PGIM Real Estate has raised $2B to build, fill and sell data centers.
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The firm, the real estate investment arm of Prudential Financial, has already committed $450M of equity from the fund, according to a press release. It expects to deploy the remaining capital within the next 18 months.
“Data centers are at the heart of the digital framework that is playing an increasingly critical role across our economy and society,” PGIM Global Head of Data Center Investments Morgan Laughlin said in a statement. “In line with the recognition of the importance of digital infrastructure in our modern lives, global investors are rapidly increasing their exposure to the sector.”
PGIM has been investing in data centers since 2013. When it launched the fund last year, PERE reported that if it reached its target size, it would be the largest closed-end fund raised by the firm.
In addition to raising capital from institutional investors, PGIM entered into a distribution partnership with an unnamed private bank to raise assets globally for the fund, according to the release. As of the end of 2024, the real estate arm of PGIM had $206B in gross assets under management.
Environmental, social and governance considerations will impact investment decisions, according to PGIM’s announcement. Data centers are notoriously power-hungry, and their need for vast amounts of energy has caused some states to expand fossil fuel investments to keep pace with development.
It has also become increasingly difficult for developers to secure the massive amounts of funding required to build data centers. Though interest in the asset class has spiked in recent years and is only expected to continue growing, issues with the power grid and other infrastructure have made it even more costly to get projects off the ground.
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