AMB Capital Partners, the private funds arm of industrial REIT AMB Property, has formed a new joint venture fund – AMB Brazil Logistics Partners Fund I – to invest in logistics properties in Brazil.
The initial third-party equity investment will be approximately R$360 million (US$211 million), and the joint venture's overall equity commitment is R$720 million (US$422 million), including AMB's 50 percent co-investment. AMB's partner in the fund is a major university endowment, which it declined to name.
“Our private capital business is a significant growth engine for AMB, allowing us to offer investors the opportunity to co-invest with us across geographies and risk/return spectrums,” said Guy Jaquier, president of AMB Capital Partners. “We considered a number of different structures for the current investment vehicle, but in the end, one investor was interested in the entire commitment.”
The fund's investment strategy is to develop, acquire, own, operate, manage and dispose of logistics properties primarily within AMB's target markets in Brazil, namely Sao Paulo and Rio de Janeiro.
“Economic growth in Brazil is driving the expansion of its consumer class and, in turn, the need to distribute greater amounts of product,” said Gene Reilly, AMB’s president for the Americas. “The current supply of logistics facilities in Sao Paulo and Rio de Janeiro does not meet the growing needs of the businesses serving the approximately 33 million inhabitants of these regions, so we are developing Class A distribution facilities to meet this demand.”
The fund will participate in a development program that AMB previously established with its local Brazilian partner, Cyrela Commercial Properties. AMB and Cyrela recently began developing industrial projects through a 50-50 partnership, and AMB’s stake in that partnership will now be assumed by the fund.
As a result, at closing, the fund acquired approximately 639,300 square feet of development properties, of which more than 88 percent is pre-leased, as well as substantial land positions in Sao Paulo and Rio de Janeiro. “More than half of the fund’s investment potential is already in the pipeline,” Jaquier added.