Investment Research The Search for Yield - Institutional Investor · PDF fileThe backdrop for real estate investors in today’s market is a global economy characterized by improving

The backdrop for real estate investors in today’s market is a global economy characterized by improving underlying growth prospects and a highly supportive policy environment. Risk appetite is rising and transaction volume is being boosted by increased cross border deal flows and growing popularity of large portfolio transactions. Prime yields have moved below pre-crisis lows in a number of major markets, but could fall further in today’s low interest rate environment. The “search for yield” is intensifying as investors find it increasingly difficult to source assets that fulfill their return requirements.

Investment markets are in a buoyant mood, but ultimately the outlook for real estate investment markets depends on the fundamentals of property-level performance. Despite an improving outlook, global GDP growth remains modest in a historical context, although there are signs that occupier market performance is gathering momentum. Global sentiment indicators, including services hiring intentions and retailer confidence are pointing upwards, while global office market net absorption has risen to its highest level in three years. Improvements in demand are set against a limited development pipeline, supporting rental growth prospects.

In this paper, Prudential Real Estate Investors identifies five separate market themes that are shaping the outlook for global property markets. These cover an Ongoing Demand for Global Real Estate among investors; improving prospects for Late Recovery occupier markets; a continuation of the low supply environment, albeit with Pockets of Faster Supply Growth Emerging; Converging Performance in Retail Markets; and the Rise of Alternative Lenders, which is further boosting liquidly in real estate investment markets.

REF: KESW-9Y8PLK

The Search for YieldGlobal Real Estate Themes & Investment Opportunities

July 2015

Investment Research

Conditions for real estate investment are favorable, but investors face a difficult strategic choice when assessing investment opportunities. One option is to push for higher returns by taking on risk, for example in late recovery sectors, non-CBD assets and secondary markets. The alternative is to invest in core assets in major markets where yields are low and underwritten returns look modest in a historical context. Patterns of investment activity suggest that risk appetite among investors and lenders is rising, but there is an ongoing focus on high-quality locations. At the same time, sectors that are exposed to structural shifts and developing markets are attracting increased interest due to their long-term growth potential.

Underpinned by our view that the outlook for global real estate returns is strengthening, the themes we identify in this paper allow us to identify attractive risk-adjusted opportunities in today’s markets. These fall into three broad groupings: Value-Add in Core Locations, Capitalizing on the Upswing, and Evolving Market Trends.

Five Themes to Shape the OutlookUnderstandably, some investors have a lingering anxiety about the outlook due to factors such as slowing growth in previously fast-growing developing markets and, in Europe, the threat of deflation and uncertainty surrounding Greece. Despite these concerns, we expect the recovery in the global economy and real estate markets to transition into a broader cyclical upswing as activity is supported by a combination of extensive policy support, lower energy prices and stronger U.S. consumer spending growth – a vital engine for the global economy.

Risk appetite is rising hand in hand with the improving outlook for returns, but there are signs that caution still prevails. Investors are broadening their investment horizons in a search for assets that offer higher yields – which can be enhanced using cheap debt to boost returns – rather than deepening their approach to underwrite value-add or opportunistic returns based on a growth recovery. As real estate occupier market fundamentals improve, we expect the market to break free of some of the shackles that have constrained higher-risk investment strategies in recent years.

In this section, we identify five separate themes that we expect to shape the real estate market outlook. We anticipate a strong environment for capital raising, increased debt availability, and stronger performance in late recovery markets and retail assets. Low supply growth is generally supportive for the rental market outlook, although falling availability and rising appetite among lenders and investors to finance development projects point to a possible supply response in some early recovery markets, such as financial centre CBDs.

Theme 1: Ongoing Demand for Global Real Estate

We expect the weight of capital targeting real estate to provide ongoing support for pricing at current levels.

Demand for real estate assets among investors continues to grow. The amount of private capital raised to invest in real estate globally increased for the fifth

Risk appetite is rising hand in hand with the improving outlook for returns, but there are signs that caution still prevails.

REF: KESW-9Y8PLK 2

Investment Research | The Search for Yield

year in a row to $119 billion in 2014. Perhaps unsurprisingly, there is a high correlation between transaction volume and fundraising: the same factors that affect investment behavior among market participants with capital to deploy simultaneously affect decisions among those seeking to allocate capital to third-party investment managers and funds. However, the time lags inherent in capital raising – relating to the product development process, marketing period, and negotiations, among other things – mean that the highest correlation is with transaction volume in the previous year.

