GIC Real Estate, a Singapore-based sovereign wealth fund, has partnered with Deutsche Bank to provide debt finance to the European real estate market, reported the Financial Times.
According to Estates Gazette, a UK-based trade magazine, the venture has already provided GBP140m in debt to finance the purchase of a GBP208m office block in London by a Saudi investor consortium.
Deutsche Bank is expected to use the relationship to expand its property lending operations in the Europe market. The lending platform of Deutsche Bank will continue to originate new debt and the bank is then will hold the senior tranches of the loan.
GIC Real Estate is expected to buy junior parts of loans, although stopping before the higher-risk mezzanine level of debt that typically occurs at a loan-to-value ratio of more than 75%. Both parties are said to lend only to prime single assets or small portfolios with good cash flow, reported the newspaper.
GIC Real Estate, which has more than $315bn of assets under management, invests internationally in equities, fixed income, natural resource, treasury & currencies, real estate, private equity and infrastructure.