The mounting sums raised by debt funds will never replace the retrenching banks, with a Âmarket-wide deleveraging likely to result, a panel of alternative investors told the British Property Federation conference this week.
ICG-Longbow managing partner Martin Wheeler said the company's latest fund, which reached a £700m final close earlier this month, would seek to back smaller borrowers with "strong property skills" who may have been traditionally been supported by RBS and Lloyds.
"These are the guys that have nowhere else to turn other than raising equity," he said.
The recently floated ICG-Longbow Senior Secured UK Property Debt Investments fund agreed its first loan this week, lending £18m to subsidiaries of the Mansion Student Accommodation fund.
But despite the billions raised by similar debt funds, AXA real estate global head of asset management and transactions Anne Kavanagh said debt funds would never fill the gap left by the major banks as they withdrew from real estate lending.