by Denis Hall
A consortium of eight institutional investors led by the Prudential Insurance Co of America has launched a $2bn global property investment programme.
The Prudential Global Real Estate Investment Programme’s membership includes Nationale Nederlanden NV, Australian Mutual Provident Society, the Government of Singapore Investment Corporation Pte, SPP of Sweden and three other, as yet unnamed, institutions. It is understood that there are no UK investors in the venture.
Prudential and Jones Lang Wootton have formed Global Realty Advisors, who will serve as the vehicle’s investment managers. For tax reasons, GRA will be based offshore.
“The programme is not a fund in the true sense of the word,” explained Christopher Penn of JLW’s Fund Management Unit, “as each member is making a $250m facility available to the programme rather than putting money down. We will pass opportunities to a committee of investors who will decide individually whether to proceed.”
JLW and the Pru will take an equal share in investment management and during the next year plan to attract four more investors to raise the total capital commitment to $3bn.
Over the next three to five years, the consortium aims to acquire prime commercial investments in the Central Business Districts of the world’s leading property markets. London, Paris, Sydney, Frankfurt, Boston, Chicago and New York are some of the cities earmarked by the programme for future investment.
The new venture represents Prudential of America’s first major attempt to extend their property activities beyond North America.
In a joint statement, Prudential’s chairman, Robert Riley, and JLW’s chairman, Keith Douglas Mann, explained their strategy.
“Since property cycles do not follow the same pattern in every country, a global portfolio affords greater diversification and the prospect of diminished overall risk. The evidence we have collected clearly shows that investing in a number of countries can provide superior risk-adjusted returns.”
