PGIM Real Estate has completed a capital raise exceeding €1.18(£1bn) for PRECap VI (Pramerica Real Estate Capital VI), surpassing its fundraising target. PRECap VI is the largest fund in a series dedicated to investing in private real estate debt in Europe.
PGIM Real Estate is the real estate investment business of PGIM, the global investment management business of Prudential Financial, Inc. (NYSE: PRU). With more than $1 trillion assets under management, PGIM is a top 10 global money manager and is the largest worldwide institutional real estate manager* with $154 billion net assets under management in debt, equity and securities as of December 31, 2016.
PGIM Real Estate raised more than 80% of the capital for PRECap VI during the nine months following the U.K.’s European Union referendum. Investors in the closed-end discretionary fund include prominent public and private pension funds, sovereign wealth funds, and insurance companies from the Americas, Europe, the Middle East and Asia Pacific. Investors were attracted to the fund’s income-driven real estate debt strategy, which targets double-digit returns, while providing downside protection.
“We are delighted with the strength of investor participation, particularly after the Brexit vote,” said Andrew Radkiewicz, global head of debt strategies for PGIM Real Estate. “We saw a fundamental increase in commitments from institutional investors’ real estate, private credit and alternative fixed income allocations, due to the sustainable risk adjusted returns offered by this asset class.”
PRECap VI will follow a strategy consistent with its five predecessor European debt strategies. The fund will provide alternative finance across the capital stack, in the form of whole loans, mezzanine and preferred equity, targeting predictable income returns combined with capital upside through profit participation. It will consider investments ranging from about £10m to over £100m, working with experienced real estate sponsors across western Europe in specialized sectors for which PRECap’s funding structures work particularly well. Examples include real estate that requires development finance funding, repositioning or other value-add initiatives.
“The demand for alternative funding sources continues to grow,” explained Andrew Macland, head of PGIM Real Estate’s U.K. business and European Debt. “The scale of our capital raise provides much needed liquidity in a financing market that is increasingly restricted by regulatory and structural change. As a funding partner, we offer certainty and continuity to investors, developers and operators of real estate in Europe in this changing environment.”
In 2009, PGIM Real Estate was a first mover to identify private real estate debt as an alternative investment opportunity. Since 2010, and testament to its fully integrated private equity and debt platform in Europe, PGIM Real Estate has raised and deployed more than £2bn in European private real estate debt over 60 transactions throughout Western Europe, assisting owners and operators to finance real estate with an underlying asset value of more than £10bn.
