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Blackstone eyes first Colombian RE foray

The New York-based private equity and real estate giant is partnering with two firms that originally had planned to raise a property fund targeting the Latin American nation.

The Blackstone Group is planning to expand its Latin American real estate footprint into Colombia. The New York-based firm, which already has been investing in Brazil for several years, is said to have formed a partnership with Ospinas y Cia, a Bogotá-based real estate developer, and Grupo Pegasus, an Argentinean private equity investment firm, to focus on investments in the country, according to multiple sources familiar with the deal.

Under the new venture, Ospinas and Pegasus would identify property deals in major markets in Colombia, as well as possible other markets across Latin America, for which Blackstone potentially could provide capital. Investments primarily would involve large-scale shopping malls, logistics facilities, mixed-use properties and office buildings.

Blackstone has not designated a specific amount that it plans to commit to the partnership and instead is expected to invest on a deal-by-deal basis. Transactions would be made through the firm’s real estate group, most likely on behalf of its global opportunistic vehicle, Blackstone Real Estate Partners VII.

Meanwhile, Ospinas and Pegasus have abandoned plans to raise an approximately $350 million commingled property fund focused on Colombia, according to sources. The vehicle was intended to pursue developments, primarily in the retail, industrial and office sectors, with an average equity deal size of $30 million to $40 million. The two firms had formed a venture in 2011 to establish a Colombia-focused real estate investment platform. Under that partnership, Ospinas – which had not previously managed institutional capital – would serve as the developer and operator, while Pegasus – which had been seeking to make in-roads in Colombia – would act as manager of the platform.

The offering would have been one of the first and largest Colombia-focused real estate funds to seek international capital. The goal was to collect approximately one-third to half of the equity target from Colombian investors, while the remainder would come from foreign institutions. Indeed, the fund was said to have attracted interest from investors in the US and elsewhere and, as of March, a first close was anticipated within the next one to three months. However, PERE understands that Ospinas and Pegasus decided to halt fundraising as their discussions with Blackstone intensified.

Blackstone’s partnership with Ospinas and Pegasus signals a more targeted push into Latin America for the private equity and real estate giant. In fact, at the end of 2013, the firm informed investors that managing director David Roth would be dedicating more of his time to Blackstone’s Latin American real estate efforts.

Blackstone already has invested a significant amount of capital in Brazil, most notably with its acquisition of a 40 percent stake in Pátria Investimentos, a fund manager investing in real estate and other alternative asset classes, in 2010. In partnership with Pátria, the firm purchased a 70 percent stake in Brazilian homebuilder Gafisa’s Alphaville unit in June 2013. Its other property-related investments in Latin America include a Brazilian mall purchased through its Tactical Opportunities Fund and real estate assets acquired through a Brazilian bank.