Chenavari Investment Managers, the London-based hedge fund, has closed six real estate debt deals across the UK and Germany since launching its inaugural property debt fund in December last year, with plans to invest its entire €250m raised by the year end.
The six deals include bridging loans, mezzanine loans, loan and CMBS bond purchases.
The €250m open-ended fund, called Chenavari Real Estate Trading Limited, is targeting a circa 15% internal rate of return.
Many of the investments Chenavari has so far closed have arisen where the real estate team – comprised of Andrew Haines, Sam Mellor and Duncan Elley, who all came across from Etesian Capital Partners in July last year – have partnered with existing borrowers to buy-out loans from lenders wishing to exit historic positions.
Chenavari has achieved discounts of between 35% and 65% across the six deals, which include including financing Signature Capital’s discounted purchase and restructuring of one of the real estate investor’s German loan facilities. Another of the deal was a €8m bridging loan Chenavari provided for the redevelopment of a retail scheme in Bonn in Western Germany, south of Cologne to a German investor.
Haines, partner in Chenavari’s real estate team, said: “We are delighted with what we have achieved in the six months since coming to Chenavari. The capital we have raised is extremely flexible and allows us to invest and partner across a wide range of investment types.
“Whilst we remain cautious about the overall environment, the deleveraging by the banks has begun in earnest and we are seeing a large number of opportunities.”
The real estate team has a pipeline of deals across its two principal markets, including several potential development finance deals, reflecting the absence of such finance for mainstream property sectors from traditional property lenders.
Chenavari was invited to tender in the first round of Societe Generale’s €500m sub and non-performing loan portfolio, as well as being an underbidder on the nominally-valued €600m NAMA Project Island loan portfolio, which was won by Orion Capital Partners. The circa 40-strong development loan portfolio were comprised of 20 in the UK, 15 in France as well as five Spanish and Italian loans – all lent to property developer Cyril Dennis.
Chenavari is currently working with Arrowcroft, the privately-owned UK property company, on several bank asset recovery opportunities. However, the team will look to bid on future sub and non-performing loan portfolios both solo and in joint ventures.
Chenavari was set-up in London in 2008, and now has more than 40 staff with expertise in corporate, high yield and structured finance debt markets. Chenavari’s Toro 1A fund – which invests in European RMBS, CMBS, CDOs and balance sheet CLOs – delivered a return of 27.8% over the first six months of 2011 and 338.7% since the fund was launched just over two years ago in June 2009.