After a decade of lending in Mexico, MetLife Real Estate Investors expects to ramp up its equity investments in the country, as well as expand into new Latin American markets. “Over the last couple of years, we have been trying to increase our presence in the Mexico market,” said Bernd Wolf, who was named the real estate investment manager’s new country head in late May. “Right now, the strategy to increase our portfolio is to grow rapidly in Mexico and pursue equity transactions.”
To date, MetLife has completed just three equity investments in Mexico: the $100 million acquisition of the Hilton Los Cabos Beach & Golf Resort with Thayer Lodging Group in September; and a couple of residential developments through a joint venture established in the late 2000s, which the firm exited last year. The Morristown, New Jersey-based investment manager currently is in talks with new potential joint venture partners and expects to close on an acquisition through a new partnership in the next six to 12 months. Although it has not set a specific target for its equity investments in Mexico, the firm plans to pursue transactions ranging between $50 million and $100 million in size.
Given the compression in cap rates in Mexico, however, Wolf is aware that MetLife may not be able to immediately find equity investments that will deliver the double-digit returns it is seeking. “It’s at the height of the cycle for equity transactions,” he said. “We’re waiting for the cycle to turn a bit so we can be more aggressive in bidding.”
Meanwhile, MetLife also is boosting its lending activity in Mexico. Over the last three years, the firm has nearly doubled its commercial debt portfolio from $900 million to $1.6 billion and anticipates increasing its loan book by an additional 20 percent to 25 percent over the next 12 months. This year, it has targeted $400 million to $500 million in new mortgages and already has locked up
$300 million in refinancings and new loans. Additionally, the manager is evaluating $1 billion in additional debt opportunities.
Still, Wolf is looking beyond just Mexico for MetLife’s real estate debt portfolio. Going forward, the firm, which also has an office in Chile, plans to evaluate other Latin American countries such as Colombia and Peru and expand into those markets over the next five years.