Pramerica Real Estate Investors has formed a joint venture company with Herbert Krämer, the CEO and Founder of property firm hkm Management AG to develop a major new shopping center in Böblingen, a town near Stuttgart in the Baden-Württemberg area of Germany.
The new Luxembourg-based joint venture, PBC Preco S.à.r.l., has a total investment capacity of around 120 million, which will be used to finance the acquisition of the site and the subsequent construction of the shopping center. Pramerica is the European arm of the real estate investment and management business of Prudential Financial, Inc., (NYSE: PRU) which is headquartered in the US.
The shopping center, which has outline planning consent, will provide approximately 24,400 m² of net lettable area across 95 retail units and more than 800 parking spaces. The JV will acquire the site and plans to begin construction in mid-2012.
With a team of 18 employees, hkm will advise on the development, administration and management of the center and the rent negotiations of the planned shopping center. Herbert Krämer, who has more than 30 years of experience in the German retail sector, founded hkm in 2001. Pramerica's London-based Merchant Banking Group structured the investment on behalf of institutional investors in its PRECO IV fund.
"This JV is very much in line with Pramerica's strategy of partnering with experienced local operators in markets where we see strong potential to create value," said Philip Barrett, Managing Director of Pramerica.
"It is clear that there is significant demand for a better retail offer in Böblingen. hkm is a very well respected business with a lot of experience in developing and managing real estate, and we look forward to working closely with them as we progress this scheme."
Herbert Krämer, CEO of hkm, added, "Baden-Württemberg has a very stable investment environment. Böblingen as a town also has a high absolute purchasing power and is one of the top five development regions in Germany. As such the potential tenant demand is large. Pramerica is for us the ideal joint venture partner as the company is known internationally, has many years' experience in commercial real estate and has the necessary access to capital."
Pramerica has been advised by Clifford Chance, Ernst & Young, CBRE and WSP CBP. Herbert Krämer and hkm were advised by Rotthege & Partner. Project financing has been provided by EuroHypo.
Source: FTI Consulting