ACOFI’s fifth debt fund likely to involve value-add loans

French fund manager ACOFI has launched its fifth property debt fund, with a fundraising target of €600 million by July 2018.

In its first closing, the Paris-headquartered firm raised €60 million for the LF Prédirec Immo 5 fund, which is now fully invested, Christophe Murciani, director in the French lender’s real estate debt division, told Real Estate Capital.

“We deployed money two weeks after the first close, with two loans, one in France and the other in Spain, which shows our commitment to invest abroad,” Murciani said, adding that the firm has a pipeline of €400 million of potential transactions.

The return of the fund is expected to be at 200 basis points-plus over 3-month Euribor, as its risk profile will be below 65 percent loan-to-value ratio.

ACOFI’s latest vehicle follows a similar strategy to the firm’s previous property senior debt vehicles. It can be invested across all type of properties, and it is likely it will have an increased exposure to value-add properties, Murciani said.

“The strategy for the fifth fund will take into consideration the property cycle, which we consider is reaching an end, and therefore we are targeting properties with more positive rental prospects, as we feel this will compensate negative impact of rising interest rates,” Murciani said.

“Across Europe there’s a lack of grade A modern office space, and therefore, we prefer properties that are going to be refurbished than shiny, well-leased properties. There is not much value to be created by a borrower on those properties,” he added.

ACOFI’s real estate debt vehicles are mainly focused on office, retail, and logistics assets which make up around 70 percent of the company’s loan book.

Geographically, the firm typically invests in its neighbouring countries: Italy, Germany, the Benelux and Spain. In France, ACOFI’s property debt business is targeting at least 50 percent of its loan book.

With a portfolio of 30 outstanding loans, the firm has already invested over €1 billion in commercial real estate debt since 2012.

ACOFI recently expanded its team with the appointment of Leïla Benamer as portfolio manager for the firm’s real estate debt funds. Prior to ACOFI, Benamer was at Eurohypo Bank, Bayern LB and Japanese bank MUFG. She has over 20 years’ experience covering structured real estate finance. “The appointment is aligned with our rationale that we are probably nearing the end of the real estate cycle and therefore, monitoring and managing the loans is as crucial as originating them,” Murciani said.