Pramerica Real Estate Investors has created a 150 million joint venture with Groupe Hoche, the Paris-based developer, to invest in residential and office developments in Paris. Pramerica is the European arm of the real estate investment and advisory business of Prudential Financial, Inc., (NYSE: PRU), which is headquartered in the United States.
With leverage, the joint venture has about 150 million to invest over an expected two-year period, and has already committed 25 million to three projects in Paris, along with identifying a strong pipeline of additional opportunities.
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."
The venture continues Pramerica's strategy of finding local partners with the relevant expertise to source and execute development or refurbishment projects in sectors that Pramerica has identified as providing a clear opportunity to create value. It follows the announcements earlier this year, of an 82 million residential development joint venture with Aros in Sweden, and two European logistics joint ventures, totaling 220 million, with Panattoni.
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 Paris office has a longstanding relationship with the principals of Groupe Hoche through its acquisition of the Rue d'Astorg development in 2002 and the 26,600 m² Tour Qualis office refurbishment in 2010.
The JV currently has a portfolio of three investments comprising the following:
- a 5,000-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, Paris which may be converted into residential
- a 1,600-m² new build residential development in Puteaux, near Paris.
The JV expects to submit planning for the first development very shortly, with construction and marketing for pre-sales due to commence later this year.
Richard Saint Guilhem, CEO of Groupe Hoche, said, "We are very excited about the joint venture as Pramerica's financial strength and Europe-wide real estate expertise, combined with our ability to source and management local development opportunities, puts us in a strong position to take advantage of the current market conditions.
"Mid-market residential properties in greater Paris are highly desirable, given the current lack of supply and the unaffordability of city center locations, so our aim is to deliver product that will satisfy that demand."