Principal Real Estate Investors has raised at least $257.8 million for its latest real estate debt fund, according to a document filed with the US Securities and Exchange Commission filing. The firm has not disclosed a target.
Principal Real Estate Investors is a subsidiary of Principal Global Investors, a Des Moines, Iowa-based asset management company with $294 billion under management.
Principal Real Estate Debt Fund will target investments in subordinated debt, bridge loans and higher loan-to-value senior loans, according to the July meeting minutes of the Adams County Retirement Board. The 7-year fund has a three year investment period.
“Principal Real Estate Debt Fund may be an attractive alternative to other fixed-income alternatives, such as BB corporate bonds, which is believed to have similar risk to investments targeted for this particular Fund,” according to documents available through the Arapahoe County Retirement System, which committed $12.5 million to the fund.
“Advantages to subordinate debt are the access to investments in larger higher quality properties. 8 – 10 percent coupons provide potential for attractive risk-adjusted current returns, most properties are substantially stabilized, and the structural leverage in the form of the senior mortgage provides non-recourse term financing.”
In February, Principal Real Estate Debt Fund also received a $50 million commitment from the Iowa Public Employees’ Retirement System, however, that investment was contingent on the fund’s ability to raise $250 million by June. It is unclear whether IPERS ultimately committed that amount to the fund.
A spokesperson for IPERs had not responded to a request for comment at press time. Principal Real Estate was unavailable for comment.
Principal Real Estate Investors is led by chief executive officer Patrick Halter. That segment of Principal’s business had $47 billion under management.
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