PGIM Real Estate completed more than €11.16bn ($12bn) in transactions worldwide on behalf of investors in 2016, including about $8bn in the U.S., the company announced today. PGIM Real Estate is the real estate investment business of PGIM, the trillion-dollar global investment management business of Prudential Financial, Inc. (NYSE: PRU).
“During a year marked by market volatility and political uncertainty, PGIM Real Estate’s transactions in 2016 reflect our ability to successfully identify cyclical momentum and growth potential in the short term, and invest into longer-term structural trends that offer attractive pricing opportunities around the world,” said Eric Adler, Chief Executive Officer of PGIM Real Estate.
“Despite continued market uncertainty, the economic backdrop for real estate investment remains largely supportive,” Adler continued. “As markets and geopolitical events evolve, we will employ our disciplined investment approach to capitalize on income-driven core opportunities in major markets alongside targeting value-add strategies, alternative real estate sectors and select emerging markets. We will also continue to selectively sell stabilized, non-strategic properties.”
The more than $12bn across 220 transactions in 2016 spanned the Americas, Europe, and Asia Pacific regions, including investments in real estate equity and debt and property dispositions. The U.S. and Europe accounted for most of the activity. Overall, highlights include:
- More than $8bn through 120 U.S. transactions
- Approximately $2.5bn through 70 Europe transactions
- More than $400m of Latin America transactions, primarily in Mexico
- Approximately $1bn of Asia Pacific transactions, primarily in Japan, China, South Korea and Malaysia
- More than $700m invested through debt strategies, primarily across the U.K., Germany and the U.S.
Regional highlights and trends
Americas
In the United States, PGIM Real Estate continued to focus primarily on high barrier, coastal markets. Nearly 75 percent of its acquisitions targeted the office and multifamily sectors, consistent with the company’s expectations that job growth and demographic trends will continue to fuel growth in apartment rentals and improve office demand.
In addition, PGIM Real Estate provided approximately $200 million in financing, including preferred equity and mezzanine debt.
In Latin America, transaction activity included retail and industrial development projects in the central area of Mexico, the Bajío region, Monterrey and the northern state of Chihuahua.
Europe
In Europe, the U.K., Germany and France accounted for the majority of transactions activity. Most of the 53 European acquisitions targeted office, multifamily and retail sectors, as PGIM Real Estate focused on value-add opportunities resulting from market dislocation, a cyclical recovery and ongoing structural trends in the region.
In addition, PGIM Real Estate provided approximately $500 million in financing across 18 transactions, primarily in Germany and the U.K., including preferred equity provided for student housing and mezzanine facilities to support office and retail assets.
Asia Pacific
In Asia Pacific, transactions focused on major cities in Japan, China, South Korea and Malaysia. The retail, multifamily and office sectors accounted for the majority of transactions as PGIM Real Estate targeted high-quality assets with the potential to capitalize on mid-term market recovery and add value through active asset management strategies.
Representative activity around the world
Acquisitions
- 40 percent interest in Eleven Madison Avenue with S.L. Green Corp.—
- a 2.3 million square foot Class-A office in New York City
- Avalon, a 1.1 million square foot mixed-use, open-air lifestyle center in Alpharetta, a suburb of Atlanta
- The Nuevo Sur Shopping Center, a 34,149 square meter open-air lifestyle retail center in Monterrey, Mexico
- The Ginza Building, Abercrombie & Fitch Company’s flagship store comprising 11 stories across 2,131 square meters in Tokyo
- Waterfront Place, two class-A office properties across a total area of 27,805 square meters in Shanghai
- Junghof Plaza in Frankfurt, an office property to be redeveloped in a joint venture with FGI
