Venn holds second close of commercial real estate debt fund

By Bridging Loan Directory 12th April 2016

Venn Partners, an investment manager of real estate and other asset-backed loans, has secured circa £185 million from institutional investors following the second close of its commercial real estate discretionary debt fund, Venn Commercial Real Estate Fund I (VeCREF I).

Commitments for the Fund have been sourced primarily from UK and North American pension funds, and should benefit from the Fund’s regular cash distribution and a low double digit total return. Venn’s experienced commercial real estate team, headed by Paul House, former Head of Citigroup’s Real Estate EMEA business, has completed over £1.2 billion in 27 loans since commencing operations in January 2013, including over £140 million of loan investments within the Fund.

The Fund is a closed-ended structure focused on value-add loans in the mid-market, £5 million to £50 million range, where there is strong borrower demand and opportunities to generate attractive risk adjusted returns. The loans will be offered at up to 75 per cent LTV and will include loan maturities for a period of six months to five years. Geographically, the Fund will focus on UK and selective Western European commercial real estate markets. VeCREF’s current investment portfolio is defensively positioned with a conservative loan to value metric, which provides strong downside protection while maximising returns for investors. A final close of the Fund is expected to take place during the third quarter of 2016.

The market opportunity for the Fund remains attractive, in view of the ongoing dynamic where the banking sector continues to grapple with a combination of increased regulatory capital requirements and scrutiny and reduced exposure to the commercial real estate debt as an asset class. Recent equity market volatility, combined with a low-interest rate environment, provides a conducive environment for commercial real estate debt investments as a source of yield. Exposure to commercial real estate debt also offers investors with the benefit of diversification against other fixed income assets, where credit spreads are at historic lows. In addition, the underlying real estate market fundamentals remain broadly stable, thus supporting the continued investment opportunity to find attractive risk adjusted loan investments.

Paul House, Managing Partner of Venn Partners and Portfolio Manager of VeCREF I, said:

“We are delighted with the level of commitments secured for the Fund and grateful for the trust investors have placed in us. Over the past few years we have built a strong team and track record through managing investment accounts for institutional investors and have demonstrated that we have solid origination and underwriting skills, in-depth market knowledge and a robust infrastructure to successfully manage real estate debt investments.”

Beatrice Dupont, Partner of Venn Partners and Deputy Portfolio Manager of VeCREF I, said:

“As a consequence of the continued evolution within the bank lending market, set against our borrowers’ needs to work with solution-orientated debt providers, we continue to source and underwrite attractive investment opportunities with strong downside protection for our investors. We are delighted to use our expertise and strong relationships in the UK and European commercial real estate debt markets to identify and capitalise on this favourable backdrop on behalf of our institutional investor base.”