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Paladin forms new Brazilian homebuilding JV

The Los Angeles-based real estate fund manager’s investment in a new low- and middle-income housing platform targeting the São Paulo metropolitan area represents the firm’s seventh housing joint venture in Latin America in the past year.

Paladin Realty Partners has made a $30 million investment in a low- and middle-income housing joint venture with Brazilian homebuilder YPS to construct up to six projects in the greater São Paulo metropolitan area.

The joint venture, called PYPS, has identified four for-sale housing projects and already has committed up to 40 percent of Paladin’s investment to two developments, a 500-unit apartment property in the city of Santo Andre and a 180-unit project in the city of Diadema. Both projects are now accepting pre-sales and are slated to begin construction in the late third quarter or early fourth quarter.

The 15-year-old YPS has built more than 9,000 low- and middle-income housing units around São Paulo and currently is developing an additional 4,459 units through 10 different projects. The homebuilder is known for its close ties with Caixa Econômica Federal, the Brazilian government’s financial institution for lower-income housing.

PYPS is the latest of seven housing joint ventures that Paladin has formed in the past year, all on behalf of its third Latin America fund, Paladin Realty Latin America Investors III, which closed on $454 million of equity in 2009. Those ventures, which span Brazil, Mexico, Colombia, Peru and Costa Rica, represent a total investment of $200 million. Along with a number of pending residential and commercial deals in Brazil, Uruguay, Colombia and Mexico, these investments essentially will exhaust Fund III’s capital.

Programmatic joint ventures to build low- and mid-income for-sale housing typically account for about two-thirds of the investments in Paladin’s Latin America funds, with the remaining third going to more opportunistic deals such as entity-level or commercial property investments.