A record number of private real estate funds focusing on Latin America are active, targeting $3.8bn (€2.8bn) in investor commitments, as fund managers see more opportunities in the region, according to data provider Preqin.
Investor appetite is also strong, having last year set a record for Latin America-focused private real estate fundraising. Eight funds reached a final close in 2012 having secured $3.4bn in investor capital.
Latin America-focused private real estate funds accounted for 5% of capital secured by real estate funds closed globally in 2012, up from 2% in 2007.
Domestic firms are becoming increasingly prominent in the region. Latin America-headquartered firms accounted for 52% of capital raised by Latin America-focused real estate funds closed in 2011-12, compared with just 17% for funds closed in 2009-10.
PLA Residential Fund III, managed by Pramerica Real Estate Investors, is the largest Latin America-focused fund to close in the period 2008-2013 to date, securing $869mn in investor capital.
Brazil is the country most commonly targeted by private real estate managers. Of the $9.3bn raised by Latin America-focused funds in the period 2009-2013, $6.4bn was raised by 17 Brazil-focused vehicles.
Six Mexico-focused funds closed between 2009 and 2013 securing $1.2bn, while six pan-Latin America-focused funds closed having raised $1.7bn.
A total of $2.5bn is being targeted by seven Brazil-focused real estate funds in market, accounting for 66% of total capital sought by Latin America-focused real estate funds on the road.
Five Columbia-focused funds are in market looking for $600mn in investor commitments.
TFI-Hines Brazil Income Real Estate Fund and Tishman Speyer Brazil Fund III are the largest Latin America-focused funds in market, both seeking $500mn.
Andrew Moylan, head of real assets products at Preqin, said: “There are encouraging signs for private real estate fundraising in Latin America, with a record number of funds on the road seeking capital for investment in the region.
“With 2012 the strongest year in terms of capital raised to invest in Latin America, the region accounts for a small but growing proportion of all private equity real estate fundraising globally.
“More managers headquartered in the region are raising funds, reflecting the growing maturity of the private real estate fund industry in the region. The flow of fresh capital is likely to lead to more opportunities for developers to undertake large-scale development projects in key growth markets such as Brazil in the coming years.”
