US REIT Joins Parade

Península de Maraú- Cassange Beach looking north.

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Hines, Calpers May Create $800 Million Brazil Fund by August
By Carla Simoes and Guillermo Parra-Bernal

Feb. 8 (Bloomberg) -- Hines, a U.S. real estate developer, and the California Public Employees' Retirement System may create an $800 million fund to buy properties in Brazil as demand for commercial space surges in Latin America's largest economy.

The fund would be the third that closely held, Houston- based Hines and Sacramento, California-based Calpers have created for Brazil. Some proceeds from the fund may be invested in low-income housing, Douglas Munro, chief executive of Hines do Brasil Empreendimentos, said in an interview yesterday. The fund may be ready by August, Munro said.

Hines is investing outside the U.S. to make up for a decline in the value of properties in the country, where the housing industry is in recession for the first time in 16 years and the dollar is losing ground against most major currencies. Hines may also invest in Angola and India, Munro said.

``So far, the performance of these Brazilian funds has been fabulous. We have obtained an excellent rate of return for our investors,'' Munro told Bloomberg Television in Sao Paulo. ``The drop in the dollar and a need to diversify portfolios has led our clients to look for new places'' like Brazil.

Foreign investment in new construction and real estate projects in Brazil jumped 35 percent to $2 billion last year, as the fastest expansion in three years raises demand for warehouses, manufacturing plants and distribution centers, Brazil's central bank reported last month. Record low interest rates and rising wages stoked record mortgage borrowing, and government guarantees for low-income homebuyers are making low cost homes attractive, Munro said.

Hines plans to expand from Brazil's biggest cities such as Sao Paulo and Rio de Janeiro to as many as 20 mid-sized cities like Santos, where Latin America's biggest port is located, in the next two to three years, Munro said.

To contact the reporter on this story: Carla Simoes in Sao Paulo atcsimoes1@bloomberg.net ; Guillermo Parra-Bernal in Sao Paulo atgparra@bloomberg.net .