Zencap closes second property debt fund on €250m – Exclusive

Around a quarter of the French firm’s latest vehicle has been deployed, offering an average coupon of more than 5%.

French alternative investment fund manager Zencap Asset Management has closed its second real estate debt fund, focused on providing credit to value-add and opportunistic deals, Real Estate Capital can reveal.

Zencap’s Real Estate Debt II closed on €250 million, despite having initially set a hard-cap of €350 million. A larger fund would have taken too much time to deploy amid a “very competitive” market, Richard Jacquet, the firm’s chief executive officer, told Real Estate Capital.

“We don’t want to wait too long to invest the capital, but we want to deploy it finding the right investments,” Jacquet said, noting that, with more private debt at play in European real estate markets, it is increasingly difficult to source attractive deals.

“We stopped at €250 million, which is good enough and will allow us to do tickets between €5 million to €25 million. It will take more than a year to invest the capital and then we might launch a third fund when the time comes,” he added.

Zencap has already deployed around a quarter of the fund on several investments offering an average coupon of more than 5 percent, Jacquet said. It has provided mostly senior tickets, primarily in France.

“We will probably focus on France because it’s easier for us, but it’s not a market we target specifically. We also aim to source good deals in continental Europe; in Belgium, Germany, Italy, Spain, Luxembourg, Netherlands, maybe Switzerland,” Jacquet said.

The vehicle, expected to finance a total of 15 to 20 investments, can provide senior and unitranche loans in addition to mezzanine pieces. The fund is expected to generate returns of between 4 percent and 5 percent net per year.

The firm expected to provide most loans in the 70 percent to 75 percent loan-to-value range. The fund can be invested across property sectors in continental Europe, with commercial property to be the main focus.

“We are more driven by opportunities, rather than by identified general trends. We believe this opportunistic approach is a good way to build our portfolio, instead of being forced to look at French offices, for example,” Victoire Blazsin, deputy chief executive officer at Zencap, said in September.

“Once we have done a transaction in a particular sector, we try to avoid another similar deal to keep our portfolio diversified. We manage risk through a diversification of our portfolio,” she added.

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