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PREI forms $500m JV to buy NY properties

The real estate investment arm of Prudential Financial is teaming up with investment and development company L&L Holdings to target office buildings in the New York City metro area. The firms argue ‘softening’ prices are generating unique opportunities.

Prudential Real Estate Investors has launched a $500 million (€336.5 million) joint venture with investment and development company L&L Holding Company to acquire office properties in New York City.

Despite concerns the real estate market could get worse over the next 12 months, the real estate management arm of Prudential Financial is targeting the metro area, saying “softening prices” were presenting “unique opportunities.”

Yesterday, the US real estate trade body, the Real Estate Roundtable, warned that more than eight out of 10 chief executives in the industry believed the economy was worse today than one year ago.

However Leonard Kaplan, principal for PREI’s global merchant banking team said in a statement that “current markets have provided our investors with a unique opportunity to take advantage of softening prices.”

L&L owns, operates and manages more than five million square feet of property in the city, having previously partnered with The Carlyle Group, GE Asset Management, Lehman Brothers, Morgan Stanley and Principal Real Estate Investors.

Terms of the joint venture were not disclosed but the duo said that although New York City was not immune from the US economic downturn, the metro office market had remained strong, with steady vacancy rates and job gains in the government, information, education and healthcare sectors offsetting losses in the financial arena.

In June, PREI announced a joint venture with Beekman Helix to invest in middle-income residential development projects and office parks in India, as well as other sectors. The JV, known as Pramerica BHI India, has already made 11 equity investments in India totaling $220 million.

As of March 31 this year, PREI managed $32 billion in net assets on behalf of more than 400 clients and had $45 billion in assets under management, $30 billion in the US, $7.4 billion in Europe and $5.5 billion in Asia.