TC Latin America Partners, a New York-based Latin American real estate fund manager, has collected a total of $268 million in commitments in the final close of its second fund, Terranum Capital Latin America Real Estate Fund II.
For its second fund, TC Latin America expanded its limited partner base geographically, with about one-third from Latin America and the remainder from the US, Europe and the Middle East. By contrast, 75 percent of the capital in the firm’s predecessor fund, which attracted a total of $235 million in 2013, came from Latin American investors.
Fund II was launched in 2015 with an original target of $400 million, but the equity goal was subsequently revised to $300 million. TC Latin America held an initial close for the fund in April. About one-third of the capital in Fund II came from investors that re-upped with the firm.
The fund will have the same geographic focus as its predecessor, targeting real estate investments in Peru, Colombia and Mexico. However, for Fund II, TC Latin America has broadened its investment strategy – which previously was focused on residential real estate – to also include the industrial and retail sectors, along with some mixed-use properties.
Through the fund, TC Latin America will pursue opportunistic investments by providing debt or equity to projects or developers that are in need of liquidity. About $60 million, or roughly 25 percent of the capital in the fund, has already been committed in six investments. They include the $15 million acquisition of an unfinished 595-unit apartment development project in Mexico City earlier this year, as well as a retail and office development project in southern Peru.
TC Latin America is targeting an internal rate of return of between 16 percent and 20 percent for Fund II. The firm declined to disclose performance data on Fund I.
“We are uniquely positioned to take advantage of the current real estate investment opportunity in the region and believe that this is an ideal time to build a portfolio at valuations that we have not seen in a long time,” said Gregorio Schneider, managing partner and chief investment officer at TC Latin America Partners. “Compared to other emerging market countries, Peru, Colombia and Mexico are better positioned to withstand potential headwinds. The market fundamentals in these countries are sound and the real estate sector will continue to be very dynamic.”
Added managing partner Daniel Grunberg: “With the increased volatility in the market and lack of liquidity, we continue to see the opportunity to structure investments higher in the capital structure and in some cases in US dollars.”
Hodes Weill Securities acted as the exclusive placement agent to TC Latin America.
2016 has been a tough fundraising year for Latin America-focused real estate funds, largely because of investor uncertainty relating to volatility in Brazil – which saw the impeachment of President Dilma Rousseff earlier this year – and other countries in the region. TC Latin America Real Estate Fund II is one of the few such vehicles that reached a final close this year. Also this year, HSI captured a total of $700 million for its latest Brazil-focused real estate fund, HSI Real Estate Fund V, while Peninsula Investments Group held a $180 million final close for its pan-Latin American real estate fund, Peninsula Investments Group Fund III.