LONDON-Friends Life, a UK-based insurance and pensions provider, says a new $746 million (£500m) investment plan has been awarded to the commercial mortgage business of Pramerica Investment Management Ltd., the asset management business of Prudential Financial Inc., headquartered in the US.
The mandate relates to the investment in commercial real estate (CRE) loans in Friends Life's annuity funds. The CRE assets will be UK-based, senior secured, fixed rate loans with maturities of between five and 15 years, with loans being originated by Pramerica's London-based mortgage business, Pricoa Mortgage Capital Company.
“We are very pleased to begin this new relationship with Pramerica's mortgage business,” said Mark Versey, chief investment officer at Friends Life. “After extended analysis of our annuity fund portfolios, we identified CRE loans as an attractive alternative source of assets to effectively meet the ongoing needs of the funds. Pramerica demonstrated their expertise in managing this asset class and we look forward to working with them going forward.”
Friends Life stated its beliefthat allocation to CRE loans will increase returns and sustainable cash generation. Friends Life's annuity funds do not currently have a material exposure to commercial property rental flows, so adding CRE loans to these portfolios facilitates a diversified risk exposure away from corporate bonds for particular credit ratings.
“There is a growing demand among commercial property owners and borrowers in Europe to seek financing from well-established, experienced global lenders,” said Michael Jameson, head of Pramerica's commercial mortgage institutional funds management business. “That demand, combined with the strategic opportunities available in the current economic climate, is why we entered Europe. We are proud that an established firm such as Friends Life has chosen to work with us, and we look forward to providing them with the same high quality service and flexibility our clients have come expect.”
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more inforrmation visit Asset & Logo Licensing.