“Our global transactions in 2015 reflect PREI’s ability to successfully invest in real estate markets that have strong, improving supply and demand fundamentals in a highly supportive economic policy environment,” said PREI’s CEO, Eric Adler. “That same environment also gave us the opportunity to sell stabilized properties that benefited from continued yield compression.”
“Despite recent market volatility, conditions for real estate investment remain attractive for 2016, and we will seek opportunities to invest in income-driven core properties in major cities, buy into late recovery markets and capitalize on structural changes that are not reflected in current market pricing. In addition, we will continue to selectively sell stabilized assets in some of the more advanced cycle markets,” he continued.
The 257 total transactions spanned the U.S., Europe, Asia Pacific and Latin America and included investments in real estate equity and debt and property dispositions. The U.S. and Europe accounted for most of the activity. Highlights include:
- More than $9.5 billion through 153 U.S. acquisitions and dispositions.
- Approximately $2.5 billion through 79 Europe acquisitions and dispositions across 13 countries.
- More than $1 billion of transactions in Latin America, primarily in Mexico.
- More than $500 million of transactions in Asia Pacific, primarily in Malaysia, Japan and Australia.
- Approximately $465 million invested through lending strategies, primarily across the U.K. and the Netherlands.
Approximately 70 percent of PREI’s U.S. acquisitions were in the office and multifamily sectors, consistent with PREI’s expectations that demographic trends and improving job growth would fuel growth in apartment rentals and improve office demand. Retail investments comprised approximately 20 percent of the U.S. activity.
During the year, PREI focused primarily on U.S. high barrier, coastal markets. The Pacific and Southeast regions represented approximately 60 percent of the acquisitions, while investments in California represented nearly one quarter of all U.S. activity.
Most Latin America acquisitions included industrial development projects and building expansions in the central area of Mexico, the Bajio region, Monterrey and the northern state of Chihuahua.
In Europe, the U.K. and Germany accounted for the majority of activity. Approximately half of European acquisitions came from retail and office sectors, as PREI focused on value-add opportunities in capital-starved, late recovery markets in the Eurozone periphery and second-tier cities. PREI continued to be an active investor in the U.K.’s commercial and residential ground lease market, closing 27 transactions across a mix of single and portfolio-based assets, including the purchase of more than 6,200 residential units.
Representative transactions around the world include:
- Acquisition of majority stake in Bella Terra, a Class-A, 849,909 square foot outdoor retail center in Huntington Beach, Calif., in a joint venture with DJM Capital Partners.
- Acquisition of Twenty|20, a newly developed, 355-unit, high-rise luxury residential tower in Cambridge, Mass.
- Acquisition of a portfolio of 16 grocery- and home improvement-anchored retail assets, comprising more than 140,000 square meters across 57 units in western Germany, in a joint venture with QInvest.
- Financing of No. 1 Spinningfields, a 20-story, 300,000 square foot office and retail development in Manchester.
- Acquisition of 41 Rue Ybry, a Class A office asset situated over 15,000 square meters in Neuilly-sur-Seine, a Paris suburb.
- Disposition of 215 Adelaide Street, a refurbished grade-A, 25,764 square meter office tower and 3,346 square meter retail property in Brisbane, Australia.
About Prudential Real Estate Investors
Prudential Real Estate Investors is the global real estate investment business of Prudential Financial, Inc. (NYSE: PRU), and operates as Pramerica Real Estate Investors in markets outside of the Americas, Korea and Japan. Redefining the real estate investing landscape since 1970, PREI has professionals in 18 cities in the Americas, Europe and Asia Pacific with deep local knowledge and expertise, and gross assets under management of $63.7 billion ($47.1 billion net) as of December 31, 2015. PREI’s tenured team offers to its global client base a broad range of real estate investment vehicles that span the risk-return spectrum across core, core plus, value-add, debt, securities, and specialized investment strategies. For more information, visit www.prei.com.
PGIM’s businesses offer a range of investment solutions for retail and institutional investors around the world across a broad range of asset classes, including fundamental equity, quantitative equity, public fixed income, private fixed income, real estate and commercial mortgages. Its businesses have offices in 16 countries across five continents and had $963 billion in assets under management as of December 31, 2015. For more information, please visit http://www.pgim.com.
About Prudential Financial
Prudential Financial, Inc. (NYSE: PRU), a financial services leader with more than $1 trillion of assets under management as of December 31, 2015, has operations in the United States, Asia, Europe and Latin America. Prudential’s diverse and talented employees are committed to helping individual and institutional customers grow and protect their wealth through a variety of products and services, including life insurance, annuities, retirement-related services, mutual funds and investment management. In the U.S., Prudential’s iconic Rock symbol has stood for strength, stability, expertise and innovation for more than a century. For more information, please visit www.news.prudential.com.