A report published by real estate association INREV has revealed that real estate debt funds remain popular as a source of capital.
The 2018 INREV Debt Funds Universe report showed that 23.6% of investors planned to increase their allocations to debt funds.
The full Universe of 67 vehicles – eight more than last year – recorded a total target gross asset value of €33.0bn, up from €30.2bn last year.
The report said though the increase in the number of debt funds in the Universe is relatively low at 11%, this is likely to increase.
A survey on investment intentions suggests that interest is likely to come from US investors hunting for opportunities to gain greater exposure to European non-listed real estate, it said.
Direct lending remains the most popular loan generation strategy at 35.8%, whilst 34.3% of funds opt for a combination of both loan acquisition and direct lending, the report said.
Funds with a closed-end structure dominate the debt funds space, accounting for 88.2% of the Universe – a rise from 76.2% in 2017.
Henri Vuong, INREV’s director of research and market information, said: “Traditional banks may be back in the lending game, but this report clearly indicates that real estate debt funds remain attractive.
“They may not have become the ubiquitous source of capital that might have been expected post-financial crisis, but they offer important benefits as a diversified source of capital. And this may be particularly relevant as we approach the cusp of a market downturn.”
