UBS Global Asset Management is about to launch a new European hybrid debt fund targeting a size of several hundred millions, Anthony Shayle, managing director and head of Global Real Estate - UK Debt at UBS said during the PropertyEU European debt finance and investment briefing held at Expo Real.
UBS Global Asset Management is about to launch a new European hybrid debt fund targeting a size of several hundred millions, Anthony Shayle, managing director and head of Global Real Estate - UK Debt at UBS said during the PropertyEU European debt finance and investment briefing held at Expo Real.
‘We are in the process of launching a senior debt fund which should be up and running in the next six to eight weeks,’ Shayle said.
Dubbed UBS Participating Real Estate Mortgage Fund, the vehicle will provide senior loans with a loan-to-value of up to 75% and a maturity of between five and seven years, offering investors a net return of between 8 and 10%. ‘Our fund has a core-style risk with core-plus returns,’ Shayle commented. ‘We are not more expensive than a combination of traditional debt and mezzanine but we offer a one-stop solution, one single tranche of debt with no set up costs and no complications in putting deals together.’
Commenting on the fund’s acquisition strategy, Shayle noted that the vehicle will have a higher risk profile compared to average senior debt funds, targeting assets with elements of growth, including forward-funding and development loans.
Shayle: 'Everybody should recognize that there is demand for financing not just in the core space but also for core plus and valued-add as well as for products offering different maturities and lot sizes.’
The fund will seek deals with profit-share arrangements and returns could be typically broken down into four areas: a coupon of 5-6%; a front-end fee of 1-1.5%, a 25-35% share of surplus rent after the coupon is paid; and a similar share of assets’ capital appreciation.
