Pramerica Real Estate Investors (PREI) said on Friday that it has completed a £492 mln (EUR 558 mln) fund to provide financing for commercial property transactions on behalf of institutional investors in its closed-end Pramerica Real Estate Capital 1 Fund. Pramerica, the European real estate investment arm of US group Prudential Financial, said the vehicle is the largest discretionary, dedicated mezzanine debt fund launched to date in Europe.

'The extremely high calibre of global investors invested in the fund fully endorses our belief in the opportunities that exist as a result of the ongoing lending gap in commercial property,' said Andrew Radkiewicz, managing director and co-portfolio manager of the fund. 'We are encouraged that clients view our debt strategy as an alternative to direct real estate equity investment and we see many opportunities that offer the potential for attractive risk-adjusted returns, while providing a viable and deliverable alternative source of capital to the property markets.'

The investment has come from leading, global investment institutions including pension funds and sovereign wealth funds from North America, Europe, the UK and the Middle East. It .

The fund is the first offered to institutional clients as part of Pramerica's global debt strategy platform, led by Jack Taylor based in New York. Pramerica designed the strategy to meet increasing global appetite for financing, which is put at $109 bn in Europe in the next three years, according to the latest research from DTZ.

Pramerica's portfolio managers will seek opportunities to provide 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 mln to £75 mln, secured against quality real estate assets, primarily in the UK and Germany.

Pramerica will target experienced real estate investors focusing on medium to large public and private property companies, private equity funds and real estate investment managers. Andrew Macland, managing director and co-portfolio manager at Pramerica, added: 'We expect to see an increasingly large number of potential debt transactions in the coming months, and the additional funds that we have now secured will allow us to make the most of these opportunities.'