Hermes Real Estate Investment Management Limited is to make its first foray into commercial property lending as the fund manager looks to exploit the gap in the market created by the retreat of bank finance.
The company announced yesterday that it has launched the Hermes Real Estate Senior Debt Fund to invest in loans against high-quality assets in London and the south east as well as “prime metropolitan” locations in the regions.
The new fund is being launched with an initial £400m cornerstone investment from its parent company and aims to raise as much as £2bn from investors.
Hermes’ Marcus Palmer, who was hired as head of real estate debt in June to set up the fund, said: “Loans will typically be made to strong borrowers in partnership with other debt providers and of values between £30m and £100m”.
It is the latest example of alternative lenders – from insurance companies, bond markets to fund managers – stepping into the real estate finance market.
Insurer Aviva launched a £500m senior debt fund in July while Legal & General entered into the property lending market last year, providing student housing group Unite with a £121m loan.