In total, SELF II has invested in 17 transactions across Europe with a gross investment value of €579 million. With the completion of the final two investments, commitments have now been fully deployed.
“We started investing in SELF [the predecessor to SELF II] in 2012, so we have a strong track record over seven years,” said AEW’s Cyril Hoyaux, co-head of the real estate debt platform with Ostrum’s Arnaud Heck. “We’ve received the total amount of €1.5 billion and we’ve raised close to €2 billion – in short, we’ve delivered what we said we would, with commitments fully deployed, on time, with better than expected yields and in line with our risk parameters.”
With real estate debt, the investment is on loans backed by real estate assets – everything from office buildings and residential properties to student housing and hotels – and the investment therefore tends to have more predictable returns and lower volatility than owning the buildings themselves.
The combination of Ostrum in credit and AEW in real estate is designed to unearth new opportunities in secured debt. “The idea is to look at investments and build a portfolio that requires bespoke skills and resources – something that an investor would never be able to do on their own,” Cyril added. “They benefit from our ability to provide diversification across different jurisdictions, sponsors or banks, and access a diverse range of underlying assets, which span offices, light industry, logistics and data centres across almost everywhere in Europe.”
Arnaud commented: “This is definitely not an asset class for new kids on the block. We have been investing in this asset class a long time now and we are used to adapting to new situations. You need a sound risk approach and the know-how to master a subject from every angle, as well as having a deep network of contacts.”
One of the final investments, completed in April 2019, was the refinancing of a single office asset in the Messeturm – Germany’s second tallest building. The Messeturm provides 63,447 square meters, over 900 parking spaces and it is located in an extension of Frankfurt’s banking district, which is emerging as a prime office location.
“It’s a great location and an iconic building,” added Arnaud. “Then there’s also the equity cushion we have underneath as the lender and the fact that it has a diversified roster of tenants, including several blue chips, which provides resilience in the cash flows. It’s the combination of the asset itself, the sponsor, the ability to deliver the business plan within the agreed time period, and the capital allocation we set… which makes this an excellent investment for SELF II.”
With SELF II fully invested, Cyril and Arnaud are now back in fundraising mode for SELF III.
For further reading:
- Ostrum Asset Management and Natixis’ Corporate & Investment Banking arm join forces to set up co-investment offering on real asset private debt
- Real estate debt is gathering momentum among bond investors.
- Natixis Asset Management launches a new area of expertise, real asset private debt, in three complementary, high potential sectors: real estate, infrastructure and aircraft
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