Pramerica Real Estate Investors, the European real estate investment management business of New Jersey-based Prudential Financial, is poised to close on a new fund targeting core junior debt, Andrew Radkiewicz, managing director of Pramerica Real Estate Investors in Europe, told PropertyEU.
Pramerica Real Estate Investors, the European real estate investment management business of New Jersey-based Prudential Financial, is poised to close on a new fund targeting core junior debt, Andrew Radkiewicz, managing director of Pramerica Real Estate Investors in Europe, told PropertyEU.
‘It will be a low-risk fund focusing on the UK and Germany. We have also launched a follow-on £500 mln (EUR 614 mln) mezzanine fund, targeting low-to-mid-teen returns, which continues the successful investment theme of our first strategy,’ he added. The target size of the new debt fund will be revealed nearer to the closing, Radkiewicz said.
At a time when many funds are still struggling to attract investors, Pramerica Real Estate seems to be on an investment roll. Earlier this month, it raised $805 mln (EUR 620 mln) for its US Real Estate Debt fund, which will provide fresh capital for new originations as well as make secondary market purchases of performing, sub-performing and non-performing loans.
Last year, the real estate group raised $800mln for its UK and German mezzanine debt fund, Pramerica Real Estate Capital 1 Fund. The fund is likely to be fully invested by the year-end, Radkiewicz told PropertyEU. Around 70% is slated to be invested in the UK, with the remaining 30% in Germany. ‘In terms of the underlying real estate, we’re firmly targeting good real estate fundamentals, so we’re providing capital to fund predominantly traditional core and core plus assets, in office, retail, warehouses and multi-family sectors,’ he said.
According to Radkiewicz, the strategy behind the Pramerica Real Estate Capital debt funds is the provision of alternative capital in the gap between traditional sources of senior debt and equity. ‘With this gap widening considerably, capital like ours works well. The UK and Germany occupy more than half of the European funding market,’ he noted.
According to Jack Taylor, head of Pramerica Real Estate Investors global real estate finance group, based in New Jersey, the US real estate debt fund will target the top 25 Metropolitan Statistical Areas (MSAs) in the US, which includes cities such as New York, Washington, D.C., and L.A. but also non-coastal cities. ‘Our mandate is to invest in income-producing properties that are of institutional quality. This includes the usual ‘food groups’ of offices, retail, hospitality, logistics and multi-family but we’re very flexible and could also invest in other asset classes. Our target returns are in the low double digits,’ he told PropertyEU.
Pramerica Real Estate Investors had $50 bn of real estate assets under management as of 30 June 2012.
