Investment Opportunity
The real estate and banking markets have undergone fundamental change in Europe, resulting in a considerable expansion in investment opportunities in the short term, as well as creating an environment in which specialist platforms can build a long-term investment strategy in European real estate.

A number of factors have been responsible for bringing about a fundamental change in the liquidity available for financing real estate, which has particularly impacted the banking sector's previous dominance of the European market. The management team believes that this has substantially expanded the funding gap between debt and equity, creating a strong demand for mezzanine financing.

The market opportunity for a provider of mezzanine finance for European commercial real estate is immediate and clear. Over the past 12 to 18 months, the commercial real estate lending market has seen a material reduction in the number of participating banks, with less capital available for lending, stricter lending criteria, lower loan to value covenants and higher margins.

The availability of mezzanine finance has become increasingly scarce at a time when demand for it is high. The introduction of regulatory capital constraints has made the provision of mezzanine finance by the banking sector increasingly less attractive and capital inefficient, paving the way for specialist mezzanine finance providers to develop long term sustainable financing platforms.


Investment Strategy
Market factors have created the environment for mezzanine investments to generate a high level of current income, combined with potential for capital returns through participation in future value gains from the underlying real estate. Mezzanine is capable of delivering strong risk adjusted returns, as income payments have a priority ranking and subordinated borrower equity mitigates risk by providing an effective defense against cap rate expansion.

The strategy is to build up, on an investment by investment basis, a diverse mezzanine finance portfolio that takes advantage of re-pricing in both the debt and equity real estate markets. The team will target favorable risk-adjusted returns and will aim to generate high current income with the potential for capital gain through participation in profits generated by the underlying real estate assets.


Management Team

		Andrew Radkiewicz Managing Director Andrew Radkiewicz is a Managing Director in PREI's Global High Yield Debt Group, focused on investing in Europe and responsible for co-leading PREI's dedicated European real estate mezzanine strategy as Portfolio Manager. Mr. Radkiewicz has 18 years of experience in European real estate finance, encompassing investment banking, capital markets/CMBS, corporate restructuring and debt advisory. Prior to PREI, Mr. Radkiewicz was Head of Real Estate Finance at a major UK investment bank serving on the banking and investment banking board as well as the investment committee.
		Andrew Macland Managing Director Andrew Macland is a Managing Director in PREI's Global High Yield Debt Group, focused on investing in Europe and responsible for co-leading PREI's dedicated European real estate mezzanine strategy as Portfolio Manager. Mr. Macland is a Chartered Surveyor with a blended banking and real estate skill set, and has 13 years of European real estate experience focused on equity and subordinated debt structures, asset management, property recoveries and restructuring. Prior to PREI, Mr. Macland held senior positions within European investment banks.