The European real estate arm of Prudential Financial, Pramerica Real Estate Investors, has closed its third real estate debt fund with after securing €520 in commitments.
The capital is split into two equal tranches: the second €260 million can only be drawn on once the first €260 million has successfully been invested, the firm said in a statement.
The fund’s strategy is focused on directly-originated junior real estate debt, at lower loan-to-value levels ranging from 45-50 percent to 75 percent. Pramerica said it would look to take advantage of growing opportunities in areas of financing not currently being filled by banks and other senior lenders.
By working alongside asset managers, the fund will provide 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, the firm said.
Andrew Macland, who will be responsible for managing the fund alongside fellow managing partner Andrew Radkiewicz, believes there are “tremendous opportunities” to fill the funding gap, particularly in the UK and Germany.
Pramerica will work with various banks and institutions to “refinance existing borrowings, as well as restructured performing loans where a further injection of capital is required,” explained Macland.
Roland Mangelmans, senior portfolio manager of APG, describes the market opportunity for providing junior real estate loans as “deep and sizeable.”
Mangelmans believes 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,” added Mangelmans.