How Emerging Debt Managers are Making their Mark - September 2025

Published by Real Estate Capital News 4th September 2025. Written by Silvia Saccardi.

Launching a real estate debt strategy in today’s market is no easy feat. A cohort of established managers control a large share of the European private real estate credit market, meaning new entrants face the task of positioning themselves effectively.

Real Estate Capital Europe’s annual Debt Fund 30 ranking highlights the dominance of the established firms in the fundraising arena. In the latest edition, reflecting the 2020-24 period, the top 10 accounted for 64 percent of the $75.58 billion raised by the 30 ranked managers for Europe-focused lending strategies.

However, this has not deterred new entrants. REC Europe data shows that since 2023, at least 16 real estate debt funds have been launched in Europe by managers recorded as having no prior property lending funds in the region.

“In a competitive fundraising and deployment market, it can be difficult to find a product that works,” says Henry Randolph, the partner leading the debt business of London-based manager Patron Capital Partners, which was formed in April.

Like other emerging real estate debt managers that REC Europe spoke to, Randolph explains that differentiating your strategy to appeal to investors and borrowers is important. So, too, is careful consideration about how to capitalise your strategy and scale it over time.

“It’s clearly not an easy fundraising environment right now, so new strategies need to be thoughtful about how they grow,” says Richard Craddock, head of real estate debt at Dutch manager Redevco, which launched a lending business in October 2024.

Capital formation specialists acknowledge the challenges facing new entrants. Dominic Schultens, partner and global head of private credit project management at placement agent First Avenue, says the market is bifurcating into the larger mega-funds and smaller bespoke strategies.

“In the private credit space, the largest managers have been raising increasingly sizeable funds, all at the expense of emerging managers. This means placement agents have become much more selective when doing business with new fund managers,” he says.

Strategies with a clear objective and returns targets of more than the net 8-9 percent being offered by many in the market can attract attention, he adds. “If we were to back a new real estate debt manager, we would look for something differentiated and higher-returning, favouring strategies which are pushing 12 percent-plus net IRR.”

Differentiated debt

Points of difference, explains Schultens, come in a variety of forms. How a firm sources transactions, structures its loans or focuses on specific subsectors can all be potential selling points.

Redevco’s Craddock agrees with the idea of taking a targeted approach. “It’s important to have a differentiated offering where you have deep conviction in the underlying strategy,” he says. Redevco’s debt business has set out to finance assets in transition, where it can set measurable sustainability targets.

“We’ve seen a divergence in recent years between the very large funds from managers with long-established predecessor fund track records – which may offer more diversification – and more specialised managers who are able to execute a particular strategy very well,” Craddock adds.

Depending on their investment needs, capital allocators are gravitating to either of the two types of managers, he explains. “Some investors want that focus and are backing the specialist managers or programmes, whereas others prefer exposure to larger managers or funds.”

Meanwhile, Patron’s approach is to focus on ticket sizes of between €10 million and €60 million, where many of the larger debt managers do not concentrate their time. There are investors in the market who are keen for exposure to the sector through investments on such a scale, Randolph says.

Firma Partners, which launched in September 2024, finances developments, and provides short-term finance, particularly in UK living sectors. Victor Librae is its founder and chief executive. He argues that the lending experience of individuals within emerging managers in their specialised areas is important.

“Lenders tend to get backed for their specialism and depth of expertise,” he says. “I’ve been lending to real estate developers and investors since 2007 and, together, Firma’s executive team has lent north of £3.5 billion over the last decade. You can’t just turn up in London with a pot of money and expect people to borrow from you. Borrowers want to be confident that their lender of choice really understands development and that they have a track record of treating borrowers fairly.”

Development lenders need to be responsive when things do not go to plan, Librae adds. “We believe that kind of adaptability and judgment are worth the extra 100 or so basis points.”

Experience on the equity side of the industry can also provide a basis for a debt strategy, some argue. Affinius Capital entered the European real estate lending market in 2024, but it is an established equity and debt manager in its home market of the US. The firm has a decade-long presence investing equity in European property.

