Cheyne Capital to raise £7.5bn for real estate lending

Global alternative investment manager, Cheyne Capital is preparing the next iterations of its Cheyne Real Estate Credit Holdings (CRECH) programme to help fulfil UK and European borrower demand for funding solutions as real estate transitions to a higher interest rate environment and banks retreat further from lending to the sector.

Cheyne is focused on two areas:

  • senior lending
  • recapitalisations

The firm’s senior loan strategy will focus only on making senior real estate loans across Core, Core+, Value-Add and Development assets located in the UK and Western Europe.

This will be the eighth launch in the CRECH programme and will target a capital raise of £5 billion.

The Capital Solutions strategy will also make senior loans and, in addition, will also provide comprehensive solutions across the capital stack, including subordinated debt, hybrid credit and commercial mortgage-backed securities (CMBS). This strategy already has a £650 million investor commitment and will be the ninth launch in the CRECH programme with a hard cap of £2.5 billion.

The sector that Cheyne has chosen to support most significantly in recent years, and in which it maintains the highest conviction, is the Living sector (including affordable homes, purpose-built student accommodation, later living and senior care). The firm also favours the onshore industrial and technology-led sectors. 

Some of the firm’s recent deals include:

  • the structuring of a £780 million loan alongside JP Morgan to Quintain for the refinancing of Wembley Park
  • £318 million to Goldman Sachs-backed Riverstone for two later living developments in London
  • £229 million to Stanhope Plc for the transformation and extension of 76 Southbank in London into a low carbon office
  • More than €200 million to the Beaumier hotel group with lifestyle hotels across France, Switzerland and Spain.

Why it matters

Hotels are obviously a small part of a wider real estate pie but Cheyne has been active in the area of hospitality leading in recent times. The new fundraising drive also shows the appetite for private credit in this post-ZIRP (zero interest-rate policy) world.

What they said

Ravi Stickney, managing partner and CIO of Cheyne Real Estate, said: “The end of the zero interest rate environment brings a much-needed re-adjustment in asset values and the move to long-term necessary, productive assets and away from obsolete assets held up by low interest rates. 

“We believe that this transition will take place over the next five years. At the end of this period, the owners of thematic assets, providing for structural long-term needs, and with the highest environmental and social credentials, will thrive. This transition, however, will demand substantial capital and innovative, complex solutions. With a substantial localised presence, track record and deep bench of knowledge, Cheyne Real Estate is well placed to offer those solutions to the best-in-class counterparties in the UK and Europe”.

Stuart Fiertz, co-founder and president of Cheyne Capital, said: “We believe that Cheyne is one of the few European-based real estate debt managers with a long and consistent track record and a large team with experience across all aspects necessary to be a successful real estate debt manager. This, combined with local presence via a network of offices across Europe, has enabled us to build deep and trusting relationships with our borrowers and an enormous pipeline of loans which we look forward to funding through the next iterations of the CRECH programme”.