Cordea Savills, the international property investment manager, has appointed Keith Davidson and James Tarry to lead its entry into the European real estate debt market. They join from Palatium Investment Management, where Davidson was Managing Director and Tarry was Director.
Cordea Savills is establishing the team to manage a real estate lending platform with a view to transacting new senior and subordinated lending as well as acquiring performing and non-performing loans. Davidson and Tarry have been appointed as Co-Heads of Debt Investment and one of the first initiatives will see them working closely with the team of the Prime London Residential Development Fund, which was launched in October 2011 and where the provision of mezzanine finance to developers is a core strategy.
Cordea Savills believes that the financing landscape for European commercial real estate is undergoing a fundamental change: the retreat of a number of high volume lenders previously active in the property market, together with a marked reduction in risk appetite from those who remain, creates an exciting opportunity for investors. The team will create investment vehicles to provide new investment finance, or to acquire existing financing arrangements, at attractive risk-adjusted rates of return.
The regulatory environment and large scale refinancing that is required, coupled with ambitious bank balance sheet reduction targets, will create significant opportunities in the UK and continental Europe for the emerging non-bank lending sector.
"The debt funding gap is likely to continue in the medium term. It was not unexpected that more money was raised for debt funds in Europe in the third quarter of last year than for equity funds," commented Justin O'Connor, Chief Executive Officer at Cordea Savills.
Davidson and Tarry have 25 years' combined banking experience, 20 years of which are in European commercial real estate debt markets at leading financial institutions. They first worked together in 2004 at Eurohypo AG in the company's structured finance business where Davidson headed the European mezzanine and structured finance team.
They have an extensive track record in originating, underwriting and syndicating European commercial real estate debt products. This includes senior, junior and mezzanine debt, structured finance, corporate acquisition finance and listed debt securities, having closed transactions in all of the key European jurisdictions encompassing retail, office, industrial and hotel asset classes. Their recent focus has been Commercial Mortgage Backed Securities where, in addition to the ongoing management of a £353 million legacy pool, they established a series of funds to acquire bonds at deep discounts in the secondary market.
Davidson commented: "Cordea Savills has an excellent brand, investor relationships and direct real estate expertise. This creates a powerful platform on which we can leverage our experience and maximize opportunities to raise and deploy capital successfully."
Tarry added: "We are delighted to be joining a company with the resources and ambition to make a real impact in a market that we know extremely well and which has huge potential going forward."
Source: Citigate Dewe Rogerson