Investment markets are buoyant and global real estate transaction volume is growing at just under 10% per year. As a result, we expect growth in capital raising activity and estimate that global private fundraising will increase to $125 billion in 2015. In addition, public equity markets continue to deliver solid performance, and listed players look set to attract further capital over the course of the year, although the persistence of lower energy prices seems likely to translate into at least a temporary cooling of demand for real estate assets among sovereign wealth funds. Returns on real estate remain attractive compared to other asset classes and we expect the weight of capital targeting real estate to provide ongoing support for pricing at current levels, despite historically low yields in some parts of the market.

Theme 2: Late-Recovery Markets Move Ahead1

Occupier market momentum is improving most quickly in late-recovery markets, particularly those that went through major housing busts in the downturn.

While there have been many bumps in the road, the global economy is now effectively five years into its recovery phase. As is typical for any recovery, progress has been uneven, and different parts of the economy and real estate markets are at very different stages of the cycle. As the recovery broadens into a cyclical upswing, the relative performance of occupier markets is set to play an important role in determining the success of investment strategies.

In global office markets, occupier market momentum is improving most quickly in late-recovery markets, particularly those that went through major housing busts in the downturn, including Los Angeles, Miami, and Phoenix in the United States, and Dublin and Madrid in Europe’s periphery. In mid-cycle recovery markets, which are linked to government occupiers and less-cyclical non-financial business sectors, growth of non-CBD rents is now outpacing CBD areas as cost-conscious tenants take modern space in cheaper submarkets.

Mid- and late-recovery markets continue to face some challenges, in many cases relating to a legacy of elevated vacancy rates, particularly in non-CBD areas. Leasing activity in government-driven markets remains sluggish as public finances remain stretched in most major nations. Even so, we expect late-recovery markets to outperform early recovery markets, where a renewed acceleration in rental growth from already elevated levels is unlikely.

We expect late-recovery markets to outperform early recovery markets, where a renewed acceleration in rental growth from already elevated levels is unlikely.

1 We categorized developed office markets into various types, based on key drivers of occupier demand, and then into three groups based on stage of recovery. The categories are “early” – energy, finance; “mid” – technology, government, business; and “late” – industry, housing-bust.

REF: KESW-9Y8PLK 3


Theme 3: Pockets of Faster Supply Growth Emerging

Our view is that supply growth will remain low, resulting in a further reduction in availability across real estate sectors as new demand outstrips the pace of space additions.

Limited development activity since 2009 means that global real estate supply growth has fallen sharply. While additions of new stock in office and retail markets are expected to pick up over the next five years, pipeline data suggests that completion rates are set to remain well below historical norms (Exhibit 1). Our view is that supply growth will remain low, resulting in a further reduction in availability across real estate sectors as new demand outstrips the pace of space additions, particularly in office markets.

EXHIBIT 1: GLOBAL OFFIcE & RETAIL SuPPLy PIPELInE

1) Global Of�ce & Retail Supply Pipeline

0%

1%

2%

3%

4%

5%Net Additions to Supply (% Existing) Forecast

Long-term Average

Of�ce

Net Additions to Supply (% Existing) Forecast

Early Mid Late All Of�ce

88 90 1892 94 96 98 00 02 04 06 08 10 12 14 16

0%1%2%3%4%

7%6%5%

Long-term Average

Retail

88 90 1892 94 96 98 00 02 04 06 08 10 12 14 16

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

Of�ce - Developed Markets Summary

2014 2015 2016 2017 2018 2019

Supply pipeline has responded in early recovery of�cemarkets, which have falling availability and rents atlevels that make development pro�table.

Retail supply growth remains very low compared tohistory, with the exception of developing Asia andCentral and Eastern Europe.

Sources: Cushman & Wakefield, CoStar, CBRE, JLL, Colliers, Prudential Real Estate Investors; As of July 2015.

However, risk appetite among lenders is increasing, and investors are looking at higher risk strategies to achieve target returns in a low-growth environment. As a result, pockets of faster supply growth are starting to emerge. In office markets, supply in developing markets is set to reach 9% this year, which represents the fastest pace of additions since 2009. Increased supply at a time of rising economic uncertainty in Asia Pacific and Latin America is set to put further downward pressure on office rents.

