UNITED STATES - Pramerica Real Estate Investors has expanded its industrial investment efforts into Brazil for the first time, through a joint venture with Racional Engenharia.

Pramerica is expecting to invest $1bn (€692.2bn) in the joint venture over time through a combination of debt and equity, in a bid to tap into the development potential of Brazil, said Paulo Gomes vice president and chief strategy officer for PREI Latin America. 

"We have been looking at the industrial market in Brazil for over a year. It's our opinion that there are many local and international companies there are looking for new industrial space to keep up with their growth," said Gomes.

"It makes more sense to build new properties. Most of the existing industrial properties in the country are way outdated, so it works better to build new development projects," he added.

Pramerica is expecting to develop a mixture of industrial assets, from traditional distribution units to light manufacturing space in some of Brazil's largest cities, including Sao Paulo and Rio de Janeiro, and for both local and international firms.

The JV, known as Structured Operations, is expected to identify its first project by the end of the Q1 2008 but Pramerica is only investing at the corporate level so assets are not being placed into a specific commingled fund or separate account at this time.

Racional Engenharia has been active in the Brazilian commercial real estate market for the past 36 years, first focusing on industrial properties but later expanding into other property types like retail, office and hotels.