UNITED STATES- Pramerica Real Estate Investors is creating a commingled investment fund which for the first time will encourage only Mexican pension funds to invest.
The main reason for this is pension funds in Mexico are now allowed to invest in real estate. This authority was awarded to the pension fund recently by the government of Mexico for placing capital into real estate and private equity.
Pramerica sees this as a way to access a different capital source. Roberto Ordorica is chief executive officer of PREA Latin America. He said, "Never before have we offered our investment products in Latin America to local investors. They have all been done with investors outside of the country. This has been in seven investment funds totaling $2.5bn ($1.75bn euros) worth of capital," he said.
The total assets of the pension funds in Mexico are now over $100bn. It's expected that on a long range basis that the allocations established for real estate will be in the neighborhood of 5% to 6%.
PREA is calling the new commingled fund Prumex Industrial Fund III. The total equity raise will be around $500m. The real estate manager remains hopeful of having all of the capital raised by the end of 2010.
The real estate manager will be making a $50m allocation to the commingled fund as a co-investment. This will be a cash investment from the company and will not involve the trading of any assets into the new fund from one of Pramerica's existing commingled funds.
The investment strategy for Prumex III is to invest in industrial properties all over Mexico. This will include the buying of existing assets and the development of new industrial properties. The purchase of any existing asset will not involve the purchase of any asset that is currently held by another Pramerica sponsored commingled fund.