In developed economies, early recovery office markets offer a combination of falling availability and rents that have risen to levels that make development profitable again. As a result, some energy markets, most notably Houston, and

REF: KESW-9Y8PLK 4


financial centers, such as London, Hong Kong, and Tokyo, are set to record a steady increase in completions over the next few years. There is evidence of similar trends in other sectors too. For example, in the United States, developers are responding to rising employment in the under-30s age bracket – a large proportion of whom are renters – and apartment completions are rising.

In contrast, the retail pipeline is especially low, which is unsurprising, given the rate at which online sales are growing in many markets, eating into demand for physical store space as retailers streamline their sales channels. U.S. retail completions are expected to rise slightly over the next five years – albeit from a low base – reflecting an improving outlook for consumer spending, but completions in Europe are expected to fall to a historic low. As a result, in many global markets, a lack of new supply presents an opportunity for investors to refurbish existing stock in order to tap into ongoing demand for high-quality space by major international retailers.

Theme 4: Retail Market Performance converging

The broader recovery in consumer sentiment and spending is starting to foster rental growth in late-recovery segments of the retail market.

In terms of fundamentals, international retail brands continue to demand space in the best locations, typically on prime, in-town shopping streets, and in the best-performing dominant, regional shopping malls. With physical store sales under threat, retailers in Europe and the United States are being selective about location decisions and there is an ongoing pattern of consolidation among major retailers. As a result, a large gap in performance has opened up between prime pitch space in major cities, which is highly sought after, and older secondary centers that are struggling to attract tenants.

More recently, there are signs that performance is converging again. Previously fast-growing segments are recording a deceleration in growth at historically high rent levels, while the broader recovery in consumer sentiment and spending is starting to foster rental growth in late-recovery segments of the retail market. Over the past year, rental growth for European retail warehouses and power centers in the United States has picked up, reflecting success of some repositioning strategies along with improvements in housing markets – particularly in Europe, where home prices were still falling until mid-2014. As the retail recovery turns into a more balanced upswing, previously weaker sectors offer potential for rental growth from a low base, despite structural challenges facing parts of the retail sector.

Theme 5: Rise of Alternative Lenders Boosting Liquidity

Opportunities for debt lenders are being boosted by rising transaction volume, a stronger growth outlook, and regulatory changes.

As prime yields move lower, the search for yield is intensifying and there is a growing desire among investors to become involved in real estate lending markets.

Previously fast-growing segments are recording a deceleration in growth at historically high rent levels.

REF: KESW-9Y8PLK 5


Opportunities for debt lenders are being boosted by rising transaction volume, a stronger growth outlook, and regulatory changes such as Basel III, which is creating structural opportunities for alternative debt sources by restricting bank lending at higher loan-to-value (LTV) ratios. Private debt funds, which remain largely unregulated, are becoming increasingly popular, with nearly $20 billion raised globally in 2014 – just under one-fifth of total private capital raised over the past year.

Debt funds and other new entrants are boosting market liquidity and, at the margins, are having a notable impact on loan pricing. All-in borrowing costs have been tumbling as loose monetary policy continues to anchor interest rates at record low levels, while increased competition among lenders is driving down lending margins. Even if market interest rates do rise from their current low levels, borrowing costs wouldn’t necessarily increase sharply. In both Europe and the United States, lending margins remain above their pre-crisis level, and there is scope for some further compression, which would cushion the impact of tighter monetary policy.

Investment Opportunities: Focus on QualityIn today’s market, generally supportive conditions constitute something of a sweet spot for real estate investors. Low interest rates, rising liquidity, an improving GDP growth outlook in developed markets, stronger occupier demand, and low supply growth all imply favorable conditions for investors. Over time, there is a very high correlation between movements of global real estate values and economic growth (Exhibit 2). An expectation of faster global GDP growth over the coming years points to improved prospects for capital value growth, boosting the overall returns outlook for global real estate

EXHIBIT 2: GLOBAL PRIME cAPITAL VALuE GROwTH & GDP

2) Global Prime Capital Value Growth & GDP

20%

10%

0%

-10%

-20%

-30%

Global Prime All Property Capital Value GrowthGlobal GDP Growth (RHS)

4.5%

3.5%

2.5%

1.5%

0.5%

-0.5%

-1.5%

-2.5%

16 17 18 1901 02 03 04 05 06 07 08 09 10 11 12 13 14 1594 95 96 97 98 99 00

Real estate values and GDP growth have ahigh correlation coef�cient of 0.83.Improving global GDP growth is supportingthe outlook for property returns.

