New UK lender Pricoa Mortgage Capital could exceed its £325m lending target for Europe this year through direct loans and bank syndications.
Drew Abernethy, the US insurer’s head of European origination, said $500m “is a target, not a limit; [ for the right deals] we have a lot of flexibility to go beyond that.
“In France and Germany, we are likely to have opportunities to work with local banks that have relationships with good clients, by taking pieces of larger deals.” Abernethy heads Pricoa’s two – man London team, working with European debt originations associate David Gingell.
They recently closed the group’s first European loan: a £70m, 11-year, fixed-rate, senior loan for O&H Group, secured against four London offices and a supermarket in Bath.
“This was a perfect first deal,” said Abernethy. “We do a lot of US business with institutions and families, and this is a family company with a lot of core, stable real estate that wanted long-term debt, which it doesn’t have to worry about refinancing every three to five years. Their approach is aligned with ours.”
The deal’s all-in finance costs were “typical for a core London portfolio with moderate leverage,” he added. Pricoa, Prudential Financial’s commercial mortgage arm, has a dedicated real estate division of 400 people in the US. “This is a natural growth of that, as well as diversification from our US portfolio,” Abernethy said.
The company aims to build its exposure rather than target specific returns. “For us, it’s an alternative to US public bond markets,” he said. It will lend from £30m up to £100m, over five to 25 years, at 60-65% loan-to-value levels, and will hold every loan to maturity.