Latin American LPs invest in US real estate fund

Finesa Real Estate Group has held a first close on its investment vehicle, Diversified International Partners. This marks the first time that Colombian pension funds have invested in US real estate through a discretionary fund.

Finesa Real Estate Group, a Rockville, Maryland-based private equity real estate firm, has held a first close on a real estate investment vehicle developed primarily for Latin American institutional and high-net-worth investors. The fund, Diversified International Partners, which is targeting a $200-million equity raise, raised $70 million in commitments from Colombian investors, including three pension plans that contributed about 60 percent of the capital.

While Colombian pension plans have been active investing in Latin America-focused real estate funds, the first close for Diversified International Partners marks the first time that such investors have invested in US real estate through a discretionary fund format, according to Transwestern Investment Management (TIM), which is the investment manager responsible for the vehicle’s acquisitions, asset management and dispositions. Finesa is general partner of the fund.

Colombian pension funds “have been successful investing in real estate for the last ten years in Latin America,” Andres Gonzalez, Finesa’s president and chief executive, told PERE. “They’re looking at broadening their horizons and diversification by adding US real estate.” 

The main driver of diversification has been the maturing of Colombian pension funds, which began to be established in the country in the early 1990s, said Gonzalez. Regulations have allowed the institutions to invest in illiquid assets once they reach a certain size, and initial investments were made in private equity locally and internationally. The pension funds have been preparing to enter the US real estate market over the past four years, and are seeking to make capital outlays primarily through fund investments. “It’s a source of capital that’s going to continue to grow,” he said.

Diversified International Partners is Finesa’s fifth real estate fund. The firm raised its previous funds primarily from family offices, but is targeting institutional investors – including pension plans, endowments, foundations and insurance companies – as well as high-net-worth individuals, for its latest offering. 

The new fund also represents an expansion of Finesa’s investment focus. Having previously targeted multifamily and retail properties on the East Coast and Midwest regions of the country, the firm will pursue core- and value-add investments in income-producing multifamily, retail, office and industrial properties across the US through Diversified International Partners.

“We are targeting investments in U.S. markets that we know are the healthiest and fastest-growing in terms of job recovery,” said Juan DeAngulo, managing director of TIM, in a statement. “It’s a successful, positive strategy as we continue to emerge from the economic downturn.”  TIM is the Dallas-based investment advisory subsidiary of real estate investment firm Transwestern Investment Group.

Finesa’s chairman, Diego Sanint, is active in the Latin American banking community and currently is the president, chief executive and dominant shareholder of two Colombian auto-loan companies that control a significant share of the country’s auto-finance market, according to Finesa’s website. Additionally, Sanint’s companies run a major sugar cane operation in Colombia.

Sanint formed Finesa in 2002 with Gonzalez, a former asset-backed securities trader at Citigroup who helped to structure an asset-backed portfolio deal for Leasing del Pacifico, a financial institution managed and controlled by Sanint, in 1996. To date, the firm has acquired 28 properties valued at a total of more than $500 million.