has provided AUD70m (β¬46.8m) in senior debt for a commercial redevelopment in Brisbane
The US-based fund manager is supporting an AUD110m riverfront project in the cityβs central business district.
It will be PGIM Real Estateβs single largest debt exposure in Australia.
Steve Bulloch, PGIM Real Estateβs managing director and head of Australia, told ΒιΆΉΣ³» Real Estate: βWe originally approached this deal as a potential equity partner.
βWe really like the real estate story and the consortium involved with the project.β
The project, known as Howard Smith Wharves, is being undertaken by the HSW Consortium, which is the developer and will be the operator of what it hopes will be a βworld-classβ recreation, lifestyle, events and tourism destination for Brisbane.
Bulloch said that, when PGIM Real Estate began talking to HSW Consortium, it became clear that want they really wanted was a debt funding solution.
βIt is a complex project, with lots of moving parts, and what it needed was an equity market investor to play a different role in the capital stack,β Bulloch said, adding that traditional Australian banks are funding a hotel development on the 2.7-hectare site.
Bulloch told ΒιΆΉΣ³» Real Estate that PGIM Real Estate has been investing in the Australian real estate debt market since 2012 β a year after it first began investing equity in Australiaβs property market.
Its debt exposure is primarily to residential apartment projects in Sydney, with commitments ranging upwards from AUD25m as part of a portfolio of βa few hundred millionsβ in Australia.
βIf we like the projects and the sponsors,β he said, βour approach is that we would be happy to participate in an equity capacity β but if it is more appropriate for us to play in the debt space, we will do that.β
Bulloch added: βYou need to be quite flexible in terms of giving the sponsors what they are looking for β but we are happy to take some risks and get rewarded along the way for the right deals.β
