March 21, 2024

PGIM Real Estate expands agriculture financing platform to Australia

PGIM Real Estate has taken its agriculture financing platform beyond North America for the first time, entering the Australian market with long-term, fixed-rate financing solutions spanning 10 to 15 years, The Edge reported.

The move comes as PGIM Real Estate announced an exclusive partnership with Foundation Agri Finance, a specialist agricultural debt provider, on March 18. The platform closed its inaugural transaction at the close of 2023, extending a loan to a diversified horticultural business.

Australia, known as a robust agriculture-producing nation, presents significant opportunities for expansion, according to PGIM Real Estate. The country's Department of Agriculture, Fisheries, and Forestry forecasts a 6% increase in the value of agricultural production to AUD 85 billion (US$74.71 billion) by 2025.

In a market dominated by short-term, floating-rate loans from Australian banks, PGIM Real Estate sees an opening to provide an alternative with its long-term, fixed-rate financing offerings.

Rachelle Schlesinger, head of agriculture finance at PGIM Real Estate, expressed ambitious plans to grow the Australian loan book to over AUD 1 billion (US$660 million) in the next five years. She highlighted the intention to offer competitive financing solutions to leading farmers and agribusinesses across the country, leveraging the existing operational infrastructure established through PGIM's commercial real estate business in Australia.

PGIM Real Estate, a division of PGIM, manages US$310 billion in private alternative strategies encompassing real estate, agriculture, private credit, and private equity. The company's agricultural investment platform, which has primarily focused on the US market for 120 years, has seen substantial growth, expanding from US$4 billion to US$10.8 billion in assets under management over the past decade.

Foundation Agri Finance, founded in 2023, aims to revolutionise agricultural financing by offering tailored, long-term solutions. Led by industry veterans David Haydon and Natalie Meyenn, the firm seeks to address the evolving needs of farmers and agribusinesses, challenging the trend of increasingly short-term lending practices in the Australian agriculture sector.

-      The Edge