The seventh fund in PGIM Real Estate’s European flagship high yield debt fund series, PGIM Real Estate Capital VII (PRECap VII), has closed on €1.82 billion (£1.53bn/US$2.07bn), the largest European real estate debt fund closed in 20211. PGIM Real Estate is the real estate investment and financing business of PGIM, the US$1.5 trillion global investment management business of Prudential Financial, Inc. (NYSE: PRU).
PGIM Real Estate’s European debt platform provides alternative financing, including senior debt, whole loans and mezzanine with co-invest equity. The platform has completed over €10 billion across over 180 senior and high yield debt investments in UK and Continental Europe, through its PRECap series of funds, as well as its senior debt strategy, which also recently closed a global mandate of €1 billion from a European investor.
PRECap VII has a disciplined focus on high yield real estate debt opportunities in core liquid asset classes, in the largest European markets including the UK, Germany, France, Ireland, Netherlands, Spain and Italy. With a research driven approach, the strategy takes advantage of increasing opportunities driven by continuing regulatory change in the banking sector combined with the growing demand from borrowers for alternative sources of funding across the capital stack from large scale institutional partners.
Andrew Radkiewicz, Global Head of Private Debt Strategy and Investor Solutions, comments “We are delighted by the commitment we have seen from investors for PRECap VII. As a secured income driven strategy, the fund attracted global demand from pension, insurance, sovereign wealth and private clients. The strategy presents an attractive proposition for investors seeking sustainable risk adjusted returns within their real estate, private credit and alternative fixed-income allocations.”
Andrew Macland, Head of European Debt, comments “We are continuing to see compelling investment opportunities in logistics and living sectors as well as tactical opportunities in low vacancy office markets, fulfilment retail and leisure. We are focused on ‘create core’ real estate assets in liquid markets, founded on structural trends in e-commerce and supply chain, living and offices in smart cities across UK and Europe. We offer bespoke and creative capital solutions for our borrowers across a wide array of asset classes and jurisdictions and have already committed to 11 investments in PRECap VII, providing a range of whole loans, mezzanine and preferred equity investments.”
PRECap VII commitments include:
- Logistics, Italy - a mezzanine loan to support the funding of close to a dozen logistics projects totaling over €500 million across Italy. This investment allows exposure in the ever-strengthening and competitive European logistics sector.
- Living, UK – a preferred equity loan for a highly-regarded specialist developer and operator, to finance £240 million of Purpose Built Student Accommodation (PBSA) developments located in the UK. PBSA continues to become an increasingly core sector of the institutional investment market.
- Cold Storage, UK – a mezzanine loan to fund the refinance and growth of an over £700 million cold storage portfolio in the UK. Cold storage is a growing alternative asset class, with structural demand continuing to outstrip supply following the impact of Brexit and COVID-19.
- Office, Ireland - a mezzanine loan and preferred equity commitment, to support the redevelopment of a €125 million office building in Dublin, Ireland. This is an undersupplied market with strong occupier demand from the clustering effect of the technology and media sector.
1Source: Prequin, as of 11 January 2022
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