The Fund will invest in fixed-rate first-ranking mortgages advanced at up to 65% Loan to Value (LTV) with five to 10 year maturities. These mortgages are secured against core and core plus UK commercial real estate, owned and managed by proven high-quality borrowers and sourced from the extensive borrower network of Aviva Commercial Finance, one of the UK’s leading long term fixed-rate property lenders in Commercial Property Finance, Public Private Finance and GP Finance, with a portfolio of over £14bn1 assets under management.
Ben Stirling, Managing Director, European Real Estate at Aviva Investors said:
“Banks have been withdrawing from lending to real estate due to increased regulation, higher costs of capital and the requirement to shrink balance sheets and reduce the proportion of their overall lending to the real estate sector. At the same time, there is over £140 billion of maturing real estate debt which needs to be refinanced over the next five years.2 We believe this significant funding gap and the attractive yields in the market present investors with a strong opportunity, especially for institutional investors looking for a good diversifier from traditional fixed income assets.”
James Tarry, Fund Manager, Real Estate Debt, added:
“We see attractive opportunities in the senior part of the capital structure, where the supply and demand imbalance is at its greatest and there is scope to deploy significant volumes of capital into good quality loans. We believe the opportunity in the market for senior debt investors is compelling enough for managers such as Aviva Investors to replace the space previously occupied by banks.”
Kevin Sale, Commercial Finance Director at Aviva said:
“We are delighted to support Aviva Investors with this initiative, which is complementary to our traditional long-term lending and will enable us to offer our customers loan terms of five years to 40 years.”
Aviva Investors’ real estate team comprises 60 investment professionals managing over £23 billion in assets under management.3 Aviva has a 29-year track record in originating, underwriting and managing commercial mortgages with a current portfolio of over £10 billion and over 100 investment professionals.4
Aviva Investors UK Commercial Real Estate Senior Debt Fund key facts
• Structure: English limited partnership closed-ended with a 10 year final maturity from the end of the 24 month investment period.
• Fund focus: Newly originated bilateral loans secured against high quality UK
commercial real estate. Up to 65% LTV with a maturity between 5-10 years.
• Final closing: December 2014
• Minimum investment: £10 million.
