PGIM Real Estate has £700m to spend across its European core plus and value-add strategies as it looks to take advantage of distressed sales.
It is on the hunt to acquire “stranded assets” to refurbish and relaunch into the market, head of UK investment Charles Crowe told EG.
He said: “It’s going to be a busy year, we will see an element of distress from property owners – which we, to be brutally honest, can take advantage of.”
The investor wants to deploy around £400m from its European value-add fund and £300m from its European core-plus fund on residential, offices, industrial, data centres and last-mile logistics assets, as opportunities arise.
Crowe said: “We are looking at existing income-producing assets that need to be repurposed.”
The firm wants to buy first-generation purpose-built student accommodation assets and invest in “heavy refurbishment”, and is already under offer on a university-owned site. The team will use the same repositioning strategy in targeting light industrial and last-mile logistics.
The investor is also looking at senior living, for which its strategy is to build later-living developments for rent. The company has assets under construction in Matlock, Exeter and Canterbury, and aims to build a portfolio and sell it either as a whole or as individual assets. There is a separate strategy for later living development within the M25, operated by Signature Care Homes and will be “large-scale premium communities”.
In London, PGIM Real Estate wants to acquire offices for its value-add strategy as well as new-builds, but is waiting for “values to come down a little”.
Crowe said the goal is to “create” high-spec offices, he added: “We see the core plus and the value-add fund as an incubator, so we can buy it, sort it, reengineer it and sell in two years.”
For its “multi-lease” industrial strategy, PGIM Real Estate is looking to deploy and create its own platform piece by piece. Crowe added: “We are still keen on the industrial sector and now is the correct time to enter it again. We are looking at the development side because land values have come down considerably.”
Crowe believes prices could yet have further to fall. “The owners of real estate need to adjust to the new prices as soon as that happens there will be more deals happening,” he said. “We are still getting in situations where some vendors are slightly unrealistic, and that is mainly because our returns our commercially sensitive, so we need to have a certain level of return and pricing is not where it should be in some sectors.”
To send feedback, e-mail akanksha.soni@eg.co.uk or tweet @AkankshaEG or @EGPropertyNews
