Term Sheet: LaSalle’s target-hitting debt fundraising, AXA ‘s sheds fund bond, Grosvenor’s first green financing

LaSalle Investment Management’s €1.1 billion latest fundraise demonstrates investor interest in European real estate debt; AXA continues to tap the green bond market to finance its core funds; UK property company Grosvenor refinances Spanish asset with its first green loan; and more in today’s briefing, exclusively for our valued subscribers.

They said it

“On the forefront of all investors’ minds right now is inflation.”

Richard Litton, president of real estate investment and management firm Harbor Group International, tells affiliate title Real Estate Capital USA about a rising concern for the US commercial real estate lending market [read more here].

What’s happening?

Fourth time around
US-headquartered LaSalle Investment Management was one of the first non-banks to enter Europe’s real estate lending market after the global financial crisis. Now it has closed the fourth vehicle in its flagship high-yield lending fund series. LaSalle Real Estate Debt Strategies IV closed on €1.1 billion including side car commitments – above the €1 billion target it had set in 2019.

LREDS IV, which has an 8-11 percent return target, is the largest in the series and provides LaSalle with substantial dry powder as Europe’s real estate markets recover from the shock of covid. Speaking to Real Estate Capital Europe in October 2020, following the €435 million first close of LREDS IV, Amy Klein Aznar, then head of the firm’s debt and special situations business, now executive chair of debt and value-add strategies, said there was a feeling among investors that this will be a good vintage for real estate debt [read the full interview here].

Big boxes, big bond
So far this year, AXA IM Alts has raised €1 billion of finance for its flagship core real estate fund across two separate green bond issues in June and October. This week, the French manager’s flagship European logistics fund, AXA Logistics Europe, priced an €800 million green bond, featuring a green finance framework [read the announcement here]. AXA said the bond was around four times oversubscribed and the notes were placed to 136 institutional investors.

Timothé Rauly, global chief investment officer and head of fund management at AXA IM Alts, said the shift in financing strategy to unsecured debt will allow the repayment of existing mortgage loans, which would be a “positive change in the long-term capital structure of the fund allowing for further growth and continued market leading returns”.

Going digital
Recent years have seen several attempts by fintech entrepreneurs to bring the real estate financing process into the digital age. Monday saw the launch of a new platform, backed by German property manager Patrizia, described as the first ‘hybrid’ platform in Europe’s commercial real estate debt market to combine the “speed, power and reach” of digital with the skills of advisers and dealmakers.

BV Debt will allow those in need of €5 million-plus loans to list ‘smart’ deals into the platform and invite vetted lenders into them. Advisers are also able to be part of it, to collaborate on deals and to use the platform to engage new clients and manage transactions. Its backers say the in-built transparency of the platform will lead to optimal debt terms for borrowers. Now it is time to see how the borrowers, lenders and advisers it covets make use of this latest attempt to modernise the industry.

REC Europe Awards

Last chance to make a submission!
You have until midday UK time, Friday 19 November to tell us why your organisation deserves to be in contention in the Real Estate Capital Europe Awards 2021. The stand-out organisations and transactions in Europe’s property lending market this year will be recognised in the awards. But as we prepare to compile the shortlists, we want to hear your highlights from a year of challenges and opportunities.

We are inviting you to click HERE to submit your achievements in 2021 so far. Voting will open in December, with the winners announced in our spring 2022 edition, and online at recapitalnews.com in March next year. Do not miss out!

Data snapshot

Mind the gap
Investors around the world continued to wait for clarity this year, but that does not mean they lacked confidence in real estate. Affiliate title PERE’s coverage is here.

Loan in focus

Grosvenor’s first green loan
London-headquartered property company Grosvenor has sourced its first green secured financing agreement. The company sourced €24.5 million from Spanish bank Santander to refinance Titán 8, an office building in Madrid. The deal releases equity for Grosvenor to make further investments in Spain, where it has bought €250 million of office buildings in the last few years. The loan complies with the components of the Loan Market Association’s Green Loan Principles and is labelled green due to Titan 8’s LEED Gold certification status.

“Climate change presents a clear risk for business,” said Grosvenor Europe CEO Sara Lucas. “By acquiring and managing sustainable buildings, and improving the environmental credentials of our existing portfolio, we are investing in a more sustainable future for our business, our assets, and setting an example for the property industry to work towards a climate positive future.”

Today’s Term Sheet was prepared by Daniel Cunningham, with Samantha Rowan and Kyle Campbell contributing.