Zencap looks at value-add, opportunistic deals for debt fund

The firm raised the capital in three months, with a final close expected at year-end.

French fund manager Zencap AM has raised €240 million for its second property debt fund, a vehicle which will be focused on providing credit to value-add and opportunistic deals, PERE's sister publication, Real Estate Capital, reported Friday.

The firm, a subsidiary of asset manager OFI Group, has raised the capital in approximately three months, as the vehicle’s final closing is expected by year-end, with a hard cap at €350 million. The fund’s latest closing takes Zencap’s total debt commitments to more than €1.6 billion.

“We prefer value-add, opportunistic transactions as, unlike banks, our debt approach is not purely senior,” Victoire Blazsin, deputy chief executive officer at Zencap, told Real Estate Capital.

“We are more comfortable with properties that have a value-add component, which can provide some buffer to protect us in case of macro changes,” Blazsin said.

Zencap’s Real Estate Debt 2 follows the firm’s first real estate debt vehicle which was launched in 2013 and closed at €100 million three years later. That vehicle contains a total of 20 investments.

The second fund, which provides senior and mezzanine loans, can be invested across all types of assets in Continental Europe, from which it is expected to generate returns of between 4 percent and 5 percent net per year. The firm expects to complete tickets of between €5 million and €25 million, in the 70-75 percent loan-to-value range.

Zencap has already made several investments offering yields above 5 percent and has an extensive current pipeline of projects for its second vehicle.

“A good portion of our pipeline is in France, where we have seen opportunities in the residential and office space,” Blazsin said.

“We are more driven by opportunities, rather than by identified general trends. We believe this opportunistic approach is a good way to build our portfolio, instead of being forced to look at French offices for example.”

“Once we have done a transaction in a particular sector, we try to avoid another similar deal to keep our portfolio diversified. We manage risk through a diversification of our portfolio,” she added.