Hermes Investment Management (Hermes), the £24.1 billion manager focused on delivering superior, sustainable, risk adjusted returns to its clients – responsibly, has completed a £42 million loan for its Hermes Real Estate Senior Debt Fund.
Hermes has provided £42 million of financing to an affiliate of H.I.G. Capital LLC, a leading global private equity investment firm, for its purchase of two UK shopping centres: the Kirkgate Centre in Bradford and Newbury’s Kennet Shopping Centre. The deal has a loan period of five years.
This deal brings the total amount the fund has invested in the UK senior debt market to £300 million across nine loans. The Hermes Real Estate Senior Debt Fund aims to generate net returns exceeding 3 month LIBOR plus 2% margin p.a. by investing in loans with equivalent risk to corporate bonds rated A- or BBB.
Vincent Nobel, Head of Real Estate Debt, Hermes Investment Management, said: “Fundamentals in the UK real estate senior debt market are strong, with occupier demand remaining at healthy levels despite a moderate slowdown in investment activity in the sector. We still see a good supply of low risk deals offering our investors an income return that is compelling on a risk-adjusted basis. In 2015 we saw more than 146 loan opportunities worth in excess of £10 billion, and we expect to make further deployments this year.”
Riccardo Dallolio, Managing Director at H.I.G. in London, said: "The Kennet Centre in Newbury and the Kirkgate Centre in Bradford are high quality shopping centres which follow our purchase in Chester of the Grosvenor Centre. We continue to focus on high quality retail assets in the UK regions where we see strong occupier demand. We appreciate Hermes' support and look forward to working with them again in the future.”