Forecast

Sources: Cushman & Wakefield, CoStar, CBRE, JLL, Colliers, Oxford Economics, Prudential Real Estate Investors; As of July 2015.

REF: KESW-9Y8PLK 6


However, this doesn’t tell the whole story, as global GDP growth forecasts for the next decade remain relatively modest in the context of history. As a relatively high-yielding asset class, even with record low yields, real estate should continue to attract capital in a low interest rate environment, but investors today face a difficult choice to either push for higher returns by taking on risk, or invest in high quality assets and markets where underwritten returns look low in a historical context.

Recent transaction activity hints at both approaches being deployed. On the one hand, investors do appear to be taking on more risk, moving into alternative sectors and debt products as part of a broader search for yield. Interest is also growing in sectors that are exposed to structural shifts and developing markets, which offer potential of longer-term outperformance that persists beyond the duration of a given real estate cycle. However, the shift of investment market emphasis away from major gateway markets, which have very low yields, is happening more slowly than had been anticipated, suggesting an ongoing focus on high-quality locations, if not strictly core assets within them.

Overall, we believe that the most attractive risk-adjusted opportunities in today’s markets fall into three broad groupings, each targeting higher returns than those available on stabilized buildings in major markets, but maintaining a focus on quality assets and locations. These opportunities – “Value-Add in Core Locations”, “Capitalizing on the Upswing”, and “Evolving Market Trends” – are summarized below and in Exhibit 3.

Opportunity 1: Value-Add in core Locations

Nature of Opportunity: Value-add deals to earn excess returns via income growth in core markets

Target: Office assets in major cities with high barriers to entry; mezzanine debt and preferred equity; in-town and housing-related retail

While we are positive about the near-term outlook for markets, we remain cautious about long-term growth potential. The occupier recovery is gathering momentum, but our preference is to work harder for returns in major markets where supply growth remains low – for example via value-add strategies, such as repositioning and refurbishment of office or retail assets – rather than chasing higher yields in smaller regional markets or peripheral locations, many of which are suffering from a legacy of high vacancy rates.

Ultimately, value-add investing is all about improving the level, quality, and durability of income received on a portfolio of assets throughout the cycle. Returns in excess of core, “buy-and-hold” strategies are driven by the capitalization of growth in a portfolio’s income stream, either via movements in market pricing or active asset management. Even with low initial yields in major cities, projects that are able to generate some income growth while using a little leverage, which is plentiful, are able to achieve relatively high returns compared to ultra-low interest rates. Value-add deals can be accessed through traditional equity investments or debt positions, which are increasingly popular with investors. While low interest rates are tempering returns on coupon-driven junior and mezzanine loans, debt

REF: KESW-9Y8PLK 7


investors are also able to provide preferred equity capital that combines fixed interest payments with a profit participation component – an increasingly attractive option for value-add investing in the context of improving fundamentals.

Our view is that the opportunity for equity and debt investors is greatest in markets with high barriers to entry, encompassing CBD areas, major shopping streets, and well-located submarkets that exhibit relatively low supply growth and face little competition from competing substitutes. In U.S. office markets, strong leasing conditions mean that we see value in taking on vacant space to capture income growth in low-yielding gateway markets. In Northern European cities and established markets in developed Asia Pacific, including Hong Kong, Japan, and Singapore, low supply growth and an ongoing lack of capital expenditures (capex) imply a significant opportunity to refurbish and reposition city center office assets in major cities.

In retail markets, a stronger consumer outlook and converging performance among different subsectors points to a growing opportunity, particularly in the context of a historically low supply pipeline. Despite the threat from online sales channels, retailer demand is recovering, and there is an opportunity for repositioning plays in well-located assets that are in need of a capex injection. Globally, in-town retail assets continue to offer the strongest rental growth potential in the context of very low supply growth, while retail formats such as U.S. power centers and European retail warehouses offer repositioning opportunities and growth potential from a low base as performance improves in line with stronger housing market prospects.

Opportunity 2: capitalizing on the upswing

Nature of Opportunity: Invest in faster-growing, late-recovery markets

Target: Office and retail assets in government centers and housing-bust markets

The recovery is transitioning into a broader cyclical upswing. While higher-risk, higher-return value-add deals in core markets are growing in popularity, for investors with a slightly lower risk profile or a preference for stabilized assets, late-recovery markets offer an attractive combination of higher entry yields and potential for market-driven returns. Rental growth in mid- and late-recovery markets has increased and could accelerate as rising demand meets an unusually low development pipeline and shortages of Grade A space.

