DRC Savills Investment Management (“DRC SIM”) has held the final close of its fourth fund in DRC SIM’s high yield debt strategy; European Real Estate Debt IV (“ERED IV”). The Fund successfully reached its target fundraise of c.€600 million (c$680 million/£500 million).
DRC SIM is the real estate debt financing arm of Savills Investment Management, the €25 billion global investment management platform of Savills plc (LSE: SVS).
The Fund has successfully closed sixteen institutional investors, allocating from their real estate and fixed-income allocations. Six of these investors were new to DRC SIM with capital commitments coming from several global locations including Asia, the U.S., the Middle East and Europe.
ERED IV is the first fund in DRC SIM’s flagship high yield debt series to offer investors the opportunity to commit capital in either GBP or Euros.
ERED IV has already invested over fifty percent of its available capital and will continue to deploy capital across all major European jurisdictions including the UK, Netherlands, Germany, France, Spain, and Italy. The Fund ensures strong asset class diversification with investments inmost core, liquid assets classes including Industrial, Logistics, Multi-family Residential, Student Accommodation, Office, Food Retail and Hotels.
The Fund focuses on providing strong income-based returns for investors with a Gross IRR range of 10.0 – 12.0 percent with consistent quarterly cash distributions to investors.
New investments made to date include newly originated mezzanine debt, senior loans and whole loans. The Fund aims to create diversification across regions, asset class, loan type and the number of investments.
DRC SIM is a market-leading commercial real estate debt platform dedicated to lending across the capital structure in the UK and Western Europe and was one of the first non-bank lenders in the European debt space to emerge following the Global Financial Crisis. The platform has one of the largest dedicated CRE lending teams in Europe and has originated over 150 loans in the mid-market space across its High Yield, Whole Loan and Senior Core Plus debt strategies.
Dale Lattanzio, the Managing Partner at DRC Savills IM, said: “I am delighted to confirm that we have achieved the final close of ERED IV with over €600 million in the capital. This was achieved in spite of one of the most challenging markets for attracting new investors, that has existed for some time. This is our first fund with multiple currency offerings in both GBP and Euros and will lead to further innovations in currency offerings as we move forward. The Fund is currently over 50 percent invested with 7 loans forming an attractive income base for our investors. We have already seen a significant increase in lending opportunities this year and with a number of opportunities already in the pipeline, we can expect to be significantly invested by year-end.”
Richard Anthony, Senior Managing Director at Evercore, said; “We are delighted to have partnered with DRC SIM, as exclusive placement agent, for a fourth time to continue the success of its ERED strategy. The growth and evolution of the DRC SIM business over the past decade have been truly exciting to witness. Support for the Fund from both existing and new investors is a testament to the quality of the DRC SIM team and the Firm’s position as a clear leader in the European real estate debt space.”
