OAK BROOK, IL—The United States real estate market remains one of the most attractive places in the world to park your money, even for European investors. PGGM, for example, a Dutch pension fund service provider, has just made another major commitment to invest in America by forming a joint venture with a wholly-owned subsidiary of The Inland American Real Estate Trust, Inc. The new venture, between PGGM and IAGM Retail Fund I Member, L.L.C., will focus on acquiring and investing in necessity-based retail shopping centers in Texas and Oklahoma.
The partners say the venture will eventually have a value of more than $600 million. Inland American, a real estate investment trust based in suburban Chicago, will have an equity stake of 55% and brings in an existing portfolio of 13 retail centers scattered across the two states with about 2.3-million-square-feet. PGGM has contributed about $79.4 million of equity and will contribute another $50.7 million for new acquisitions in the targeted area. Inland has recently been on a spending binge in the two states. In January, for example, the trust completed the purchase of Rockwell Plaza, a 254,690-square-foot shopping center in Oklahoma City and Stone Ridge Market, a 218,436-square-foot shopping center located in San Antonio.
Inland Institutional Capital Partners Corporation assisted Inland with the transaction and Jones Lang LaSalle helped PGGM with property due diligence on the contributed Inland properties.
“This partnership is a strategic fit with Inland American’s long-term business and investment strategies and provides a strong platform for future growth in our core retail sector, while maximizing the benefits to our stockholders,” says Michael Podboy, senior vice president of non-core asset management for Inland American Business Manager & Advisor, Inc.
This is not the first partnership of this kind for the Dutch. In 2010, they formed a similar joint venture with the Inland Real Estate Corp., in which, like the one with Inland American, Inland Real Estate holds a 55% ownership and acts as the managing partner. Unlike this new partnership, however, the one formed in 2010 focuses on acquiring retail centers in Midwestern states like Illinois and Minnesota.
Other Europeans may also join the rush of investments flowing into America. According to a report released a few weeks ago by Chicago-based DTZ, “US markets are classified as the most attractive region, ensuing future volume growth. Considering the high level of market liquidity, we would expect more international investors to focus on the U.S. going forward.”