AEW Europe is aiming to build a €3bn UK and European performing senior loan book by the end of 2015 across a three-pronged strategy of debt fund investments, larger club deals and opportunistic loan book purchasing from deleveraging banks.
Speaking at the EXPO REAL 2012 conference, Christian Delaire, chief executive officer at AEW Europe, told CoStar News that his debt team has closed its maiden senior loan – a €20m participation in a just over €100m loan, alongside two banks, securing a French logistics portfolio at circa 60% LTV.
But this fund strategy is just one of three pillars which AEW will employ to build a long-term foothold in the UK and European senior debt market, for which Delaire predicts as much as 25% of European senior lending will come from non-bank sources in five years time.
Delaire told CoStar News yesterday: “There is a structural shift in the lending markets with some banks exiting the market because real estate finance is no longer strategic for them. Our ambition is to become a major player.
“As well as the fund strategy, we will look at bigger loans – in primary origination and secondary purchases – in club deals with other lenders, and we will talk to banks about buying performing loans on a larger scale.”
Delaire said these “second and third pillar strategies” for acquisitive growth will be opportunity-led, with AEW likely to take such opportunities to their underlying investors on a bespoke basis.
These three combined strategies will seek to establish AEW with a deep, long-term presence in European real estate senior debt lending which will be as significant as €3bn by the end of 2015, according to Delaire.
AEW’s 2012 capital raising exercise across the four distinct equity and debt investment strategies has seen €1.5bn raised. Insurance companies, pension funds, sovereign wealth fund and high net worth individuals were targeted across the UK, Europe, Middle East, Asia Pacific and the US.
This wider pool of investors, which have committed to different strategies will be presented with these larger senior debt opportunities as and when transactions emerge.
Like many raising for senior debt funds, AEW’s efforts are directed towards traditional fixed income investors seeking to persuade investors that circa 60% LTV senior lending on prime and top secondary is an equivalent bond strategy.
Six months ago at the MIPIM conference in Cannes, Delaire revealed plans for a €500m senior debt fund, which was part of a four-pronged strategy across equity and debt investment styles.
In the intervening months, AEW Europe has completed a first closing of its senior debt fund – closing €240m from two external French insurance companies as well as a circa 10% allocation by the Naxtis insurance company.
Delaire believes the balance of the capital to raise – at €260m – can realistically be raised from external investors over the coming 12 months.
AEW Europe is a subsidiary of Natixis Global Asset Management (NGAM), the asset management platform of the Natixis group, which in turns owns through Natixis Asset Management.