Flatow Advisory Partners to launch first real estate mezzanine debt fund

Berlin-based consultancy Flatow Advisory Partners (FAP) is to launch its first real estate mezzanine debt fund, the group’s founder, Curth Flatow, told REFIRE this month.

‘The fund, which will be launched towards the end of this year or early next year, will be Luxembourg-based,’ Flatow said. ‘It will also have the remit to invest in sub-ordinated debt. The target size is €250m, unleveraged. I expect about 90% of the fund to be invested across Germany, with the remaining 10% invested in countries such as the Netherlands.’

While additional details concerning the fund have still to be made public, Flatow said the aim was ‘to build a broad, risk-diverse portfolio, so we’re open to investing in all asset classes, from residential to offices, retail and hotels’. FAP will target deals of between €5m and €30m for the mezzanine tranche.

The fund is, in part, a response to burgeoning demand for real estate debt. ‘It’s not quite mainstream yet but it’s getting there,’ Flatow said. ‘We’re seeing a lot of investment opportunities, hence the new fund. Also, the fund is within typical German financing parameters, which makes it attractive.’

FAP has advised on around €800m in European real estate debt deals so far this year and hopes to hit €1b by the year end, up from €900m last year, according to Flatow.

The group also announced earlier this month that it has spun off its business division for institutional investors as a separate company, effective August this year. FAP Invest is headed up by FAP’s former head of investment management, Markus Mirbach, and will offer institutional investors advice on and access to real estate debt investments as well as direct investments.

‘Particularly in view of the sustained low interest rate environment, property remains highly attractive to institutional investors as a direct investment or in the form of real estate debt investments,’ Flatow said. ‘That is why we are committed to investigating attractive proposals for our clients and developing new products with partners,’ he added.