What’s in a name? For Pramerica, it was quite a lot. Better known in its native US, South Korea and Japan as Prudential Investment Management, in Europe the company was called Pramerica to avoid confusion with the UK insurer.
But this convenient agreement always had the downside of potentially confusing the firm’s international investors, which are spread across 28 countries.
So, with an increasingly global client base, the parent company changed its name to PGIM in January, and the property arm rebranded last week as PGIM Real Estate.
The rebranding cements moves led by Eric Adler, chief executive of PGIM Real Estate, to create a more homogenous business with a unified global approach to strategy.
Adler explains that creating this common culture was important as the company’s investor base was becoming more global in its outlook.
“If you look at our European investor base, more than half of them invest outside Europe, and more than two-thirds of our Asian base invest outside Asia. So they were having to deal with multiple names with us,” he says.
For PGIM Real Estate, the single name is also important because, as Adler says: “When we look at our investor base, it is an overwhelming majority of arm’s length third-party institutions around the world.”
Unusually for the investment arm of an insurer, little money comes from the parent, meaning a consistent brand is important to help raise new funds.
Across the world, PGIM Real Estate manages $65bn (£45bn) of assets, some co-mingled and some in segregated accounts, with roughly $40bn allocated to US strategies.
Andrew Macland, head of UK at PGIM Real Estate, estimates the European business is currently managing about €7bn (£4.5bn) of assets on behalf of international institutions. Of that €7bn, he says it is close to a 50/50 split between co-mingled funds and segregated.
The US business is dedicated to core and core-plus investments, while Europe is focused on value-add and opportunistic strategies.
One of these is a debt-focused strategy, says Adler. “Globally, European mezzanine debt remains very interesting and in the UK, in particular, it remains one of the best ways to outperform,” he says.
PGIM Real Estate is unlike other insurers, however, in not pursuing a long-term senior debt lending model. This is left to sister company Pricoa. Instead it favours a whole-loan model that can take equity in more interesting deals.
So far, the strategy has backed everything from private rented sector schemes, such as Grey Star’s Bradstowe House in Harrow, north-west London, to speculative developments, such as Allied London’s Spinningfields in Manchester.
PGIM Real Estate does pursue more conventional strategies, but likes them to be income-focused and longer-term. Teams in Germany and the UK invest for co-mingled funds across Europe aiming at a £2m to £20m lot size, and £30m to £50m for their segregated accounts.
The company has more than $1bn available to invest in these strategies across Europe.
In addition, about six years ago it set up a ground rents business. That team now manages around £1bn in assets, according to Macland.
Adler says this model of diverse income streams is something that he hopes to promote across the global business, where the US division is as likely to deploy for European investors as Europe is to invest for Asian.
From Adler’s point of view, maybe the change of name will finally make it easier for investors to see the company as a truly global player in real estate.
Chief executive: Eric Adler
Total assets under management: $65bn
IRR: 14% (PREC VI)
European assets under management: €7bn
Share price (Prudential Financial): $75.95 (16 May ‘16)
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