€150 million venture for real estate investment in Paris

United States based 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.

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,’ he added.

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 square meter Tour Qualis office refurbishment in 2010.

The JV currently has a portfolio of three investments comprising a 5000 square meter office building in Courbevoie, Paris for conversion into residential flats in a joint venture with Pitch Promotion; a 2000 square meter office building in Courbevoie, Paris which may be converted into residential; and a 1600 square meter 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.

‘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,’ said Richard Saint Guilhem, chief executive officer of Groupe Hoche.

‘Mid market residential properties in greater Paris are highly desirable, given the current lack of supply and the unaffordability of city centre locations, so our aim is to deliver product that will satisfy that demand,’ he added.