The nature of opportunity differs across different market types. As pressure on public finances eases, government-driven markets, such as Paris and Washington, D.C., are expected to report a steady increase in demand from low levels, set against a backdrop of low vacancy rates and minimal supply pipelines. Rents are rising – notably in non-CBD submarkets, which offer cost-effective accommodation – and there is an opportunity for investors to acquire stabilized assets that deliver attractive market-level returns with a defensive risk profile.

In contrast, investors should focus more heavily on CBD offices and core retail assets in housing-bust markets, such Miami and Phoenix in the United States, and Madrid in Europe’s periphery. Unusually low supply growth means that there is potential for rents in CBD areas to grow quickly from a low starting point – similar to the pattern of growth recorded by Dublin over the past couple of years. For

Our view is that the opportunity for equity and debt investors is greatest in markets with high barriers to entry.

REF: KESW-9Y8PLK 8


higher returns, we favor secondary assets in CBD areas, where rents are benefiting from a lack of available space as demand rises, rather than submarkets in most housing-bust cities, which continue to battle with a legacy of high vacancy rates.

Opportunity 3: Evolving Market Trends

Nature of Opportunity: Capitalize on changing market patterns relating to structural trends

Target: Global logistics networks; city center residential conversions; structural growth in developing markets

Evolving market trends relate to shifting patterns of occupier and investor behavior, which are set to persist beyond the duration of a given real estate cycle. Such trends imply challenges and opportunities for real estate investors as physical space demand is affected by factors such as new technology, changing preferences among consumers and businesses, and structural growth of incomes and spending in developing markets.

In today’s market, one major source of evolution is occurring in retail and logistics markets as a result of rising penetration of online retail platforms. Market conditions are changing rapidly, and retailers haven’t yet settled on a preferred mode of distribution that balances physical store presence with warehousing and delivery capabilities. Ultimately, though, rising online retail means less physical store space is likely to be needed, while opportunities are growing in distribution markets. Working with major logistics providers and retailers to cater to their distribution requirements serving major population centers remains a major opportunity, particularly given that the sector offers elevated yields, albeit in a highly uncertain market environment.

Urbanization is another notable ongoing trend, as more people demonstrate a preference to live and work within the boundaries of major metropolitan areas. While some office markets and submarkets are suffering from a lack of supply, others have a legacy of elevated vacancy rates, often with outdated stock that is either poorly specified or located. At the same time, housing markets are recovering, supported by low interest rates, falling unemployment, and rising incomes. With demand among urban residents increasing, there are attractive opportunities to redevelop low-value, older office, retail, or light industrial space located in urban areas to residential use in major cities such as Frankfurt, London, Tokyo, San Francisco, and Sydney.

While developing markets are currently going through a softer growth patch – not least in China, where growth is structurally slowing – there remains an opportunity to capitalize on a structural expansion story. While the idea of eventual convergence with developed markets appears challenging, developing markets have the potential to outperform in terms of growth for some time, implying potentially higher returns for real estate investors. As the share of the population in developing Asia and Latin America that have discretionary income to spend on items such as housing and consumer goods grows, demand for modern retail and residential assets in suburban areas is set to increase, offering sustained development opportunities over time.

Market conditions are changing rapidly, and retailers haven’t yet settled on a preferred mode of distribution that balances physical store presence with warehousing and delivery capabilities.

REF: KESW-9Y8PLK 9


ConclusionThe combination of a supportive policy environment, an improving returns outlook, and low returns on other assets represents something of a sweet spot for real estate investment. Market liquidity and debt availability are increasing, while the pace of recent real estate fundraising activity suggests that investors have plenty of capital to deploy into real estate markets. The overall growth outlook is modest in a historical context, but supply growth remains low and real estate occupier markets are showing signs of improvement. Investors are broadening their horizons beyond a narrow set of prime markets in a search for yield, while opportunities relating to structural trends are also attracting attention due to long-term growth potential.

In this paper, we have identified some key themes that we expect to shape the outlook. Capital raising activity and an influx of debt lenders point to further improvements in liquidity to support values, while performance in late-recovery office markets and retail formats is improving, supported by low supply growth. We anticipate a further weight of capital targeting real estate, but investors face a difficult choice to either push for higher returns by taking on risk, or invest in high quality assets and markets where underwritten returns look low in a historical context.

