Our approach to real estate debt

With expertise dating back three decades, our end-to-end loan platform provides commercial real estate senior debt and whole loan financing for a wide range of property investors and developers. As one of the largest originators of real estate debt in Europe (Source: PFR Top European RED managers 2023), we have deep relationships across the market, allowing us to source attractive deals the broader market may not see. 

Our investment philosophy is focused on managing the downside, given the asymmetric risk profile of debt investing. As such, we lend against core, essential assets with asset security. We place high value on financial covenants and avoid highly subordinated debt positions. We take the view persistent excess returns come via excellent deal sourcing, not extra risk, and therefore, avoid the higher risk parts of the credit spectrum. We also embrace newer sectors and structures that may offer ‘complexity’ or ‘novelty’ premia.

We also offer investors sustainable solutions, including sustainable transition loans, leveraging our independent credit and governance framework and non-binding environmental, social and governance integration

Benefits of real estate debt

Real estate debt can offer attractive diversification from liquid credit, with underlying asset security.

Cash flow

Helpful for institutional investors with defined cash-flow criteria.

Diversification

Historic performance demonstrates diversification benefits versus liquid market opportunities.

Illiquidity premium

The private nature of the assets and networks needed to access them typically command an illiquidity premium over comparable liquid credits.

Security

High-quality collateral and strong covenant protection contribute to improved recovery rates in the event of default.

Key risks of real estate debt

Investment risk

The value of an investment and any income from it can go down as well as up. Where investments or loans are in other currencies or countries, values can fluctuate in response to changes in exchange rates. Investors may not get back the original amount invested.

Illiquidity risk

Certain assets held could, by nature, be hard to value or to sell at a desired time or at a price considered to be fair (especially in large quantities), and as a result their prices could be very volatile.

Complexity risk

Counterparties can be diverse, so successful investment requires appropriate credit analysis and the expertise to understand investment risks.

Resources

Sustainable transition loans framework

PDF 327.0 KB 6 pages

We are committed to reducing the carbon footprint of our portfolio and future proofing our assets against physical and transition climate risks.

Real estate debt team

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Real Assets Study 2024

Demand remains strong, but the investment drivers are changing. At a time of macroeconomic uncertainty, real assets continue to play a significant role in the investment strategies of global institutions. The sixth edition of the Aviva Investors Real Assets Study is our biggest yet and seeks to answer some key questions. 

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Sustainable Transition Loans

Tackling climate change in real estate.

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