EUROPE - Pramerica Real Estate Investors has completed its capital raising programme for its debut European real estate debt fund, securing £492m (€559m) in commitments from institutional investors.
Institutional investors, including pension funds and sovereign wealth funds, from North America, continental Europe, the UK and the Middle East provided the capital for the closed-end Pramerica Real Estate Capital 1 fund.
The conclusion of Pramerica's fundraising effort comes almost 12 months after it announced that it had raised an initial £150m pool of capital from institutional investors, including Dutch pension asset manager Algemene Pensioen Groep (APG).
It is the first fund focusing on European real estate debt to be launched by Pramerica, which is the European arm of the US-based Prudential Financial.
The investment manager entered into the space in 2009 when it hired real estate debt specialists Andrew Radkiewicz and Andrew Macland, who are best known for running the real estate finance division at Rothschild.
Radkiewicz said: "The extremely high calibre of global investors invested in the fund fully endorses our belief in the opportunities that exist as a result of the ongoing lending gap in commercial property.
"We are encouraged that clients view our debt strategy as an alternative to direct real estate equity investment, and we see many opportunities that offer the potential for attractive risk-adjusted returns, while providing a viable and deliverable alternative source of capital to the property markets."
Pramerica's portfolio managers will seek opportunities to provide funding for acquisitions and refinancing, targeting the gap between traditional senior debt and equity and looking to provide mezzanine or preferred equity financing of between £5m and £75m, secured against real estate assets primarily in the UK and Germany.
Pramerica will target experienced real estate investors focusing on medium to large public and private property companies, private equity funds and real estate investment managers.
Macland, co-portfolio manager for the fund alongside Radkiewicz, said: "We expect to see an increasingly large number of potential debt transactions in the coming months, and the additional funds that we have now secured will allow us to make the most of these opportunities.
"The current lending market remains extremely illiquid, and there are clear opportunities for us to work with companies that need financing or to bridge shortfalls in senior debt for property deals."
Macland said the "discretionary nature" of the fund would enable the team to move quickly to provide mezzanine lending for deals and give investors the potential to earn attractive returns.
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