Goldman Sachs has announced a final close on $4.2 bn (€3.4 bn) of equity for its third global real estate debt fund, making it one of the largest property debt funds ever raised.
The US investment bank said that Broad Street Real Estate Credit Partners III will have a total of $6.7 bn (€5.5 bn) to invest, including leverage.
The latest fund will follow the strategy of its $4.1 bn (€3.35 bn) predecessor, looking for higher-yield debt returns through making large mezzanine loans or ‘transitional’ senior or whole loan finance for complex property transactions, with loans typically from $100 mln to $500 mln in size.
‘We successfully added European-based investments during the prior fund and we will continue to leverage our scale and our deep understanding of the various local real estate markets to provide customized solutions to borrowers across Europe and North America,’ said Jim Garman, the London-based co-head of the merchant banking division’s Real Estate Group.
Fund II is thought to have invested over 20% of its total capital in European debt, in the UK, Ireland, the Netherlands, France, Germany and Spain.
Goldman’s merchant banking division invests alongside the credit funds. Peter Weidman, the division’s global head of real estate credit, added, 'Real Estate Credit Partners III will pursue the same investment strategy that has proven so successful in our prior funds – focusing on direct originations of both senior and mezzanine loans secured by high-quality assets in major markets. The fund’s scale and flexibility allows us to be an originate-and-hold lender, providing highly customized loans throughout the US and Europe.’
Goldman Sachs also lends to European property via its investment bank real estate finance team, headed in London by Jan Janssen. The investment bank uses its balance sheet to underwrite transactions and then often distributes the debt via syndication or securitisation.
Loans that Janssen’s team at the bank wrote last year included approximately €500 mln for Pradera’s €900 mln acquisition of 25 retail parks from Ikea, and a €337 mln refinancing of Dutch secondary assets company Merin shortly before the company was sold by TPG and Patron.
Both parts of the bank were in a club that lent circa €2.6 bn to Blackstone last September to finance the investor’s Finnish Sponda acquisition, with Real Estate Credit Partners providing €340 mln of mezzanine debt.
