PGIM Real Estate and Citymark Capital have announced a strategic joint venture to deploy $500 million in capital. This partnership will focus on acquiring senior loans and other structured positions backed by multifamily properties. The initiative aims to address a significant refinancing opportunity with $650 billion in multifamily debt maturing between 2024 and 2026.
Targeting Refinancing Opportunities
As the real estate market navigates higher interest rates and tighter credit standards, banks are under increased regulatory scrutiny. This environment creates challenges for real estate borrowers trying to refinance their existing loans. PGIM Real Estate and Citymark Capital plan to provide solutions specifically for this segment. The partnership will focus on purchasing loans that banks currently hold, offering a vital lifeline in a changing market.
“Over the next 18 months, we expect to see a large volume of multifamily loans coming to the market,” said Soultana Reigle, head of U.S. Equity and senior portfolio manager for PGIM Real Estate’s Value-Add Strategies. “We believe that our deep experience and capabilities in the residential sector will allow us to take a partnership-like approach to identifying creative capital solutions for banks that also provide attractive opportunities for our investors.”
Leveraging Expertise and Relationships
Citymark Capital brings a strong background in banking and long-standing borrower relationships to this partnership. Daniel Walsh, CEO and founder of Citymark Capital, emphasized the benefits of this collaboration: “We are thrilled to partner with PGIM Real Estate to leverage Citymark’s strong banking background and long-standing borrower relationships to provide an opportunity for structured financing solutions across the capital stack. Our combined multifamily investment expertise and proven asset management capabilities, coupled with the scale of PGIM Real Estate’s existing residential portfolio and a proven track record of successful transactions, provide for the creation of a program to underwrite collateral on a more granular basis. This collaboration brings the best of both firms together on behalf of our clients.”
PGIM Real Estate’s substantial portfolio includes approximately 650,000 units in living sectors globally and 600,000 in the U.S. as of June 30, 2024. With decades of experience in the multifamily market, PGIM’s knowledge dates back to the 1970s, providing a robust foundation for the venture. Similarly, Citymark Capital’s principals have multi-cycle experience, especially in the regional banking sector. Their deep understanding of market dynamics enables them to develop custom credit structures tailored to current economic conditions.
Related: Turner Impact Capital Launches $2.3 Billion Multifamily Fund to Combat Affordable Housing Crisis
Focus on Diverse Loan Acquisition
The partnership will target loans secured by multifamily properties at various lifecycle stages, from newly delivered assets to fully stabilized properties. They plan to acquire both performing and non-performing loans where the underlying fundamentals indicate potential for recovery. The multifamily market outlook supports this strategy, with rent growth projected to increase through 2025. Supply is expected to decline by over 50% in the next two years, while demand for rental housing remains strong, driven by the high cost of homeownership in the U.S.
About PGIM Real Estate
PGIM Real Estate manages $206 billion in gross assets, with $132 billion net under management as of June 30, 2024. The firm offers access to various investment options, including real estate equity, debt, agriculture, and impact investments. PGIM Real Estate is part of PGIM, the global asset management division of Prudential Financial, Inc. (NYSE: PRU). With a history of over 140 years in real estate financing and a 50-year legacy in commercial real estate, PGIM’s local teams operate in 35 cities worldwide.
The firm’s investment approach emphasizes environmental and social impact while focusing on community development. PGIM’s comprehensive risk management and execution capabilities aim to maximize value for its investors. For more information, visit pgimrealestate.com.
About Citymark Capital
Citymark Capital is a U.S.-based private equity investment firm specializing in commercial real estate. It focuses on delivering durable, risk-adjusted returns by investing in both equity and debt positions across economic cycles. With a combined 200 years of industry experience, Citymark’s leadership team has built a national network of operating partners, brokers, banks, and financial intermediaries.
The firm’s disciplined approach is committed to fundamental value and long-term success for its clients. Citymark serves a wide range of investors, including public and private pension plans, insurance companies, foundations, and high-net-worth individuals. For more information, visit citymarkcapital.com.
Market Outlook
The multifamily sector is set for significant shifts as high mortgage rates and a tight credit environment influence refinancing activities. The PGIM and Citymark partnership is poised to capitalize on these dynamics, offering structured financial solutions to a market with growing needs. Their combined expertise and scale will likely make a considerable impact as they navigate this large refinancing opportunity.
This strategic venture shows how industry leaders are responding to evolving market challenges. By targeting distressed loans with tailored solutions, the partnership aims to provide relief to borrowers while securing favorable investment returns.
