Europa Capital Partners, the European real estate fund manager, has launched a UK commercial real estate mezzanine lending business backed by capital from majority shareholder Rockefeller Group International, in the latest example of a fund manager seeking to capitalise on the UK’s financing gap, CoStar News can reveal.
Europa Capital Mezzanine (ECM) will originate and structure small ticket mezzanine loans to the UK’s commercial property sector, at between £5m and £20m-sized loans at an LTV range of between 60% and 85%.
The size of the loans ECM is looking to write places the new mezzanine provider beneath the average deal size for more established providers already operating in the UK, including DRC Capital, LaSalle Investment Management and Pramerica Real Estate Investors.
ECM will target assets delivering high and sustainable income returns in “liquid property sectors” with strong property fundamentals backed by financially-sound and experienced borrowers.
“We aim to achieve this through the execution of astute lending strategies and backing sound management and investment principles,” said ECM on its just-launched website. “Our focus will be on the analysis of the real estate fundamentals, with the financial structure tailored to suit the business plan, rather than the reverse.”
ECM continued: “Our focus is the underlying business plan not simply the financial structure. We will provide acquisition facilities and will also refinance existing structures.”
The lending focus will be on assets with sustainable cashflows, liquidity of the underlying investment and transactions that have “value-creation opportunities”, added ECM, while transactions that require interest accrual will be avoided.
Selina Dicker has joined from Ireland’s NAMA, where she was lending and corporate finance team Leader for two years, taking up the role of head of mezzanine lending at ECM.
Prior to her two-year stint at NAMA, Dicker spent three years at Capmark where she was responsible for originating and structuring of European commercial real estate loans transactions, worth around $500m, including financing of €170m and €125m shopping centres in Magdeburg and Leipzig, Germany.
Dicker has also worked in loan syndication and securitisation, including the $2bn sale of Capmark’s European loan portfolio to GE Capital over two tranches. For seven years prior to her Capmark career, Dicker worked in Rothschild’s leveraged finance and real estate finance division.
Michael Birch will be chief executive at ECM, while Tim Turnbull will take on the head of property role and Noel Manns – a founding partner of Europa Capital Partners – will be chairman of the ECM investment committee.
Since 1995, Europa Capital have raised six real estate funds, including one previous UK-focused mezzanine fund and committed to over 70 transactions totalling some €7bn across 17 European countries.
Europa Capital is a member of Rockefeller Group International (RGI), itself a subsidiary of Mitsubishi Estate. RGI became a “strategic investor” alongside management in Europa Capital’s investment management business two years ago in October 2010, acquiring a majority interest.
Mitsubishi Estate first acquired a majority stake in RGI in 1989, which following a series of exercised stock purchase options, now wholly owns The Rockefeller Group.