Property investment manager CBRE Global Investors has made a significant push into the European real estate debt market with the acquisition by its parent organisation, consultancy CBRE Group, of London-based credit specialist Laxfield Capital.
For CBRE GI, the acquisition of Laxfield, which has £818 million (€955 million) of assets under management in the UK, represents an expansion of its existing real estate credit strategies. The firm has been investing in debt in the Americas since 2009, with more than $1 billion of investments on behalf of funds and separate accounts, according to its website. The group’s purchase of Laxfield provides it with a European real estate loan book and a longstanding specialist credit business, overnight.
Speaking to PDI‘s sister title Real Estate Capital, Sophie van Oosterom, chief executive and chief investment officer of CBRE GI in the EMEA region, described the acquisition as an important step in expanding the organisation’s product range.
“It’s been on the agenda for a while,” van Oosterom said. “We wanted to find the best team, culturally, with the best product. The team we are acquiring are professionals in the debt space and they will be able to leverage off the wider CBRE GI business. They have not lost a single euro for their clients in over 30 years.”
Van Oosterom added that CBRE’s investor clients are increasingly demanding access to real estate debt strategies. “Investors at this stage of the cycle want to take some risk off the table,” she said. She added that CBRE GI will seek a total return of around 5-6 percent from its European lending activities, which she described as “slightly lower return and lower risk” than the firm’s equity fund management business.
Laxfield was officially launched in 2008 by founders Emma Huepfl and Adam Slater. However, the founders had worked together on debt mandates for clients since 1997. Among its lending mandates, Laxfield was appointed as originating partner to US insurer MassMutual in 2012 as it expanded into the European property lending markets. The firm also launched a £1 billion lending strategy backed by Singaporean sovereign wealth fund GIC in 2013.
As well as providing debt advisory services, Laxfield lends across three main business lines: its Laxfield LLP debt fund provides whole loans of up to £100 million at up to 75 percent loan-to-value; Laxfield National, a senior loan platform aimed towards the smaller-scale lending market, provides £4 million-£20 million loans for one to seven years at up to 65 percent LTV; its special situations business lends in situations involving high leverage, development, bridging or repositioning, at up to 85 percent LTV.
Laxfield has, until now, been predominantly UK focused. However, in a statement, the leadership team said the deal would “accelerate growth and broaden our products into continental Europe”.
On its fundraising plans, CBRE GI said it intends to launch a strategy with “similar characteristics” to Laxfield LLP in the continental European market. The firm said there is already good interest among CBRE GI’s investor base for the product.
CBRE GI signalled its intent to launch a European real estate lending business earlier this year, with the appointment of Marco Rampin as managing director for EMEA debt investments in July. Rampin joined the company from CBRE’s capital advisory unit, where he was head of debt advisory and structured finance for Europe since September 2015. Prior to CBRE, Rampin was a banker with French lender BNP Paribas and German bank HSH Nordbank.
Rampin will join the Laxfield executive team to focus in expansion in continental Europe. Huepfl will remain as managing director, with Alexandra Lanni as head of investments and Chris McMain as fund manager for debt investments. Slater will continue to chair the debt business in a consultancy role. The Laxfield team added in its statement: “This felt like the right time for us to partner with the world’s leading commercial real estate services organisation.”
The acquisition demonstrates the demand from institutional real estate managers to add debt capabilities to their offering in the European market. A similar deal was struck in July 2018, when Savills Investment Management, the investment management arm of CBRE’s consultancy rival Savills, bought an initial 25 percent stake in London-based debt fund manager DRC Capital, with the option of acquiring the remaining 75 percent in 2021.
Nick Cooper, chairman of Savills IM, said at the time that combining DRC with Savills IM would “enable us to provide our investors with product access to the entire real estate capital structure”.