News & Research

Any inquiries from the press should be directed to:


Evan Pickering
Vice President
(310) 996-8755
epickering@paladinrp.com

Paladin Realty Closes on R$337 million for Brazilian REIT Targeting Boutique Office Development in São Paulo

Paladin Realty Partners, LLC, a leading real estate investment fund manager focused on the Americas, has had a successful R$337 million first closing of a Brazilian Fundo de Investimento Imobiliario (“FII”, a fund similar to a U.S. REIT) for the development of boutique office buildings in the prime supply-constrained submarkets of São Paulo. In partnership with investment firm Hedge Investimentos and local developer Idea Zarvos, Paladin’s São Paulo-based team will be executing the development strategy, taking advantage of the recovery of São Paulo’s office market and trends that favor smaller office buildings in prime submarkets. The first four development sites are located in the submarkets of Itaim, Pinheiros, Paulista and Jardins, which have vacancy rates in the range of 5-10%, compared with 24% for the city’s overall Class A market. Paladin and Idea Zarvos have been partners since 2014, developing for-sale residential projects as well as purpose-built rental apartment building in São Paulo.

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Latin American Housing Sales Boom in 2020, Despite Pandemic

It was French writer Jean-Baptiste Alphonse Karr that said more than 250 years ago, “the more things change, the more they stay the same.” It was fascinating to watch that in 2020, a year where the whole world changed, one thing certainly remained the same: demand for housing in Latin America, especially in the low-income segments. The combination of huge existing housing deficits, incremental demand outpacing supply by large margins, affordability with long-term mortgages at historically low rates, and government support, continue to buoy this market through the most challenging of times. For-sale housing has been the cornerstone of Paladin Realty’s Latin American investment strategy since it entered the market in 1998, for exactly these reasons.

In Brazil, a new record was set in 2020 for residential sales in São Paulo. According to SECOVI (one of the principal sources of residential sales data in Brazil), 51,417 units were sold in Brazil’s largest city in 2020, setting an all-time record. This figure was 5% higher than the previous record of 49,244 units, set in 2019. Some of the purchasing may have been investors searching for hard assets amidst the economic uncertainty and record-low interest rates, but much of it speaks to the demand-driven opportunity that housing presents: Brazil is a country that requires an estimated 1.5 million new housing units per year, which is met with a supply that is estimated at less than 500,000 homes. Paladin Realty launched Praça Marajoara in September 2020, a lower-income development with an average price-point of US$85,000, and had sold 66% of its 204 units by year end. Paladin’s prior two launches in São Paulo, ARQ, a middle-income project in Vila Mariana and CORE a mixed-use project in Pinheiros, ended 2020 with 71% and 99% of their residential units sold, respectively.

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Paladin Realty Invited by IFC to be an “EDGE Champion” – Recognized as a Leader in Sustainable Housing in Latin America

Paladin Realty Partners has been invited by the International Finance Corporation (“IFC”) to be an EDGE Champion in recognition of Paladin’s more than two decades of leadership in accelerating the adoption of international green building best practices for housing throughout Latin America.

The IFC’s Excellence in Design for Greater Efficiencies (EDGE) program was established to help developers design, build, and certify projects that achieve a minimum of 20% savings in water, energy, and embodied energy in materials. Paladin has been working with the EDGE program since 2018 when it certified its first low-income project in the greater metropolitan area of Mexico City, “Villas del Fresno”, a 1,639-unit project which is currently the largest EDGE-certified affordable housing project in the Western Hemisphere. The project will save an estimated 1,300 tons of CO2 from entering the atmosphere each year as well as saving 28% in energy, 24% in water and a savings of 74% in embodied energy in materials compared to conventional building.

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Paladin U.S. Research – California Residential Rental Regulations

Regulations affecting residential rental properties in California are varied and complex. Several current and proposed statewide and local ordinances will affect Paladin’s apartment investments in Southern California and, like the regulations themselves, the results will be varied and complex. On the one hand, Paladin believes these regulatory requirements and risks create additional stress on smaller “mom and pop” owners of apartments who may be ill-prepared to deal with these rules. As a result, many of these owners may decide to exit the market, providing investment opportunities for sophisticated investors who have more expertise underwriting and navigating such regulatory complexities. On the other hand, such regulations may reduce the potential returns from existing investments. Paladin believes that careful underwriting of the risks, along with the solid execution of value-added business plans to mitigate the effects, will continue to generate attractive risk-adjusted returns for our investors. Additionally, asset pricing will eventually adjust to reflect the realities and limitations of any such regulations.

