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Prime Capital holds aviation first close, launches real estate vehicle

The German fund manager has agreed partnerships to make debt investments in the aviation and real estate sectors.

Prime Capital has held a first close on a fund investing in aviation debt and announced it is launching a real estate vehicle.

The Frankfurt-based fund manager said it has reached a first close on the Prime Capital Aviation Debt Fund at $115 million. The fund is seeking additional investments to reach its $400 million target.

The fund has a 10-year tenor with an investment period of two years and will be providing finance for airlines to purchase standard Airbus and Boeing models of aircraft. Targeted net returns are expected to be in excess of 4%.

Prime Capital will be working alongside DVB Bank as a sourcing partner. It said DVB is a major player in the aviation debt market with expertise in aircraft that will support Prime’s transactions. The two firms have been working together for over a year and have so far invested $200 million on behalf of institutional investors.

While Prime Capital has been active in aircraft financing since 2014, it has until now focused on customised mandates for institutional clients, but is now looking to widen investor access to the aircraft financing space.

Prime Capital has also launched a real estate fund which will focus on mezzanine finance in partnership with Lenwood Capital. The Prime Capital-Lenwood Real Estate Debt Sub-Fund No. 1 will look for junior and mezzanine loan opportunities as well as financing project developments in Germany.

The fund is launching with hard and soft commitments totalling several hundred million euros and has a target net yield of 6.5% and a 10-year maturity. The fundraising target and hard cap were not disclosed.

Prime Capital will be responsible for portfolio and risk management, while Lenwood Capital, a real estate finance specialist will take a role in originating, reviewing and approving credit and managing the loans.