FAP Group, the Berlin-based advisory company, has said investor demand led to the alteration of FAP Balanced Real Estate Financing I (FAP BREF I) from a closed-end into an open-end vehicle with unlimited duration.
Hanno Kowalski, managing partner, explained: ‘The conversion from a structure with limited duration into an Evergreen was incited by investor demand. Several parties wished to remain invested in the fund and are planning to raise their equity commitments.’
FAP expects additional commitments of around €100 mln for FAP BREF I by the end of this year.
In Q4 2022, FAP BREF I noted new equity commitments of over €65 mln from existing investors - which are all German institutional backers.
The fund currently has an overall equity volume of close to €300 mln. ‘The commitments came in a difficult market environment in which fund raising for real estate private debt funds hardly happened. This speaks volumes for the quality of our product and investor satisfaction,’ added Kowalski.
FAP explained its fund was ‘structured defensively’ in terms of its assets, geographies, markets, leverage and LTV as well as its sponsors. ‘It is thus the only core-mezzanine product for real estate financing in the German-speaking region.’
Raphael Wowra, senior investment manager, said: ’The market environment is volatile and classic lenders remain restrictive in their credit allocation. As a result, demand for alternative financing is set to rise again this year - and we prepared for it.’
Greenberg Traurig and Victoria Partners advised FAP on the restructuring. Victoria Partners is a banking boutique in the German real estate sector. It also advised FAP on the initial fundraise.
