Eccelera, a São Paulo, Brazil-based private equity shop, is currently marketing its Eccelera Real Estate Fund I in conjunction with local real estate developer SDI Desenvolvimento Imobiliario. The firm is looking to raise US$200 million for its real estate offering and has already identified 40 properties to invest in.
The fund intends to invest in double-A-, A- and B-class commercial properties located in Brazil’s main metropolitan areas, São Paulo and Rio de Janeiro, with an already established high quality tenant base, according to fund documents. In particular, it will look at upgradeable B-class buildings, which with “minor investments” should lead to higher rental rates and significant property appreciation at exit.
The firm’s research indicates that rental rates for the targeted properties are starting to recover from their 2004 lows; vacancy rates are decreasing, in some cases reaching record-lows; and there are few new properties coming to the market in the next three to five years, at levels insufficient to absorb projected demand.
Eccelera expects the fund to generate a net IRR of 17% p.a. and distribute dividends of 10% p.a. The fund has a 10-year life cycle and investors are locked in for two years. It charges a management fee of 1.5% with a “success fee” of 20% of returns above a 10% annual hurdle rate in dollars.
Pedro Cordeiro, a former partner at McKinsey & Co., founded Eccelera in 2000.