At Geneva Wealth Day, Cédric Dingens, Partner and Head of Alternative Investments at NS Partners, led an insightful discussion with Nicolas Darsa, Partner at O2 Capital AM, on the dynamics of private real estate financing.
Still relatively unknown to some institutional investors, this asset class is now emerging as a credible alternative to traditional corporate debt, particularly in a context of valuation corrections and the partial withdrawal of banks.
A Distinctive Positioning Compared to Corporate Debt
Private real estate debt—and more specifically bridge loans—offers, according to Nicolas Darsa, a gross yield of around 15%, with senior exposure and collateral on the financed assets. Unlike traditional corporate debt, where such yield levels exist only in distressed situations, these transactions are based on sound projects that require rapid execution—areas where banks can no longer or no longer wish to intervene.
Often backed by mature projects, these bridge loans enable companies to meet a regulatory milestone or cover a temporary financing need prior to bank refinancing. This positioning allows for capturing a liquidity premium without compromising credit quality.
Risk Management and Windows of Opportunity
Among the highlights of the discussion, Cédric Dingens emphasized the rigor of O2 Capital’s risk management process: a safety buffer of at least 30%, an LTV capped at 70%, strict sponsor selection, and solid collateral coverage.
In the post-2022 context, marked by a sharp correction in valuations, these safety margins take on their full significance. Nicolas Darsa is convinced: “Valuations have already corrected significantly. Assets are better priced, but financing needs are still there—and even more pressing.”
Cédric Dingens also raised a strategic question: isn’t now the right time to enter this segment, as valuations stabilize and banks pull back?
Indeed, banking disintermediation creates a natural opportunity: if banks, which still cover 75 to 80% of the French market, pull back by a few percentage points, a whole segment of financing opens up to alternative players.
A structure designed for performance and flexibility
O2 Capital’s investors—primarily family offices—seek an annual net return of around 10%, coupled with regular income. To meet this need, the firm offers two investment formats: direct co-investments or evergreen funds.
The latter format, Nicolas Darsa points out, emerged naturally: “A closed-end fund limits the duration of actual exposure. With an evergreen fund, we smooth out performance, reinvest more efficiently, and offer greater flexibility to investors.”
This approach aligns particularly well with a strategy of short-term, frequent bridge loans that require active capital deployment.
Conclusion: an asymmetric strategy, aligned with the cycle
In a changing market, short-term private real estate debt offers several rare advantages: high returns, capital protection, a tangible underlying asset, and great agility in execution.
The gradual withdrawal of banks, stabilizing prices, and growing demand for flexible solutions are opening a strategic window of opportunity. For savvy investors, this is an opportunity to strengthen the credit component of their portfolio with a product offering a well-managed complexity premium.
However, as Cédric Dingens emphasized, it is essential to rely on partners capable of sourcing, structuring, and securing high-value-added transactions.
Professional Communication
This communication is intended exclusively for professionals as defined by MiFID II. It does not constitute an offer, a solicitation, or investment advice. It is distributed for strictly informational purposes in connection with an event organized by O2 Capital AM, a portfolio management firm authorized by the Autorité des marchés financiers (AMF) under number GP-202400011.
The information presented in this interview should under no circumstances be considered a personalized recommendation or a performance commitment. Investments in private debt involve risks, including the risk of capital loss, liquidity risk, and valuation risk, which must be carefully evaluated.
