By Jon Peterson
PGIM Real Estate has signed a long-term joint venture with CityView for the possibly of PGIM buying future apartment assets from the apartment developer/owner. The relationship will look to expand upon five properties in the San Francisco Bay Area that were the first deals for the venture.
“Our plan with the joint venture is to substantially increase the size of the relationship over time,” says Alfonso Munk, Americas chief investment officer for PGIM. There is a possibility that this could double from the initial $500 million venture that was announced earlier this month.
PGIM is now looking at some other assets that CityView currently owns. These include properties across the West Coast in the East Bay region of San Francisco, Koreatown in the Los Angeles area and Seattle. CityView has a current portfolio of $2 billion assets under management in over 25 projects. There is no guarantee that PGIM will be investing in all of these assets.
PGIM is a big believer in the type of real estate that CityView owns. “There are many features that we like about the properties that CityView has developed. One is that they are located in supply-constrained markets where it’s difficult to find sites, and the permitting process can be very complicated. The location of their projects is in very robust employment centers where many technology workers would like to live, and where it is difficult to buy a house,” said Monk.
The initial properties in the joint venture were owned by CityView and the Los Angeles County Employees Retirement Association, as confirmed by an email from the pension fund. These assets were located in San Francisco, Berkeley, Foster City and Menlo Park. CityView and the pension fund still hold a 50 percent ownership stake in the properties.
The venture with PGIM and CityView will represent the first time that these two firms have come together. PGIM will consider the relationship as a core investment once the properties are completed and stabilized or even a build-to-core investment during the time the properties are under development.