Bio
Bryan McDonnell is a managing director, head of the U.S. debt business, and chair of global debt for PGIM Real Estate. Bryan is responsible for overseeing PGIM Real Estate’s global debt strategy and execution, including oversight of U.S. real estate debt portfolio management, originations and credit teams, the agency lending business, and the agricultural finance and investments strategies. Bryan chairs the U.S. Debt Executive Council and is a member of the Global Investment Committee, the Global Management Council and the Global Operating Risk Committee. Previously, Bryan was head of portfolio
management and investor strategy for the U.S. debt business. Prior to that role, Bryan was based in London and spearheaded the development of PGIM Real Estate’s senior debt investing in the United Kingdom and Europe. In that role, Bryan helped PGIM become one of the most comprehensive non-
bank lenders in Europe.
Prior to his time in Europe, Bryan held a series of management and investment roles throughout the United States. In addition to his investment roles, Bryan served as an asset manager and was responsible for managing problem loan workouts, bankruptcy strategy, and real estate dispositions across the United States during the global financial crisis. Bryan’s global real estate knowledge comes from nearly two decades of working in PGIM’s London, New York, Washington DC, Chicago, Boston, and Atlanta offices. Bryan received his bachelor’s degree in civil engineering from Northwestern University as well as his master of business administration in finance and real estate from the Kellogg School of Management at Northwestern University. He is a member of the Real Estate Roundtable and the Urban Land Institute’s Global Exchange Council.
Show Notes
- PGIM Real Estate is a subsidiary of Prudential. Series of debt funds and now a full scale investment management business like a private equity firm (6:40)
- Also manages the Agricultural investments and the Agency lending businesses (7:30)
- Focuses day to day on:
- Strategic vision for 5 yrs. looking forward (8:00)
- Investors in their funds (8:20)
- Managing and counseling people in their many offices (8:30)
- Personal history (8:50)
- Middleton, MA home town
- Public school all the way
- “Below average” until 7th grade (9:50)
- Dad was a teacher and pharmacist (10:30)
- Self sufficiency- Paper route from 6 yrs. old on (10:50)
- Went to Northwestern University– Outside driving radius of his parents (11:30)
- Studied Civil Engineering after transferring from Chemical Engineering (12:50)
- Joined an engineering firm, Carollo Engineers, in California and did consulting work (13:30)
- Moved to Boston to join a civil engineering consulting firm focusing on BRAC projects, which gave him the “real estate bug” (14:30)
- Returned to graduate business school at Kellogg School (Northwestern University) (15:30)
- Internship at A.G. Edwards on advisory work in the summer
- Would have been fined for not showing up for an interview (17:40)
- Impressed with PGIM’s scope and scale along with its deal velocity (18:00)
- Joined PGIM (19:30)
- Life Insurance and CMBS investments when he started in 2006(20:30)
- Firm has evolved considerably since the 1970s including global growth (21:40)
- $202B in Assets Under Management (22:00)
- 80% of business is US originated
- Growth both through acquisitions and de novo investing
- Core, Core Plus and Value Add Equity and Debt Strategies (23:20)
- European strategy might take more risk- construction lending (23:50)
- Construction/Permanent lending done strategically (24:30)
- Sources of capital
- Originated $22B in 2021- $15B from outside the life company (24:50)
- Core Plus fund (25:20)
- PGIM name change was to identify as an investment manager and to establish that the Prudential in Europe and US are different companies (26:00)
- Competes with Blackstone and Brookfield (26:55)
- Solve capital market solutions for clients (27:10)
- Interim investing and value add strategy offers more risk and returns (28:30)
- Will sell loan participations (29:00)
- Ended CMBS business after the GFC (29:25)
- Career trajectory
- Started in Chicago in a training program traveling to different offices (29:50)
- Markets getting challenging in 2007 and he was transferred to Boston (30:50)
- Became clear that markets were very selective and the fun part would be to do workouts and moved to Atlanta (32:30)
