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Principal closes $225m debt vehicle

The real estate arm of the financial giant Principal is launching a $225m fund to invest in real estate debt.

Des Moines, Iowa-based Principal Real Estate Investors announced today that it has recently closed a new fund, Principal Mortgage Value Investors, to focus on investments in the value-added commercial real estate debt sector, including bridge loans and subordinated debt.

The closed-end fund has raised $225 million (€166 million) in commitments from institutional investors, with 10 percent of the fund coming from the firm’s insurance affiliate, Principal Life Insurance Company.

“With this new source of capital, we are able to leverage the experienced staff, market knowledge and underwriting expertise of both Principal Commercial Acceptance and Principal Real Estate Investors to more aggressively seek out good quality bridge loans and subordinate debt investments,” Margie Custis, managing director of Principal Real Estate and the manager of the new fund, said in a statement.

According to the release, the fund plans to use capital markets financing to juice the vehicle’s returns and plans to issue a commercial real estate collateralized debt obligation early next year.

Principal Real Estate Investors currently manages approximately $40 billion in assets.