Tunstall Real Estate Asset Management, the pan-European alternative investment management firm created recently by London-based M7 Real Estate, has made its first investment for a new Dutch-focused discounted pay-off debt fund, after receiving €55 mln of initial commitments from a number of international investors at its first closing.
The fund, DPO Fund 1, is Tunstall’s first credit investment fund and is in line with its strategy to develop a pan-European real estate platform investing, via equity and debt, into corporate, direct and indirect opportunities.
'This exciting transaction marks the launch of our first fund and our first debt investment. The loans we have acquired are backed by a strong portfolio of properties owned by a well-respected and very capable sponsor who will now be free to undertake a number of value accretive asset management initiatives,' commented Roger Clarke, CEO and founder of Tunstall.
'We believe that there is a significant demand from owners and borrowers of residual post financial crisis non-performing loans that are looking for an investor that is willing to provide a refinancing package that allows them to unlock the value of the underlying assets. Our current pipeline is testament to that.'
DPO Fund 1 has been established to facilitate the restructuring of non-performing loans (NPLs), held against otherwise performing assets, by a mechanism of acquiring loans (from as small as €2 mln) and simultaneously restructuring them, by mutual consent, alongside the original borrower.
Tunstall, was set up last November and has M7 as a significant minority shareholder, is aiming to invest about €100 mln of capital in senior debt in the Netherlands. The company will invest across Europe in strategies across the capital stack - equity and debt and listed as well as private real estate - which don't compete with M7.
The investment for Tunstall's first fund comprises the acquisition of a portfolio of five loans for €31.7 mln, secured on a portfolio of 20 assets across the northern part of the Netherlands, predominantly office properties but also comprising warehouse and retail assets.
With an estimated €11 bn of NPLs to be worked through in the Netherlands alone, Tunstall believes there is significant demand for an investor that is willing to refinance loans through a discounted purchase mechanism, from both the holders of existing loans of this size as well as the original borrowers.
M7's Dutch team, including M& capital markets director Hugh Fraser, who is now based in Amsterdam, and joint managing director for the Netherlands Remko Dickhaut, will hep in sourcing and underwriting transactions. M7, which has operations in 13 countries across Europe, has invested €1 bn in the Benelux over the eight last years and is effectively acting as operating advisor to Tunstall's Dutch business.
'Following on from our recent investment in Pinnacle in London, the launch of our DPO Fund 1 is indicative of the ambition we have for Tunstall and the innovative types of investments we are seeking to undertake,' concluded Clarke.
