GAM Investments has launched commercial real estate (CRE) debt fund. The strategy invests in secured mid-market CRE loans in UK and western Europe. Investors have committed £200m to the fund.
Fund raising will continue over the remainder of the year. Fund deployment has commenced with the first loans extended to borrowers.
The fund’s management team follows a rigorous investment process, focused on sourcing and originating whole loans to retain control and maximise the portfolio risk/return profile. Following the global financial crisis, banks have massively scaled back their CRE loan financing activities in Europe due to much tighter lending standards. The resulting scarcity of loans in excess of 60% loan-to-value ratios has created a very fertile ground for non-bank lenders in this space.
Jon Rickert, investment director of GAM’s real estate debt finance team, said: “Increased regulation and continued de-leveraging in financial markets have caused banks to pull back from the mid-sized CRE loan market, which has created a structural funding shortage for the segment. At the same time, we see great investor demand for this asset class as it can offer attractive returns in the current low-yield environment with a focus on downside protection and valuable diversification to traditional market portfolios.”
Prior to joining GAM in 2015, Jon Rickert and his team had already successfully launched a similar fund, which was fully subscribed and closed for new investors in February 2015.