Chicago-based real estate investment management firm Heitman has reportedly launched a new real estate debt fund, Heitman Core Real Estate Debt Income Trust, PERE's sister publication, Real Estate Capital, reported Thursday.
The core-plus open-end fund will invest in senior loans on income-producing commercial property across the primary US property sectors, including hotel, industrial, multifamily, office, retail, self-storage and student housing.
The firm’s complementary real estate debt fund series, Heitman Real Estate Debt Partners, invests in short- and intermediate-term mezzanine financing for high-quality US real estate operators and developers, according to its website. The latest vehicle in that series had a $250 million equity target and a $350 million hard cap.
IREI, which first reported on the new fund, noted that in February of this year Heitman also launched Heitman European Residential Investment Partners, a $279 million European core apartment fund focused on multifamily investments across Western Europe. It also closed the value-add Heitman Value Partners III fund in April 2015 with $420.6 million in equity commitments.
David Maki, co-head of real estate debt for North America at Heitman noted last month in a commentary that appeared in Real Estate Capital's sister publication Private Debt Investor that increased regulatory and compliance burdens on banks and CMBS had opened up opportunity for private lenders.
“Serving as a complement to a direct equity strategy, the predictable income returns from private real estate debt offer a way to reduce volatility and counterbalance the cyclical asset appreciation/depreciation experienced in private equity real estate, and is being embraced by investors as a tool to achieve resilient and predictable income returns,” he wrote.
“In an environment where asset appreciation is modest or flat, the fixed returns from debt investments can provide income which outstrips comparable returns posted by core indices.”
Heitman engages in private debt, as well as private and public equity strategies. The firm did not respond to requests for additional comment.