(Bloomberg) -- Cheyne Capital is targeting £7.5 billion ($9.3 billion) for the latest vehicles in its UK and European real estate debt fund series, as investor appetite for property loans booms.
The London-based alternative asset manager plans to raise about £5 billion for senior loans that it will provide to a range of property types, from fully leased buildings to developments in the UK and Western Europe, according to a statement Monday.
It has also set a maximum £2.5 billion target for its so called Capital Solutions strategy, which focuses on recapitalizations by providing a range of loans including junior debt, hybrid credit and commercial mortgage-backed securities, it said in the statement. The strategy already has a £650 million investor commitment.
Rising interest rates have shrunk commercial real estate valuations, opening up a major financing gap for borrowers with maturing loans, as banks demand more capital be injected before agreeing to renew facilities. That’s created an opportunity for alternative lenders to step in and benefit from higher margins.
“The end of the zero interest rate environment brings a much-needed re-adjustment in asset values and the move to long-term necessary, productive assets and away from obsolete assets held up by low interest rates,” Cheyne Real Estate managing partner and chief investment officer Ravi Stickney said.
The senior loan strategy is the eighth to be launched in Cheyne’s Real Estate Credit Holdings series, which made £2.8 billion of loans in 2022 and is on track to provide over £3 billion this year.
The firm has been a major lender to residential properties, including affordable, student and senior housing. It has also been an active lender to warehouses, but will only lend against offices “with the strongest environmental credentials and a focus on employee well-being,” it said in the statement.
Earlier this year, Cheyne Capital and JPMorgan Chase & Co. helped refinance Quintain’s Wembley Park in London with a £780 million package. The asset manager is also financing a Goldman Sachs Group Inc.’s senior housing developer Riverstone, as well as the Beaumier hotel group, which owns properties in France, Switzerland and Spain.
(Updates with recent Cheyne deals in final paragraph.)
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