French fund manager Amundi has launched a commercial real estate debt fund and announced a segregated lending mandate, marking its initial foray into the property lending market, PERE’s sister publication, Real Estate Capital, reported Thursday.
As previously reported, the asset manager is aiming to raise up to €500 million to deploy through senior lending in club deals or participations in the syndication market.
In addition, Amundi will invest on behalf of Crédit Agricole Assurances, the insurer of the firm’s parent Crédit Agricole Group, through a segregated mandate that will provide the firm with an additional €300 million to lend. The mandate will have a more “defensive profile” than the fund for external investors, which still takes a vanilla approach but with some capacity to invest in value-added assets, Bertrand Carrez, Amundi’s head of real estate debt strategy, told Real Estate Capital.
The strategy, targeting an average gross return of 200-250 basis points, has been developed by Amundi’s Alternative and Real Assets Platform. Through the vehicle, Amundi will predominantly invest in loans with floating rates of interest, which the firm said will offer a hedge against rising interest rates. The fund’s sweet spot for lending will be between €30 million and €50 million per asset, with a leverage between 50 percent and 70 percent.
“We are aiming to raise between €350 million and €500 million and are confident of being able to invest this swiftly, exploiting our relationships with players across eurozone senior debt,” Carrez said.
“This should yield abundant deal flow and enable rapid deployment of capital, while remaining highly selective in the quality of the loans,” he added.
“We are offering clients a combination of Amundi’s deep expertise in fixed income, where we are Europe’s leading platform, and in real estate – where we made €6 billion of acquisitions in 2017,” Carrez said.
Through this strategy, Amundi will bank on the growing appeal of private real estate debt. In 2017, investors’ interest fuelled more than $10 billion of fundraising for Europe-focused vehicles, Real Estate Capital data show.
“Investing in property debt makes sense at this point of the cycle. Returns are still attractive in terms of relative value and, through debt, you are much more protected,” Pedro Antonio Arias, Amundi’s director of real and alternative assets, said in December last year.