Península de Maraú- Coconut Paradise along Cassange Beach
So, what took them so long......?
Local anecdote: A Carioca buddy's US friend is currently investing on average US$50M/month, acquisition range US$10M-150M/property- on behalf of a US REIT....
CNN article on US real estate investment funds (REITS) moving into Brazil and Mexico.
http://money.cnn.com/news/newsfeeds/articles/newstex/IBD-0001-20341794.htm
U.S. Commercial Real Estate Bulls Run South Of The Border
October 18, 2007: 08:05 PM EST
Oct. 19, 2007 (Investor's Business Daily delivered by Newstex) --
U.S. real estate investors are staking claims in Latin American countries where growth has returned after years of economic struggle. Property yields have hit 9% to 15% a year there, compared with roughly 5% to 8% in the U.S.
Take Brazil. While foreign investors drizzled just $143 million into Brazilian property in the first half of 2006, they poured in more than 15 times that in the first half of 2007, about $2.2 billion, according to Chicago-based real estate services firm Jones Lang LaSalle. (NYSE:JLL)
U.S. real estate investment trusts, private equity funds and other backers are behind much of the activity, though European investors are showing increasing interest, says Steve Collins, managing director of international capital markets for Jones Lang LaSalle.
"We think over the next couple of years you're going to see a huge boom in Latin America," he said.
In Brazil and Mexico, disposable income is rising and pent-up demand is lifting real estate returns.
Internal growth, tourism and foreign investment in other industries are boosting Brazil's economy amid retreating inflation. Plus, analysts expect Standard & Poor's (NYSE:MHP) to upgrade the country's credit rating to investment grade next year.
Brazil's gross domestic product grew 3.7% last year. Mexico's grew 4.8%.
Brazil Buyers
The potential pitfalls hardly have dented interest in Brazil.
New York office investor and developer Tishman Speyer raised $500 million earlier this year to invest in the country. In August, it acquired a block-long landmark building dating to the 1930s in the heart of downtown Rio de Janeiro.
Tishman Speyer intends to rehab and modernize the structure, much like the Rockefeller Center redevelopment it launched in the late 1990s. Tishman Speyer also is developing four office towers in Sao Paulo. Construction of the first tower is expected to wrap up this month.
Brazil's rising retail sales, up 10% at midyear, are drawing American retail REITs.
REIT Moves
Cleveland-based Developers Diversified Realty (NYSE:DDR PRF) (NYSE:DDR PRI) (NYSE:DDR PRH) (NYSE:DDR PRG) (NYSE:DDR) DDR last year acquired a 50% interest in Sao Paulo-based Sonae Sierra Brazil, which owns nine retail assets. The partnership will open a mall in 2009. Developers Diversified's initial stake was valued at $150 million.
Meanwhile, Chicago-based General Growth Properties (NYSE:GGP) GGP has acquired an ownership interest in eight centers since entering into a joint venture known as Aliansce Shopping Centers in 2004.
Aliansce is building four regional shopping centers in Brazil. Two are due to open late this year.
Aliansce had planned to raise $378million on Brazil's Bovespa stock exchange this summer, but withdrew amid the global sell-off. Aliansce will revisit the offering this fall, General Growth CFO Bernie Freibaum said in the REIT's second-quarter earnings conference.
"(Aliansce) doesn't need capital," he told analysts. "We want to take it public so we can utilize Brazilian stock market currency for potential future acquisitions."
Newstex ID: IBD-0001-20341794
Originally published in the October 19, 2007 version of Investor's Business Daily.
Copyright (c) 2007, Investor's Business Daily, Inc. All rights reserved. This article is protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of Investor's Business Daily, Inc. You may not alter or remove any trademark, copyright or other notice from copies of the content.
