European investors still not attracted by low-returning debt strategies

Real estate debt strategies are not delivering enough returns to attract investors in Europe.

That was the message delivered in Amsterdam by a number of speakers at Institutional Real Estate, Inc.’s 2019 Visions, Insights & Perspectives (VIP) Europe conference on Feb. 19–21.

Bert Van den Hoek, a senior vice president at Partners Group told delegates that the returns on offer from senior side debt are too low to meet minimum return requirements, including the premium requirement over fixed income.

“With an interest rise rising environment, real estate debt may be the first to crumble, particularly on the senior side,” said Van den Hoek.

Matilde Attolico, global head of funds advisory at JLL corporate finance, agreed, explaining that although new debt players were appearing in Europe, they have not been able to attract the same amount of interest from institutional investors as they have in the United States.

“U.S. debt funds h