Brunswick posts €267m first close for senior debt fund

Two Swedish pension funds and Norway’s largest life insurer have backed the vehicle.

Swedish asset manager Brunswick Real Estate Capital has raised SEK2.6 billion (€267 million; $284m) in a first close of its second Nordic senior debt fund.

Norway’s largest life insurer, Kommunal Landspensjonkasse (KLP) and Swedish pension fund Pensionsgaranti (PRI) have invested follow-on capital, having previously invested in Brunswick Real Estate Capital I.

They are joined in Brunswick Real Estate Capital II by Swedish insurance and pension savings company Folksam.

The capital raised for Fund II at the first close is greater than the total raised for Brunswick Real Estate Capital I, demonstrating Nordic institutions’ continuing appetite for senior debt and taking Brunswick’s assets under management in real estate private debt to over SEK4 billion.

Like the first fund, Brunswick Real Estate Capital II is a Luxembourg-domiciled, unlevered closed-ended debt fund offering senior secured lending in Sweden, but it is likely to also lend in Finland in future. Fund II’s target is approximately €800 million, split between an SKr capital compartment and an equivalent euro compartment of up to €400 million to expand the strategy into Finland.

Like Fund I, the new vehicle will make loans primarily in the range of SEK 200 million to SEK 600 million (€20 million to €60 million) and is able to compete with local banks by offering longer terms if required, up to 10 years, and selectively higher leverage up to 70 percent LTV.

Brunswick targets net returns to investors of 2 percent on its loans and made about 10 investments in Fund 1 with an average blended term of six years.

Commenting on the opportunities in the region, Louise Richnau, CEO and partner of Brunswick Real Estate Capital, said: “We see senior debt as a market that is opening up and is going to grow. It is obvious that bank lending is more restrictive than it used to be. Banks used to be very, very dominant and there are not that many.”

Recently, Aksel Lunquist joined the alternative lender from Goldman Sachs, as a director. He has previous experience working at DRC Capital. The senior debt team also draws on the wider Brunswick management team which has extensive experience of Nordic property markets.

Richnau said she was pleased to see the support and trust from the firm’s investors for the second debt fund.

“Demand for Nordic real estate remains high and with macro issues such as the Brexit vote and the US election creating uncertainty in other markets, we believe investors will continue to be attracted to safe havens like the Nordics. This, coupled with the fact that lending remains restrictive from traditional sources of capital, were the main drivers behind our creation of the second fund,” she said.

Peter Leimdörfer, co-managing partner, Brunswick Real Estate, added: “Despite Sweden being one of the most liquid real estate markets in Europe, the availability of financing to borrowers has historically been volatile and dependent on the appetite of a handful of banks. To become an even better partner for our clients we added the debt investment management service to our group in 2013, as the first of its kind in the Nordics.

“With the first close of the second fund we can state that there is a true and growing demand for debt investment management.”