Industrial Drives PGIM Real Estate Finance Lending

Core-plus financing and multifamily lending will also be areas of focus for the division.

David Durning

NEWARK, NJ–PGIM Real Estate Finance, the commercial mortgage business of PGIM, reports that it originated $8.1 billion in commercial mortgage financing in the first half of 2018, much of it propelled by the industrial asset class with lending up 33% compared to the same period last year. PGIM Real Estate Finance expects this trajectory to continue. “In the second half of the year, we plan to build on this momentum and target key sectors such as industrial and multifamily, which we believe will be the best performers at this point in an elongated real estate cycle,” David Durning, CEO of PGIM Real Estate Finance, says in a prepared statement.

Another driver of business has been over $425 million in core-plus financing, which targets properties that can generate value from minor upgrades. In this category, says Marcia Diaz, national head of originations, there has been strong interest from borrowers who need debt to complete light transitional or value-added work at their properties. She said PGIM Real Estate Finance expects this segment to grow over the coming years.

$7.49B So Far This Year

The unit provided $7.49 billion in financing to US multifamily, industrial, office, retail and other sectors, and $622 million in international markets such as Australia, Japan, the UK and other European nations, with a large concentration in Australia and the UK.

PGIM Real Estate Finance has more than $15 billion available for financing for the rest of the year. “At this point in the cycle, our borrowers are looking to lock in fixed-rate financing in the face of rising interest rates, and many are coming to us for refinancing, as the sales market has slowed down slightly,” Durning says.

PGIM is one of the largest real estate investment managers in the world, with more than $163 billion in combined gross assets under management and administration across its PGIM Real Estate and PGIM Real Estate Finance businesses, as of March 31, 2018.

Middle Market Multifamily

PGIM Real Estate Finance also made nearly $2.5 billion in conventional and affordable multifamily loans on behalf of Fannie Mae, Freddie Mac and FHA — a 53% increase over the first half of 2017. Diaz said that the company grew its multifamily business this year with offerings for borrowers in the middle market.