New York. – Falcon Real Estate Investment Company, LP a nineteen-year old establishment renowned for its expertise in US Commercial Real Estate advisory and management services, has just announced their latest venture – Falcon The Americas Real Estate Opportunity Fund. The Fund is registered in Luxembourg, the largest fund center outside of the United States, and structured as an umbrella vehicle with four main Sub-Funds in Argentina, Brazil, Colombia and the United States.
With the first phase scheduled to close in January 2009, the Americas Fund will focus on a five year projected net IRR of 20% p.a. to investors.
The Americas Real Estate Opportunity Fund creates an excellent opportunity for savvy investors seeking an alternative to the volatile stock and bond markets of the world. The fund will invest in some of the world’s most promising markets; and will be diversified by geography, currency and type of commercial properties. Investors will have the option to choose which of the four countries they would like to invest in, or they may work under the guidance of the many years of real estate experience that Falcon has to offer.
Combining their proven bottom-up style track record in commercial real estate investments, where Falcon generated an alpha of 100% on average for its clients, with their talent for identifying profitable markets, the company conducted strategic research to carefully choose which countries would be included in the Americas Fund. In the United States, The Americas Fund will focus on acquiring distressed properties in the commercial real estate market across the country.
Howard Hallengren, Chairman of Falcon, said “In view of the collapse of the mortgage market and the serious economic recession in the United States, we believe that during 2009 there will be some excellent investment opportunities for investors who have strong cash positions.”
Additionally, each Latin American Market was chosen because of the particularly attractive attributes of each country. Colombia has a strong and growing economy, with a commercial real estate market that has been significantly underdeveloped. In addition, it has a very efficient mortgage market, while its banking system has been relatively unaffected by the current global financial crisis.
While Argentina does face some political problems, the growth of its economy in recent years has not been dependent upon bank credit, and the commercial real estate market is unaffected by the credit crisis given that the country’s mortgage market has been inactive since 2001. Equally positive, the commercial real estate market in Argentina is entirely priced in US dollars, so there is no currency exposure from a US dollar perspective. Brazil is one of the four so-called BRIC countries – Brazil, Russia, India and China -- supposedly the four fastest growing emerging economies in the world.
Despite the global recession forecast for 2009, Brazil is still expected to show growth of between 3 and 4% next year. At the same time, the Brazilian currency has retreated during the current crisis to levels last seen over five years ago, providing much more attractive opportunities for investors coming in from abroad. Hallengren concluded, “We think our fund creates an interesting opportunity: four markets with somewhat different attributes but all with quite extraordinary opportunities.”
Falcon is certainly aware of the problems in today’s marketplace, but the company has confidence in the long-term outlook for the real estate markets in each of the countries that were selected for the Fund. Amaury de Parcevaux, Vice President and Marketing Director of Falcon explains, “Investors should weigh each opportunity on a risk-adjusted return basis. When any diversified portfolio, allocates a certain percentage to the Colombian, Argentinean, Brazilian or US commercial real estate markets, which are only minimally correlated with the global stock and bonds markets, it is reducing the risk, or volatility of the overall portfolio.
On the return side of the equation, we hope to achieve 20% net return p.a. over the next 5 years for our clients, so when you combine the risk and the return, you have a pretty compelling product.” Amaury adds “Our choice of local partners who understand each of their markets combined with Falcon’s proven commercial real estate track record has compelled many of those held responsible for successful large-scale investments – be it Pension Funds in Colombia, Family Offices in France, Insurance Companies in the US, or Brokerage firms in Japan, to seriously consider the Falcon Americas Real Estate Opportunity Fund and have recognized its unique positioning in a volatile market.”