debt businesses to “collectively reach $1 trillion in AUM within the next 10 years”. Announcing the formation of an integrated platform called Blackstone Credit and Insurance, or BXCI, Schwarzman said the firm now has a “one-stop solution that we believe will allow us to be a more effective lender” to address the opportunity. Notably, while the firm – which reached $1 trillion in overall assets in July – said its $1 trillion target included real estate credit, it also said its property debt business would remain a separate unit.
But Blackstone Real Estate Credit is doing well enough on its own. Indeed, CalPERS, the biggest US pension fund, confirmed last week it had committed $1.5 billion to Blackstone’s fifth real estate credit fund, Blackstone Real Estate Debt Strategies V, its biggest single commitment among more than $10 billion committed across private funds in the first quarter of the year. According to data from affiliate title PERE, BREDS V reached a third closing in June, collecting $3.7 billion of commitments so far against an $8 billion target.
KKR on the fundraising trail
New York-based private equity firm KKR has launched the third iteration of its Real Estate Credit Opportunity Partners fund series, according to filings provided by the US Securities and Exchange Commission. Data from affiliate title PERE shows the firm, through the KKR Real Estate Credit Opportunity Partners III fund, will look to provide loans secured against retail and offices globally. The firm closed its predecessor fund in July 2020 on $950 million. KKR launched its European debt business in 2022, with the aim of investing in the Europe through its KKR Real Estate Credit Opportunity Partners vehicles. KKR’s European debt platform is led by Ali Imraan, former managing director of debt investments and special situations at Chicago-based manager LaSalle Investment Management.
People moves
KanAm hires for finance role
Frankfurt-based investment management firm KanAm Grund Group has appointed Raphael Schöttler as its head of financing and treasury. Schöttler, who was a vice-president at German lender Deutsche Bank between 2019 and 2022, will be responsible for the further development of the group’s financing strategy. In addition to financing the portfolio, his activities will focus on maintaining existing banking relationships and acquiring new financing partners. Olivier Catusse, chief executive officer and managing partner at KanAm, said Schöttler’s role will become imperative in the coming years as the real estate sector comes to grips with digitalisation. The firm said Schöttler has extensive experience in linking finance and technology after his role of managing director at Loanboox, a digital credit platform for financing solutions.
Kennedy Wilson to lose ‘fearless leader’
Los Angeles-based manager Kennedy Wilson last week announced president Mary Ricks will be retiring after a 33-year tenure at the company. Among Ricks’ notable achievements at the firm were launching its European business, Kennedy Wilson Europe, for which she later served as president and chief executive, as well as establishing investment platforms in the Irish private rented sector, UK/Irish logistics and value-add real estate. In the announcement, Kennedy Wilson chairman and CEO William McMorrow called Ricks “a fearless leader with a team-first attitude”. The firm has promoted former executive vice-president Matt Windisch to president of Kennedy Wilson and former head of UK Mike Pegler to president of Kennedy Wilson Europe. Ricks will remain a consultant to ensure a smooth transition.
Trending
Hines sees signs of a rebound
Houston-based manager Hines has provided a noticeable counter-narrative to all the research demonstrating falling investment volumes around the world. In a white paper published last week, the firm highlighted signs of rebounding activity in all three major regions of the globe. In Market Outlook: Opportunistic Patience Prevails, Hines pointed to how plummeting office investment volumes in the US and Europe are distracting from increased transactions in other property types. For instance, although overall transaction volumes in the US were down 68 percent year-on-year in the second quarter, apartment dealflow had grown 10 percent, according to the report, which used research from data provider MSCI Real Assets. In Europe, meanwhile, industrial, retail and apartment transaction activity had increased 12.4 percent, 11.5 percent and a massive 81 percent, respectively. And in Asia, industrial volumes rose 22.4 percent during the same period, while retail went up 15.9 percent.
“While quarter-over-quarter data can be volatile and we prefer to see a more sustained increase in transaction activity before calling a bottom, the gains we did see in Q2 are encouraging,” Josh Scoville, managing director of Hines’ proprietary research, wrote in the paper.
All-time low
Each quarter, Stuttgart-based advisory firm BF.direkt conducts a survey of German lenders and boils the findings down to a sentiment index score. This week, the firm announced the latest survey had resulted in a record low for its index score. BF.direkt said more than 80 percent of respondents spoke of more restrictive financing terms, while the proportion of those that noted a downward trend in new lending was up from the previous survey. Liquidity costs were reported to have either remained unchanged or increased by 53.5 percent of respondents. Francesco Fedele, chief executive of BF.direkt was not surprised by the survey results. “The Barometer score matches the impression that the market has made on us lately,” he said. Access the survey results here.
Data snapshot
Loving the living sector
The growing imbalance between supply and demand is one of several reasons property investors have set aside £45 billion (€52 billion) to invest in the UK living sectors over the next five years, according to real estate consultant Knight Frank. Nearly a third of respondents told Knight Frank they intended to more than double their current total investment in the sector in the coming five years.
Loan in focus
Henderson Park’s Paris hotel refi
In October 2016, the first deal to be completed by the then-recently-formed private equity real estate firm Henderson Park was the €365 million purchase of Le Méridien Etoile – an upscale Paris hotel. The London-based firm initially financed the purchase with a €200 million loan from French bank Natixis. Last week, Henderson Park’s refinancing of the historic asset was announced, and the lender was one of Europe’s most active finance providers for hotels – Aareal Bank. The German lender provided a €210 million senior refinancing loan. Le Méridien Etoile was built in 1972 by Air France and was famous for its jazz bar. Today, the property is France’s largest hotel and conference centre.
Today’s Term Sheet was prepared by Daniel Cunningham, with Mark Mwaungulu, Evelyn Lee and Jonathan Brasse contributing
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