PGIM Real Estate raises £1bn-plus for European debt fund

It is the firm's sixth real estate debt fund which attracted 80% of its commitments following the UK's vote to leave the European Union.

PGIM Real Estate has raised more than £1 billion for its latest European property debt fund, PDI sister publication Real Estate Capital has reported.

Pramerica Real Estate Capital VI (PRECap VI) is the sixth and largest of the firm’s funds dedicated to European private real estate debt. PGIM said that it raised more than 80 percent of the capital for PRECap VI during the nine months following the UK’s vote to leave the European Union.

Investors in the closed-end discretionary fund include public and private pension funds, sovereign wealth funds and insurance companies from the Americas, Europe, the Middle East and Asia Pacific. The fund has an income-driven debt strategy and targets double-digit returns.

The fund will provide whole loans, mezzanine and preferred equity, targeting predictable income returns combined with capital upside through profit participation. It will target loans from £10 million to around £100 million in deals which will include development finance funding, repositioning or other value-add initiatives.

“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.”

“The demand for alternative funding sources continues to grow. The scale of our capital raise provides much needed liquidity in a financing market that is increasingly restricted by regulatory and structural change,” added Andrew Macland, head of UK business and European debt at PGIM Real Estate.

PGIM Real Estate first raised private real estate debt capital in 2009. Since 2010 it has raised and deployed more than £2 billion in European private real estate debt across 60 transactions throughout western Europe.

PGIM Real Estate is the real estate investment business of PGIM, US-based Prudential Financial’s investment management business.