Twardock says he expects PMCC’s CMBS activity to increase
over time, although how much it will grow is still to be determined. “A lot will depend upon how much confidence investors
have and what lenders are delivering,” he says.
Looking at opportunities outside the key US cities—while
maintaining a busy pace of transactions within those markets—
has been a recurring theme for both PREI and PMCC. Aside
from its return to securitization, PMCC has also begun doing
more business overseas. In September 2009, even as the industry
was still recovering from the financial earthquake that took down
Lehman Brothers a year earlier, PMCC began offering commer-
“The dynamic between investors and investment managers in our business is sort of a pendulum; it swings back and forth in terms of who has the greatest leverage.”
ALLEN SMITH
CEO, Prudential Real Estate Investors
cial mortgages in Japan, where Pru already had a significant presence as an insurer. The Tokyo office closed its first yen-denomi-nated loan the following spring, a $49-million debt financing for
Mitsubishi’s Diamond Realty Management Logistics Fund.
Longtime PMCC client Gayle Starr, senior vice president of
capital markets for ProLogis since its 2011 merger with her former employer, AMB Property Corp., claims some credit for the
decision to launch the Tokyo office. “I had a lively discussion
with Dave Twardock and convinced him to actually do debt in
Japan, and we did three loans with them there,” says Starr.
That her arguments proved persuasive, Starr adds, is a testament to PMCC’s acumen in client relationships. “They listen,
number one, and they recognize opportunities,” she says. “They
wouldn’t have done it if the opportunities didn’t make sense for
them.” Prudential’s existing base of insurance companies in
Japan made the market a good fit, and a relative lack of competition may also have been a factor. “Outside the US, Canada and
Mexico, it’s effectively banks lending,” says Starr. “The UK has
some pension funds and life companies that provide financing,
but for the most part, it’s banks.”
Similarly, Starr and AMB had figured in PMCC’s first secured
financing in Mexico, a $114.5-million loan facility that closed in
September 2006. “Higher yields are achievable in Mexico
because you’re lending in dollars, which may have been what
attracted Pru to go there,” she says.
Simultaneously with PMCC launching in Japan two years
ago, PREI expanded its existing UK platform, hiring a London-based team to manage transactions for its existing commingled
funds and create new funds under the Pramerica brand. Smith
notes that PREI’s investment in talent amid the recovery has
been “disproportionately outside the US in both Europe and
This past May, PREI completed a £492-mil-
lion (approximately $805-million) fund to
provide financing for commercial property
transactions on behalf of institutional investors in its closed-end Pramerica Real Estate
Capital 1 Fund. Smith says it’s the largest real
estate mezzanine fund raised in Europe to
date. “We felt we had a team with credentials
that matched up well with the needs of the
market, and we felt there was a deal pipeline
that would support the investment hypothesis,” he says.
The fund was also the first offered to institutional clients as part of PREI’s global debt
strategy platform, led by New York City-based
Jack Taylor; the team expects to offer a range
of debt products around the globe. In Europe
alone, PREI estimates that nearly $1 trillion of
commercial property loans from banks and
other financial institutions will require refinancing within two years, with a funding gap
that could grow to $60 billion in 2013.
Mezzanine and preferred equity financing
opportunities between £ 5 million and £75 million, mostly in the UK and Germany, will be
the target of PREI’s portfolio managers in
deploying the fund. The idea, according to
PREI, is being able to move quickly in acting on opportunities,
thanks to the discretionary nature of the vehicle.
PREI has had a strong Asia-Pacific presence since 1994, and
has grown that over the past year by opening offices in Beijing,
Seoul and Sydney. The Singapore-based Pramerica Real Estate
Investors (Asia) Pte. Ltd. announced several new hires last
month, including a portfolio manager in Tokyo and asset management, research and marketing staff in Singapore, Seoul and
Hong Kong.
Earlier this month, PREI announced the closing of the $3-bil-
lion Pramerica AsiaRetail Ltd., a private open-end property fund
that invests in Asian shopping centers on behalf of institutional
clients. Denominated in Singapore dollars, the fund is PREI’s
first private open-end fund in Asia and consolidates PREI’s
closed-end Asian Retail Mall funds. PREI currently manages 11
retail assets totaling more than three million square feet across
Singapore and Malaysia.
“We’ve been a long-term investor in many different markets:
Singapore, Korea, Japan, Malaysia,” Smith says. He adds that
PREI’s Asian arm has built “a particular expertise in retail, being
