FINANCE: Cornerstone Real Estate Advisers has secured a new mandate to make a push into higher-yielding European debt.
The MassMutual-owned investment manager has been awarded the new capital – the amount of which has not been fixed – by an existing North American separate account client.
The firm will deploy the cash into short-term junior or whole loans of two to five years “higher up the risk curve” as it looks to deliver returns in the 8%-12% range.
The target deal size is £10m-£30m, which can be used across investment, refurbishment and development opportunities.
Chris Bates, Cornerstone’s head of real estate finance in Europe, said: “The capital is opportunity driven and Cornerstone will look at transactions across all sectors in search of appropriate risk-adjusted returns.”
He added that while the initial focus of the capital will be the UK market, it has the capacity to expand across the European markets.
The new mandate sees the London-based operation take a step towards replicating Cornerstone’s US business, which provides whole loans plus higher-yielding and junior debt products, and manages $29bn (£18bn) of debt investments.
It will be managed alongside the group’s core senior offering, which has invested circa £300m in the UK over the past 12 months.
Cornerstone has more than £1bn of US separate account money to put into long-term, fixed-rate senior deals at the core end of the spectrum, targeted at deals of between £25m and £200m.
The firm’s push into the higher-yield space follows its £3bn short-term bridge facility to a central London residential developer to enhance planning on an existing scheme.
