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Pru Sees Debt as Best Investment Bet

NEW YORK CITY-The commercial sector is "at the front end of the storm" in defaults, which will lead to distressed opportunities later, said Prudential's David Durning.

By Paul Bubny | Updated on July 16, 2009

NEW YORK CITY-Debt-related opportunities, rather than distressed assets, top the list of current possibilities for institutional investors, Prudential Real Estate Investors’ Allen Smith said Wednesday. At a media briefing in Prudential’s Manhattan offices, Smith put debt and real estate-related securities ahead of distress, simply because the anticipated flood of bank-owned properties hasn’t materialized yet. However, it soon will: “We’re right at the front end of the storm” of defaults, said David Durning, executive director of Prudential Mortgage Capital Co.

CEO of Parsippany, NJ-based PREI, Smith said that “credible, institutional-quality partners” are coming back into the game. Many are willing to go for all-cash deals, he said. On a major-market asset PREI recently put on the market, there were 35 bids, said Smith. PREI is looking to sell off about $1 billion worth of properties this year.

Although the maxim that cash is king has been often repeated since the credit crunch set in, Smith said liquidity isn’t the problem. Would-be investors can obtain the debt “if they’re willing to pay for it”

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