 

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Paladin Realty Adds Camilo Otálora as Managing Director and Colombian Country Manager

Paladin Realty Partners, LLC, a boutique real estate private equity fund manager and operator focused on the Americas, announced today that it has hired Camilo Otálora as Managing Director and Colombian Country Manager. Mr. Otálora will be based in Paladin’s Bogotá office and serve on the region’s Investment Committee. A native of Colombia, Mr. Otálora has over 20 years of real estate investment, finance and development experience in Colombia, Central America and the USA. Prior to joining Paladin Realty, he was a partner at Boston Andes Capital, a private equity real estate investment, asset management and development firm with offices in Boston, Bogotá and Buenos Aires.

 
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Paladin Realty Adds Senior Executive to Los Angeles Office to Lead U.S. Value-Added Apartment Business

Paladin Realty Partners, LLC, a boutique real estate private equity fund manager and operator focused on the Americas, announced today that it has hired George Pappas as Managing Director to lead the firm’s U.S. value-added investment business focused on renovating and repositioning Class B and C rental apartment properties in Southern California. He will be based in the firm’s Los Angeles headquarters and serve on its Investment Committee. For more than 35 years, Mr. Pappas has sponsored and managed investment vehicles that have acquired a range of income-producing real estate assets throughout Southern California, including over two dozen value-added apartment investments. He previously worked for a private equity investment firm led by former U.S. Treasury Secretary William E. Simon that acquired failed U.S. thrifts and savings and loans. In these prior roles, Mr. Pappas acted in a range of senior management functions, including in asset management and receivership capacities spanning virtually all types of real estate across a range of U.S. markets. In addition, he has served as an advisor to the U.S. SEC and bankruptcy courts on matters relating to complex, multi-use real estate assets. He previously founded Sunterra Golf, in partnership with American Golf Corporation co-founder Sandy Burns, and grew that company to more than $24 million in revenues and 200 employees, which was named as Crittenden Golf Magazine’s 2007 Management Company’s on the Rise.

 
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Paladin Realty Pioneering the Development of Purpose-Built Rental Apartments in São Paulo, Brazil

Paladin Realty Partners, LLC, a leading real estate investment fund manager focused on Latin America, has announced a new programmatic joint venture to develop a portfolio of purpose-built rental apartment properties in São Paulo, Brazil. The venture has initially committed in excess of R$130 million to capitalize its first projects, with the intention of increasing the size of the program as more sites are identified. While more than 40% of households in São Paulo are believed to be renters, there are few purpose-built, institutional quality apartment buildings due to a historical lack of debt financing and other factors. As a result, the existing rental market is comprised largely of “mom and pop” landlords who may rent one or two condominiums, providing a compelling market opportunity for well capitalized institutional investors to build and operate a portfolio of purpose-built rental apartment buildings. With a population of over 20 million, São Paulo represents an ideal market to launch the venture’s strategy.

 
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Paladin Realty Adds Ex-Hines Executive to its Brazilian Investment Team

Paladin Realty Partners, LLC, a leading real estate investment fund manager focused on Latin America, announced today that it has hired Julian Villacorta as Managing Director to be based in its São Paulo, Brazil office. Mr. Villacorta has more than 25 years of experience executing important real estate projects in Brazil. Before joining Paladin, he was Managing Director and Senior Project Officer at Hines, responsible for high-profile, multi-billion dollar projects in São Paulo and Rio de Janeiro. Prior to Hines, he was New Business Director at Tishman Speyer, focused on acquisitions and dispositions. Mr. Villacorta has also worked as the Country Head at Cargill Value Investment, and in the Brazilian offices of Cushman & Wakefield, Jones Lang Lasalle and CBRE.

 
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International Finance Corporation: Green Buildings Finance on the Rise: Investing in Mexico

Santiago Gil, Managing Director and Mexico country head at Paladin Realty, was recently featured in a video produced by the International Finance Corporation “IFC”, highlighting the rise of finance for “green building” in Mexico.

 
International Finance Corporation VIDEO

Paladin Realty Announces New Joint Venture with Ambientti to Develop Low and Middle-Income Housing in Bogota

Paladin Realty Partners, LLC, a leading real estate investment fund manager focused on Latin America, announced a homebuilding joint venture with local partner, Ambientti S.A. The joint venture will focus on providing low and middle-income housing in and around Bogota. Ambientti is a vertically integrated developer founded in 1999 with a track record of nearly 40 projects totaling approximately 6,000 housing units.

“We are pleased to announce our partnership with Ambientti, a well-established and highly regarded developer in Colombia,” said Alejandro (Alex) Krell, Managing Director and Head of the Andean region at Paladin Realty. “We look forward to launching our first project before year-end and believe it will be the first of many”.

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