IGS Splits CCD to Afores’ Tastes

Mexico’s IGS has raised MXP1.80bn ($78m) in the certificado de capital de desarrollo (CCD) market, splitting the transaction into 2 separate CCDs to accommodate different investors’ interest in different projects. In what is a first for Mexico’s young CCD asset class, the real estate investor is issuing MXP575m in a 2021 CCD that will be more focused on industrial real estate assets, and MXP513m in a second to be more focused on residential investment. “Late in the process we had an impasse. Some Afores wanted more of one asset than the other, so we decided to make 2 CCDs,” Antonio Ruiz Galindo, CEO of IGS, tells LatinFinance. He explains that a good deal of the investments will still go to both CCDs. The CCD funds will account for part of a larger pool that is made up of 47% private investor cash and about 5% IGS’ own capital, to invest in residential, commercial and industrial real estate projects in Mexico. The industrial investments will be sale-leasebacks on existing properties, while the residential assets will be land to be used for low-income housing supported by government Infonavit and Fovissste. The commercial investment comes from a deal with Homex to develop the commercial spaces within the low-income residential developments. As much of the pipeline is ready, Ruiz says he expects 30% of the fund to be invested within 6-8 months. In a structure typical of CCDs, investors earn a return to repay their invested capital plus a preferred return, in this case 12%, with further proceeds divided 80% for investors and 20% for the manager. IGS expects overall returns of 18% for the industrial investments, 20% for commercial investments and 22% for residential investments, according to the prospectus. ING managed the sale, the first CCD placed since April. Bankers are hopeful that issuance will again pick up, noting the pause was mostly due to discussion with Afores regarding funding CCDs via capital calls, rather than the problems in the public equity markets. Se