de Monet: u201cFIBRA has increased competition and compressed yields.u201d

LOS ANGELES—Palisades Mexico Partners has launched the Palisades Private Capital Fund I targeting foreign investors from Latin American countries. The fund in currently raising $50 million and plans to raise $100 million in commitments this year. The company is a joint venture between Palisades Capital Realty Advisors and Sergio Arguelles, president and CEO of the Mexican-based firm FINSA.

According to Joaquin de Monet, the founder and managing principal of Palisades Capital Realty Advisors, the fund aims to capitalize on the recent increase in liquidity in Mexico due to the formation of Mexican REIT FIBRA. “FIBRA has increased competition and compressed yields to a level that improves the attractiveness of US investments,” de Monet tells The ongoing conversation about foreign investors is usually focused on Asian investors, and European investors, to a lesser extent. However, Latin American investors are also seeking US real estate opportunities for “growth prospects in a developed economy, safety and a hedge against local currency.” 

The fund will target class-A and class-B office properties in emerging West Coast markets. “Where we see pricing inefficiencies and attractive yields we acquire class-A assets; otherwise we see a better value in class-B assets, especially suburban markets,” de Monet explains, adding that their goal is to create a pool of quality assets in the $12 million to $21 million range with an age of six to 30 years and 75% occupancy. The fund has already targeted three institutional-quality assets in Texas, Arizona and Southern California. They plan to purchase these assets in the next month through the fund.

De Monet and Arguelles met in 1997 after de Monet led a $450 million acquisition of FINSA’s portfolio. He retained Arguelles in the partnership. “He is a respected leader in Mexico and is solely focused on Industrial product, so US office did not create any conflicts to his investors and business in Mexico,” says de Monet.

While focused on launching the fund, de Monet’s Palisades Capital Realty Advisors is still busy growing its portfolio. The firm recently purchased two office properties in Portland, OR, totaling 127,000 square feet. The properties were purchased in partnership with two Silicon Valley investors.