Natalie Howard to run £1bn AgFe senior debt fund

AgFe, the real estate structured finance advisory firm set up by former Morgan Stanley securitisation banker Paul Rolles, has beguan capital raising for its inaugural £1bn UK senior debt fund. 

AgFe, the real estate structured finance advisory firm set up by former Morgan Stanley securitisation banker Paul Rolles, has beguan capital raising for its inaugural £1bn UK senior debt fund.

The medium-term debt fund will offer straight senior debt, on five and seven-year durations, lending purely against the UK prime and good secondary real estate in London and the regions at up to 70% loan-to-values (LTVs), across the three core sectors.

AgFe will apply market-driven pricing, which across prime and good secondary currently ranges from 300bps to 450 bps. The capital raising process could take from six to 18 months, targeting liability-matching institutional investors, such as pension funds, insurance companies as well as sovereign wealth funds.

Natalie Howard, who managed European and Asian real estate debt fund for Lehman Brothers as well as establishing Barclays Capital’s CMBS conduit programme, Eclipse, in the mid-2000s, and her team will manage AgFe’s senior debt fund. The team includes Phil Pearson, who joined from Aviva Invetsors, and Emma Hallgren, who worked with Howard at Lehman.

Howard, under then managing director Lynn Gilbert, was responsibile for BarCap’s real estate lending businesses, comprising more than £20bn of balance sheet lending on development and investment real estate. Prior to this, Howard worked at Morgan Stanley as a founding member of their European CMBS conduit programme, ELoC.

AgFe is better for known for a series of highly-complex advisory mandates, including on the €8bn Lehman Brothers collateral which was transferred, via the European Central Bank, to the Deutsche Bundesbank, Germany’s central bank. This included the recent sale of Excalibur collateralised debt obligation (CDO) to Lone Star, the global private equity investor.

AgFe also advises Beacon Capital Partners on the restructuring of the defaulted single-loan £429m Ulysses ELoC 27 CMBS, secured by the 703,382 sq ft Citypoint tower at One Ropemaker Street in the City of London.

Rolles, a founder member of Morgan Stanley’s securitisation group in the 1990s, established AgFe in September 2006, and hired Richard Atterbury as chairman, who was once a colleague at the US investment bank and later co-head of European capital markets and global co-head of the financial sponsors group at Lehman Brothers, in May 2010.

There is an ever-growing assembly line of new senior debt funds, led in size by AXA Real Estate, which is expected to invest more than €2bn across Europe this year, taking its total real estate loan book to around €5bn. M&G Investments is in the proces of raising a multi-billion-pound senior debt fund with both internal parent and third party capital, as well as a sucessor mezzanine fund, taking its European real estate loan book to around £2bn by the year end.

Private equity groups Fortress Investment Group, Starwood Capital and Renshaw Bay are also all talking to prospective investors for senior debt funds – each having hired senior real estate bankers Cyril Courbage, Peter Denton and Jon Rickert respectively to head up the funds.

Keith Davidson and James Tarry have both just joined Cordea Savills this week from Palatium Investment Management, to set up a real estate lending platform, while Legal & General, Henderson Global Invetsors and AEW Europe all similarly have long term senior debt ambitions.

US insurers are also keen on investing in the increasingly mainstream asset class, with MetLife expected to take its UK loan book to more than £1bn by the end of this year, while Mass Mutual is organising its platform.

The emergence of more debt is expected to continue throughout the rest of the year and beyond which while a positive feature of the market, it remains a modest set against the estimated $182bn (€113bn) two-year European funding gap, estimated by DTZ Research. 

This is set against a near €500bn European commercial real estate refinancing wall over the same period – a figure which more than doubles to above €1trn over the four years to the end of 2014, according to DTZ, in a sobering reminder of just how daunting the long unwinding road ahead is.

AgFe declined to comment.

jwallace@costar.co.uk

About CoStar News

Finance Editor, CoStar News
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