Thursday, 24 July 2014
Eric Adler, CEO, Pramerica
Pramerica is the real estate investment management business of Prudential in the United States. With an international team of more than 600 professionals, it strategically invests in real estate opportunities around the world, for institutional investors across the globe. Europe Real Estate caught up with Eric Adler, CEO of Pramerica, who shared Pramerica's investment strategy and focus.
We feel that Europe's existential threats have subsided, so now it's a better environment to take a bit more risk on the equity side.
Tell us a little bit about your company and background.
Pramerica is a US-based, $55 billion global fund manager. The company started from the US, which still remains our largest market. However, we have been investing globally for several decades, and we have been active in multiple strategies across Europe, Asia and Latin America for a long time.
We currently have over US $20 billion outside the US, about half of which is in Europe, and we operate from 25 offices globally. Our strategies are quite varied and range from very downside protected core strategies in major cities with maximum liquidity all the way to higher alpha, higher volatility strategies covering the opportunistic space. We do both debt and equity, both private and public real estate with a large global securities business that invests in REITs across the world.
Pramerica is a third-party manager; we have a client base of nearly 500 different large institutional investors, consisting mainly of pension funds, sovereign wealth funds and insurers. Our job is to create products that present good investment opportunities and that we can effectively execute on based on our local teams and expertise.
What is your focus in the European market?
We have historically been an equity player in Europe, but more recently we have put a lot of emphasis on the mezzanine financing business, which has become quite central to our strategy. We continue to acquire core equity investments across the major European countries, but now the balance is shifting back towards more value-added equity. We believe that the opportunities in Europe have always been there, but some existential threats to Europe were a cause of concern. We feel that these threats have subsided now so it’s a better environment to take a bit more risk on the equity side. This is indeed the view of many of our large international clients. I think Europe currently has much more interest for many non-European investors than it has for a long time; obviously local investors have been comfortable with the local markets, but today there is a lot of cross-border money coming into Europe and that fits our strategy.
What are your criteria for investing in a market?
In our long history, there are very few markets we have not looked at or invested in, but generally we are very focused on the big Western European countries. Those are our structural areas that we think we should always be in. We have had some good experiences in Central Europe, but generally we have attained a scale that requires us to remain in markets that have a minimum size. That means that outside the big Western European countries, a country that fits our strategy is Poland, but the rest of the Eastern European countries are too small for us. Turkey is also of interest to us; we have previously invested in the country and learned from some mistakes, but we believe in Turkey in the long run and we will continue to monitor the market, because it is a big country. Istanbul is a world city that is in a very interesting location geopolitically, which can create volatility, but can also create a lot of opportunity, acting as a bridge between Europe and the East.
Is Pramerica looking for partners?
We have 150 people on the ground in multiple offices here, so we don’t need local partners in a traditional sense that some US players do. If we work with partners, it’s because of the specific deal angle they can bring or of a specific operating skill that we don’t want to have to have in house. We have done a lot of very specific strategies that require heavy development expertise or expertise in a specific sector or niche, and in those cases we have had to look for the suitable partners.
By Leon Goldwater.