PGIM Real Estate, the real estate investment business of PGIM, the global investment management business of Prudential Financial, has been awarded a £265 million ($335 million; €314 million) mandate to invest in UK property by the Co-operative Group Pension Scheme (PACE).
PGIM Real Estate’s mandate will see the firm target long-term returns through investments in UK commercial and residential properties, including leisure, social housing, care homes and car parks.
PACE is one of the largest pension schemes in the UK with approximately 90,000 defined benefit members and £11 billion in assets under management, as of September 30, 2016.
“We are pleased to partner with Pace to help secure financial security for its members, and appreciate its confidence in our ability to manage liability matched strategies built over several years of working with UK pension schemes,” said Andrew Macland, head of UK for PGIM Real Estate.
PGIM Real Estate’s UK pension fund client base has grown steadily since 2010. As of September 30, 2016, it manages £1.1 billion in UK real estate for its UK pension scheme clients, out of a total of £2.7 billion under management in the UK on behalf of its overall client base, and has commitments of approximately £800 million to deploy.
“PACE is exploring alternative opportunities to capture inflation-linked returns; PGIM Real Estate demonstrated both its credentials and experience in managing a range of property solutions to deliver this,” said Harry Baines, chair of PACE trustees Limited.
In September, PGIM Real Estate amassed €457 million in capital commitments for its debut European value-add fund. The investment vehicle, European Value Partners (EVP), will focus on office, residential, retail and industrial assets in Germany, France, Italy and Spain, and will seek to enhance the value of its investments through active tenant management, asset repositioning or specialized operational expertise. The firm did not disclose the original target size for the fund but did reveal that the capital was garnered from institutional and high net worth investors from around the world, including one western European bank.
In one of its most recent deals, in August, PGIM Real Estate acquired a 40 percent stake in a class A Midtown skyscraper in New York for $480 million. The firm bought the minority interest in Eleven Madison Avenue from real estate investment trust SL Green in a transaction which valued the 29-storey building at $2.6 billion.
In May, Eric Adler, PGIM Real Estate’s chief executive officer, announced that the firm had rebranded and was adopting a single name. The move brought to an end a decade of operating under two different brands, Pramerica Real Estate Investors and Prudential Real Estate Investors.