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Clarion invests in $100m Brazil warehouse project

The New York-based investment firm has acquired 78 acres of land outside of Sao Paulo on behalf of a separate account client to develop an industrial warehouse property.

Clarion Partners has acquired 78 acres of land in a suburb of Sao Paulo for the purpose of developing and leasing a Class A industrial warehouse. According to a statement by the New York-based real estate investment manager, the project is expected to be completed in phases over the course of five years and eventually will include three buildings comprising 1.4 million square feet. 

The acquisition is the result of a joint venture between Clarion and an undisclosed separate account client with an initial equity investment of $100 million. A spokeswoman for Clarion declined to disclose the client.

As managing partner of the venture, Clarion has formed a strategic alliance with the real estate development arm of the global logistics company DHL Supply Chain to develop first class industrial warehouse properties in Brazil, and this project will be its first. Clarion has a longstanding relationship in the US with Exel, DHL Supply Chain’s business in North America.

Located within one of the region’s most important industrial markets, the property is well situated, with access to major highways and a suburban location that is close to the Sao Paulo market as well as to nearby factories and distribution centres. Multinational companies located in the area include Pepsi, Coca Cola, Nike, Siemens, Avon, Kraft, HP and Samsung.

According to Clarion, the Brazilian industrial market has “a shortage of new, modern warehouse space that meets institutional standards,” with only one-quarter of its current industrial stock being classified as “investment grade.” As a result, the firm believes the demand for warehousing space is strong.

“Brazil is vibrant and growing, supported by powerful underlying fundamentals,” said Jeb Belford, managing director at Clarion Partners. “With a lack of high-quality warehouse space in many parts of the country, we believe this provides an excellent opportunity to participate in the continued expansion of this increasingly important market.”

Construction of the first phase of the project began in early December, with an anticipated delivery of mid-2012. DHL Supply Chain has agreed to lease about half of the first building upon completion and is anticipated to lease substantial portions of buildings two and three for itself and its clients. The additional buildings are to be constructed sequentially and are expected to be completed in mid-2013 and mid-2014, respectively.