Investors - APRIL 2, 2014

Pramerica launches fifth debt fund with APG

by Andrea Waitrovich

Pramerica Real Estate Investors and Algemene Pensioen Groep have launched Pramerica Real Estate Capital V, a debt vehicle to invest in the Netherlands.

Pramerica raised €265 million ($365 million) of discretionary capital of which the majority is provided by APG, a €345 billion ($475 million) pension fund manager in the Netherlands. APG has been an investor in all of the firm’s funds in the series.

The strategy for PRECap V is to build up a diverse junior debt and preferred capital portfolio, secured against commercial real estate assets located in the Netherlands, with a partial allocation to Belgium.

“The Netherlands is at an attractive point in the cycle, earlier in the recovery phase than the United Kingdom, and there is less competition in the lending market compared to other countries, where increasing numbers of lenders are active,” says Andrew Radkiewicz, managing director and co-head of Europe at Pramerica, in a statement. “We believe there is an exciting opportunity in the Netherlands market, with a large number of loans and CMBS expiring in the short to medium term, and a significant shortfall in existing debt availability.”

The latest fundraising follows 30 debt investments from the Pramerica Real Estate Capital platform, with the value of capital invested exceeding €1.2 billion ($1.7 million) in loans secured on €4.6 billion ($6.3 million) of European real estate.

Pramerica Real Estate Capital IV closed in November 2013 with €820 million ($1.1 billion) in equity. The value-added fund targets offices, retail, industrial and residential in the United Kingdom and German seeking €10 million to €100 million ($13.8 million to $138 million) deals. APG was among the investors in PRECap IV.

Pramerica Real Estate Capital III announced its close in April 2013 as well, raising €520 million ($716 million). APG was also an investor in PRECap III. The fund’s strategy is focused on directly originated junior real estate debt, at lower loan-to-value levels ranging from 45–50 percent to 75 percent.

The second PRECap vehicle was a joint venture between APG and Pramerica which made a €40 million ($55 million) junior loan to refinance the La Roca outlet village in Spain.

Pramerica Real Estate Capital I raised £492 million ($818 million) in equity. The fund focused on funding for acquisitions and refinancing, targeting the gap between traditional senior debt and equity and looking to provide mezzanine or preferred equity financing of £5 million to £75 million ($8.3 million to $125 million), secured against quality real estate assets, primarily in the United Kingdom and Germany.

PRECap I was one of top five the largest real estate debt closed-end funds raised during 2011 and 2012. During 2012 many real estate debt vehicles were launched, representing a trend for debt within the market. Debt funds have grown from a niche segment into a central part of the industry.

According to data from the IREI FundTracker Database, 31 debt funds launched during 2013, and 18 debt funds that had launched in the previous five years closed in 2013, raising approximately $10.86 billion.

Pramerica Real Estate Investors is the European arm of the real estate investment and advisory business of Prudential Financial, which is headquartered in the United States and has a global real estate debt platform of more than $5 billion.

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