Friends Life, the insurance and pensions provider, today announces a new £500m investment mandate which has been awarded to the commercial mortgage business of Pramerica Investment Management Ltd., an asset management business of Prudential Financial, Inc, which is headquartered in the US.
The mandate relates to the investment in Commercial Real Estate (CRE) loans in Friends Life's annuity funds. The CRE assets will be UK-based, senior secured, fixed rate loans with maturities of between five and 15 years, with loans being originated by Pramerica's London-based mortgage business, Pricoa Mortgage Capital Company.
Friends Life believes an allocation to CRE loans will increase returns and sustainable cash generation, by delivering more value in the annuity book. Friends Life's annuity funds do not currently have a material exposure to commercial property rental flows, so adding CRE loans to these portfolios facilitates a diversified risk exposure away from corporate bonds for particular credit ratings.
Mark Versey, Chief Investment Officer at Friends Life, said:
"We are very pleased to begin this new relationship with Pramerica's mortgage business. After extended analysis of our annuity fund portfolios, we identified CRE loans as an attractive alternative source of assets to effectively meet the ongoing needs of the funds. Pramerica demonstrated their expertise in managing this asset class and we look forward to working with them going forward."
Michael Jameson, head of Pramerica's commercial mortgage institutional funds management business, said:
"There is a growing demand among commercial property owners and borrowers in Europe to seek financing from well-established, experienced global lenders. That demand, combined with the strategic opportunities available in the current economic climate, is why we entered Europe. We are proud that an established firm such as Friends Life has chosen to work with us, and we look forward to providing them with the same high quality service and flexibility our clients have come expect."
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