Paladin Realty Partners has expanded its portfolio in Mexico with the formation of a new homebuilding joint venture in the northeastern city of Monterrey. The firm’s partner in the venture is Orange, Ltd., a local real estate company focused on urban development, including mixed-use, office, retail and multifamily projects. Paladin has committed $20 million to the venture on behalf of its third Latin America real estate fund, Paladin Realty Latin America Investors III, which closed on $454 million in commitments in 2009.
The Orange joint venture will target the middle-income residential market in Monterrey, which is Mexico’s second-wealthiest city after Mexico City and is seeing increasing demand for secure residential communities. The partnership recently acquired its first project, called Fundadores, a mixed-use development with for-sale residential condominiums and townhouses, below-ground residential parking and ground-level retail condos. All of the projects in the Orange joint venture are expected to be funded with approximately 30 percent equity, 30 percent pre-sales income and 30 percent debt.
“Monterrey is an exciting, growing market with many opportunities for this venture to produce the new kind of real estate that consumers in that market are seeking,” said James Worms, chairman and chief executive of Paladin, in a statement.
The Orange joint venture marks Paladin’s eighth investment in Mexico across its three Latin America-focused funds, with Fund III expected to allocate about 10 percent of its capital to the market. Other Mexican investments include Paladippsa, a joint venture focusing on lower-income to upper middle-income housing development, in partnership with a Mexican construction management firm. Paladin has committed $36 million to three projects under that venture, including two that are under way in the north-central state of Querétaro and a third that is planned for the southern resort city of Cancún.