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Published in Business and Finance on Friday, May 6th 2011 at 20:01 GMT by Market Wire🞛 This publication is a summary or evaluation of another publication
PARSIPPANY, N.J.--([ BUSINESS WIRE ])--Prudential Real Estate Investors has completed a 492 million (about $800 million) fund to provide financing for commercial property transactions on behalf of institutional investors in its closed-end Pramerica Real Estate Capital 1 Fund, the company announced today. PREI® is the real estate investment and advisory business of Prudential Financial, Inc. (NYSE: PRU).
"The extremely high caliber 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"
The investment has come from leading global investment institutions including pension funds and sovereign wealth funds from North America, Europe, the U.K., and the Middle East. It is the largest discretionary, dedicated mezzanine debt fund launched to date in Europe and is managed by PREIa™s debt team in London, which operates under the Pramerica brand in the U.K. and Europe.
aThe extremely high caliber 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,a said Andrew Radkiewicz, managing director and co-portfolio manager of the fund. aWe 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.a
The fund is the first offered to institutional clients as part of PREIa™s global debt strategy platform, led by New York-based Jack Taylor, whose team expects to offer a range of debt products around the world. PREI designed its initial strategy to meet increasing global appetite for financing, beginning with the demand for alternative sources of funding amid the scarce sources of financing in the current U.K. and European market.
In its [ European Quarterly outlook (April 2011) ], PREI, citing statistics from advisory firm Navigant, estimates that up to a'670 billion ($967 billion) of European commercial property loans made by banks and other financial institutions will require refinancing within two years. PREIa™s report predicts that this trend could produce a funding gap (i.e. the difference between the current debt level and the amount banks are willing to refinance) of a'18 billion ($26 billion) in Europe this year, a'28 billion ($40 billion) in 2012 and a'42 billion ($60 billion) in 2013.
PREIa™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 5 million to 75 million, secured against quality real estate assets, primarily in the U.K. and Germany. PREI will target experienced real estate investors focusing on medium to large public and private property companies, private equity funds and real estate investment managers. The discretionary nature of the fund will enable the team to move quickly to provide mezzanine lending for deals and give investors the potential to earn attractive returns.
Andrew Macland, managing director and co-portfolio manager for the London-based team, said:aWe 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. The discretionary nature of our fund means that we are able to move quickly when we identify attractive opportunities, providing a mutually beneficial situation for our investors and the borrowers in whose deals we are ultimately involved.a
PREI is a leader in the global real estate investment management business, offering a broad range of investment vehicles that invest in private and public market opportunities in the United States, Europe, the Middle East, Asia, Australia and Latin America. Headquartered in Parsippany, N.J., PREI has other offices in Atlanta, Chicago, Miami, New York, San Francisco, Lisbon, London, Luxembourg, Madrid, Munich, Paris, Abu Dhabi, Istanbul, Mexico City, Rio de Janeiro, Sao Paulo, Beijing, Hong Kong, Singapore, and Tokyo; as well as representatives in Milan and Zurich. As of December 31, 2010, PREI managed approximately $44.6 billion in gross real estate assets ($26.5 billion net) on behalf of more than 490 clients worldwide. For more information, visit [ http://www.prei.com ]
Prudential Financial, Inc. (NYSE: PRU), a financial services leader with approximately $859 billion of assets under management as of March 31, 2011, has operations in the United States, Asia, Europe, and Latin America. Prudentiala™s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds, investment management, and real estate services. In the U.S., Prudentiala™s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit [ http://www.news.prudential.com/ ].