LONDON-The locally based debt team of Prudential Real Estate Investors, a division of Newark, NJ-based Prudential Financial Inc., has completed an $810 million fund to provide financing for commercial property transactions. The investment in the closed-end Pramerica Real Estate Capital One fund will primarily focus on assets in the United Kingdom and Germany.
The investment has come from global institutions, including pension funds and sovereign wealth funds from North America, Europe, the UK and the Middle East. Andrew Raddkiewicz, managing director and co-manager of the fund, said that opportunities exist as a result of the ongoing lending gap. There’s a demand for alternative sources of funding amid the scarce sources of financing in the European market, he said in a statement.
In a recent company report, PREI estimated that almost $1 trillion of European commercial property loans made by banks and other financial institutions will require refinancing within two years. PREI’s report predicts that this trend could produce a funding gap of $26 billion in Europe this year, $40 billion in 2012 and $60 billion in 2013.
Andrew Macland, the other co-manager of the portfolio, said that this new fund increase will allow the firm 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.”
PREI said it 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 $8 million to $123 million, secured against quality real estate assets, primarily in the UK and Germany. The company will target real estate investors focusing on medium to large public and private property companies, private equity funds and real estate investment managers.