By Jon Peterson
New Jersey-based PGIM Real Estate has made a $362.4 million investment into the Kirkland Urban mixed-use development project in Kirkland, according to a board meeting document from the Ohio Bureau of Workers Compensation Board.
PGIM Real Estate declined to comment when contacted for this story. The investment from the real estate manager will give it a majority ownership in the largest development in Kirkland’s history.
Upon completion, Kirkland Urban will be a trophy caliber mixed-use development in a well-established community and a strong long-term investment for our clients
PGIM made the investment for its open-ended commingled fund known as PRISA II. The size of the Kirkland transaction represents 4.6 percent of the commingled fund’s $7.9 billion of net asset value, as of the end of September 2016.
Kirkland Urban will have the involvement of two other companies. These are Seattle-based Talon Private Capital and Minnesota-based Ryan Companies U.S. Inc.
“Upon completion, Kirkland Urban will be a trophy caliber mixed-use development in a well-established community and a strong long-term investment for our clients. We are pleased to partner with Talon and Ryan to bring a high-quality, modern office space and apartment, and a new retail destination to Kirkland,” said Kevin R. Smith, head of Americas for PGIM Real Estate, in a prepared statement.
The first phase of Kirkland Urban has already started. This will include 390,000 square feet of office and a new 50,000 square feet QFC/Kroger multi-department grocery store. The residential part of the development will have 185 apartments.
PRISA II is known as a core plus commingled fund. Ohio BWC had made a $125 million commitment into this commingled fund in March 2016. The market value of this commitment is at $130.1 million, through September of 2016.
PRISA II looks to split its investment in a mixture of core and non-core assets. The breakdown is that PGIM looks to have at least 65 percent of the commingled fund’s portfolio made up of core assets and up to 35 percent in non-core assets. The fund will primarily execute property sector investment strategies by co-investing with experienced partners who have demonstrated success in development, lease-up and/or repositioning.
PRISA looks to invest capital on a nationwide basis. The west region made up 37.6 percent of its investments. The other region that had a bigger piece of the commingled fund was the eastern part of the country, where 42.25 percent of the portfolio is located. The fund also invests in the southern United States as well as the midwest.
From a property type perspective, PRISA II had its biggest exposure in office buildings. This is where 37.60 percent of the portfolio had been invested. The other property types invested in are apartments, retail, industrial, land and hotels. The total loan-to-value ratio on the entire PRISA II portfolio is 30.04 percent. The commingled fund has no entry or exit queue currently.