Standard Life Investments has today (3 December) announced the launch of a new commercial real estate lending fund, as it closes a real estate investment vehicle.
The Commercial Real Estate Debt Fund is designed for institutional investors seeking a reliable and attractive source of income with limited capital risk, the global investment manager said.
It will invest in a portfolio of senior commercial real estate loans secured against UK-based commercial real estate assets.
The fund will aim to deliver a target of 5-6 per cent per annum return over ten years.
The fund has already attracted an investment of £100m from the Standard Life group pension scheme, who view this investment as a sustainable source of yield whilst providing strong risk adjusted returns, according to SLI.
Neil Slater will be the fund’s manager. He has over 12 years experience in cross-asset and debt fund structuring in investment management.
Speaking today at the launch event for the fund, Anne Breen, head of real estate research and strategy at SLI, said that the firm was expecting the UK commercial market to receive a return of 20 per cent, the strongest year since 1993.
Ms Breen said:“Almost all segments in the Uk are achieving growth - this is not a London-specific story but a UK-wide story.”
David Paine, head of global real estate at SLI, said: “We believe that real estate debt is a compelling investment opportunity, offering investors access to a funding market which is undergoing structural change.
“The fund aims to provide a reliable and stable source of income with limited capital risk, together with the benefit of being an excellent diversifier for existing portfolios.
“Real estate debt can also be a valuable additional element when constructing portfolios and can assist clients by forming part of an overall liability-matching strategy.”
Today, SLI has also completed its fifth and final close of a new closed ended real estate investment vehicle focused on selective Continental European real estate markets.
The total equity raised was over €300m (£236m) providing over €600m (£472m) of investment capability once the target gearing of 50 per cent is deployed.
SLI said that the Standard Life European Real Estate Club has attracted capital from institutional investors in the US, Canada, Thailand, the Netherlands, UK and the Middle East. Most clients were advised by the Townsend Group.
Daniel McHugh, head of continental European real estate at SLI, said: “We identified a market opportunity to acquire prime assets in certain core locations with some measured risk attached. We believe this asset profile offers an attractive return to investors with lower risk.
“The Club strategy is core-plus in nature, but over the vehicle life it is targeting a 13 per cent net financial return on investment.
“We’re particularly pleased to have gained support from The Townsend Group with a number of their clients on board, supporting the investment thesis.”
ruth.gillbe@ft.com