- Moved to Washington DC to help build business in PGIM’s 3rd biggest market from 2010 to 2014 (35:15)
- Sourcing and winning transactions
- Competed well- $700-800MM in production while in DC (37:00)
- Promoted to move to London to ramp up European operations (37:25)
- More of a strategy role than investment management (38:00)
- Train and hire talent (40:00)
- UK, France and Germany was the bulk of investments (40:30)
- Offices in London, Paris, Munich, Frankfort & Berlin
- How to compete with local banks who also did permanent financing
- Went from $1B to $5B in investments in Europe during his tenure (42:15)
- Logistics and residential became a strong business opportunity there (42:50)
- Data challenging in Europe relative to the US
- Merged debt and equity business globally (44:45)
- Came back to US to run US Debt (47:15)
- Third party capital raising ramped up (47:40)
- Expanded Agency business with Freddie, Fannie and HUD (48:30)
- Evolving into investment management business
- Filling former CMBS bucket with Debt fund strategies (48:50)
- $5.5B origination in debt funds in 2021
- Both closed and open ended funds
- Prudential “hires” PGIM to invest their capital (50:30)
- Change is evolving the life companies (50:50)
- Comparison game on risk strategies and underwriting (55:45)
- Pricing accommodates risk
- Pandemic Impact (56:30)
- Office issues- Class B office (56:50)
- Destination that people want to go to (57:50)
- Hyper focus on office properties location and metrics (58:20)
- Industrial is a “race” to get more (58:45)
- Retail still viable (59:00)
- Office issues- Class B office (56:50)
- DC Market
- Downtown DC is sad- Not a 24/7 environment and is less vibrant (59:30)
- Overbuilt offices (1:00:00)
- It will come back with more 24/7 environments (1:00:15)
- Returning to the office (1:02:00)
- Flexible office use depending on the culture locally (1:02:30)
- 2-3 days per week in the office (1:02:45)
- Redesign space but not necessarily shrink it, as capacity will probably stay the same (1:03:20)
- Leases renewing on shorter terms (1:04:00)
- Hyper focus on what their expertise (1:05:30)
- ESG Policy (1:06:30)
- Thesis of investing (1:07:00)
- Sustainable long term investing (1:07:45)
- Underwriting (1:08:00)
- Tool to measure sustainability for investments (1:08:15)
- Deal by deal on potential environment and weather risk
- Social issues- Sometimes more important (1:10:00)
- Data is the most important aspect for each (1:10:40)
- Talent development (1:11:15)
- Work with colleges and universities (1:11:45)
- Reference to Project Destined (Cedric Bobo) (1:12:00)
- Cities competing among themselves to retain and attract companies (1:13:30)
- Mentorship (1:15:00)
- Internal- leaders of PGIM (Dave Durning, Paige Hood)
- External- Phil Mudd and Christian Miles at Cassidy & Pinkard (now Cushman & Wakefield)
- Washington is a collaborative market (1:16:15)
- PGIM kept him “moving forward” in his career and helped him be successful and offering him fresh challenges (1:17:15)
- Wins-
- Experiences doing workouts that accelerated his career to figure out challenges (1:19:30)
- European job (1:20:00)
- Loss- Hotel deal in New Jersey that had only a 6% recovery of value (1:21:15)
- Surprise- Merger of debt and equity businesses was a sea change internally (1:22:40)
- Lessons are “all about people” (1:24:45)
- Story about a building that was underwater and major tenant was a law firm and the managing partner helped with the workout (1:25:00)
- Borrower looking for lender he can trust (1:28:10)
- Qualities of a good lender
- Underwriting skills (1:28:30)
- Curiosity
- Common sense
- People as important as the real estate (1:29:15)
- Life priorities
- Family first- 3 daughters (1:29:50)
- Enjoys working with students in giving back (1:30:40)
- Advice to 25 yr. old self
- Be more “relaxed” and letting things play out (1:31:10)
- Billboard Statement
- Believe in yourself! (1:33:00)
- Rameez Munawar asked about underwriting changes (1:34:20)
- No real changes during and after the pandemic
- Still doing considerable apartment and industrial investments
- Rameez asked about Class B office and Mass Timber in office buildings (1:35:20)
- Conversion of office to residential- sound mitigation issues
- Conrad Calcagno asked about whether to get an MBA today (1:36:30)
- Bryan thought that an MBA allows one to redefine oneself, but it is not required to achieve a job there
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