Investors

Cheyne fund closes on $770m

The UK-based real estate debt provider closed its third European fund on $770 million, surpassing its target of $650m. The firm will launch Fund IV later this year and it will focus on senior debt.

By
david.b@peimedia.com
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Real estate lender Cheyne Capital Management has closed the Cheyne Real Estate Credit Holdings Fund III (CRECH III) after raising $770 million from investors.

The final total beat the firm’s $650 million target by 18 percent. So far, 85 percent of the fund has been deployed with the rest expected to be lent by the summer. The latest round of fundraising began in January 2014.

It focuses on predominantly direct real estate loans. The targeted net internal rate of return for Fund III is 10-12 percent. Fund II delivered net returns of 16.1 percent. 

CRECH III was set up to target lending in the European real estate markets, particularly the UK and Germany. Its latest fund in the series aims at deals between £10 million ($14 million; €12.6 million) and £75 million. 

Ravi Stickney, head of real estate for Cheyne, declined to disclose how much ‘skin in the game’, he and his partners had invested in the fund, but he they were “substantially invested”.

Stickney said more opportunities are likely to open up for private lenders in the European real estate market as the regulatory pressures on banks become more “onerous”. Banks instead are increasingly focusing on asset disposals and recapitalisation, the investment firm said.

Cheyne expects to launch its fourth fund later this year and Stickney said that the risk profile of this fund will come down as Fund IV will focus more on senior debt than mezzanine loans, he told PDI. 

In December, PDI reported that Cheyne’s investment partner Graham Emmett left the firm to join HIG’s Bayside Capital as a managing director of the real estate team.

Cheyne’s first fund was launched in 2000 and the firm has deployed $1.5 billion in real estate investments and special situations since it was first established, according to a statement by the firm.

UK-based Cheyne Capital Management was established in 2000 by Jonathan Lourie and Stuart Fiertz. The firm invests across the capital structure from senior debt to the equity of corporates and real estate. It manages investments on behalf of pension funds, insurance companies, sovereign wealth funds and other financial institutions.