Pramerica Real Estate Investors (Pramerica) has closed the third of its Pramerica Real Estate Capital vehicles, having raised up to €520 million comprising an initial €260 million tranche of discretionary capital which can be increased by another €260 million once the initial tranche is successfully invested.
The capital includes a commitment from APG, the leading pension fund manager in The Netherlands, which has more than €325 billion of assets under management. 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 $2 billion.
The recent close of Pramerica Real Estate Capital III brings to €1.1 billion the amount of discretionary capital from institutional investors in North America, Europe and the Middle East for Pramerica’s European debt strategy, and follows 18 debt investments over the last 24 months, exceeding €550 million of invested capital secured on €2.8 billion of European real estate, predominantly in the UK and Germany.
Pramerica Real Estate Capital III’s strategy is focused on directly originated junior real estate debt, at lower loan-to-value levels ranging from 45-50% to 75%. The portfolio management team, led by managing directors Andrew Radkiewicz and Andrew Macland, seeks to take advantage of growing opportunities in areas of financing not currently being filled by banks and other senior lenders.
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 Macland commented, “Following a successful 2012 and the 18 transactions we have completed over the last 24 months, we believe there is still a tremendous opportunity to fill a funding gap in Europe, particularly in the UK and German markets. We’re looking forward to working with new and existing partners this year to meet the need for innovative lending solutions in the market.”
Working through a network of asset managers, Pramerica Real Estate Investors provides debt ticket sizes ranging from €5 million to more than €100 million that, with senior debt, support underlying property acquisitions and refinancings of €50 million to €500 million. Pramerica has also worked with banks and other institutions on refinancing existing borrowings, as well as restructured performing loans where a further injection of capital is required.
Roland Mangelmans, senior portfolio manager of APG Asset Management, commented, “APG's view is that the market opportunity for providing junior real estate loans is deep and sizeable. Junior real estate lending provides compelling risk adjusted returns, with a high level of paid coupon, in comparison with core real estate equity. We deem this an attractive contribution to APG’s European real estate debt portfolio in terms of diversification and complementary to our existing real estate debt strategies.”