Abu Dhabi Investment Authority, the sovereign wealth fund owned by the Emirate of Abu Dhabi, has been named by manager Cheyne Capital as the first investor in the latest iteration of its flagship European real estate debt fund series, with a commitment of £650 million ($831 million; €760 million).
In November, Cheyne announced the launch of the closed-end vehicle, the ninth vintage of its Cheyne Real Estate Credit Holdings program, for which it has a fundraising target of £2.5 billion. At the time, Cheyne said it had raised an initial £650 million of investor capital for it but did not disclose the identity of the investor.
The vehicle, which Cheyne also calls its Capital Solutions strategy, is designed to enable it to lend across the capital structure, through senior loans, as well as subordinated debt, hybrid credit and commercial mortgage-backed securities. It plans to originate loans of between £50 million and £500 million, with an expected average loan size of £150 million.
Alongside the launch of the Capital Solutions vehicle, Cheyne also launched an open-end senior debt fund, for which it is aiming to raise £5 billion in the coming three years.
Mohamed Al Qubaisi, executive director of the real estate department at ADIA, explained that the investor has backed Cheyne’s strategies previously. “We have invested with Cheyne for a number of years and welcome the opportunity to grow our relationship,” he said.
“The Capital Solutions strategy aims to meet the increasing demand for various forms of real estate credit by drawing on Cheyne’s expertise in the European real estate lending market. We see this as a compelling investment proposition in a market that is looking to private credit lenders for capital,” he added.
ADIA is one of the world’s largest sovereign wealth investors. It invests across asset classes on a global basis, with investments in more than 50 countries. Its real estate commitments are made through core, fund of funds, opportunity, secondaries and value-add funds, as well as debt. In PERE’s Global Investor 100 ranking, published in October, ADIA was placed fourth, with a real estate allocation of around $59 billion, accounting for 7.5 percent of its portfolio.
The six and seventh funds in Cheyne’s CRECH series had a final close in March 2022, on £316 million and £1 billion, respectively. Cheyne also closed three separately managed accounts for the CRECH series in 2022.
“The Capital Solutions strategy aims to help the European real estate industry transition away from increasingly obsolete assets supported by low interest rates and towards productive, sustainable assets for the long term,” explained Ravi Stickney, managing partner and chief investment officer of Cheyne Real Estate.
“With an enormous pipeline of future investments requiring funding, we look forward to continuing to address this need as we open the strategy up to other investors in 2024,” he added.
Through the CRECH series, Cheyne provided several large loans in 2023. Among them was the subordinated debt within a £780 million refinancing of UK developer Quintain’s Wembley Park private rented sector residential scheme, being built out around the England football team’s stadium in London. The loan was provided alongside senior debt from US bank JPMorgan. The deal was closed in September.
Other transactions included £318 million of financings to Riverstone, a retirement accommodation developer backed by US bank Goldman Sachs, for two ‘later living’ schemes in London. In July, it provided a £229 million loan to property company Stanhope for the redevelopment and extension of the 76 Southbank office building in London into a low-carbon office scheme.
Cheyne has also been active in continental Europe. In October, it provided €250 million to US manager Bain Capital and Italian firm Borio Mangiarotti for 600 homes across two sites in Milan. In December 2022, it provided more than €200 million to the Beaumier hotel group for lifestyle hotels across France, Switzerland and Spain.
In total, Stickney said Cheyne reported European real estate lending of more than £5.8 billion in 2022 and 2023.
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