Sourcing channels help Aeon flow into CRE CLOs

Sayed Kadiri

Editor

There is a growing buzz in Europe for CRE CLOs, with Aeon Investments and Blackstone among the issuers tapping into this nascent market, which opened a year ago courtesy of a deal from Starz Realty Company.

Aeon chief executive officer Oumar Diallo says the structured credit specialist cast its net wide in search of relative value in the credit space. It settled on UK real estate loans in part because of a unique sourcing approach it has arranged.

This consists of partnerships with WayPark Capital, Arbuthnot Latham & Co and Assetz Capital, which could lead to almost £900 million (€1.01 billion) of CRE CLOs issued through Credit Suisse.

“The UK real estate lending market is fragmented, such that we realised we could create rigid sourcing criteria and could still be very selective of loans we want across three different platforms,” says Diallo. “Multi-originator platforms are not penalised by rating agencies, provided there is a common set of criteria and risk parameters to build a homogeneous portfolio.”

“We realised we could be very selective of the loans we want across three different platforms”

Oumar Diallo, Chief executive officer | Aeon Investments

He says there is always a teething phase when forming partnerships, but the hit rate is now “relatively high” for collateral that will fit into Aeon’s first CRE CLO — a deal which will likely price in the first half of 2023.

Aeon had also considered adding SME lending to its CLO division, but found that there were not enough platforms to produce CLO-worthy assets of the required scale.

Diallo says Aeon, which he co-founded in March 2019, sees potential pan-European CRE CLOs in Q1, with assets contributed from Ireland, France, Germany and the Netherlands. He also confirmed Aeon is close to entering the Dutch RMBS space.

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Global credit funds & CLO's

January 2023 | Issue 251

Published in London & New York.