New German debt fund launches with €20m Swiss commitment

Things have been moving quickly for Caerus Debt Investments AG, the Düsseldorf-based investment firm previously known as Signa Real Estate Advisory AG. The new group was created in a management buyout led by CEO Michael Morgenroth in July this year, and has already received firm equity commitments for seed investment for its first loan fund.

The new firm’s first mezzanine debt fund, structured under Luxembourg law and targeting €300m volume, was seeded by €20m from Swiss private bank Reichmuth, which specializes in asset management. The fund will concentrate on real estate financing with loan-to-value ratios of between 50% and 80%, with the geographic focus being on Germany, Austria and Switzerland. The minimum investment in the fund is €10m, while the target for returns is 6-7% annually.

Morgenroth, a former chairman of INREV and board member of Gothaer Asset Management before joining Austrian group SIGNA Holding in 2001, has long been bullish on the prospects for debt funds as an asset class in German-speaking Europe. “Compared to other countries, the German-speaking region has a lot of catching up to do in this regard. We see structured financing, as already widely practiced in the Anglo-Saxon world, as becoming standard here in Germany as well. The changes in the regulatory environment – mainly Basel III and Solvency II – reduce lending activity by the banks while making it more expensive for insurers to invest in equity. That is why innovative investors are seeking alternative investment opportunities such as real estate debt. We expect to profit from a very lively senior debt market in this country, which is extremely liquid at extremely low prices.”

Morgenroth as CEO and CIO Dr. Patrick Züchner have also broadened the new group’s shareholder basis with Reichmuth and Co. Holding taking a shareholding, along with Berlin-based real estate manager Dupuis Asset Management as partner with operational expertise.