Zencap targets €300m for second RE fund – exclusive

The firm is aiming to move down the risk curve in its latest real estate debt fund by offering senior and unitranche loans in addition to mezzanine investments.

Zencap Asset Management is aiming to raise €300 million on a final close for its second real estate debt fund.

So far, the firm has secured more than half the amount from investors and is expected to hold a first close shortly.

The fund will move down the risk curve compared with the fund’s predecessor. It is open to providing senior and unitranche loans in addition to the mezzanine instruments the debut vehicle offered.

It is seeking a 5 percent return on the fund level and is aiming to complete tickets between €5 million and €25 million.

For Victoire Blazsin, the partner at ZenCap who oversees the real estate debt fund strategy, the firm has found a sweet spot where deals are too large for regional banks, but too small for bigger banks and larger private debt funds.

The strategy is flexible in terms of the underlying assets it invests in with an openness to commercial and residential real estate. The vehicle has a mandate to complete transactions across Europe. While there a few restrictions on the pricing the firm is willing to offer to allow for greater flexibility, the firm expects to complete most transactions in the 70-75 LTV range.

It’s an ambitious plan for Zencap’s real estate debt fund strategy. The previous fund raised €100 million from institutional investors, but Blazsin said it makes sense to scale up the fund considering how popular private debt is among investors.

“The size makes sense if you want to diversify properly and a realistic size for our capital raising capabilities. Private debt provides security and it offers an attractive risk-reward profile and investors are attracted to the fact that you are financing the real economy,” she said.

The fund has a three-year investment period with an investment horizon of between seven and nine years, reflecting the traditional length of loans in the market which range between five and seven years.