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TIAA Henderson Real Estate launches UK Enhanced Debt Fund

TIAA Henderson Real Estate (TH Real Estate) has completed a first close of £138m for its UK Enhanced Debt Fund.

TH Real Estate launched its maiden commercial real estate debt fund in December 2014 with a focus on the UK market. The Fund has already commenced its investment programme.

The capital has been committed by TIAA-CREF, TH Real Estate and Aviva Investors Real Estate Multi Manager. The Fund is designed to produce net returns of 6-7% IRR with a 6% distribution yield.

The six-year Fund invests in whole loans and selective mezzanine loans up to 75% loan-to-value. Loan origination is focused on prime and strong secondary assets, as well as well-positioned regional assets in the core-plus and value-added sectors of the UK market. The Fund can selectively syndicate the senior portions of whole loans, in order to enhance returns and optimise its investment portfolio.

Christian Janssen heads the Real Estate Debt platform, with Christoph Wagner and Shawn Kaufman leading the origination, structuring, portfolio management and syndication of investments respectively. The Fund will leverage the internal debt, portfolio management and direct investment expertise across TH Real Estate, which manages in excess of £9.5bn of commercial real estate assets in the UK, to ensure expert underwriting and risk management.

Christian Janssen, Head of Real Estate Debt at TH Real Estate said: “We are delighted and proud to have TIAA-CREF and Aviva Investors Real Estate Multi Manager, two very experienced and respected global investors, as partners in our maiden debt Fund. Their support is a testament to the professionalism and reputation of the TH Real Estate platform.”

Christoph Wagner, Director of Debt Strategies at TH Real Estate, added: “Structural changes in the lending market have created the opportunity for alternative lenders to originate CRE debt investments at attractive risk-adjusted returns. Meanwhile, a weak supply of efficient debt finance is continuing for certain parts of the UK market. As a result, we believe that CRE debt can offer investors stable, income-focused returns with significant insulation from volatility in the wider property and investment markets.”

Shawn Kaufman, Director of Debt Strategies, TH Real Estate, said: “We believe that a thorough understanding and assessment of the real estate securing our loans is an integral component of good real estate lending; we work closely with the sector specialist teams across TH Real Estate to deliver the right debt structures on the right assets for our borrowers and investors.”

Eudes Berthelot, Fund Manager at Aviva Investors Global Indirect Real Estate said: “We think this opportunity’s positioning strongly differentiates it from alternative debt offerings and strategies currently available in the market and should therefore offer attractive risk-adjusted returns for our clients.”

John Gellatly, Head of Aviva Investors Global Indirect Real Estate Europe added: “It is a pleasure to further expand our successful global relationship with TH Real Estate, which has put together a very seasoned debt management team for this Fund.”

This document is intended solely for the use of professionals and is not for general public distribution. Past performance is no guide to future performance. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested. Where opinions have been expressed, they are based on current market conditions and are subject to change without notice. All figures as at 31 December 2014. The target return above is derived from both quantitative and qualitative factors, including historical returns and market conditions and assumptions (including but not limited to occupancy rates, market conditions, cap rates and availability of financing). Any target data or other forecasts contained herein are based upon subjective estimates and assumptions; if any of the assumptions used do not prove to be true, results may vary substantially. In any given year, there may be significant variation from these targets, and the General Partner makes no guarantee that the Fund will be able to achieve the target return in the long term. Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment. Any investment will be made solely on the basis of the information contained in the Prospectus or offering documents (including all relevant covering documents), which will contain investment restrictions, risks and fees. This document is intended as a summary only and potential investors must read the Prospectus or other relevant offering document before investing. This document is not directed at or intended for any person (or entity) who is citizen or resident of (or located or established in) any  jurisdiction where its use would be contrary to applicable law or regulation [or would subject the issuing companies or products to any registration or licencing requirements]. Issued by Henderson Real Estate Asset Management Limited (reg. no. 2137726), (incorporated and registered in England and Wales with registered office at 201 Bishopsgate, London EC2M 3BN) which is authorised and regulated by the Financial Conduct Authority to provide investment products and services. Telephone calls may be recorded and monitored.

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