Pramerica Real Estate Investors has formed a new joint venture company with Hagen Kahmann and Julian Brown, the founders and principals of Kauri CAB Management GmbH, to invest in residential apartment blocks in Berlin.
The new Luxembourg-based JV, Preco Kauri CAB S.a.r.l, has a total investment capacity of around 120 million, which will be used to acquire and refurbish residential flats in Berlin, Germany's largest residential market. Pramerica is the European real estate arm of the real estate investment and management business of Prudential Financial, Inc., which is headquartered in the United States.
Pramerica's London-based Merchant Banking Group structured the investment on behalf of institutional investors in its PRECO IV fund, continuing its decade-long track record of investing in German residential property on behalf of investors in a variety of funds.
The JV has already committed around 24 million to the acquisition of 13 residential blocks with 325 units, comprising about 22,000 square meters. The JV aims to take advantage of the current strong rental growth in Berlin and the large numbers of under managed residential flats currently available in the city, which can be acquired at attractive prices.
The joint venture has contracted with Kauri CAB Management to manage the property to strengthen its value through capital expenditures and possible rent increases.
"Pramerica has a strong track record of investing in German residential assets and we believe this market, if approached correctly, presents a significant opportunity to create value for our clients," said Philip Barrett, Managing Director of Pramerica.
"Our joint venture with Kauri CAB positions us well to take advantage of attractive macro and micro market dynamics currently available in Berlin."
With a team of 18 employees, Kauri CAB will source acquisitions and oversee the day-to-day management of the properties, rental negotiations and the development process for the joint venture.
Kauri CAB Managing Directors Hagen Kahmann and Julian Brown founded their company in 2008. Both have been managing and investing in German residential real estate since 1998.
Said Kahmann, "Germany's recovering economy provides a very stable investment environment and, in residential terms, offers sizable markets with a very strong renting culture. Cities such as Berlin, where levels of disposable income mean residential rents are still considerably lower than where they should be, have demonstrated clear demand and strong rental growth over recent years."
Added Brown, "The combination of clear growth opportunities across a regulated residential market together with the prospect of improving existing stable cash flow through additional investment creates a unique and compelling investment environment. We are very pleased to be forming this joint venture with Pramerica whose residential experience and access to capital makes them the ideal partner for us."