The launch of two major debt funds is a step towards bridging Europe’s real estate funding gap, as investors are enticed by the continent’s massive refinancing needs.
Apollo Global Management has reportedly launched its first European real estate debt fund, targeting €1 bn in commitments, marking the first time the New York-based alternative asset manager is seeking to raise third-party capital alongside its own funds to invest in originating European real estate loans.
Similarly, M&G Investments has reached the first close of its latest vintage of real estate debt funds, raising £350 mln (€411 mln) of capital from four clients.
Dan Riches, real estate finance, M&G Investments, said: ‘Rising interest rates have contributed to a reduction in property valuations, providing investors accessing this asset class now with lower debt bases and subsequently greater downside protection and preservation of capital.’
The biggest funding gap is currently in development finance, says Steve Grant, chief executive of Kinetic Capital, a specialist lender in the purpose-built student accommodation sector. ‘However, we expect refinancing opportunities in the next 12-18 months,’ he told PropertyEU. The company recently provided a €100 mln three-year development loan together with Kayne Anderson Real Estate for two student housing projects in Milan.
This week also saw one of the largest development loans being signed, with AXA IM Alts securing a £480 mln (€564 mln) development financing from Cale Street for its net-zero London office scheme at 50 Fenchurch Street.
The firm said the financing deal represents one of the largest development loans agreed ahead of any pre-let in the UK since the beginning of 2023.
The six-year facility will fund the delivery of the 60,000 m2, 36-storey building, on which is construction is expected to commence this year.
Other major loans this week include lender Landesbank Baden-Württemberg (LBBW)’s €210 mln refinancing to US privately-held developer-investor Hines for the Allianz Campus in Stuttgart.
We also track all the new investment deals and new assets coming to market this week.
Click here to see all this week’s data.
