Pramerica forms French development JV to generate opportunistic returns

Pramerica Real Estate Investors said on Monday it has created a EUR 150 mln joint venture with French developer Groupe Hoche in a bid to meet the demand for new office and residential space among institutional clients.

The joint venture is an example of Pramerica's strategy of finding local partners to source and execute development or refurbishment projects in sectors that Pramerica believes offer the potential to create value. It follows the announcements earlier this year of an EUR 82 mln residential development joint venture with Aros in Sweden, and two European logistics joint ventures, totalling EUR 220 mln, with Panattoni.

Initially, the Pramerica-Groupe Hoche joint venture will invest in residential and office developments in Paris. With leverage, the joint venture has about EUR 150 mln to invest over a two-year period, and has already committed EUR 25 mln to three projects in Paris. The projects are a 5000-m² office building in Courbevoie, Paris for conversion into residential flats in a joint venture with Pitch Promotion; a 2,000-m² office building in Courbevoie which may be converted into residential; and a 1,600-m² new build residential development in Puteaux, near Paris.

A further pipeline of opportunities has been identified, Pramerica said.

The joint venture has entered into an asset management agreement with Groupe Hoche, a private residential and office developer, which has been owned by Richard Saint Guilhem since 1997. Groupe Hoche has extensive experience of undertaking refurbishments and developments of French office and residential properties both as principal investors and on behalf of a number of institutional investors.

Pramerica's London-based Opportunistic Investment Group structured the investment on behalf of institutional investors to offer the potential for opportunistic returns. The joint venture will also explore opportunities in major French cities such as Lyon and Toulouse.

'The recent credit crisis created the need for new residential and office space in France, and we needed a local partner with the expertise and track record to help us to provide our investors with the opportunity to benefit from the current demand in a well-performing market,' said Phillip Barrett, managing director of Pramerica's London-based merchant banking group. 'Groupe Hoche meets these requirements perfectly and we are looking forward to getting our first three developments underway while working together to complete further transactions.'

Pramerica Real Estate is the real estate investment arm of US-based Prudential Financial. At end-March 2011, Pramerica managed EUR 33 bn in gross real estate assets, or EUR 20.2 bn net, on behalf of more than 490 clients worldwide.