First closing for La Française real estate debt fund
La Française Group has raised an initial €150m after the first closing for its real estate fund, comprised of senior property debt.
The fund, with a target size of €400m, offers institutional investors and insurance companies in particular an opportunity to position themselves in a market undergoing significant changes as traditional banking players pull back, the manager said.
The fund, LFP Créances Immobilières, invests in senior real estate loans on quality property assets, mainly offices and commercial property, located exclusively in France. The investment strategy is based on its direct access to two segments: the banking network for buying existing loans and property lenders for new loans, either on a bilateral basis or as part of a club deal.
The first loan, with top RE investors as counterparties, for €20m with a maturity of five years was acquired from a French bank and offers Euribor + over 250bp, despite low leverage (under 50%). Several other loans totalling an additional €100m were shortlisted and should be finalised within the next two to three months.
La Française Group plans to offer qualified institutional investors access via two different channels: the first, already operational, consists of investing in units of “LFP Créances Immobilières”, an FCT (securitisation fund under French law), while the second will consist of bonds issued by a Lux ST (securitisation vehicle under Luxembourg law).
The two investment channels would share the same underlying loan portfolio, which by its nature (limited volatility) consumes little capital under Solvency II. The innovative structure meets the wide range of constraints and objectives for both French and international investors, particularly in terms of the regulatory and accounting aspects of investment products, the manager said.
La Française REM, the fund manager of the FCT, was approved by the French regulator in November 2012 to carry out this activity.
A Structured Finance team led by Bertrand Carrez will develop the real estate debt investment platform for Française REM. After welcoming Thomas Aubert as a property fund manager in the summer of 2012, the team will be expanding again with the addition of a former banker, experienced in property finance.
La Française Group also intends to expand its debt fund management business to other asset classes. The firm, set up 35 years ago, focuses on asset management, real estate and comprehensive investment solutions. With some €35bn AUM, it describes itself as a “socially responsible company that puts customer satisfaction at the heart of everything it does”.
It is owned partly by Crédit Mutuel Nord Europe, alongside institutional shareholders and the Group’s officers and employees.