Prudential Financial has signalled its intention to lend on Japanese real estate after receiving the necessary government approvals.
Through its lending unit, Prudential Mortgage Capital, the global insurance giant aims to provide longer loans rather than the short length loans traditionally provided to investors in Japanese real estate.
Thor Orndahl, managing director at Prudential Mortgage Capital, who is responsible for the firm’s non-US mortgage platform, said: “Having a significant insurance presence in Japan means that our source of capital is both local and long-term, making our decision to create a platform dedicated to the Japanese commercial real estate debt market a logical one.”
He said the firm had received approval from the Tokyo Metropolitan Government and was aiming to provide “senior debt at moderate leverage for income-producing multifamily, office and warehouse properties in Japan.”
Tomoyuki Ishikawa, head of Prudential Mortgage Capital’s Tokyo office added: “Japan has traditionally been a short-term, floating rate debt market which, although not ideal for some investors, works when liquidity is high and loans are easily refinanced. We see significant opportunity in working with investors who recognise the value of matching their long-term real estate assets with long-term debt.”
Prudential Mortgage Capital, which had $62 billion of assets under management and in administration as of June 30, has already been an active lender in the US this year. Examples of loans provided include $108 million on assets owned by Kimco Realty Corporation and $139 million on assets owned by Federal Realty Trust, both of which are REITs.
Prudential becomes one of few active lenders to Japanese real estate. Many of the large investment banks have withdrawn from the market. Bankrupted Lehman Brothers has been selling its lending units off since it collapsed last September. Currently German lender, Deutsche Bank, is active while some other German banks, such as West Immo and Deka Bank are also open for business.
To read more about Japan’s real estate lending climate, see PERE’s interview with Doug Smith, head of commercial real estate at Deutsche Bank, in the forthcoming October issue.