Paladin Realty Partners has held a final closing on Paladin Realty Brazil Investors III, a $100 million Brazil-focused sidecar fund complementing its Latin America regional real estate fund, Paladin Realty Latin America Investors III. The Brazil sidecar brings the Los Angeles-based real estate fund manager's combined equity commitments to $554 million.
According to Paladin, when combined with local partner equity and modest leverage, the fund has the potential to invest in more than $1.5 billion of assets across the region. Paladin's LatAm strategy consists of joint ventures with local homebuilders to provide affordable housing, as well as opportunistic investments in commercial and select distressed properties. Its investment pipeline in the region is more than $1 billion.
According to Paladin managing director Frederick Gortner, the firm launched the Brazil sidecar one year ago due to increased and continued investor interest in the country. “This was our first country-specific sidecar vehicle,” he said. “We formed it due to strong investor interest in Brazil and our substantial investment pipeline in that country, which typically exceeds $500 million at any point in time.”
To date, the main fund has committed $330 million to various investments in Brazil, Mexico, Peru and Costa Rica. Among those are the recapitalization of two public homebuilders in Brazil, EVEN Construtora e Incorporadora and VIVER Incorporadora e Construtora. Those transactions were closed in late 2008 and early 2009 as those companies faced liquidity challenges at the height of the global financial crisis.
“The macro opportunity in Brazil has been pretty compelling for more than the decade we've been investing there, and lately it's phenomenal,” said Gortner. “Fundamentals for low-income housing couldn't be stronger.”
Investors in the main fund and its sidecar include US pension funds and institutional investors from the US, Europe and the Middle East. Triton Pacific Capital, along with its European affiliate, Capital and Marketing Group, served as placement agent.
Paladin was founded in 1995 in partnership with former US Treasury Secretary William Simon, but it is now wholly-owned by its management team. The firm has been investing in emerging markets since 1998, initially focusing on Brazil, Mexico, Chile, Peru and Costa Rica. Since its inception, Paladin has invested in more than 130 real estate projects throughout Latin America with a projected total capitalization of more than $4 billion.