Friends Life has awarded Pramerica Investment Management a £500 million (€587.9 million) mandate to invest in commercial real estate loans.
Insurance and pensions provider Friends Life says an allocation to this asset class will increase returns and sustainable cash generation by delivering more value in the annuity book.
Currently, its annuity funds do not have a material exposure to commercial property rental flows.
Adding commercial real estate loans is therefore a means of diversifying the risk exposure away from corporate bonds for particular credit ratings.
Pramerica Investment Management is an asset management business of Prudential Financial, which is headquartered in the US.
It will invest in 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.
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