VBI holds $500m final close on Brazil fund

The Sao Paulo-based real estate investment management firm has reached its hard cap for its second real estate fund.

VBI Real Estate has held a final close for its Brazil Real Estate Opportunities Fund (BREOF) II, which was oversubscribed and reached its hard cap of $500 million. The fund had attracted $700 million to $800 million in investor demand, but $500 million “was the right size for the investments we wanted to make,” Ken Wainer, a partner at the Sao Paulo-based real estate investment management firm, told PERE.  Given the difficult fundraising environment, the fund was able to attract investors because “there’s a broad perception that opportunities in Brazil are still going strong.”

Investors in BREOF II included US and European public pension plans, corporate pensions, insurance companies, non-profit foundations and family offices. In April, the Oregon Public Employee Retirement Fund agreed to commit $100 million to the fund. BREOF II, which held a first close in October 2010, is seeking a net internal rate of return of 20 percent.

VBI’s latest fund will invest in office, retail and industrial properties, as well as development projects involving for-sale affordable housing, in Brazil’s primary cities and secondary metropolitan areas with populations greater than 250,000. BREOF II is targeting a 35 percent to 50 percent allocation to affordable housing, 25 percent to 40 percent to office, 10 percent to 35 percent to retail and 5 percent to 20 percent to logistics properties. The fund, which has a three-year investment period, already has made commitments that account for 20 percent of its capital and plans to commit an additional 20 percent over the next six months, Wainer noted.

BREOF II will follow a similar investment strategy to that of VBI’s first real estate fund, BREOF I, which closed on $200 million in 2009. That fund is fully invested and expected to return 100 percent to 150 percent of the committed capital to investors, following the sale of the majority of the fund’s office assets and a number of housing developments, Wainer said. The fund’s limited partners also are due to receive a share of the profits generated by the end of first quarter 2012 from four of the 14 projects owned by the fund.