BF Capital is seeking to raise €300m for its latest real estate debt fund.
The German investment firm said the BF Capital Real Estate Debt Fund II fund would invest mainly in senior loans secured by existing properties with value-add potential. At least 80% of the fund’s capital will be allocated to such loans.
Manuel Köppel, managing director of BF Capital, said the fund will mainly target a “manage-to-core or manage-to-green investments” for the repositioning and repurposing of properties.
Köppel said: “When selecting projects, we will take both environmental aspects and our social responsibility into account. In terms of use classes, investments will focus on residential, community-related uses and social infrastructure.”
In addition to its core focus, the fund has the flexibility to invest up to 20% of its capital in financing ESG-compliant property developments, Köppel added.
Pascal Scheeff, head of sales at BF Capital, said: “Real estate debt funds offer something that direct real estate investments have a hard time delivering at the moment: Investors get to benefit from the higher level of interest rates plus from the higher credit spreads while also getting to invest in the real estate sector at the same time.
“Real estate debt can be a valuable building block when seeking portfolio diversification, not least because of the stable payout expectations. Moreover, real estate debt offers an attractive illiquidity premium, resulting in a better risk-return profile than comparable liquid fixed-income investments.”
BF Capital Real Estate Debt Fund II has a target distribution and net return of around 6%.
To read the latest IPE Real Assets magazine click here.
