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Canadian pension forms JV with Mexican developer

Equity International-backed Advance Real Estate has received $250 million in new capital to help drive significant expansion in the Latin American country.

Advance Real Estate, an industrial real estate developer in central Mexico, has partnered with one of the largest Canadian pension plans to expand its portfolio in the country. The pension plan, the identity of which has not been disclosed, has committed $250 million through an asset-level joint venture that would support the development of 800,000 square meters (approximately 8.4 million square feet) in central Mexico over the next four years.

The investment would signal a substantial – and aggressive – expansion for Advance. The equity commitment is more than twice the total amount of capital that the company has invested to date and stands to more than double the developer’s existing portfolio. In contrast, throughout its seven-year history to date, the firm has deployed an aggregate of more than $100 million in various projects throughout central Mexico and built in excess of 500,000 square meters (approximately 5.3 million square feet).

The Canadian pension plan’s commitment follows Equity International’s acquisition of a minority stake in Advance, which was announced in October. The entity-level investment, made on behalf of the $650 million Equity International Fund V, marked the Chicago-based private equity firm’s first deal in the country in half a decade. Since EI made its investment, Advance has increased its pipeline in Querétaro, Irapuato, Celaya, Guadalajara and Mexico City by more than $150 million. New projects that it has initiated include the development of two businesses parks and one speculative building in Querétaro.

“With high occupancy rates across the warehousing and distribution sectors and rising demand for Class A space, the market outlook for Advance is highly favorable,” said Tom Heneghan, chief executive of EI, in a statement. “This investment underpins Advance’s reputation as a preferred industrial developer in central Mexico.”

Based in Querétaro, in the Bajío region of central Mexico, Advance develops and manages Class A industrial real estate in the country. The company’s projects include traditional build-to-suit projects for multinational and domestic corporations, as well as business parks for small and medium-sized businesses.