Art Capital has launched a dedicated European commercial real estate back leverage division.
The firm has appointed Alexander (AJ) Storton as partner to establish and lead Art Capital Structured Finance (ACSF), which will initially advise clients on CRE back leverage and loan-on-loan financing, with plans to expand into wider structured finance activities in the future.
Storton (pictured), who has more than 15 years of pan-European real estate credit experience, joins from JP Morgan Chase where he was executive director and head of EMEA and APAC CRE loan capital markets and EMEA CRE loan-on-loan.
Prior to that, he spent six years at Bank of America Merrill Lynch, where he worked across origination, underwriting, syndication and securitisation.
Storton said: “Over the past five years, back leverage has quietly become a fundamental component of the European real estate capital markets, adapting structures and technology inspired by the mature loan-repo markets in the US. Our dedicated back leverage advisory business led by experienced lending professionals is the first of its kind in Europe, driven by a significant increase in demand from lenders and investors for independent, technical advice in what remains a relatively opaque and evolving space.
“Unlike direct lending, back leverage introduces added complexities – including mark-to-market requirements, structured guarantees and diversification criteria – which require specific structuring and risk evaluation knowledge. ACSF’s aim is to bring greater clarity, efficiency, and standardisation to this rapidly growing segment through the application of deep expertise, market experience, and technical insight, allowing our clients to access the most effective and prudent financing solutions amidst a shifting regulatory and market landscape.”
Tim Vaughan, partner at Art Capital, added: “Back leverage can transform debt funds’ competitiveness on pricing and open up opportunities to match bank-level margins, while in turn, allowing banks to maintain real estate exposure without carrying direct risk on their balance sheets – a trend set to continue as new regulatory frameworks like Basel IV come into play.
“Through our existing debt advisory business, we have only seen interest in the back leverage sector increase from both banks and debt funds. Establishing ACSF with someone as experienced as AJ allows Art Capital to expand its offering in an under-served part of the advisory market”
