Edmond de Rothschild Real Estate Investment Management (EDR REIM) has revealed plans to further grow its real estate debt platform, to further capitalise on structural changes and disruptions in the European real estate financing market.
Since the start of the debt platform in 2020, the first vintage and second vintage together raised over €350 mln.
EDR REIM’s debt team is currently working on a third vintage with the objective to deploy €600 mln over the next few years, with a targeted net IRR of 9% (unlevered) and a target portfolio loan-to-value (LTV) ratio of 70%.
Ralf Kind, head of real estate debt at EDR REIM, said: 'High inflation rates, rapid interest rate hikes, and an uncertain economic outlook are widening the financing gap in the commercial real estate financing market.
'As a result, the market share of real estate debt funds will continue to significantly increase in the coming years. Investing in real estate debt offers an attractive opportunity for investors to benefit from higher interest rates, lower LTVs, and tighter credit security structures.'
EDR’s RED team aims to build a diversified pan-European credit portfolio with a focus on first-lien secured whole loans, which will be extended to experienced and well-capitalized borrowers.
Due to the ongoing withdrawal of banks from commercial real estate financing and the upcoming refinancing wave of maturing loans, Edmond de Rothschild expects an excellent environment for debt capital investments in the next few years.
The origination strategy emphasizes financing in the mid-sized segment for core+/value-add assets located in strong Western European markets.
The team at the moment has a significant pipeline in place with an average loan-to-value (LTV) ratio of approximately 70%. The expected gross IRR for new loans is currently around 10-11%.
In the past two years, Edmond de Rothschild's Real Estate Debt team has provided finance totalling over €200 mln in six whole loans and mezzanine loans to reputable sponsors in multiple countries (Germany, Netherlands, France, Italy, and the UK) and across various real estate sectors (industrial, logistics, office, residential, and hotel). The current pipeline stands at over €800 mln.
The real estate debt team is part of Edmond de Rothschild's pan-European real estate platform, which is represented by more than 120 real estate experts in the largest European markets.
