Celfin Plans Real Estate Fund

Celfin Capital plans to raise a second Chile-focused real estate investment fund. The fund, Celfin Rentas Inmobiliarias II, expects to see commitments of $100m-$150m, with a first closing in April, Rafael Ariztia, investment manager at the Celfin’s asset management unit, tells LatinFinance. He expects to add about $200m-$240m in leverage to the fund. Fundraising has already begun and the Chilean firm is targeting high net worth individuals and insurance companies. The first fund, which closed in 2009, had about $100m in commitments and is carrying $140m in debt. Ariztia says that the first fund, Celfin Rentas Inmobiliarias, is about to make its last investment, but declined to identify the target. The two funds acquire and lease office and commercial real estate. He says that ideally, the new fund will provide returns equal to inflation plus 8%. Ariztia adds that the funds generate stable, recurring revenues. For example, a lease contract on a unit in an office or commercial building can go from a minimum of 2-5 years to up to 15-25 years. Ariztia says the average investment per project is around $60m-$80m, depending on the asset type. The funds invest in Santiago, where overall vacancy rates are around 3.5%. Demand for space is even higher in the city center, with vacancy rates of only 1.0%-1.5%. Celfin has about $295m AUM.