Based on our market outlook and themes, we see an opportunity for investors to target higher returns – while maintaining a focus on quality assets and locations – in three main groups: working harder for returns in major core markets that have low yield, by deploying value-add strategies; capitalizing on the upswing in late-recovery office and retail markets; and investing in evolving market trends, either in sectors that are exposed to structural shifts, or in developing markets.

REF: KESW-9Y8PLK 10


3) Map

Housing-Related RetailImproving housing market performance points to prospects of rental growth from a low base in European retail warehouses and U.S. power centers.

Mezzanine / Preferred EquityDebt deals are increasingly popular with investors in Europe and the United States. Preferred equity offers profit participation, which is attractive as fundamentals improve.

Housing-Bust MarketsStronger housing market performance is set against unusually low supply. We expect rents to grow from a low base.

nature of Opportunity

Value-Add in Core Locations Capitalizing on the Upswing Evolving Market Trends

EXHIBIT 3: SuMMARy OF GLOBAL OPPORTunITIES

Government-Driven MarketsRising demand due to easing pressure on public finances and stronger housing markets is set against low supply.

Residential conversionsRising demand for city accommodation points to an opportunity to redevelop older commercial space for residential use.

Office RecoveryStrong leasing conditions mean that we see value in taking on vacant space to capture income growth in gateway markets.

Retail DevelopmentSuburban retail assets in developing Asia and Latin America to cater for a growing number of households with discretionary income.

ResidentialDemand for modern residential space in urban areas set to increase as discretionary incomes rise.

Global Logistics networksRising online retail means growing opportunities to cater to changing requirements in logistics markets in major population centers.

capex and RepositioningA lack of capex and low supply growth imply an opportunity to acquire and reposition office and retail assets in major cities in North Europe and Developed Asia.

Source: Prudential Real Estate Investors; As of July 2015.

REF: KESW-9Y8PLK 11


DisclaimerThese materials represent the views, opinions and recommendations of the author(s) regarding the economic conditions, asset classes, securities, issuers or financial instruments referenced herein. Distribution of this information to any person other than the person to whom it was originally delivered and to such person’s advisers is unauthorized, and any reproduction of these materials, in whole or in part, or the divulgence of any of the contents hereof, without prior consent of Prudential Real Estate Investors is prohibited. Certain information contained herein has been obtained from sources that PREI® believes to be reliable as of the date presented; however, PREI cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. PREI has no obligation to update any or all of such information; nor do we make any express or implied warranties or representations as to the complete-ness or accuracy or accept responsibility for errors. These materials are not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment management services and should not be used as the basis for any investment decision. Past performance is no guarantee or reliable indicator of future results. No liability whatsoever is accepted for any loss (whether direct, indirect, or consequential) that may arise from any use of the information contained in or derived from this report. PREI and its affiliates may make investment decisions that are inconsistent with the recommendations or views expressed herein, including for proprietary accounts of PREI or its affiliates.

The opinions and recommendations herein do not take into account individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial in-struments or strategies to particular clients or prospects. No determination has been made regarding the suitability of any securities, financial instruments or strategies for particular clients or prospects. For any securities or financial instruments mentioned herein, the recipient(s) of this report must make its own independent decisions.

Conflicts of Interest: Key research team staff may be participating voting members of certain PREI fund and/or product investment committees with respect to decisions made on underlying invest-ments or transactions. In addition, research personnel may receive incentive compensation based upon the overall performance of the organization itself and certain investment funds or products. At the date of issue, PREI and/or affiliates may be buying, selling, or holding significant positions in real estate, including publicly traded real estate securities. PREI affiliates may develop and publish research that is independent of, and different than, the recommendations contained herein. PREI personnel other than the author(s), such as sales, marketing and trading personnel, may provide oral or written market commentary or ideas to PREI’s clients or prospects or proprietary investment ideas that differ from the views expressed herein. Additional information regarding actual and potential conflicts of interest is available in Part II of PIM’s Form ADV.

Prudential Investment Management is the primary asset management business of Prudential Financial, Inc. Prudential Real Estate Investors is Prudential Investment Management’s real estate investment advisory business and operates through Prudential Investment Management, Inc. (PIM), a registered investment advisor. Prudential, the Prudential logo, the Rock symbol and PREI are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.

REF: KESW-9Y8PLK 12


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Investment Research The Search for Yield - Institutional Investor · PDF fileThe backdrop for real estate investors in today’s market is a global economy characterized by improving