Investment firm Abrdn has raised an initial £205m (€243 mln) for a new semi-open ended UK commercial real debt fund which aims to grow to £1 bn in commitments.
The Commercial Real Estate Debt fund II (CRED II) is an evergreen, UK-focused strategy for institutional investors. CRED II is designed to generate attractive levels of income by investing in a diversified portfolio of predominantly senior, investment grade real estate debt assets. The fund is targeting spreads and illiquidity premia in the range of 375-575bps and 100-300bps respectively.
The fund raised the equity from public and corporate pension schemes in the UK. A number of prospective clients are considering the upcoming second close, as the fund is offering an ‘early bird’ discount until September 2022, Abrdn said.
Peter Hall, partner at Momentum Investment Solutions & Consulting, said: ‘Private credit is an important addition to an institutional portfolio, and given the attractive spreads seen in the real estate debt markets, we see abrdn’s CRED II fund as a promising solution to capture this opportunity. The semi-open ended nature allows our clients access to the illiquidity premia of the asset class alongside some redemption optionality.’
CRED II’s semi-open ended nature provides flexibility for investors to adjust their exposure over time, and offers potential liquidity options to DB pension schemes that are considering buy-out.
CRED II will be managed by Neil Odom-Haslett and Martin Barnewell. Odom-Haslett is the head of Commercial Real Estate Debt at Abrdn and is also president of the Association of Property Lenders.
Craig MacDonald, Global Head of Fixed Income, Abrdn, said: 'Our private credit offering has evolved considerably over the past few years. We listen to our clients and have designed products and solutions with their needs in mind. CRED II is no exception, combining the track record of CRED I with the attractive market opportunity we’re seeing in this space.'
