European non listed real estate debt in the spotlight

As appetite for non-listed real estate debt increases, IQ looks at INREV’s plans for the first European private debt vehicles performance index.

INREV’s Debt Vehicles Universe Study 2020, released  in October, revealed that a record €32 billion was raised in non-listed real estate debt products globally in 2019. This impressive level of capital raising represents a strong growth in appetite for non-listed real estate debt, with an approximate increase of 50% from the results posted in 2018.

Not only was the capital raised significantly higher than totals recorded since 2013 – when INREV records first began – but debt vehicles also posted strong performance expectations in 2019, with the average target IRR for all vehicles at 7.7%.

This uptick in demand and robust performance clearly shows that non-listed real estate debt is now truly in vogue amongst institutional investors and investment managers alike. It brings private debt back into focus, having seemingly lurked in the shadows for a while since the initial flurry of enthusiasm in the aftermath of the global financial crisis.    

Greater prominence
Interestingly, what we have seen since the economic turmoil ensued is that despite the relative immaturity of the private debt market, real estate debt funds have increasingly started to form a core part of many investor portfolios across Europe.

With the asset class rising to prominence, we believe the time is now to further increase transparency within the private debt market. 

Over the last few years, INREV – together with the Debt Funds focus group – has taken large strides to deliver greater transparency of, and insight into, the non-listed real estate debt space for market participants. We have done so by developing debt-fund specific definitions, performing a review of the INREV Guidelines and drafting the recently launched appendix to the Due Diligence Questionnaires. But the project is not yet complete. In fact, this is just the beginning. 

Future performance measurement 
Looking further into the future, INREV plans to create the very first European private debt vehicles performance index to enable a more comprehensive analysis of the market as it continues to evolve. Currently, there is a distinct absence of tools to measure real estate debt performance – this presents a clear blind spot for investors.

Through the development of INREV’s performance index, once again we will be working to improve transparency and comparability with the overall aim of expanding market information on debt funds, developing fund metrics and performance indicators.

What’s needed now is an expansion of loan data collection and a further surge in the volume of data from market participants to significantly broaden and deepen the INREV Debt Vehicles Universe so that it can become truly representative of the debt vehicles market.  This will enable us to deliver much greater transparency and market comparison for the European, and ultimately the global, non-listed real estate debt funds industry.

To include your debt vehicle in the universe contact