REAL ESTATE – In the US, Fifield Companies has created an apartment development joint venture with Pacific Life Insurance Company. The two firms together will construct $400m (E293m ) worth of properties over the next 24 months.
The structure of the operation calls for 25% equity and 75% debt, with the vast majority of the equity coming from Pacific Life.
This is not the first time that the two firms have done business together. Fifield president Rick Cavenaugh said: "We have done business with Pacific Life in the past, dating back to 1993. These were on single-property transactions. This will be the first time we have done things together on a multi-property basis."
Cavenaugh sees now as a good time to be developing apartments. He said: "Many of the apartment markets around the country are making a comeback. Occupancy and rents in a good number of regions are improving. Part of this has been the fallout of units planned for condo development.
"The development possibilities look good for the next couple of years." He added.
The first project planned for the JV is the K Station mixed-use development in downtown Chicago. The total development cost of this project is at least $100m.
The plans call for the project to have 2,400 units developed in as many as six high-rise towers. The first tower is called 353 N DesPlaines at K Station. And is now under construction. The second building will be started later this year.
The venture gives Pacific Life first rights to any apartment development that Fifield is constructing. If the life company says no, then the developer can show the project to other sources of capital.
The venture will be looking at developments in a few specific markets, including such areas as Chicago, California, Washington, DC, southeast Florida and Phoenix.
The common theme for these markets is that they have good long range demographic trends and will continue to be in demand by buyers for new complexes. The JV has an interest in both urban and suburban sites for development.