São Paulo, Brazil—Paladin Realty Partners, a U.S. institutional real estate investment fund manager focused on Latin America, has formed a joint venture with YOU Inc Incorporadora e Participações S.A. (YOU Inc.) to develop middle-income housing in São Paulo, Brazil. This is the sixth joint venture over the past 17 years between Paladin Realty and YOU Inc.’s founder, Abrão Muszkat, and the first new joint venture investment to be made by Paladin Realty’s fifth pan-regional Latin America fund; the investment period for Paladin Realty’s prior fund, Latam IV, ended in December.
Paladin Realty’s Latam V fund is committing up to $75 million to the joint venture, with YOU Inc. committing up to $32 million. The platform has acquired its first project, a 152-unit middle-income residential project in São Paulo’s Tatuapé neighborhood.
“While there’s no doubt that Brazil is in the midst of a serious recession, it’s also an opportune time to have capital to deploy in the country—you just need to make sure your underwriting assumptions reflect the current environment,” said Randall Loker, CIO for Paladin Realty. He added that YOU Inc. is benefiting from widespread distress in the public home building sector, which has greatly reduced competition and the supply of new housing in São Paulo.
Paladin Realty’s two most recent housing projects launched in December with YOU Inc. were very well received, with over 40 percent of their units pre-sold in the opening weekend. “You wouldn’t think that would be possible if you just read the newspaper headlines, but well-located, well-priced units are still selling well,” explained Loker.
The new venture brings the total number of residential units completed or under development by Paladin Realty’s various joint venture platforms to over 30,000 units. The firm began investing in various markets throughout the region in 1998.