PGIM Real Estate completed a record $42.7 billion in transactions globally in 2021 across debt and equity, up 43% from the prior year — including $4.7 billion in debt and equity transactions in Europe, increasing more than 40% from 2020. PGIM Real Estate is the $209.3 billion real estate business of PGIM.
In Europe, transaction volume in equity increased by 38% to $3.3 billion in 2021 and in debt by 55% to $1.4 billion, across a total of 76 transactions. Across both debt and equity, in Asia-Pacific, PGIM Real Estate completed $3.0 billion in transactions and in the US completed $35.0 billion. In Latin America, it completed over $200 million in equity transactions.
Raimondo Amabile, global chief investment officer and head of Europe and Latin America at PGIM Real Estate, commented: “The sustained growth of PGIM Real Estate in Europe continues to be centred on high-conviction investment themes driven by four pillars of growth: digital transformation, generational change in living needs, the ageing population structure and sustainability. Using these pillars, we identify sectors, markets and opportunities with high growth potential across all asset classes and investment strategies.”
Digital transformation driving logistics activity
Underpinning the increasing importance of the digital transformation, which is impacting the real estate industry through rising demand for e-commerce, PGIM Real Estate has entered strategic joint ventures with local logistics developers with a total equity commitment of roughly $300 million and completed roughly $400 million of investments across seven equity transactions in Europe. These investments include several last-mile logistics developments in strategic locations across major markets including UK, Germany, France, Spain and Netherlands.
Across the European debt platform, PGIM Real Estate completed roughly $900 million financing deals in logistics in Italy, UK, Netherlands and France. Most recently, the European debt team committed to a mezzanine loan to support the funding of close to a dozen logistics projects totaling over $550 million in northern Italy.
Generational change in living needs
The transformation of living needs sees strong growth potential, as demand remains for modern, high-quality affordable living spaces to suit the changing living habits of the next generation. In the UK, the Build to Rent housing market continues to grow — PGIM Real Estate recently demonstrated its commitment to bringing high-quality affordable accommodation to the market by entering a multimillion-pound joint venture with Osborne Developments, targeting Build to Rent multifamily opportunities in South, Southeast and Southwest London.
Across European debt, the team completed around $100 million of financing deals in the living sector. Most recently the team completed a preferred equity loan for a highly regarded specialist developer and operator, to finance over $300 million of Purpose Built Student Accommodation (PBSA) developments located in the UK.
An ageing population seeks more senior living
The ageing population demographics throughout Europe are driving a large, anticipated wave of demand for high-quality senior living facilities. In 2021, PGIM Real Estate invested just over $400 million in the sector across both debt and equity. Across equity, the firm continues to invest in this sector of the market, having entered a joint venture with Signature Senior Life to develop and operate a portfolio of prime senior housing in and around Greater London.
Sustainability continues to play an important role in driving the growth of investments in the region, with the firm recently bolstering its commitment to ESG (environment, social and governance) investing by appointing Julie Townsend as ESG lead for Europe and Asia-Pacific. In 2021, PGIM Real Estate committed to reduce the operational carbon emissions across its global portfolio of managed properties to net zero by 2050.
"Across all countries, asset classes and strategies, both ESG-characteristics and ESG development potential are key components of our investment process," Amabile added. "Most immediately, we are focused on the office sector where the difference between the green premium and the brown discount is set to be extremely wide. In 2021, we invested more than $500 million in offices across Europe, and made huge progress in developing our existing properties towards improving their ESG credentials."