PGIM Real Estate has raised over $400m (€372m) for its newly launched European core-plus strategy. The company said the strategy's capital was raised in less than six months after the launch of the open-ended fund, "European Core Plus".
According to PGIM, the strategy is targeting Europe’s most liquid markets, allocating to sectors benefiting from structural trends driven by digitalisation, changing demographics and decarbonisation.
These will include sectors such as last mile logistics; residential including rental, senior and student housing; and new generations of office. The strategy will also target "tactical opportunities in mis-priced sectors, such as hotels or self-storage".
According to Jocelyn de Verdelon, senior portfolio manager of the European Core Plus fund, "In this high inflation environment and amid market dislocations, investors increasingly want strategies that are able to distribute sustainable income and generate alpha.
"Our European Core Plus strategy aims to do just that, by focusing on high conviction investment themes across the true core-plus universe to deliver growing income combined with value creation."
PGIM has a solid track record here, having already invested more than €1.8 bn in previous vehicles, including two closed end funds; PGIM Real Estate Pan European Real Estate Fund (PEREF) I and II, both closed to new investors.
REFIRE sat down recently with Andrew Radkiewicz, PGIM's Global Head of Debt Strategy, to discuss the company's renewed drive into the German debt lending market. To boost its push, PGIM made an additional hire of a lead originator based in Frankfurt in mid-2022, whose job is to grow the European debt platform, particularly in Germany.
Radkiewicz sees Germany not just as a growth market for real estate debt but also for PGIM's direct investment in real estate, as embodied by the European Core Plus fund. With the pullback of the German banks from lending against property, he sees opportunities in senior debt lending, moving in to the piece of low-risk, traditional lending to the capital stack.
With funding gaps starting to appear everywhere, the trend is back to secured lending, he said, while banks are hampered by higher equity demands, with capital recycling for the banks taking more time. PGIM is actively on the hunt for local champions and international investors looking for repeat business.
PGIM Private Capital, the private capital arm of PGIM, had its second consecutive year of record originations of debt lending in 2022. In Europe it invested nearly $1.8bn from its London office, and more than €2.0bn collectively by the Paris, Frankfurt, Madrid and Milan offices. The Paris team alone invested over $1 billion across 10 financings, making it a record year for the team.
