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PREI® Launches Fifth U.S. Property Fund With Acquisitions In San Diego, San Francisco, And New York City

Prudential Real Estate Investors, continuing its successful series of closed-end real estate funds managed on behalf of German investors, has acquired several properties following the recent closing of its $430 million U.S. Property Fund V. PREI® is the real estate investment management and advisory business of Prudential Financial, Inc. (NYSE:PRU).

Most recently, PREI has reached an agreement to acquire the Rio San Diego from Jones Lang LaSalle. The six-story, 190,000 square foot office building in Mission Valley suburb of San Diego is 92 percent leased. It’s the second time a USPF fund has owned the property, and in this most recent transaction, PREI has reached an agreement to acquire it for $56 million—20 percent less than the price the company sold it for about seven years ago.

Additionally, as part of its core/core plus strategy, USPF V has also invested in two office buildings in prime locations. The first is 575 Lexington Ave. in New York City, and the second is 650 California St. in San Francisco. The fund, in a joint venture with Alliance Residential acquired Broadstone North Central, a 225-unit residential property in Phoenix. The fund has also secured apartment developments in Houston and Dallas.

“We are very pleased to have reached this level of equity commitments for continued U.S. investments,” says David Pahl, senior portfolio manager for PREI. “We’re grateful for the tremendous support and confidence our German investors place with us and we are very optimistic about the investment environment over the next several years in the U.S.”

Since the first U.S. Property Fund was created in 1994, more than 80 properties have been acquired with a total investment of more than $3.7 billion for the entire range of funds.

USPF V continues the balanced investment strategy of the predecessor funds. The focus of office investments are in premium locations in major office markets such as Manhattan, Washington, DC, Boston, Los Angeles as well as other ‘next tier’ markets. This core-plus strategy is complimented with a minor allocation to apartment development in infill, high growth markets. With the funds raised equity capital and a 60% debt financing at fund level, real estate investments of approx. $1 billion can be made.

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