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Aeon Investments, the London-based credit-focused investment company, has closed its first commercial real estate CLO warehouse in the UK, backed by three strategic loan agreements totalling £900 million.
The new investment is the continuation of Aeon Investments to grow its private credit business, according to the information shared by the communication company, Perception A. Loans will be funded through Aeon’s balance sheet and a three-year revolving senior warehouse facility provided by Credit Suisse. Aeon anticipates issuing three CLOs within the next two to 3 years. They will be the largest of their kind in Europe.
A collateralized debt obligation is a form of structured credit that is becoming increasingly popular in the US. This product, which was not used in European commercial realty since the global financial crises, was first issued by Starz Realty Capital in Q4 202021. It offers investors an alternative to the commercial loan syndication marketplace.
Aeon’s recent agreements with WayPark Capital, a newly launched commercial real estate lending platform, private bank Arbuthnot Latham & Co, and specialist SME finance platform Assetz Capital, expands its commercial real estate investment programme, which launched in Q4 2021.
The originators will provide commercial real estate borrowers with tailored loans and financial solutions of between £2 million and £20 million with LTV ratios of up to 75% for acquisitions, refinancing, and asset upgrades across the UK, including offices, industrial units, warehouses, and some retail properties
Oumar Diallo, CEO of Aeon, said: “We are delighted to be working with our new partners as we build solutions for investors to access private credit in the UK. With the experience and performance of our CLO platform, we believe our disciplined investment approach will continue to deliver best-in-class returns for our stakeholders and broader CLO investors.”
Aeon’s proprietary ESG Positive Screening Method is used by Aeon to assess new loans, track their progress against measurable KPIs and evaluate the impact of each initiative.
Ben Churchill, COO of Aeon, added: “While interest rate hikes and inflation are typically unwelcome news for fixed-rate bonds, floating-rate assets become more appealing to investors in such an environment, which act as an inflationary hedge. Structured credit products, despite the current credit crisis, have the fundamentals to absorb recessions. In fact, they have performed better than most other asset classes in the past. We are confident investor demand for this type of asset-backed security will remain buoyant.”
The commercial real estate market in the UK saw £49.8bn of new lending in 2021 alone, and market factors indicate there is likely to be continued demand for such originations despite the macro environment. As banks are forced to retrench in the high-interest rate environment, a significant amount of this will likely be driven by nonbank lenders.
With tighter lending standards and increasing interest rate pressures, the space will likely continue its trend of being served by banks. Non-bank lenders have less capital-intensive loan books and are better able react to changing market conditions.
Richard Thompson, Partner at PwC said: “It is clear that both lenders and investors acknowledge the need to first navigate the current market and macroeconomic challenges in the UK including interest rate rises, cost of living, supply chain pressures and rises in inflation. Any growth in new lending is expected in the short term to be driven by those lenders that focus on lending that is aligned to the level of risk observed in the commercial real estate market.”
Aeon was founded in 2009 by Oumar Diallo, a Deutsche Bank alumni, and Ben Churchill, a shareholder of ABS Capital Company. Juan Ball and Federico Hermida are US-based shareholders. Edward and Harry Lawson Johnson were co-founders Alvarium Investments. Tiedemann Group recently announced a merger.
Aeon’s high-profile list of Board Advisers and Non-executive Directors, including Nina Shapiro, who has held senior management and operating roles at The World Bank Group, sits on the Boards of HSBC Global Asset Management and served as Independent Non-Executive Director of Man Group Plc from 2011 to 2018, and Soroosh Shambayati who was most recently co-Head of Global Markets at Renaissance Capital and formerly Global Chairman of Emerging Markets at Nomura International.
Aeon is a credit-focused, London-based investment company. It structures, invests and originates long-term, income-focused investment opportunities for its stakeholders, families foundations institutions and sovereigns.
AeonStructured credit is a fixed-income strategy that uses relative value. It specializes in segments that offer attractive returns on a risk-adjusted base, such as the real estate, infrastructure, and private debt sectors.
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