When a business demotes one of its regional heads to be a country head while simultaneously promoting a subordinate to take his place, it should expect questions.
Last month, Pramerica Real Estate Investors (PREI), the real estate investment management arm of US financial services firm Prudential Financial, announced the reorganization of its Asia leadership. As of April 1, Asia head Morgan Laughlin will become PREI’s head of Japan and will hand over leadership to Benett Theseira, its head of Southeast Asia.
“There is an organization chart and we haven’t changed the construct of that,” said Eric Adler, the firm’s chief executive officer when PERE pressed for an explanation. “There is an Asia Pacific head and all of the parts of the region report into the Asia Pacific head. That is mechanical.”
“But what I can say is there is a huge opportunity in Japan and Morgan put his hand up to be the one to drive that,” Adler said. “I couldn’t be happier that I have someone like Morgan spending 100 percent of his time in a market we want to expand on greatly.”
PREI has been a net seller in Japan of late. But, according to Adler, that position will change under Laughlin. The firm currently manages approximately $1 billion of assets in the country, down from a high of closer to $3 billion.
However, Adler has set ambitious targets that, if achieved, would radically alter its standing in the market.
By his reckoning, a meaningful number of Asian institutions are looking beyond the region for real estate investments, diminishing the domestic competition in the process. “There’s a huge opportunity in the next few years to be real net buyers,” Adler said. “Under that construct, the idea that five years from now we can have $5 billion-plus in Japan…I’m very comfortable saying that.”
Adler would not discuss fundraising, but PERE learned the firm is readying itself for the next in its series of pan-regional investment funds. It is believed to be targeting more than $2 billion for its Asia Property Fund III fund via which it would operate a core-plus to value-added-style risk and return strategy.
Marketing and oversight of that fund will, therefore, now reside with Theseira, the former Pacific Star executive who joined PREI in 2011, two years before Laughlin arrived as his boss from Grosvenor. Theseira assumes leadership of a platform with 85 staff and $6.8 billion of gross assets.
Reaction to the restructure was mixed: “I find it odd Morgan has agreed to stay on and do Japan,” said one person. Another said: “Morgan does know the market here and he knows the people.”