Shaun Connery, managing director and head of European debt at the firm, says: “If you want to build a debt strategy today, you will benefit from a strong equity platform with the operational expertise to vet a credit investment, especially if you are looking at higher-leverage deals.”

Underserved markets

One private equity firm that has recently chosen to back an emerging real estate lending strategy is London-based Ashen Capital, which takes minority stakes in UK real estate platforms. In January, it backed a debt fund launched by residential lender Sibner Investment Management, a subsidiary of real estate firm Sibner Group, targeted at UK housebuilders.

Ashen co-founder and chief executive Alex Price says two things made Sibner’s strategy stand out: its emphasis on small and medium-sized housebuilders and the technology the in-house team uses to speed up origination.

“Sibner’s technology allows the borrower to go through an online process to get access to the funds. The automated process can easily originate loans under £5 million (€5.8 million),” explains Price.

Sibner lends between £1 million and £5 million, typically at 60-65 percent loan-to-value and pricing of 12-13 percent. “Broadly speaking, it’s true that it is hard to deploy capital in such a competitive market,” adds Price. “However, lending money to SME housebuilders is an underserved market where lenders are not very active.”

Price acknowledges there is a temptation to widen a fund’s investment horizons to make it easier to source deal flow. But the danger of that is becoming a “jack of all trades and a master of none” he says.

As well as deciding the focus of their strategies, emerging managers are exploring routes to securing financial backing for their businesses. Redevco is using balance sheet capital in the first instance, with the potential to create co-investment partnerships to fund its deployment.

“Access to proprietary capital is important in a more challenging fundraising environment,” says Craddock. “It means we can focus our efforts on building our track record, demonstrating proof of concept, execution on that concept, and showing that the opportunities we seek are out there. It also shows deep alignment of interest with co-investment partners.”

Redevco is not planning to launch a co-mingled, discretionary fund at present. But the firm is open to potential partnerships with “like-minded” co-investors to help grow the platform, says Craddock.

“There’s a growing pool of larger LPs who are seeking access to the market via more bespoke, customised investment programmes. These typically offer closer relationships with the manager, and that’s something we can offer,” he adds.

First Avenue’s Schultens explains that managers have a range of options when looking to secure backing.

“You’ve got the GP stakes business, which is when a manager sells a share in the fund manager to another manager. Then you have the separate LP audience interested in a revenue share at fund level in return for a sizeable commitment. Emerging managers selling stakes to either party need to ensure they can start deploying and show some momentum in the fundraise,” he explains.

Bigger capital allocators, subject to getting a fee share of fund revenues, might be able to cornerstone a fund, he adds. “At this point, the emerging manager must decide whether giving up 15-20 percent of fund revenues makes sense for a £50 million-£ 100 million commitment to the fund.”

Piece of stake

A stake sale has boosted Patron’s fledgling debt strategy. In June, the overall company sold a majority stake to Mitsubishi Estate Global Partners, the investment management arm of Japanese developer Mitsubishi Estate. Mitsubishi committed €600 million, of which 50 percent was invested in the firm itself and the remainder committed to its strategies, including €100 million of seed capital for the debt strategy.

Randolph describes the seed capital as “critical” to launching the debt business. “It’s a complementary relationship: the stake sale meant we can share our investor relations teams. It has also allowed Patron to expand its potential investor base.

“There are lots of investors who want to access credit investments. We’re seeing more saying they’re increasing their European allocations. But there are also a lot of managers out there competing for that capital. So, having that increased trusted network is hugely helpful to us.”

While breaking into Europe’s property credit market is challenging, Schultens says the appeal of the asset class is felt strongly in today’s market, particularly in comparison to equity strategies.

“Investors have realised allocating to private credit versus equity means receiving coupons and having defined maturities. You can also build a rate or inflation hedge into the loan terms, which you don’t always see on the private equity side.”

He said it is likely this ongoing appetite for debt strategies will continue to spur the creation of emerging strategies, even in tougher conditions than normal.