Pramerica enters joint venture to invest in German residential property
GLOBAL - Pramerica Real Estate Investors has formed a joint venture with Hagen Kahmann and Julian Brown - founders and principals of Kauri CAB Management - to invest in residential apartment blocks in Berlin, as part of its plan to invest in German properties on behalf of institutional investors.
The new Luxembourg-based joint venture Preco Kauri CAB will have a total investment capacity of €120m, which will be used to acquire and refurbish residential flats in the city.
Pramerica's London-based Merchant Banking Group structured the investment on behalf of institutional investors in its PRECO IV fund.
The JV has already committed around €24m to the acquisition of 13 residential blocks with 325 units, comprising about 22,000 square meters in Berlin.
The three parties said the deal aimed to take advantage of the current strong rental growth in Berlin and the large numbers of under-managed residential flats currently available in the city, which can be acquired at attractive prices.
The JV has contracted with Kauri CAB Management to manage the property to strengthen its value through capital expenditures and possible rent increases.
Philip Barrett, managing director at Pramerica, said: "Our joint venture with Kauri CAB positions us well to take advantage of attractive macro and micro market dynamics currently available in Berlin."
As part of the agreement, Kauri CAB will source acquisitions and oversee the day-to-day management of the properties, rental negotiations and the development process for the joint venture.
Kahmann said: "Germany's recovering economy provides a very stable investment environment and, in residential terms, offers sizeable markets with a very strong renting culture.
"Cities such as Berlin, where levels of disposable income mean residential rents are still considerably lower than where they should be, have demonstrated clear demand and strong rental growth over recent years."
Brown added: "The combination of clear growth opportunities across a regulated residential market, together with the prospect of improving existing stable cash flow through additional investment, creates a unique and compelling investment environment."