REAL ESTATE Pramerica Real Estate Investors has formed a $500m (€400m) joint venture with Kite Realty Group to invest in retail properties.
The capital will be placed over a four-year period. Around 80% or $400m would be supplied by Pramerica and the balance by Kite Realty. The ownership split of any assets in the joint venture would go along the same lines as the equity contributions.
Pramerica feels that this venture will allow the company access to some high quality retail properties. Terry McHugh is the portfolio manager for Prudential Property Real Estate Separate Account II (PRISA II). He said, "We believe that Kite will be able to find us some very good properties to invest in. These are assets that would have been very difficult to get to on our own."
The first property for the venture is the development of Parkside Town Commons near Raleigh-Durham, North Carolina. This is a 100-acre project. There will be around 700,000 s.f. of retail in the project. No tenants have been inked to the project. The plan is to have a couple of large retailers to anchor the project and have the rest filled in with small shop space. The center will be delivered to the market in the next two _ to three _ years. Total development costs have been figured out.
This project will be funded by equity from PRISA II. It fits the commingled fund’s strategy of investing some capital in new development projects. Pramerica anticipates there will be a variety of other sources of capital that will be involved in the Kite JV. McHugh said, "There are several commingled funds and some large separate account pension fund clients that would like to participate in the JV."
Kite Realty will be looking at a variety of markets for deals for the venture. Some will be finding new development opportunities. There also will be the purchase of existing centers that can be improved. Most of the deals will be no less than $50 m . These will be with assets totaling 200,000 to 800, 000 s.f.