January 25, 2011 / 3:12 PM / in 7 years

REFILE-Pramerica Real Estate to launch China, Brazil funds

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* China fund to specialise in prime retail development

* Brazil private placement to develop logistics assets

By Andrew Macdonald

LONDON, Jan 25 (Reuters) - Pramerica Real Estate Investors (PRU.N) is targeting commercial property in the emerging markets of China and Brazil with two new ventures, seeking to capitalise on the positive economic growth generated by those countries.

Chief Executive Allen Smith said on Tuesday that this year Pramerica, a unit of U.S.-based Prudential Financial, plans to launch a China fund to develop prime retail assets in top-tier cities, and structure a private placement focused on development of industrial logistics property in Brazil.

Smith would not detail the size of either vehicle, but said they would probably be anchored by a large global investor, with a limited number of others who shared the same level of investment sophistication and financial capability.

“One of the characteristics of these (emerging markets) is the lack of institutional stock you can acquire,” Smith said, adding that developing property assets in these markets posed the longer term question of whether to hold or sell.

In China, Smith said the launch date of a retail-focused fund depended on securing a lead investor, adding Pramerica had a number of “credible” prospects.

He expected such a fund to at least partially replicate the models Pramerica had used elsewhere in Asia.

“Where we’ve been very successful in a market like Singapore ... is building transit-oriented, middle-market malls ... and it has been incredibly successful and, frankly, that sort of approach I personally like tremendously,” Smith said.

“My general philosophy with China is that if you can pick one thing and do it really well, you can over 20 years have a very substantial business.”

China’s blistering economic growth is expected to moderate slightly to 9.3 percent in 2011, while Brazil’s economy is seen up 4.5-5 percent this year. [ID:nSGE70I02L] [ID:nN19215154]

Of the Brazil private placement, Smith said it was being marketed and that he expected it to close in the second half of 2011, followed by an investment period of about three years.

“It’s a development oriented fund ... it’s focused on what would be both the industrial and export corridor between Sao Paulo and Rio (de Janeiro),” Smith said.

The Brazil fund would also be based on a platform Pramerica had used successfully before, in this case Mexico, to minimise execution risk.

“What we’ve really tried to do is take the platform we’ve built very successfully in Mexico, which is focused on sector-specific funds ... and in effect export that to Brazil so that we’re using some of the same people.” (See www.reutersrealestate.com for the global service for real estate professionals from Reuters) (Editing by Jon Loades-Carter)

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