NEWARK, N.J.--(BUSINESS WIRE)--PGIM Real Estate Finance originated $8.1 billion in commercial mortgage financing in the first half of 2018, propelled by strong production in industrial and multifamily lending. PGIM Real Estate Finance is the commercial mortgage finance business of PGIM, the $1 trillion global investment management businesses of Prudential Financial, Inc. (NYSE: PRU).
2018 first-half financing highlights include $7.49 billion in U.S. multifamily, industrial, office, retail and other sectors, and $622 million in international markets such as Australia, Japan, the U.K. and other European nations, with a large concentration in Australia and the U.K. PGIM is one of the largest real estate investment managers in the world, with more than $163 billion in combined gross assets under management and administration across its PGIM Real Estate and PGIM Real Estate Finance businesses, as of March 31, 2018.
“We experienced a very strong first half of the year and continue to leverage relationships with our strong borrower network to drive business,” said David Durning, chief executive officer of PGIM Real Estate Finance. “In the second half of the year, we plan to build on this momentum and target key sectors such as industrial and multifamily, which we believe will be the best performers at this point in an elongated real estate cycle.”
Industrial has been a key focus for PGIM Real Estate Finance, with lending growth up 33 percent in the first half of 2018 compared to the same period last year. Another driver of business has been over $425 million in core-plus financing, which targets properties that can generate value from minor upgrades.
“Industrial has been a key part of our portfolio for many years, but as consumers continue to adapt their shopping needs, we have been allocating more capital to the sector,” said Marcia Diaz, national head of originations. “On the core-plus side, we have been seeing strong interest from borrowers who need debt to complete light transitional or value-added work at their properties, and we expect this segment to grow over the coming years.”
In addition to these two segments, with nearly $2.5 billion in conventional and affordable multifamily loans on behalf of Fannie Mae, Freddie Mac and FHA, PGIM Real Estate Finance saw a 53 percent increase over the first half of 2017.
“We have been able to grow our multifamily business by providing options for borrowers in the middle market,” said Diaz. “For the rest of 2018, multifamily borrowing will continue to be strong as there is an overall housing shortage in the U.S., and millennials and baby boomers still show a propensity for rentals.”
With more than $15 billion available for financing in 2018, PGIM Real Estate Finance will look to increase its conventional and affordable agency business, continue its strong core-plus activity and put an emphasis on multifamily and industrial for the rest of 2018.
Said Durning, “At this point in the cycle, our borrowers are looking to lock in fixed-rate financing in the face of rising interest rates, and many are coming to us for refinancing, as the sales market has slowed down slightly. We are poised to continue our strategic growth moving forward, as our local origination teams and quality capital sources can take advantage of these trends.”
About PGIM Real Estate Finance
PGIM Real Estate Finance, the commercial mortgage business of PGIM, is an international full-service, commercial and multifamily mortgage finance business with $93.6 billion in assets under management and administration as of March 31, 2018. Leveraging a 140-year history of real estate finance, the company offers one of the most comprehensive lines of real estate finance products and originates loans for Fannie Mae DUS®, Freddie Mac and specialized affordable housing programs; FHA; Prudential’s general account; and other institutional investors. For more information, please visit pgimref.com.
About PGIM and Prudential Financial, Inc.
With 15 consecutive years of positive third-party institutional net flows, PGIM, the global asset management businesses of Prudential Financial, Inc. (NYSE: PRU), ranks among the top 10 largest asset managers in the world with more than $1 trillion in assets under management as of June 30, 2018. PGIM’s businesses offer a range of investment solutions for retail and institutional investors around the world across a broad range of asset classes, including fundamental equity, quantitative equity, public fixed income, private fixed income, real estate and commercial mortgages. Its businesses have offices in 16 countries across five continents.
Prudential’s additional businesses offer a variety of products and services, including life insurance, annuities and retirement-related services. For more information about PGIM, please visit pgim.com. For more information about Prudential, please visit news.prudential.com.
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