Why Ardian sees entering real estate debt as ‘logical’

The head of the Paris-headquartered private equity firm’s new property lending business says there is a clear need across Europe for such debt providers.

With a track record of investing in real estate and private debt, among other investment areas, it is perhaps unsurprising to see Ardian, the French private equity firm, enter Europe’s real estate lending market.

Last week, the Paris-headquartered manager announced the launch of Ardian Real Estate Debt, a platform which will manage credit funds and mandates through which it will finance property across continental European markets.

In a statement, Ardian’s founder and president Dominique Senequier described the launch as a “logical next step” in the company’s development. “Our ambition is for Ardian to become a key player in real estate debt management,” she said.

For Arnaud Chaléac, head of the new platform and co-head of group finance at Ardian since 2008, there were two major drivers for the launch. “First, it is a normal and logical evolution of our real estate platform because this is a request from our investors,” Chaléac told Real Estate Capital Europe.

Arnaud Chaléac, Ardian
Chaléac: Sees opportunity in real estate debt

“Second, we are convinced there is a lot of opportunity within Europe for alternative lenders, and especially in the strategy we are looking at – investing in the financing of corporate and value-add transactions.”

Investors, he explained, have a keen interest in real estate credit. “It is mainly for the risk profile because it gives them indirect exposure to the real estate market. And it makes sense to give them the whole spectrum of the real estate market from the more speculative way of investing, through the equity, to the more senior way through the debt.”

To build the platform alongside Chaléac, Ardian has hired Sandrine Amsili as managing director. Amsili is a well-known figure in the European real estate debt markets, with 17 years’ experience, most recently as director of real estate debt at French manager SCOR Investment Partners, where she helped create the company’s property lending platform.

Deal pipeline

The platform’s activity will focus on senior debt financing. According to Chaléac, the company has a strong pipeline of deals.

For the first fund, Ardian is aiming to invest in ticket sizes of between €20 million and €40 million. “The idea is not to be the smallest one in the pool. So, at the beginning, we will provide finance alongside banks. Our sourcing will be through syndication and club deals with our main banks, because we have a strong relationship with banks through our borrowing activities,” said Chaléac.

He added: “Our aim is to build a diversified portfolio, so there is no limit in terms of asset classes. It’s true offices are more than 80 percent of the market, so we will finance offices for sure, but we will have a look at logistics, residential. And we will not be focusing just on France. We will be in Spain, Italy – this kind of market needs alternative lenders alongside banks.”

Ardian’s experience as a sponsor convinces Chaléac that equity investors need alternative lenders. “I think they have no choice if they want to invest in core-plus or value-add transactions. We know that because we are a sponsor in these countries. Sponsors need more liquidity, so it’s a very good opportunity.”

The sustainability of the underlying real estate will be a focus for Ardian, with the fund structured as an Article 8 fund under the European Union’s Sustainable Finance Disclosure Regulation, meaning it is bound to promote environmental and social characteristics through its investments.

Wider network

Being part of a wider real estate business will benefit the lending team, explained Chaléac. “We are part of the real estate platform, so we have support locally because we have offices in Italy, Spain, Germany. We have Ardian’s wider platform to support this strategy, including people dedicated to fund finance, and large legal and compliance teams.”

Ardian’s wider real estate activity, which is led by Stéphanie Bensimon, has grown significantly since 2016, with equity investments through two generations of value-add funds enabling the deployment of more than €3.7 billion of real estate assets in Europe. In 2018, it closed its first real estate fund on €738 million – the largest first-time real estate fundraising in Europe at the time.