Venn Partners has raised £185m (€230.8m) for its first European real estate debt fund.

The investment manager said the Venn Commercial Real Estate Fund I vehicle would target direct lending opportunities in the European commercial real estate market.

UK and North American pension funds backed the closed-end vehicle. 

A final close is expected in the third quarter.

The fund is focused on value-add loans in the mid-market £5m-50m range, where it said there was strong borrower demand.

Loans are being be offered at up to 75% LTV for a period of six months to five years in UK and selective Western European commercial real estate markets.

Venn Partners said around 80% of commitments to the fund, which is targeting double-digit returns, are invested in loans.

Beatrice Dupont, partner of Venn Partners and deputy portfolio manager of VeCREF I, said: “As a consequence of the continued evolution within the bank lending market, set against our borrowers’ needs to work with solution-orientated debt providers, we continue to source and underwrite attractive investment opportunities with strong downside protection for our investors.”

The company said it has completed more than £1.2bn in loans since the start of 2013, including more than £140m of loan investments within the fund.