BERLIN, June 7, 2017 /PRNewswire/ --
- Institutional investors increasingly asking for mezzanines
- Yields of 6-11% established on the market
- Overall rising demand for alternative real estate investments
Flatow AdvisoryPartners (FAP), the leading independent consultancy for the procurement and structuring of capital for real estate investments, is seeing a sharp increase in real debt investments in 2017. The increasing lack of opportunities in the real estate market has led to alternative investment opportunities, such as direct real estate debt investments and mezzanine funds, becoming ever more interesting for investors.
Curth-C. Flatow, founder of FAP: "In the German market, we are seeing institutional investors being increasingly active in the mezzanine sector. Insurers and pension funds in particular want to diversify using these investments, and these also offer significantly higher returns."
Based on the initial figures for 2017, FAP expects a significant increase in the segment over the entire year. The mezzanine returns, averaging 11% for development projects and 6% for existing properties, are admittedly much lower than in neighbouring countries. However, the low risk of investing in Germany as a whole is factored into the pricing. Margins will probably come under pressure here, for example due to the amount of available capital. Furthermore, the spread between first-tier financiers with up to 200 basis point margins and the subordinated capital is still very high.
FAP provides comprehensive advice to investors, project developers, capital providers and lenders on capital and financing issues for real estate investments and development projects. It also conducts in-house research on the capital market and investments, which it publishes annually for the subordinated capital market in its Mezzanine Report. Since 2005, Flatow AdvisoryPartners has advised on capital investments totalling more than EUR 10 billion. FAP was recently named "Property Debt Advisor of the Year" at the PIE Property Finance Awards 2016.
Dr. Tilman Pradt
SOURCE Flatow AdvisoryPartners (FAP)