Two debt fund managers have drawn in £1.6bn of capital to deploy into real estate.
Investors are being driven to the vehicles because lending margins and subsequently returns are increasing, and because they offer a more risk-averse option than equity investments.
ICG-Longbow hit its hard cap of £1bn for its Real Estate Fund IV, surpassing its £750m target. The seven-year fund can provide whole loans, mezzanine debt and make preferred equity investments. It has already deployed £600m of capital.
Deutsche Asset Management has been handed a €750m (£645m) mandate from German pension fund Bayerische Versorgungskammer. It will provide senior and junior loans of between €50m and €250m in Europe and the US held predominantly against income-producing, institutional-quality assets with some allowance for development. It is targeting a return of above 4%.
This mandate is in addition to Deutsche’s €750m European senior loan fund, for which it held its most recent €250m close in July.
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