London-based Rivercrown, the pan-European investment and capital markets advisory firm, has announced the launch of a new special situations credit vehicle to back real estate ventures during the pandemic.
According to the firm, the vehicle will seek to support a range of segments during the current period of market uncertainty, including 'out of favour' asset classes such as value-add retail and leisure, particularly with re-purposing opportunities, and serviced offices in strong locations.
It will also be open to hotel developers or investors requiring 'breathing space' or a bridge to market stabilisation, the firm said, plus student accommodation and residential investors requiring inventory bridging loans, and other markets with pandemic-related issues; or opportunities, including speculative logistics development.
In a tough borrowing climate, the strategy will be to find areas where there are funding gaps or short-to-medium-term dislocations in pricing, Rivercrown announced. It will use a variety of structures across the capital stack, ranging from stretched-senior to preferred equity.
Co-founder Stephen Benson said: 'Our experience combined with our on-the-ground teams across Europe, means that alongside our investors we will be excellently placed to support borrowers with the right track records and business plans in these unprecedented times.'
In addition, Rivercrown is pursuing loan portfolio purchases where banks and alternative lenders are looking to exit positions. This can either take the form of performing, sub-performing or non-performing loans; or loans where the lender has seen increases to their reg cap charging or provisioning.
Target geographies include core European markets with a particular focus on the UK, Ireland, Spain, the Netherlands, Germany and Portugal, where the firm has local market knowledge. Duration will range from short-term bridges to five-year term loans.
Rivercrown has initially seeded the vehicle with its own capital, alongside that of one other partner. It is in talks with investors to scale those initial commitments to a level that will allow for deployment of €250 mln to €500 mln over the next 12 months.
Head of debt investment management within Rivercrown’s principal investment division, Charles Archer said: 'We are seeing a wealth of opportunities, across all sectors. Often where there is a funding-gap combined with an element of short-term, situational distress. Our current transaction pipeline is in excess of £2 bn, half of which conceptually fits the vehicle’s mandate. We have already issued a number of term sheets and see speed and certainty of execution as being key differentiating factors.'
