Paladin holds first close on fourth LatAm fund

Paladin Realty Partners has raised $75.7 million in the first close for its fourth Latin American-focused real estate fund, Paladin Realty Latin American Investors IV, according to a filing with the US Securities and Exchange Commission. All of the capital in the initial close, which occurred last month, came from existing investors. 

Paladin declined to comment, but PERE understands that an additional $100 million in commitments – also from existing investors – has been approved for the $400 million fund and are expected to close in the coming months. 

The firm originally had planned an initial closing for January or February of last year, having circled more than $100 million in commitments from limited partners, according to a presentation made to the Los Angeles City Employees’ Retirement System (LACERS) during the pension system’s November 22, 2011 board meeting. LACERS itself approved a $20 million commitment to LatAm IV at the meeting.

But the pre-marketing period – which focused exclusively on existing investors – for LatAm IV took much longer than expected, in part because of a challenging fundraising environment, according to sources familiar with the matter. The firm also halted pre-marketing on the new fund after being granted a six-month extension on the investment period for the predecessor fund, LatAm III, through the end of September. The departure of Philip Fitzgerald, the firm’s managing director of emerging markets, early last year was not said to be a significant factor in the delay of the first closing.

The pause in pre-marketing, however, led LACERS to pull its initial commitment to LatAm IV, which was intended to be part of the pension plan’s 2012 real estate allocation. Sources said that the system may reconsider a commitment to the fund after formal marketing for the vehicle begins this year.

Paladin plans to invest up to 60 percent of LatAm IV in programmatic for-sale housing joint ventures and up to 40 percent in opportunistic commercial real estate strategies. Similar to LatAm III, about 50 percent to 60 percent of the fund will be allocated to investments in Brazil, and 10 to 20 percent each to Peru and Colombia, with the remaining capital going to other countries such as Mexico and Costa Rica. The fund has a gross return target of 25 percent.