Prudential Targets Dutch Property Market - Analyst Blog

In an effort to reap benefits from the underfunding in the Dutch lending market, Prudential Real Estate Investors, the real estate investment business of Prudential Financial Inc. PRU, has launched a debt vehicle along with Algemene Pensioen Groep (APG).

The debt vehicle named as Pramerica Real Estate Capital V (Netherlands) (PRECap Netherlands) has $366.7 million of capital at its disposal, with a major share of contribution coming from APG. It will be used to lend funds in Netherlands against security from commercial real estate assets located in the region. The funds will also consider lending in the Belgium market.

The Dutch real estate market offers an attractive opportunity. After suffering from declining property values for a long time, the market is gradually catching up. Consequently, the demand for financing is also expected to rise. Prudential foresees an easier entry into this market as it offers lesser degree of competition compared to other markets.

Since the debut of its first fund in 2010, the PRECap platform has completed 30 debt investments, comprising more than €1 billion secured on European real estate valued at more than €4 billion, primarily in the U.K. and Germany.

These efforts by Prudential signal its strategy to penetrate deeper into the real estate investment and advisory business, which will lend the company diversification benefits.

Prudential is expected to release first-quarter 2014 earnings on May 7, 2014. The Zacks Consensus Estimate of $2.28 per share translates into a year-over-year decline of 0.20%.  

While Prudential carries a Zacks Rank #3 (Hold), better-ranked stocks like MGIC Investment Corp. MTG with a Zacks Rank # 1 (Strong Buy), and Kemper Corp. KMPR and FBL Financial Group Inc. FFG, both with a Zacks Rank #2 (Buy), are worth considering.