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GE Real Estate invests in Russia.

GE Real Estate, Norwalk, Connecticut, announced it has made its first real estate investment in Russia through an investment of US$50 million in Chicago-based Heitman Russia Property Partners (HRUPP), a new fund that will have US$150 million of equity.

Along with GE Real Estate and two other institutional investors, Heitman LLC, which is acting as manager, is also taking a sponsor equity stake, aligning its interests with those of the other investors.

HRUPP will aim to acquire development and refurbishment projects in the retail, office, warehouse and residential sectors throughout Russia. It is expected that HRUPP will commit about 60 percent of its capital to development projects, in which it will co-invest with local Russian developers, according to Karim Habra, managing director of GE Real Estate Central & Eastern Europe.

"We are very excited to be entering the market through this fund, which will align our interests along with those of local Russian developers on individual projects. In an equity- and debt-hungry market, we believe this will provide us with an important point of difference to other investors operating within the market," said Habra. "We believe the Russian market to be very promising, and hope that we can replicate the success we have had by being an early entrant in the Central European market in this new market."

HRUPP will commit the remainder of its capital to completed quality investment projects that offer suitable returns. HRUPP will be leveraged and will have a seven-year life, added Habra.

This new investment vehicle represents the renewal of a successful working relationship between GE Real Estate and Heitman, having previously invested in real estate projects in the Czech Republic and Poland, according to Olivier Piani, president of GE Real Estate Europe.

"This investment provides GE Real Estate with a strong first entry into the Russian real estate market," said Piani. "Not only are we investing alongside good partners, but we also have a very experienced manager in the form of Heitman, whose experience with capital and network of contacts will be invaluable to HRUPP, and with whom we already have a successful history."
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Title Annotation:Commercial
Publication:Mortgage Banking
Date:Dec 1, 2007
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