China’s Fosun buys first building in Brazil

Seller HSI acquired the property just last year and its sale constituted the first exit from its fifth real estate fund.

The Fosun Group has closed on a deal to buy its first building in Brazil, the Torre Sucupira in São Paulo, PERE has learned.

The 24-story, 394,000 square foot office tower is being sold by São Paulo-based real estate fund manager HSI for approximately R$430 million ($130 million; €116 million), according to a source familiar with the transaction.

HSI acquired the property just last year on behalf of its fifth real estate fund, the $700 million HSI Real Estate V. The firm bought the property for $91 million in February 2016, according to data provider Real Capital Analytics.

Torre Sucupira was newly completed at the time of HSI’s acquisition and delivered vacant. The building is now 40 percent leased to French pharmaceutical company Sanofi.

The off-market transaction marks the first divestment from Fund V, which currently is approximately 40 percent invested. HSI is understood to have doubled its money on the deal, both from the currency movement of the real as well as the capital appreciation of the asset.

HSI Fund V attracted investors such as the San Francisco Employees’ Retirement System and the City of Phoenix Employees’ Retirement System, which committed $25 million, according to PERE data. Performance data on the fund was not yet available in a COPERS December 31 real estate investment report, the most recent available from the pension system.

Both Fosun and HSI declined to comment at press time.

Torre Sucupira is part of the Parque da Cidade mixed-use complex, which encompasses five corporate towers, one office tower, two residential high-rise buildings, a shopping center, restaurants and a park, in the Marginal office submarket in São Paulo. The remainder of the site is owned by Brazilian construction conglomerate Odebrecht, which currently is at the center of a massive corruption scandal in the country.

The acquisition follows Fosun’s acquisition in July of a controlling stake in Brazilian investment manager Rio Bravo Investimentos, which manages funds in real estate, private equity, public equity, credit and infrastructure. That deal marked the company’s first real estate equity acquisition in Latin American country. The purchase of Torre Sucupira represents the first asset-level real estate investment in the region for Fosun, which is understood to be seeking to boost its direct office properties in the country, particularly in the office sector. Rio Bravo will be managing property.

In February, the company made a tender offer to buy the Edificio Tower Bridge Corporate in São Paulo for R$705 million from a REIT managed by Brazilian investment bank BTG Pactual, according to filings with the Brazilian stock exchange BM&F Bovespa. The tender offer was raised to R$754 million a month later, but ultimately was rejected by shareholders.

Within the real estate space, Fosun has become best-known for making a series of platform investments including the acquisition of Idera Capital Management in Japan in 2014 and the purchase of a majority stake in Resolution Property Investment Management in the UK in 2015.

However, the company also made headlines for major asset-level property investments, including the $725 million purchase of One Chase Manhattan Plaza, now known as 28 Liberty, in New York from JPMorgan Chase in October 2013. With local developer JD Carlisle, Fosun also is developing 126 Madison Avenue, a luxury apartment tower of approximately 310,000 square feet, in New York. The company has not made any new real estate acquisitions in the Americas since acquiring the development site in 2015, according to RCA.

Fosun Property currently has more than 120 projects in over 40 cities globally valued at a total of 240 billion yuan ($35 billion; €31 billion).