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Prudential Real Estate Investors raises $805m for US debt fund

16 Oct 2012

Prudential Real Estate Investors has secured $805m for its Prudential US Real Estate Debt Fund.

PREI is the real estate investment and advisory business of New York-listed financial services group Prudential Financial.

The fund closing follows the $800m raised in 2011 for its UK offering, Pramerica Real Estate Capital 1 Fund.

The investors in the fund consist of leading investment institutions including pension funds, sovereign wealth funds and other global investors from the US, Asia and the Middle East. These investors also have extensive co-investment capital to invest alongside the fund, the firm said.

“In the US, we expect significant demand for creative debt financing as approximately $1.8tn in mortgage loans come due over the next several years, leading property owners to search for reliable and trusted sources of capital,” said Jack Taylor, managing director, head of PREI’s global real estate finance group and portfolio manager for the US platform. “We look forward to continuing to build long-term relationships by providing capital to borrowers, co-lenders and other market participants, while meeting the strong and growing global appetite from institutions for access to sound debt investments with attractive risk-adjusted returns.”

The senior management team of the US debt platform, managed from the firm’s New York office, includes Steve Alpart and Steve Plust, both managing directors and long-time colleagues of Taylor.

“We will target debt investments secured by institutional quality income producing properties throughout the US, owned by experienced real estate investors,” Plust said. “The fund will provide fresh capital for new originations as well as make secondary market purchases of performing, sub-performing and non-performing loans.”

PREI will offer mezzanine finance, debt-like preferred equity and first mortgages in areas not being filled by banks and other senior commercial mortgage lenders.

Added Alpart, “Typically our investments will range in size from $10m to $65m but can be significantly larger. Having had experience in these markets for many years in many cycles, we can offer timely, flexible and creative financing solutions for borrowers as they refinance, recapitalize and acquire properties. Because we are not a ‘loan-to-own’ shop, we work particularly well with borrowers and senior lenders in constructing capital solutions.”

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