Dive Brief:

• Two major players in asset management entered into a joint venture partnership last week to deploy $500 million to acquire senior loans or other structured positions backed by multifamily assets.
• Newark, New Jersey-based PGIM Real Estate, the asset management arm of Prudential Financial, and Cleveland-based real estate investment platform Citymark Capital expect to acquire loans backed by properties that have life cycles ranging from new delivery to stabilization. The venture will target both performing and non-performing loans.
• More than $650 billion in multifamily debt is scheduled to mature between 2024 and 2026, according to the news release. PGIM and Citymark see an opportunity to provide capital solutions for debt that is currently held by banks, which face difficulty refinancing loans under increased regulatory pressure.

Dive Insight:

PGIM Real Estate, which has been investing in the multifamily sector since the 1970s, manages approximately 600,000 units in the U.S. as of June 30. Citymark has a national network of experienced operating partners, brokers, banks and financial intermediaries.

“Over the next 18 months, we expect to see a large volume of multifamily loans coming to the market,” Soultana Reigle, head of U.S. Equity and senior portfolio manager for PGIM Real Estate’s Value-Add Strategies, said in the news release.

Citymark doesn’t expect large-scale discounts of loan sales, CEO Daniel Walsh told Bloomberg. 

“It’s really more of a little bit of capital that’s needed from all parties just to get through to a better interest rate environment, say the next 18 to 24 months,” he said.

PGIM and Citymark aren’t the only firms looking to inject capital into a market in need of liquidity. In September, Atlanta-based Cortland, the eighth-largest apartment owner in the country with 80,000-plus homes, announced a programmatic joint venture with private investment firm Declaration Partners Real Estate to invest preferred equity capital in multifamily real estate assets. 

The venture with DPRE, which is backed by David M. Rubenstein, co-founder and co-chairman of Washington, D.C.-based financial services firm The Carlyle Group, has initial capital of $100 million and will seek to provide fixed-income principal investments of between $5 million and $35 million that are subordinate to debt from senior lenders. Over the past five years, the two firms have invested in several multifamily assets.

Click here to sign up to receive multifamily and apartment news like this article in your inbox every weekday.