The debt platform of TIAA Henderson Real Estate is targeting UK regional markets as well as London assets as it makes its first steps into commercial real estate finance.
The company – a joint venture between TIAA-CREF and Henderson Global Investors – announced plans to launch its first European debt fund this year and is yet to confirm how much it is looking to deploy.
Tom Garbutt, head of global real estate at TIAA-CREF, told IP Real Estate in March that TH Real Estate had an internal client with “tremendous appetite for real estate debt”. TIAA-CREF already has significant property debt investments in the US.
TH Real Estate is focusing its efforts on both the fairly crowded space in London and lending opportunities outside the city, its head of European debt operations, Christian Janssen said, confident in the UK’s economic recovery.
Janssen, who joined TH Real Estate from Renshaw Bay last year, said the company would use its in-house knowledge of UK property to assess lending opportunities in regional cities. All sectors – with the exception of hotels and highly operational and specialised assets, such as care homes – are on the division’s radar, he added.
In June, the firm hired Shawn Kaufman from RBS as director of debt strategies. Christoph Wagner, previously at BlackRock, has also since joined TH Real Estate in a similar role.
Kaufman said carefully selected UK regional real estate offered “strong sponsors with defensive assets in good locations”.
“That’s where there’s still opportunity,” he said, adding that lending restrictions were limiting activity from traditional banks beyond the UK capital.
“Banks typically held that territory, but in the last two years we’ve seen insurance companies and debt funds growing their market share.”
Despite the notion that institutional lenders are more likely to provide long-term debt as a consequence of their liabilities, Janssen said the firm was not “solely long-term” and was also comfortable lending on five-year terms.
“We have a variety of capital types and can do either fixed-rate, lower-leverage and long-term or floating-rate, higher-leverage and shorter-term,” he said.
TH Real Estate, Kaufman added, will look to lend at loan-to-value ratios of up to 75%. The division has, he said, already provided finance to an unnamed investor at 60% LTV on a regional shopping centre with a 20-year term.
Similar facilities are in the pipeline, Kaufman said, adding that the syndication of loans was also being explored.