Fiera Real Estate UK, an affiliate of global investment manager Fiera Capital, has launched an open-ended pan-European real estate debt fund that will invest into senior-secured, investment grade real estate debt loans.
The fund is targeting 10%+ net internal rate of return and has secured £100 mln in seed commitments. This is in addition to £200 mln of commitments targeting higher yield UK opportunities across the debt platform.
The key driver behind the launch of the fund is to broaden the product offering available to Fiera Real Estate’s investors by giving them exposure to an asset class that has proven resilient through cycles and the ability to take advantage of the growing funding gap in European real estate private credit.
The fund will be investing across multiple sectors such as residential, logistics, Grade A offices, leisure assets and hotels. The focus will initially be on the UK market before it expands to select European jurisdictions.
Classified as Article 8 under the EU Sustainable Finance Disclosure Regulation (SFDR), the fund will promote environmental and social characteristics through its approach to lending, with its proprietary sustainable lending framework at the heart of its investment agenda.
David Renshaw and Richard Howe, the co-fund heads, joined Fiera Real Estate in September 2022 from Cheyne Capital to set up and run the new pan-European real estate debt strategy.
Charles Allen, head of European Real Estate at Fiera Real Estate, commented: 'Private credit is an important addition to an institutional portfolio and the launch of our fund is a natural next step in the development of our product offering.
'With a team of recognised experts and excellent market coverage, we are well positioned to offer our clients strong risk adjusted returns across Europe at a very compelling time in the market cycle.'
David Renshaw, co-head and managing director debt strategies commented: 'The opportunity set within private real estate credit was already a compelling one, but rising interest rates coupled with mainstream lenders having to deal with heritage loan books and reducing credit supply means that the timing of our fund launch is opportune.
'We believe that private real estate credit will continue to grow and play an increasingly important role for both borrowers and investors within the European real estate landscape over the coming years and the launch of our fund is a testament to that belief.'
The fund will draw on the expertise of the wider Fiera Capital network, which has existing real estate debt platforms with long-standing records in Asia-Pacific and Canada.
According to Fiera, the asset class offers the potential for attractive yields, stability of income, shorter tenors compared to many other areas of private credit, as well as high quality security and robust governance and controls to mitigate downside risk.