AEW Europe is looking to add a second €500m lending vehicle to its stable after this week appointing a new debt funds boss.
The investment manager, in a joint venture with Natixis Asset Management, is expected to start marketing a follow-on to its 2012 vintage Senior European Loan Fund towards the year end.
Plans under discussion could see SELF II provide debt at up to 75% LTV ratios – up from the predecessor fund’s 65% – in common with what rival lenders are offering.
Increased competition is also expected to push the fund’s return target down from the 5% target from the first fund. The vehicle is still expected to appeal to institutional investors that are prepared to accept “unspectacular but steady returns”, according to a source.
“Real estate debt can act as a bond proxy by life insurers and pension funds, but gives a slightly higher return,” he added. “It’s still in demand from a certain type of investor.”
SELF II would again have a dual strategy of purchasing existing loans and financing new loans in conjunction with banks. Ticket sizes will range from €10m to €100m across all asset classes.
The fund will be managed by Thibault Chauvin, who joined the firm this week to take up the newly created position of head of debt funds.
Chauvin moves across from Colony Capital where he was managing director for real estate debt strategies and origination in Europe.
AEW and Natixis continue to deploy SELF, which raised €320m after completing a second close in August 2013.
It is now around two-thirds invested, and aims to be fully deployed by the end of 2014.
So far the fund has lent on retail and logistics in the UK and France, but is shifting its focus towards Spain and Italy, where it has a deal pipeline of between €20m and €40m, in the hope of securing more attractive returns.
sophia.furber@estatesgazette.com
