German property group Patrizia said on Wednesday that it has taken on a new mandate purely focused on real estate debt.
Patrizia has received the first tranche of $50 mln committed capital from an unnamed Kong Kong insurer through the investment into a new Patrizia debt product, the high yielding Patrizia Global Real Estate Debt. The fund will make up to four investments across Europe and APAC. It will target annual net returns of over 8% in USD terms.
Through its subsidiary, Patrizia Global Partners (PGP), the company has an over $2 bn indirect exposure in real estate debt investments across Asia, the US and Europe and over 130 loans.
Patrizia’s new debt mandate follows its earlier announcement in September that it was acquiring Whitehelm Capital, an independently owned infrastructure investment manager, with a track record in private equity and debt spanning over 23 years. The acquisition, once closed, is set to triple Patrizia’s infrastructure AUM to circa €5 bn and Patrizia is aiming to grow the segment in the mid-term to €15 to 20 bn.
'In a world of low interest rates, long-term investors such as insurers and pension funds are increasingly looking at alternative strategies in private markets to secure higher returns. That is why there is currently a growing appetite for private debt and such investment products,' said Marko Multas, head of Asia, PGP and fund manager of the new product. 'We believe that real estate debt will offer attractive opportunities for new and existing clients. Many traditional lenders like banks have retreated from our target markets, opening up an opportunity for us to provide our clients with access to very attractive yields and diversification. It therefore makes a lot of sense for us to offer real estate debt opportunities for our clients.'