Falcon to raise $500m for Latin America fund

The vehicle, sponsored by New York-based Falcon Real Estate, will seek capital from Europe, Asia and Latin America but is excluding US investors.

New York-based investment firm Falcon Real Estate is to raise $500 million (€314 million) for a predominantly Latin American vehicle called the Falcon Americas Real Estate Opportunity fund.

The strategy is to target developments with local operators, with 30 percent of the vehicle being assigned to Brazil, 30 percent to Argentina, 20 percent to Columbia and 20 percent to the US. In the US it will be investing in both development sites and existing properties.

Falcon chairman Howard Hallengen said a road show starts in London next month before shifting to Latin America. He said the firm might also seek investors in the Middle East and East Asia before holding a final close toward the end of the summer. The fund will be domiciled in Luxembourg and will not be seeking capital from the United States, Parcevaux added. Falcon Real Estate was founded in 1991 by Hallengren and Jack Miller, both former executives with Chase Manhattan Bank.

The fund is targeting about a 20 percent plus return IRR over a lifespan of 5 to seven years, at which point the firm may consider taking the fund public, Hallengren said.

“Except for Brazil, Latin America has been overlooked as investors have concentrated on China,” Hallengren said. “After looking at Peru, Chile and other countries, we chose Argentina and Columbia, in addition to Brazil, as the countries in which we’d like to make investments, because the growth rates of those countries looked very good.”
Though still a largely untapped region, Latin America has been attracting some dedicated vehicles lately. In early April DLJ South American Partners closed its first fund, with a focus on Argentina, Brazil and Chile, on $300 million. In December Tishman Speyer closed on the $600 million Tishman Speyer Brazil Fund, which will focus on the acquisition and development of office, residential and mixed-use properties in Brazil. In October 2007 Prudential Real Estate Investors formed a joint venture with Racional Engenharia to invest in the Brazilian industrial real estate market. And rumors have been circulating that the California Public Employees’ Retirement System may team up with Hines to create an $800 million fund to invest in the Brazilian property market.