Europa targets UK regional markets with whole-loan and mezzanine fund

Europa Capital is launching a UK real estate debt fund that will provide whole loans and mezzanine financing.

The new vehicle will be structured as a club, the fund manager said, and has commitments of £100m (€110m).

It will follow the same investment strategy as the Europa Mezzanine Fund — which closed in December 2016 — but will also invest in whole loans of up to 85% loan-to-value, and will focus on regional markets.

Michael Birch, chief executive of Europa’s UK debt subsidiary, said: “Over the last four years we have provided around £200m of loans secured against over 6m sqft of property.”

During this period, the UK regional debt market had gone through big changes because of increased regulation imposed after the global financial crisis and more tightening after the Brexit vote, he said.

“As a result, there are now a limited number of senior lenders who are prepared to finance transactions with more complex portfolios, with multiple properties and tenants, located across the UK,” Birch said.

The company said it intended to bring various UK debt products to market in the wake of the success of its Europa Mezzanine Fund, in order to expand its debt platform and in response to strong investor demand.

David Hardcastle and Chris Swarbrick have been appointed as origination consultants to broaden the network in the UK regional market. Hardcastle is based in Leeds and Swarbrick in Manchester.

Both come to Europa Capital from Barclays where they were responsible for real estate lending across the north of England.

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