PGIM RE sells California office for $201m

DivcoWest bought the 547,000 square foot building with capital from its latest office fund.

PGIM Real Estate has sold a Glendale, California office it acquired in 2006, the firm said Wednesday.

The Madison, New Jersey-based investment manager bought Glendale Plaza in August 2006 for $214 million and sold the building to DivcoWest, a San Francisco-based private equity real estate firm, for $179 million, according to data provider Real Capital Analytics.

The 547,000 square foot building’s tenants include entertainment, insurance, legal and financial services companies, according to PGIM. Located at 655 North Central Avenue, the Class A building is 95 percent leased.

“The sale of Glendale Plaza is consistent with our strategy to reduce exposure to non-strategic office assets in our core portfolio, enabling us to deploy capital toward future investment opportunities that will generate long-term, stable income to create further value for our investors,” Kevin Smith, PGIM Real Estate’s head of Americas, said in Wednesday’s statement.

A PGIM Real Estate spokesman declined to comment on the terms of the deal, but PERE understands that the firm originally bought the building through a commingled fund. PGIM Real Estate had $66.9 billion in assets under management as of September 30, according to its website.

Capital for Divco’s investment came from its latest office fund, DivcoWest Fund V, sources with knowledge of the deal said. The firm launched the fund in April and held a first close in May on $1.1 billion, PERE previously reported.

One investor in the value-added vehicle was the Texas Municipal Retirement System, which allocated $75 million, according to PERE data. Divco plans to invest in office and research and development properties across the US with a focus on the western US, according to TMRS documents.

Divco, which manages about $5 billion of assets, also recently purchased an interest in The Telephone Building, a six-floor Santa Monica, California office building, according to Wednesday’s statement. The firm did not disclose its new stake in the Class A office property, located at 1314 7th Street.