Pramerica forms €82m Sweden JV

US firm Pramerica Real Estate Investors sees Stockholm residential property as an opportunity due to ‘clear demand’ and ‘scarce supply’.

Pramerica Real Estate Investors has formed a €25 million joint venture to invest in Swedish residential property.

The tie-up with local property company Aros Management to develop projects in the capital, Stockholm, comes on the back of “strong economic growth” in the country as well as because of its under–supplied residential market, the firm said. With leverage, Pramerica added the venture could invest in a total of €82 million of assets.

Pramerica’s merchant banking group has structured the JV on behalf of institutional investors, but it is not the first time it has paired up with Aros. It struck up an arrangement in 2006 that went on to invest €115 million in five buildings.

In the first deal for the follow-up vehicle, the joint venture is buying a 9,400 square metre office in the centre of Stockholm that can be converted to residential use.

Philip Barrett, managing director of Pramerica, said:  “The continuation of the joint venture is a natural progression, which we are very excited about. “We see the Stockholm residential market as an attractive opportunity for the creation of new residential units due to the scarcity of supply and clear market demand.”

Samir Taha, chief executive of Aros, said: “We believe our strategy of repositioning existing commercial buildings to attractive residential units in the Greater Stockholm area has great potential as the market is undersupplied, and local demographic changes are likely to increase the undersupply further over the coming years.”

Aros was founded in 2006 by Vencom Property Partners, a Stockholm-based real estate advisory and principal investing business, and Samir Taha, a local developer, investor and entrepreneur.

Pramerica Real Estate Investors, for its part, is the real estate investment management business of Pramerica Investment Management, a part of US giant, Prudential Financial.

Sweden’s GDP grew 5.2 percent in 2010, and is expected to expand 3.9 percent this year and 3.4 percent next year, according to the Organisation for Economic Co-operation and Development (OECD) in a recent report. However, Finance Minister Anders Borg said at the World Economic Forum in Davos, Switzerland, last week that the Swedish economy couldn’t continue to expand at its current “striking” pace.