The lure of Central America

Latin America is not the only emerging market on the radar of private equity real estate investors. Central America has seen its fair share of action in recent months. One such player is NOA Partners, a Costa Rica-based real estate investment firm which focuses on raw land purchase and management.

With an eye on the country's steadily growing real estate market, NOA recently launched a fund, the Costa Rica NOA Properties fund, to acquire approximately 1,156 acres of real property within a 3,000-acre part of the Northern Osa Peninsula in Costa Rica's southern zone. Greg Clements, managing partner at NOA Partners, told PERE the vehicle will target a minimum of $60 million (€39 million) and will primarily acquire land assets in the country with close proximity to Corcovado National Park – one of the largest plots of protected rain forest outside of the Amazon.

Through Costa Rica NOA Properties, NOA will acquire land assets – the firm is currently looking at more than 30 privately-owned parcels it plans to piece together – effectively tying farms, forests and beach lands together to create a single “globally important” property.

“The value really comes from being able to take disparate properties containing both beach and farm lands to make them one large contiguous free-and-clear developable piece of land,” Clements said.

NOA is a firm believer in Costa Rica's up-and-coming property market, which it says has experienced considerable consistent growth in the past few years. The country has seen a “very healthy influx of retirees and tourist dollars,” said Clements. Last year's decision to build an international airport is also expected to propel activity in the southern region of the country.

The shores of Central America have indeed been beckoning global real estate investors. NOA, which calls itself an “early mover” in identifying and targeting lands in the country with great upside value, is looking to capitalize on its first-mover advantage.

But it will soon be joined by other firms eyeing the country's steadily growing real estate market. Another early-mover in Costa Rica is New York-based Vista Verde Partners which completed its capital raise earlier this year for VVP SeaBreeze I. The fund will target the country's growing residential real estate market.

San Francisco raises RE target
The San Francisco Employees' Retirement System has increased its allocation to real estate from 10 percent to 12 percent. The pension also increased its private equity target two percentage points from 12 percent to 14 percent. The $16 billion (€10 billion) system's new allocations included an increase in international equity from 20 to 23 percent and a decrease in domestic equity from 28 percent to 26 percent and fixed income from 30 to 25 percent. The system's board also approved new commitments to private equity funds including $40 million to First Reserve Fund XII, which invests in energy companies, and $40 million to Five Arrows Realty Securities V fund, which invests in securities of real estate companies. The $38 billion Maryland State Retirement and Pension System also recently doubled its real estate target from five to 10 percent and its private equity target from two percent to five percent.

JBG, Scheer target life sciences
The JBG Companies has closed a $100 million (€64.5 million) real estate vehicle with real estate services firm Scheer Partners to develop and acquire life sciences and biotechnology commercial real estate. The Greater Washington Life Sciences Fund is now targeting $300 million of investments in the Greater Washington DC area with most of the fund's projects located in the Maryland Interstate-270 corridor. Investments will consist of existing tenanted buildings along with other research and development facilities that the joint venture plans to convert. Scheer will be the fund's managing member. Robert Scheer told PERE supply of life science laboratories had started to “dwindle” in recent years despite expectations of future federal funding in the industry. JBG used equity from its $600 million Fund VI vehicle, while life science executives and the State of Maryland invested through Scheer Partners.

LaSalle closes fifth fund on $728m
LaSalle Investment Management has closed its fifth real estate vehicle on $728 million (€470 million) of equity commitments. With leverage, the global real estate investment firm believes the value-added fund, LaSalle Income & Growth Fund V, will have a purchasing power of close to $2 billion. Fund V is the fifth in a series of LaSalle funds targeting the US office, apartment, industrial and retail sectors. Fund president and managing director Jim Hutchinson said LaSalle would also look at properties affected by the “constrained capital markets” where assets could produce high levels of income but also offer value-add opportunities. LaSalle's Income and Growth Fund series was launched in 1996, with each fund having a general holding period of three to five years. Fund IV, which raised $500 million in equity, is fully committed.

Heitman JV invests in US self-storage
An affiliate of Chicago-based real estate investment firm Heitman has partnered with Buffalo, New York-based self-storage real estate investment trust Sovran Self Storage on a joint venture, Sovran HHF Storage Holdings LLC, to acquire up to $350 million (€223 million) of self-storage properties located throughout the US. Sovran is contributing 20 percent equity to the joint venture while Heitman contributes the remaining 80 percent, with leverage expected of up to 65 percent. The properties acquired by the joint venture will be managed by Sovran and facilities will be branded under Sovran's “Uncle Bob's Self Storage” brand. Sovran currently operates 359 self-storage facilities in 22 states across the US. Earlier this year Heitman acquired a 1.9-million-square-foot industrial portfolio located in southwestern suburban Chicago from a partnership of Panattoni Development Co. The deal included four warehouse facilities in Chicago's Windham Lakes Southwest Business Park in Romeoville.

CBRE buys San Francisco offices
Los Angeles-based CB Richard Ellis Investors has acquired a six-story Class A office building in San Francisco through its Strategic Partners US IV fund for an undisclosed sum. Acquired from Lowe Enterprises, the newly constructed building totals 291,000 square feet of rentable space and is located at 500 Terry Francois Boulevard in San Francisco's Mission Bay area, adjacent to the 280 Freeway and anchored by the University of California San Francisco. The property features amenities such as high-tech conference rooms, a 4,000-square-foot fitness center and retail space. The firm's Strategic Partners US IV fund closed in 2005 with $1.2 billion in equity.

Prudential JV to build Mexican condos
The real estate investment management arm of Prudential Financial, Prudential Real Estate Investors, will be investing up to $800 million (€509 million) in the second phase of a joint venture with Mexican developer Grupo Concord. The joint venture plans to develop 1,800 condominiums along Mexico's Sea of Cortez. It will redevelop a 2.1-million-square-meter plot of land near the tip of the Baja Peninsula to comprise around 1,800 condominium units, a marina, hotel, retail shops and a golf course designed by South African golfer Gary Player. PREI-Latin America chief executive Roberto Ordorica said Mexico's rapidly growing tourism industry was a key reason for the firm in its strengthening of its commitment to Mexico.

Roark Capital acquires Primrose Schools
An affiliate of private equity firm Roark Capital Group has acquired Georgia-based Primrose Schools, a provider of education-based early-child-care services. Primrose Schools operates 182 private child care centers in 15 states across the US, generating approximately $275 million in total revenues. Atlanta-based Roark Capital Group invests primarily in consumer and business services companies, with a focus on the franchise, food and restaurant, specialty retail, direct marketing and financial services sectors. The private equity firm currently has more than $1.5 billion of equity capital under management.