FAP Mezzanine fund sees first closing, first deals

14 May 2019 10:00

We reported last year on the launch of the FAP Balanced Real Estate Financing I mezzanine fund launched by independent Berlin-based FAP Group. After its first closing with a high double-digit million amount, the fund has already started financing its first deals.

The company said its pipeline was already amply filled with more than €160m and said that by the end of 2019 at least 60% of the fund would likely be place and the corresponding finance granted. First deals include a purchase of land and premium existing properties in two German cities.

Hanno Kowalski, Managing Director of FAP Invest GmbH: “Due to very fast fund raising, we have also been able to finance the first deals just as quickly. The first FAP-fund is experiencing a high demand with investors and borrowers alike. The deal pipeline is amply filled with over €160 million of mezzanine tranches and is being quickly processed. With this product combined with our expertise, we have created an offering, which the market is obviously reacting to positively.”

The vehicle, FAP Balanced Real Estate Financing I, is a master/feeder fund, based in Luxembourg with the legal form of a fully regulated S.C.Sp., SICAV-SIF. The Bank of Hauck & Aufhäuser Luxembourg is acting as fund manager (AIFM), while FAP Invest handles the role of investment consultant and advisor.

Anchor investors of the capital fund initiated by the FAP Group Berlin are a renowned German pension fund as well as a large German insurance group.

The fund has a proposed life term of five years (with two one-year extension options), and focuses on the financing of residential, office/business, retail and hotel properties. The ticket price for institutional investors is €5m upwards.

At the time of its launch last year, Curth-C. Flatow, founder of the FAP Group, explained the rationale for the fund: "There are some debt funds in Europe that could also do business in Germany. Most of these funds, however, have a pan-European focus and have consequently directed their financing conditions to a pan-European market. Due to the market parameters they can only very seldom provide financing conditions that fit the individual German financing market. This is the gap that our fund offer will fill.”

"Most recently we've been speaking to American and Asian investors. Even if there are markets, in which a better return on investment could be achieved, there are also very sound reasons for international investors to be invested in the most significant real estate and property market in Europe, namely in Germany.”