Pramerica announced the successful close of its fourth European debt vehicle, Pramerica Real Estate Capital IV (PRECap IV), having raised €820 million of new equity. Pramerica Real Estate Investors is the European arm of the real estate investment and advisory business of Prudential Financial, Inc. (NYSE: PRU), which is headquartered in the United States and has a global real estate debt platform of more than $53 billion (approx. €39.1 billion).
The close of PRECap IV follows the announcement in April 2013 of the successful raising of up to €520 million in the PRECap III fund, and brings the amount of discretionary capital raised from institutional investors in North America, Europe and the Middle East for Pramerica’s European debt strategy to €2 billion. Since the launch of the first fund in 2010, the PRECap platform has completed 30 debt investments, comprising more than €1 billion secured on European real estate valued at more than €4 billion, predominantly in the UK and Germany.
Like other Pramerica debt funds, PRECap IV, a value added vehicle that offers the potential for returns between 13-17% IRR, saw high demand from investors. There remains a significant opportunity for providers of junior debt for the acquisition or refinancing of assets with good underlying property fundamentals, but for which traditional senior and other lenders are unable or unwilling to provide full financing. The fund will be focused on office, retail, industrial and residential properties in the UK and Germany with deals ranging in size from €10 to over €100 million.
Investors in PRECap IV include APG, the leading pension fund asset manager in the Netherlands, which has committed further capital to the PRECap platform having also participated in the earlier funds, as well as number of other global institutional investors. Pramerica’s strategy in Europe is part of a global initiative to provide institutional investors with an array of investment opportunities in commercial real estate debt.
Andrew Radkiewicz, co-head of Europe at Pramerica Real Estate Investors, commented, “The success of the latest equity raising for our European debt platform shows the level of investor interest due to strong risk adjusted returns and the attractiveness of this flexible capital to owners of real estate. This fund takes the amount of capital we have attracted to €2 billion and further establishes Pramerica as one of the leading junior debt and preferred equity providers in the European real estate sector.” Andrew Macland, Head of UK and Ireland at Pramerica, added, “It is also pleasing to be able to report that we have concluded 30 deals since the launch of our original fund. We believe our responsive and flexible approach, coupled with our ability to execute transactions typically in the €50-100 million range, has proved particularly compelling in the current markets.”