Cornerstone migrates towards higher-yielding debt strategy

Cornerstone Real Estate Advisers is eyeing higher-yielding debt investment strategies, the company’s European CEO Charles Weeks told PropertyEU.

‘Capital sourcing is not an issue for Cornerstone Europe at this stage. We have capital to invest already and we are aware of other investors that might wish to invest alongside Cornerstone Europe, once we have finalised our strategy. Rather, it is about (1) the sourcing of attractive investment opportunities in the marketplace, which are relatively scarce in number and (2) our ability to execute and deliver attractive and sustainable returns to our investor universe within our set risk parameters.’

In August, the company made its debut in the European real estate lending market by providing a £83 mln (€105 mln) refinancing secured against two prime assets in central London to UK REIT Derwent London. At the time, the company said the deal was typical of the type of opportunity Cornerstone is targeting in the UK, where it is seeking to provide property-secured senior loans, with a single property target lot size of between £25 mln and £75 mln.

It has since attempted to lend on other transactions, but competition at this end of the investment market - senior debt origination - remains stiff, Weeks said. ‘We have to be very flexible and responsive to borrowers’ requirements'.

The company is currently engaged in expanding the Cornerstone Europe debt investment platform and devising a distinctive strategy that is both deliverable and sustainable, he added. ‘We are planning to build an equity investment operation in Germany and France, with Cornerstone Europe personnel on the ground in those particular target markets. That operation will then help underwrite investment opportunities for our real estate debt platform in addition to our activities on the equity side.’

Weeks has not ruled out acquisitions to expand the platform. ‘We believe having a strong local network of Cornerstone personnel on the ground in Germany and France are vital components of what we need in order to develop and grow our European operation. We are in discussions with a number of parties on exploring the options available to us in taking this business line forward.’