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Audience

Real estate debt finance

Real estate debt finance can provide an opportunity for investors to capture attractive risk adjusted returns via loans secured against underlying commercial real estate.

Loans of this type are typically able to achieve a premium to equivalently rated corporate debt due to their illiquid nature, with specific covenant and security packages providing downside protection.

Contact us

For further information about our investment opportunities in commercial real estate debt.

Contact us

If you are seeking to raise real estate debt financing, please visit our borrower page.

The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested.

What is real estate debt finance?

Real estate debt financing allows investors to access the commercial real estate sector via loans made across the capital structure.

Senior, mezzanine or whole loans are made against commercial real estate, with the interest typically being paid by rental income generated by the underlying properties. Loans are secured against hard assets, ensuring that in any potential default scenario lenders have recourse to the underlying commercial properties to repay the loans.

Why invest in real estate debt?

Since the global financial crisis, there has been a significant change to the risk and return available in real estate debt, with loan to value ratios (the percentage of property value being offered) considerably lower whilst the margins on offer have increased dramatically. We believe this has created a very attractive backdrop for investors to gain exposure to the asset class.

In addition, investment in real estate debt offers the following advantages for investors:

  • Attractive spreads over corporate bonds of similar credit risk
  • A high proportion of current income return
  • The capacity to make significant capital allocations
  • Security against physical underlying assets
  • Defensive characteristics via high underwriting standards and tailored financial covenants
  • Significant downside protection against potential falls in property values when compared to investing in direct property

Around €500bn of European commercial real estate debt is expected to need refinancing over the next three years, presenting significant investment opportunities in the sector for non-traditional lenders. 

European-CRE-Debt-Maturity-Profile 

Source: CBRE European Commercial Real Estate Finance 2017 Update.

Our experience

Our dedicated real estate debt finance team was established in 2008 and comprises 21 professionals. The team has invested over £7.3bn* across the UK and Europe since 2009, with a primary focus on creating value by originating whole loans secured against strong underlying properties.

The real estate debt finance team operates across the capital structure providing investors with access to a range of risk and return profiles, whilst offering borrowers a trusted partner and ‘one stop’ solution for debt financing. 

*Source: M&G as at 31 December 2017.

Our strategies

We offer a range of different ways to access real estate debt finance depending on your risk and return requirements. These include senior, mezzanine and whole loan strategies across the UK and Europe.

We offer both commingled and separate account products allowing bespoke strategies to be tailored to your needs, and would be happy to discuss your specific Real Estate Debt Finance requirements.

Meet the real estate debt finance team

John Barakat 
John Barakat
Jamil Farooqi 
Jamil Farooqi
Paul Foldvari 
Peter Foldvari
Lynn Gilbert 
Lynn Gilbert
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For institutional investors only. Not for onward distribution to any other type of client. No other persons should rely on the information contained on this website.