MIPIM 2012: Aeriance to launch €500m senior debt fund

Aeriance Investments, a European firm part-sponsored by a Kuwaiti sovereign wealth fund, is planning to raise a €500 million-plus senior property lending fund as it looks to help plug the shortage of debt available in the European market.

Daniel Bendavid, senior investment officer at the Luxembourg-based firm, said Aeriance already has completed a €100 million debut senior loan fund, but it now planned to launch a second 'product' seeking at least €500 million in equity. He added that the fund would be looking at making loans against “non-conventional” assets, such as those with short lease lengths, and that the firm was considering hiring a placement agent to help the group secure the necessary equity commitments.

Aeriance told PERE of the plan at the MIPIM property show in Cannes, France, where lack of debt in the European property marketplace has emerged as a key theme. Two studies within 24 hours of each other have highlighted the dearth of capital available to finance real estate acquisitions. On Tuesday, Cushman & Wakefield said its latest reasearch showed the “severity of bank withdrawal.” On Wednesday, CBRE said the shortage of debt could even threaten the real estate recovery.

Still, Cushman & Wakefield also said in its European Real Estate Lending Survey that it expected to see some newly launched funds targeting senior debt only and senior plus stretch senior debt, which will consider both newly originated debt as well as the acquisition of performing and sub-performing loans. The report pointed to the arrival of senior debt funds in the European real estate market as one bright spot.

Indeed, a number of firms beside Aeriance have spotted the opportunity to replace conventional lenders. They include AXA Real Estate, Fortress Investment Group and Starwood Capital Group.

For Aeriance, the senior debt fund is one of two new products to come out this year. The other is a £100 million (€119 million; $157 million) London residential property debt fund. The closed-end vehicle called OREL is aimed at providing capital in the form of bridging loans for residential property transactions in high-end residential locations such as Belgravia, Knightsbridge and Mayfair.

Over the past three years, the company has lent around €700 million via AMREF 1 and AMREF 2, which are mezzanine real estate funds invested in prime European real estate; ASTREL, which is the name of its debut senior loan fund also for prime European property; and ARESS, a global real estate relative-value equity fund.