Recently our CEO, Nadine Buckland spoke at a conference in New York, discussing the European Real Estate Credit Market. Below are the 3 key insights she shared:
1️⃣ Europe has a Capital Gap
As the saying goes: money makes the world go round and credit makes money go round. Seeing the depth and breadth of the US LP and GP community across private credit strategies, led her to reflect on what she has seen now for over a decade: Europe, relative to the US, suffers from an acute lack of credit.
However, the capital scarcity isn’t applied equally. Middle market real estate operators find capital access far more difficult than larger peers despite proven track records and consistent performance. And niche real estate sectors like data centres, student housing, senior living, and co-living suffer the same fate, eschewed by traditional lenders until they are considered mainstream.
But she feels that European private credit will grow quickly. And its expansion will provide opportunities for investors seeking to capitalise on the growth opportunity and for asset managers with a history and proven expertise within local jurisdictions.
2️⃣ Vive la Difference! Europe doesn’t have a single (capital) market
It’s a misnomer to speak about European credit. Each country has its own particular and often complex regulatory and legal landscape, combined with language and cultural differences. It requires lenders with a deep understanding of local markets. Non-traditional lenders with teams spanning different European regions can navigate the diverse legal frameworks and ensure the right structuring of deals for each jurisdiction, especially in complex markets like Italy or France.
3️⃣ Relationships are crucial – lending is more than just capital provision
Successful lending to middle market real estate operators in Europe requires building deep, trusted relationships that span across borders. Non-traditional lenders who invest in understanding local market dynamics and the specific challenges faced by operators—such as local tax structures or tenant regulations—are able to offer more reliable, ongoing support for operators which in our view translates into better credit.
At Zenzic Capital, we are very proud to have built our team precisely to capitalise on the opportunities presented by these market inefficiencies: a middle market focus; technical and structural rigour; local market expertise and relationships.
