Equity International (EI) is slated to add another Colombian company to its portfolio. The Chicago-based firm has partnered with Bogota-based Terranum Hotels to buy Decameron, a Colombian all-inclusive hotel and resort company. EI declined to comment, but PERE understands that the transaction is expected to close next month.
Along with EI and Terranum Hotels, the University of Michigan also has committed up to $10 million to the transaction in a co-investment offered by EI alongside its Equity International Real Estate Fund V, according to documents from the endowment’s board of regents meeting last week. In 2011, the University committed $40 million to the fund, which is focused on sourcing, developing and building large-scale, institutional-quality real estate operating companies in emerging markets such as Latin America, India and Mexico.
“The acquisition provides immediate scale in the all-inclusive segment of the industry, which is in the early stages of institutionalization,” Timothy Slottow, the University’s chief financial officer, in a memorandum to the regents. “This commitment offers the University an attractive opportunity to invest in a project in Latin America with an existing manager.” Terms of the co-investment include no management fees or carried interest.
According to Decameron’s website, the company was established in 1987 and has 35 hotels in 10 countries in the Caribbean, Central America, South America and Africa. EI and Terranum intend to add value to Decameron through the expansion of the business as well as enhancing operating efficiencies, according to Slottow's memorandum. The partners plan to exit the investment through a potential initial public offering or sale to a private buyer.
Terranum Hotels is a related entity of Terranum Corporate Properties, in which EI invested $75 million in 2011, its first such transaction in the Latin American nation. Both companies are part of Bogota-based property developer Terranum. Terranum Hotels currently owns and operates five hotels in Colombia and is developing an additional three properties.