Trend watch: Aviva backs logistics, Cerberus raises $2.8bn and investors stick with real estate

Another major shed portfolio financing this week demonstrates real estate lenders’ sustained appetite for logistics exposure.

According to market sources, a long roster of lenders are in the market to finance logistics real estate. While debt providers are selective on sectors including offices, sheds are seen by many as a sensible sector in which to write loans, on the back of strong e-commerce activity.

Recent weeks have seen big logistics financing deals, including a €580 million continental European portfolio financing by ING, and the launch of a €383.5 million securitisation by US bank Morgan Stanley of debt held against last-mile sheds across Germany and the Netherlands. This week, UK insurance company lender Aviva Investors became the latest to announce a significant logistics transaction.

For more on that, and other noteworthy items, read on.

Aviva sees growth potential in logistics:

Aviva’s £184.7 million (€216 million) senior loan was provided to the Canadian investor Alberta Investment Management and the private UK property company Canmoor. It comprised fixed and floating-rate tranches of debt secured by 16 industrial and logistics properties located across the UK.

Gregor Bamert, head of real estate debt at Aviva, described industrial and logistics as “sectors where we are positive about potential for growth”.

Bamert was not the only lender singing the sector’s praises this week. German lender Deutsche Hypo announced a “mid-double-digit million” euro two-year financing of a logistics property near Cologne, for a company owned by real assets investor Dietz. In accompanying comments, Deutsche Hypo board member Andreas Rehfus described logistics as “undoubtedly a future segment” which has proved to be a “clear winner” of the pandemic crisis.

Cerberus eyes NPL opportunities:

Oaktree Capital Management, the US private equity firm, this month raised its largest real estate fund to date, with a focus on credit-related investments. For more comment on the strategy from sister title PERE, click here.

This week, another US private equity giant – Cerberus Capital Management – announced it had raised $2.8 billion for its global opportunistic real estate strategy. The company said it will invest in direct assets, real estate companies, entities with real estate exposure and real estate-related debt, including non-performing loan portfolios.

Cerberus was one of the major buyers of toxic loans across European markets in the wake of the 2007-08 global financial crisis. Few in the market expect an NPL buying opportunity on the same scale this time around, as lenders seek collaborative solutions to stressed situations with their sponsors. But Cerberus clearly sees potential in a new wave of NPL opportunities. “There are market dislocations and macrotrends that are driving compelling opportunities across our broad platform,” commented Lee Millstein, global head of real estate.

LondonMetric taps the PP market:

Sponsors are diversifying their sources of funding, including through capital markets deals. LondonMetric Property, the UK logistics REIT, announced last week it had priced its third private debt placement since it entered the market in 2016: a £380 million ticket with 11 North American and UK institutional investors.

According to Martin McGann, finance director of LondonMetric, private placements help the company to diversify its funding sources while offering long-dated capital. In this case, the notes were placed with investors in four tranches at a weighted average maturity of 11.1 years.

Most of the proceeds will be used to refinance existing debt facilities. But some of the placement’s tranches will be used to fund specific projects, such as a £50 million tranche subject to a ‘green framework’, under which spend will be allocated to buildings with high sustainability standards.

Investors’ real estate love affair will go on:

The results of a client survey by German manager Patrizia, published last week, indicate that institutional investors’ love for real estate is unlikely to wane, at least until the middle of this decade.

According to its survey of 222 members of the company’s investor base, 72 percent plan to increase their real estate investments in the next five years, with a focus on portfolio diversification. More than half – 56 percent – intend to grow their portfolios by up to 10 percent. With ultra-low interest rates and fixed income yields expected to persist, real estate looks likely to serve a purpose for yield-hungry investors for some time.

PEI’s new sustainability title: 

On 29 March, PEI Media, the publisher of Real Estate Capital, launched a new publication for investors in private equity, private debt and real assets to guide them through the sustainable investment mega-trend. To find out more about New Private Markets, click here.