Cheyne Capital is believed to be targeting up to £1.5 bn (€1.65 bn) for the latest in its series of real estate debt funds.
The alternative asset manager is said to have raised £500 mln at a first close for iterations VI and VII in its CRECH series (Cheyne Real Estate Credit Holdings).
The plan is to put together total capacity for lending/investing in Western Europe of £1.5 bn.
The firm and its real estate team, headed by Ravi Stickney, declined to comment.
Last week Cheyne announced that it had originated £232 mln of new loans ‘for the latest vintages of its real estate lending programme’ which is understood to be on behalf of the new funds.
The alternative lender targets gaps in the market left by the withdrawal of traditional debt providers. It is currently focused on borrowers requiring finance for value-add, transitional or development projects, predominantly in the UK, France and Germany.
With debt for these assets currently in short supply, Cheyne believes it can get strong risk-returns from senior lending where it will have first charge over the property, although it is able to lend higher up the capital stack.
The loans already made include two in the UK, one in France and one in Spain.
In France the firm has provided finance for a Grade A Paris office refurbishment, while the Spanish deal is for a student housing asset.
In the UK, Cheyne is lending on two residential projects in or close to the greater London area. One is a 310-room co-living development in Trewint Street in Earlsfield in Wandsworth which will cost £70 mln to develop and which The Collective has forward sold to a co-living fund set up by DTZ Investors.
The fund’s investors include the Merseyside and Strathclyde pension funds.
In Luton, Cheyne is replacing troubled lender Urban Exposure as the debt provider to residential developer Strawberry Star Group on its Lu2on project. Cheyne’s £75 mln loan will enable the borrower to build out the first phase comprising 401 flats.
Cheyne defines senior finance as transactions with a going-in loan-to-cost of 50-70%.
Investors are continuing to back experienced debt fund managers but show a preference for businesses with strong track records and balance sheets which have proved they can raise capital constantly.
LaSalle Investment Management raised €435 mln this month in a first close for its fourth LaSalle Real Estate Debt Strategies (LREDS) fund, one of a suite of products, while Blackstone closed its latest global debt fund, BREDS IV.
