Hamburg-based private bank M. M. Warburg & Co has announced the launch of its first Real Estate Debt Fund, WB Urban Real Estate Finance I, a Luxembourg-registered Reserved Alternative Investment Fund for institutional investors.
The fund aims to finance the development of residential properties in Germany’s major cities and Top-7 metropolitan areas. With a target volume of 300 million euro, the fund has already had its first closing, attracting investment from a pension fund of an unidentified DAX-listed company, the firm said.
«We are delighted to launch this product in a challenging environment for real estate investments,» said Roman Rocke, Head of Corporate Finance at M.M.Warburg & CO, in a statement the bank issued on Friday. «Private debt is one of the key pillars of our 2024 strategy, allowing us a significant expansion of solutions for our clients, both on the financing and investment side.
The fund was registered in the Luxembourg Business Register on 26 July, with Frankfurt-headquartered private bank Hauck Aufhäuser Lampe as the Luxembourg-supervised AIFM.
‘Opportunity’
«As many property financiers are currently holding back due to falling property prices and market apprehensions, we see this as an opportunity,» said Michael Schwalba, Head of Private Debt at M.M.Warburg & CO. «We aim to complete good deals at fair conditions.»
The real estate financing provided by the fund adheres to conservative criteria, Warburg said. The residential properties being developed must be in high-demand locations. Factors like first-rate collateral, robustness of the financing, and low object-related credit risks take precedence, Warburg said. The loans have a maximum tenure of 48 months and are registered as first mortgages. Individual investments will not exceed 30% of the fund’s Net Asset Value (NAV), although a higher degree of diversification is typically achieved, it said. Warburg has committed to providing all suitable financing options to the fund and will always retain at least a 20% stake in the financings.
Seed portfolio
The seed portfolio consists of 12 financings amounting to €86 million, already present in Warburg Bank’s books. «We ensure that the financed properties generate robust cash flows, particularly in the current high-interest-rate environment,» elaborated Schwalba. The interest rate for the individual loans is set at a minimum of three percent above Euribor.
Legal counsel for the fund’s establishment was provided by Luther Rechtsanwaltsgesellschaft mbH
Name: WB Urban Real Estate Finance I
Structure: SCA SICAV-RAIF
Target Volume: €300 Million
Target Return: Approx. 6% p.a. (after costs)
Duration: 10 years (with two one-year extension options)
Related articles on Investment Officer Luxembourg:
- Raif registrations rebound in June, recovery seen
- Rates high for longer, hurting commercial real estate