Prudential Preps Real Estate CCD

Prudential Real Estate Investors is planning to raise up to MXP6.5bn from a certificado de capital de desarollo (CCD) issuance through its Mexican arm. The CCDs would represent tickets in a 10-year fund investing in industrial real estate assets in Mexico, with a 5-year investment period. “We’re structuring a CCD, but really it is our third Mexican industrial fund,” Paulo Gomes, chief strategy officer for Prudential Real Estate Investors Latin America, tells LatinFinance. He explains Prudential has raised two previous industrial funds in Mexico, among seven real estate funds totaling about $2.4bn in equity commitments. This, however, would be the first where local pension funds can participate, thanks to the new CCD structure, thus far used by RCO and Wamex. Gomes says the fund will invest in light manufacturing and distribution facilities, and target a 16%-22% return. Unlike pure private equity funds, this real estate fund has the ability to start generating revenue very early, he says, mostly thanks to rental property income. Gomes says although the first CCDs have taken some time to close, Prudential is confident the track record of its previous funds and the work done by Afores on the previous CCD issuances, will help smooth the way. He also notes Prudential plans to put up 10% of the fund, up to $50m-equivalent, itself. BBVA is managing the transaction, expected to close 1Q 2010.