Schroders Capital's Real Estate Debt platform targets £1 billion fundraise for 2022
The strategies are designed to meet investors’ growing demand for private debt alternatives which aim to offer enhanced and differentiated sources of return.
Schroders Capital today announces another fund close for its Real Estate Debt platform.
The group has raised £100 million from a combination of UK pension schemes and UK local authorities for its UK Senior Loan fund.
The Real Estate Debt platform includes separate UK and European Investment Grade and Senior Loan funds and a combined UK and European High Yield fund with a £1 billion fundraising target over the next 12 months.
The UK Senior Loan fund will target a gross return of 6.5% by directly originating loans of between £15m-£100m in the UK mid-market across all real estate sectors. The team will aim to build a diversified portfolio of loans, designed to deliver attractive risk-adjusted returns combined with the downside protection offered by secured lending against commercial real estate.
The strategies are designed to meet investors’ growing demand for private debt alternatives which aim to offer enhanced and differentiated sources of return. They are overseen by Natalie Howard, Schroders Capital’s Head of Real Estate Debt.
The Real Estate Debt team boasts a combined 90 years of experience working in real estate markets in Europe, and will directly originate and underwrite transactions across the UK and Europe.
Sustainability will be a key component of the investment process, with all funds aligned to Article 8 as part of SFDR regulations[1].
Natalie Howard, Head of Real Estate Debt, Schroders Capital, commented:
“Traditional sources of financing began to dwindle after the Global Financial Crisis, particularly as banks reined in their lending amid closer regulatory scrutiny. But the need for real estate loans continues to grow.
“According to research, there is €1 trillion of UK and European commercial real estate debt outstanding across European markets, with an annual financing requirement of €200 billion[2].
“We therefore believe there is a significant opportunity for Schroders Capital to meet the growing demand from institutional investors looking to diversify their private debt, real estate or fixed income portfolios.”
[1] The funds have environmental and/or social characteristics within the meaning of Article 8 of Regulation (EU) 2019/2088 on Sustainability-related Disclosures in the Financial Services Sector (the “SFDR”). The Fund maintains a positive absolute sustainability score, based on the Investment Manager’s rating system.
[2] CBRE, September 2020