Avenida Capital started investing in Chile, Brazil, Panama, and Colombia in 2007-2008. The company decided to focus on Colombia in 2010 and launched Avenida Capital's first institutional fund in 2012. The fund consisted of institutional investors with the aim of funding low and middle-income level residential, retail, and mixed-use real estate developments in Colombia's primary and secondary cities. The company has spread Fund One and Fund Two over 30 projects throughout Colombia. While each project presented its own challenges, the biggest concern has been execution, as time is of the essence in real estate developments. Once an opportunity is spotted, an analysis regarding the company's desired market position in different cities is carried out with respect to a city's size and market. Colombia is a great country to invest in, but there should also be tax breaks to incentivize developers to take on large housing projects in the cities. The local pension funds are tax exempt and it would be positive for the sector if foreign investors were offered some sort of exemption as well.
Managing Director, Avenida Capital
Partner, Heritage Capital
Our first transportation client mainly sought consultancy and we assisted with business plans and complex financial models. We worked with urban transportation companies like TransMilenio and SITP operators. TransMilenio's success lead to Colombian operators offering us tenders across the region, including Panama, Peru, Chile, and Brazil. Over time, we started closing deals in different industries, like healthcare, industrial security, chemicals, and others. We currently work with land, air, and river transportation companies in financing, M&A, and consulting. Foreign companies interested in the Colombian market prefer to start with an acquisition to accelerate their learning curve. Due to our well-developed relations with banks, equity funds, and lawyers, we can help foreign investors capitalize on local opportunities in the middle market. In terms of future goals, we plan to increase the number and size of closed deals. The financial sector in Colombia is fairly conservative, which has helped us through recession periods; however, financial institutions should improve their decision process in order to facilitate transactions.
Luis Javier Castro
Managing Director, Mesoamerica
Our greatest accomplishment has been partnering with the Ontario Teachers' Pension Plan in Canada in 2015; it is the sixth-largest investor in the world that manages around USD180 billion worth of pension plans. We decided to take a long-term approach and invest for 10-20 years because catering to the needs of society leads to success. Our current focus is on education, healthcare, financial inclusion, and the food system mainly in Brazil, Mexico, Colombia, Peru, and Chile; we opportunistically analyze Costa Rica as well. Although the current situation is not optimal, we have high hopes for Colombia. In terms of the Colombian healthcare market, we want to wait and see how the policy evolves in order to pull the trigger on investing; healthcare across the world has an unpredictable nature. Moving forward we want to cement our relationships with Ontario Teachers and Polymath Ventures. 2018 will be a construction phase, and we will continue to participate in different energy auctions the Mexican government has for energy. Our future plans focus highly on large investments in education and healthcare.
Managing Director, Paladin Realty Partners
Paladin was one of the pioneers of investing institutional capital in Latin America 20 years ago. To date, we have invested in hundreds of assets totaling over USD5 billion in eight countries. Currently, our strategy is focused on the four larger economies of Brazil, Mexico, Colombia, and Peru. Most recently, we announced Paladin's first investment vehicle for investors domiciled in the Andean region; in 2017, the Superintendent of Finance approved our first Colombian private equity fund. Our strategy and investment thesis boils down to three primary drivers: demographic tailwinds, market scale, and superior project economics. In our 10 years in Colombia we have worked with four active local operating partners. The greater Bogotá region typically produces between 50 and 60,000 units a year. Despite an average 2017, we forecast 2018 to provide better results because low interest rates will re-stimulate housing demand. We plan to launch nearly a dozen residential and mixed-use development projects across Latin America in 2018, accounting for more than USD420 million of projected sales revenue.
Jairo Alberto Corrales
General Manager, Pei Asset Management
Pei is the most important real estate investment institution in Colombia, with assets under management valued around USD1.6 billion. We have managed to become one of the main institutional investment instruments in real estate with our portfolio of investors, which is 60% in the hands of pension funds. One top of this, we have expanded the investor base, and today have more than 3,500 investors. In 2017, we surpassed COP1 billion in transactions in the secondary market. Geographical diversification is one of our significant achievements; our fund has a presence in 25 cities and municipalities across Colombia. At present, one of the most important projects is the internationalization of our investment vehicle. The Colombian real estate market faced a difficult year and a half, so we must be careful to determine where we invest. However, since we invest in an asset once there is a tenant, we do not face a commercial risk. Our plan for 2018 is to issue our bonds or credit content titles, along with an emission of participatory titles worth between USD300 and 400 million.
Pienssa started operations in 2010 and we have worked with recurring and new clients in M&A and corporate finance consulting and are partners in QUADRAS, a real estate fund manager. Through QUADRAS we helped create a new real estate investment category in Colombia, with our opportunistic real estate funds focused on low income housing. Our first fund started operating in 2013 with around USD25 million in investment. In 2017, we started operations on our second fund, which presently has commitments of around USD60 million, with the aim of raising USD100 million by YE2018. We are focused on developing the funds and seek new ways to add value to the real estate sector. Our competitive advantage in M&A is that we have a small team; hence, every time a company works with us, they work directly with the partners. Although the market was paralyzed in 2017 due to tax reforms and negativity, the Colombian market is recovering, especially the mid-income housing market. It will improve further because Colombia has a large housing deficit that is difficult to close.
General Manager, Sonae Sierra
Colombia is the 14th country Sonae Sierra has entered. Looking specifically at retail real estate, we think there are many opportunities still for the arrival of new actors, especially for principal and intermediate cities. The reason for that is that the country has experienced significant population growth in urban areas in recent years. We see an opportunity to participate in this by providing shopping and entertainment alternatives for Colombia's population. For example, in Cúcuta, we are developing the Jardín Plaza Cúcuta shopping center. At present, the company owns 46 shopping centers and manages 81. In our portfolio, we have various types of investors, and some are greater risk takers than others. Sonae Sierra has developed different ways of establishing partnerships, demonstrating great versatility and affinity under multiple action angles. We like Colombia and want to replicate our success in Brazil. We are here for the long term, so right now is a good time to invest. This government has been stable and serious with public finances, and if it keeps it up, the country will only benefit with it.