TIAA Henderson Real Estate has completed a long-awaited first close of its £500m debut commercial real estate debt fund.
It has raised £138m for the UK Enhanced Debt Fund. The majority has come from parent company TIAA-CREF in addition to balance sheet money from TH Real Estate and around £40m from Aviva Investors’ Real Estate Multi Manager.
Run by head of real estate debt Christian Janssen and directors Shawn Kaufman and Christoph Wagner, the fund aims to -produce net returns of 6-7% with a 6% distribution yield.
The six-year fund invests in whole loans and selective mezzanine loans up to 75% LTV. The fund can syndicate the senior portions of whole loans to enhance its returns. It lends against prime and secondary property across all sectors throughout the UK.
Wagner said: “Structural changes in the lending market have created the opportunity for alternative lenders to originate commercial real estate debt investments at attractive risk-adjusted returns.
“Meanwhile, a weak supply of efficient debt finance is continuing for certain parts of the UK. As a result, commercial real estate debt can offer stable, income-focused returns with significant insulation from the volatility in the wider property and investment markets.”
It has already agreed a £15m loan to refinance a west London student housing asset for a UK-listed property company.
The fund was launched last December but Henderson Global Investors, which merged with TIAA in 2013, has been examining real estate debt opportunities for the past three years.
david.hatcher@estatesgazette.com
