La Française Real Estate Managers is preparing the launch of a EUR 300 mln senior debt fund focusing on the French property market, highlighting increasing activity in Europe by alternative debt providers as traditional bank lenders continue to retreat.
La Française Real Estate Managers is preparing the launch of a EUR 300 mln senior debt fund focusing on the French property market, highlighting increasing activity in Europe by alternative debt providers as traditional bank lenders continue to retreat.
The Paris-based asset manager is looking to take advantage of the scarcity of debt available in the market with the creation of a vehicle which will provide senior loans to core property assets in France. The vehicle will have a warchest of some EUR 300 mln and an investment period of two years. When operative, it will be the first such a fund in France.
'Banks' financing difficulties are not going to disappear overnight. They will last for a long time, because as a result of Basel III financing has become increasingly capital consuming. This creates a space for us to enter this market and lend capital directly with a low-risk profile and attractive returns,' managing director Marc Bertrand told PropertyEU.
The company, which is majority-owned by Crédit Mutuel Nord Europe, is in negotiations to take over a senior team specialised in debt and senior loan originations with a view to be fully operational in the second half of 2012. 'We have the real estate expertise, we need banking experts to support us in the business.'
The fund will focus on debt origination rather than loan acquisitions, he added. 'This will allow us to have a better sight on the contracts and the conditions,' Bertrand explained.
To fill the gaps left by the banking industry, several new institutes have entered the lending property market, primarily insurance companies driven by Solvency II and mezzanine providers in search of aggressive returns. According to market experts, senior debt funds are also expected to make their appearance in the coming months.
‘In a positive sign for the market, Europe’s real estate debt space has attracted a number of new players notably insurance groups such as Metlife, AXA and Prudential/M&G to fill part of the void left by banks and could grow further with the planned launch of several specialist debt funds,’ Michael Lindsay, head of Cushman & Wakefield’s EMEA Corporate Finance team recently told PropertyEU.
