PGIM Real Estate and Citymark Capital announce $500M joint venture to acquire multifamily notes

NEW YORK, Oct. 22, 2024 – PGIM Real Estate and Citymark Capital have entered into a joint venture partnership to deploy $500 million in dedicated capital for the acquisition of senior loans or other structured positions backed by multifamily assets.

The program will look to take advantage of a refinancing window that will see over $650 billion in multifamily debt scheduled to mature between 2024 and 2026[1]. The focus will be on providing capital solutions for debt that is currently held by banks, which are facing increased regulatory pressure amid a market environment where higher interest rates and tightening credit standards are also putting material pressure on real estate borrowers’ ability to refinance existing loans.

“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.”

Daniel Walsh, CEO and Founder of Citymark Capital added, “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.”

Citymark Capital is an established investment firm, whose principals have multi-cycle experience and relationships in the regional banking sector, with a deep understanding of the changing market and ability to develop bespoke credit structures. PGIM Real Estate manages approximately 650,000 units globally in the living sectors and 600,000 in the U.S. (as of 6/30/24) and has been investing in the multifamily sector since the 1970s.

The partnership will acquire loans that are secured by multifamily properties that have lifecycles ranging from new delivery to full stabilization. The program intends to focus on acquiring both performing and non-performing loans, where the collateral is supported by recovering sector fundamentals. Multifamily rent growth is expected to increase throughout 2025, as supply drops by more than 50 percent over the next two years, and as demand for rental housing remains strong driven in part by the high cost of homeownership for many Americans.

ABOUT PGIM REAL ESTATE

With $206 billion in gross assets under management and administration ($132 billion net),¹ PGIM Real Estate provides investors and borrowers access to a range of real estate equity, real estate debt, agriculture, and impact solutions across the risk-return spectrum.

PGIM Real Estate is a business of PGIM, the global asset management business of Prudential Financial, Inc. (NYSE: PRU). PGIM Real Estate’s risk management approach, execution capabilities, and industry insights are backed by a 50-year legacy of investing in commercial real estate, a 140-year history of real estate financing,² and the local experience of professionals in 35 cities globally. Through its investment, financing, asset management, and talent management approach, PGIM Real Estate engages in practices that strive to ignite positive environmental and social impact, while pursuing activities that seek to strengthen communities around the world. For more information visit pgimrealestate.com.

¹ As of June 30, 2024; net AUM is $132 billion and AUA is $46.9 billion.

² Includes legacy lending through PGIM’s parent company, PFI.

ABOUT CITYMARK CAPITAL

Citymark Capital is a leading US real estate private equity investment platform that seeks to create attractive and durable risk-adjusted returns throughout economic cycles by investing in equity and debt positions. The firm has a combined 200 years of commercial real estate and banking industry experience across its leadership team, and a national network of experienced operating partners, brokers, banks, and financial intermediaries.

Citymark’s disciplined investment approach is guided by an unwavering commitment to its investors and a focus on fundamental value. The firm serves a highly regarded investor base comprised of public and private pension plans, insurance companies, foundations, financial institutions, family offices, and high net worth individuals. For more information visit www.citymarkcapital.com.

© 2024 PGIM Real Estate is the real estate investment management business of PGIM, the principal asset management business of Prudential Financial, Inc. (“PFI”), a company incorporated and with its principal place of business in the United States. PGIM is a trading name of PGIM, Inc. and its global subsidiaries. PGIM, Inc. is an investment adviser registered with the U.S. Securities and Exchange Commission (the “SEC”). Registration with the SEC does not imply a certain level of skill or training. PFI of the United States is not affiliated in any manner with Prudential plc, incorporated in the United Kingdom or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. Prudential, PGIM, their respective logos and the Rock symbol are service marks of PFI and its related entities, registered in many jurisdictions worldwide. In the United Kingdom, information is issued by PGIM Private Alternatives (UK) Limited with registered office: Grand Buildings, 1-3 Strand, Trafalgar Square, London, WC2N 5HR. PGIM Private Alternatives (UK) Limited is authorized and regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom (Firm Reference Number 181389). These materials are issued by PGIM Private Alternatives (UK) Limited to persons who are professional clients as defined under the rules of the FCA. In the European Economic Area (“EEA”), information is issued by PGIM Luxembourg S.A. with registered office: 2, boulevard de la Foire, L1528 Luxembourg. PGIM Luxembourg S.A. is authorized and regulated by the Commission de Surveillance du Sector Financier in Luxembourg (registration number A00001218) and operating on the basis of a European passport. In certain EEA countries, this information, where permitted, may be presented by either PGIM Private Alternatives (UK) Limited or PGIM Limited in reliance of provisions, exemptions, or licenses available to either PGIM Private Alternatives (UK) Limited or PGIM Limited under temporary permission arrangements following the exit of the United Kingdom from the European Union. PGIM Limited and PGIM Private Alternatives (UK) Limited  have their registered offices at: Grand Buildings, 1-3 Strand, Trafalgar Square, London WC2N 5HR. PGIM Limited is authorized and regulated by the Financial Conduct Authority (“FCA”) of the United Kingdom (Firm Reference Number: 193418). These materials are issued by PGIM Luxembourg S.A., PGIM Limited or PGIM Private Alternatives (UK) Limited to persons who are professional clients as defined in the relevant local implementation of Directive 2014/65/EU (MiFID II) and/or to persons who are professional clients as defined under the rules of the FCA. PGIM operates in various jurisdictions worldwide and distributes materials and/or products to qualified professional investors through its registered affiliates including, but not limited to: PGIM Real Estate (Japan) Ltd. in Japan; PGIM (Hong Kong) Limited in Hong Kong; PGIM (Singapore) Pte. Ltd. in Singapore; PGIM (Australia) Pty Ltd in Australia; PGIM Luxembourg S.A.; and PGIM Real Estate Germany AG in Germany. For more information, please visit pgimrealestate.com.

For Professional and Institutional Investors only. All investments involve risk, including the possible loss of capital.

PGIM is the primary asset management business of Prudential Financial, Inc. (PFI). PGIM Real Estate is PGIM’s real estate investment advisory business and operates through PGIM, Inc., a registered investment advisor.

REF ID: 015532

Citymark Capital Disclaimer

The information contained in this communication should not be regarded as an offer to sell or a solicitation of an offer to buy any security in any jurisdiction where such an offer or solicitation would be in violation of any local laws. The general information discussed is not a guarantee, prediction, or projection of real estate investments. There are risks associated with investing in real estate assets, such as inflation, interest rates, real estate tax rates, changes in the general economic climate, local conditions such as population trends and neighborhood values, and supply and demand for similar property types. This communication may contain forward-looking statements identified by the use of words such as “outlook,” “indicator,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive.

[1] Source: MBA, Trepp, RCA, Newmark Research as of 7/22/24