Financing Trend: Institutional investors are also focussing increasingly on mezzanine investments
- FAP-Group is registering growing interest also from institutional investors in hybrid financing structures
- FAP expects decreasing returns on investment in the mezzanine segment
Berlin, 21st August 2018: The interest of institutional investors in real estate debt as an independent investment asset class continues to increase. This trend is being observed by the FAP Group, one of the leading independent consulting companies for the procurement and structuring of capital for real estate investments and project development in Germany. On the one hand, this can be seen in the transactions that are carried out by FAP Invest as a platform for real estate debt investments. On the other hand, the growing interest that the FAP loan fund “FAP Balanced Real Estate Financing I” for mezzanine financing by professional investors is experiencing confirms this trend.
Hanno Kowalski, Managing Director of FAP Invest GmbH: “In order to ensure the promised returns on investment for their contributors, institutional capital investors are increasingly focussing on the asset class “real estate debt”. Their investor behaviour is showing itself to be slightly changed in comparison to prior years. Whilst in the past, in particular “newcomers” tended to seek introduction to alternative financing models by the direct allocation of mezzanine capital, venturing into more attractive interest regions is now taking place more often via whole loans or fund investments. The clear distinction to pure junior loan financing is thus becoming less defined.”
The average investor behaviour that has been changed by the increasing number of institutional investors is also being reflected in the regional distribution of loan allocation, that is concentrated on the “TOP7-cities” so Kowalski.
According to FAP`s prognosis, the average interest rates achieved will be below the rates of last year.