DRC Capital is a recognised market leader in European real estate finance and was among the pioneers of the emergence of investment vehicles dedicated to real estate debt investing in Europe. DRC advised funds have consistently and profitably invested capital since 2009, having executed more than 70 investments representing over £1.5bn of invested capital.
DRC is an independent investment adviser focusing exclusively on the real estate debt sector in Europe and is headquartered in London. DRC was amongst the first movers in the non-bank CRE lending market and, whilst the lasting need for a supply of new capital in Europe has continued to attract new non-bank players, DRC has maintained its position as a leader in the space by providing bespoke solutions to borrowers, where previously only standardised credit products were available.
The DRC team has deep European real estate sector knowledge with outstanding origination and execution capabilities. DRC’s investment team has extensive transaction experience having acted as lenders, investors, borrowers and risk managers.
DRC is currently investing capital across its three core strategies, representing high yield loans, senior loans and whole loan solutions.
Sector forecasts
The European Commercial Real Estate (CRE) finance market has historically been dominated by banks that were prepared to provide high leverage at very low margins and higher loan-to-value ratios. Since 2007, there have been significant structural changes to the CRE market in Europe, a fall in property values and returns, overexposure of key lenders and the introduction of Basel III banking legislation.
As a result average maximum LTVs have been falling significantly and average interest margins have increased.
Current market conditions and the historic structure of the European commercial real estate debt market are combining to create a lasting need for a supply of new capital in the sector.
Non-bank lenders, such as debt funds and insurance companies, are expected to continue increasing lending volumes significantly in the next twelve months, providing much-needed diversification from the historically bank dominated landscape. DRC expects a convergence towards a more US style CRE financing market with a higher proportion of debt provided by non-bank lenders. Europe has not yet reached equilibrium, with only c.40% of CRE lending provided by non-bank lenders compared to c.65% in the US.
Investment principles & strategy
DRC Capital LLP advises on the provision of and investment in debt finance for commercial real estate in Europe, focusing on debt investments secured by high-quality real estate assets with stabilised payments. DRC Capital’s core markets are the largest and most mature real estate markets in Western Europe: the UK, Germany and France. Its current investment mandate extends to the remainder of the EU, Norway and Switzerland. DRC Capital considers investments across all commercial real estate and has provided debt financing to offices, hotels, retail and light Industrial. Investment opportunities considered include acquisition financing, interim financing, refinancing and debt acquisitions.
DRC has developed a reputation for offering borrowers speed and certainty of execution, which often enables the team to secure transactions and negotiate favourable terms for its investments.
DRC’s range and breadth of experience plays a significant role in assessing and understanding property risks and creating loan structures that protect against those risks. DRC develops bespoke structural solutions (e.g. capex facilities, mezzanine holdco loans, whole loans, sourcing other debt providers to complete the capital structure) to address the unique characteristics of each transaction.
Strategic corporate development
Innovation helps DRC stay ahead of the competition. As the European finance market evolves, DRC will continually source high quality investments whilst maintaining risk adjusted returns.
DRC is able to recognise the best opportunities and is comfortable with situations that others may find too complicated to execute, in this manner DRC acts as a problem solver, rather than just a debt provider. Furthermore, our efficient investment process means we are able to execute transactions within strict deal timelines.
These qualities have earned DRC recognition as a market leader and as such it has been awarded a number of prestigious industry accolades including Real Estate Capital Magazine’s “European Mezzanine Lender of the Year” (2014 & 2015), Professional Pensions Investment Awards’ “UK & European CRE Debt Manager of the Year” 2016, and a place in the top 40 European CRE lenders selected by Real Estate Capital Magazine (2015 & 2016), which have further raised DRC’s profile amongst prospective lenders, borrowers and investors alike.
COMPLIANCE STATEMENT : This material is not intended for general public use and is being issued only to and/or is directed only at persons who are “Professional Clients” or “Eligible Counterparties” for the purposes of the FCA rules. The information in this document does not constitute, or form part of, any offer to sell or issue, or any offer to purchase or subscribe for interests in any fund or company. No representation is made concerning the accuracy of any data compiled herein. An investment in any DRC Capital product is speculative and carries a high degree of risk and is not suitable for private investors.
