EUROPE - APG Asset Management, the wholly-owned investment manager of the ABP pension fund, is one of a number of investors to have invested in a European real estate debt strategy run by Pramerica Real Estate Investors.
Pramerica, the real estate investment and advisory subsidiary of Prudential Financial in the US, began establishing a European debt platform in 2009 and has since raised £150m (€183m) from institutional investors, including APG.
The capital will be invested in directly originated real estate mezzanine finance and debt-like preferred equity opportunities, seeking to take advantage of financing gaps not currently being filled by banks and other senior lenders.
"The dramatic shortage of debt capital in the commercial real estate markets has created significant borrower demand in the short-term, which we expect will increase and endure as the markets evolve in the face of looming capital shortfall," said Jack Taylor, managing director and head of Pramerica's global high yield debt initiative.
"Our global platform can help fill the void, with an initial focus on Europe and the US," said Taylor, who joined Pramerica last year from Five Mile Capital Partners as part of its move into the debt real estate space.
Robert-Jan Foortse told IPE Real Estate that APG is interested in real estate debt given that the expected risk-return profile in the space "look very favourable at the moment".
He said APG was mainly interested in relatively low risk debt funds that invest in newly sourced mezzanine debt, as opposed to higher risk distressed debt products.
Pramerica is targeting deals where the underlying assets are income producing commercial properties and will not invest in distressed or securitised debt.
The fund manager will look to provide mezzanine and preferred equity financing to mid-size, high quality private and public property companies and funds.
It will target borrowers looking to finance real estate acquisitions of between £10m and £300m.
The fund manager will also work with banks and other institutions on refinancing existing borrowing, as well as the restructuring of performing loans where a further injection of capital is required.
The portfolio management team, which will focus primarily on opportunities in the UK and Germany, is being led by managing directors Andrew Radkiewicz and Andrew Macland, who both joined Pramerica in 2009 when their Paramount Private Equity limited liability partnership was absorbed by the company.
Radkiewicz and Macland, who both used to run the real estate finance division at Rothschild, began building Pramerica's European debt initiative last year, with Taylor leading the team.
"To have £150m of institutional capital to invest on a discretionary basis in the current market is a strong endorsement of both the strength of the team at Pramerica and the interest in the benefits of the many investment opportunities that are available," said Radkiewicz.
"We are delighted to be working with investors such as APG at this stage of our evolution as a pioneering platform for this highly specialised asset class."