Alternative debt providers bridge gap created by covid

While the recent pandemic has been universally problematic, the shifts in sentiment towards real estate have created opportunities for alternative lenders.

Beatrice Dupont, partner, ARA Venn, a specialist investment manager in European private debt, explained that the increased role of debt funds began with the global financial crisis, prior to which banks accounted for 98% of lending. When they pulled back it left a gap in the market which was an opportunity for institutional lenders.

“Debt funds have continued to be active and continue to play a complementary role into this market acting where banks typically can’t lend,” Dupont told Real Asset Insight’s Richard Betts.

“Today, the lending market is much more balanced. Obviously we have the banks, we’ve got debt funds and we also have institutional investors that are investing directly.”

But Covid-19 meant banks stopped lending, or lent into much more conservative structures she added.

“Today we can find some really interesting opportunities at fairly conservative risk levels, obviously in an environment where there’s significant risk so one has to be careful in terms of underwriting.”

Click on the video above to watch the full interview or listen to the podcast below.