In its foray into the Brazilian residential market, the Canada Pension Plan Investment Board (CPPIB) has formed a venture with Brazilian bank BTG Pactual to invest in residential development opportunities in the country. CPPIB, which will hold a 40 percent interest in the venture, has made an equity investment of $240 million. BTG will match that investment, committing $240 million as well.
According to a statement from the $182 billion Canadian pension plan, BTG will act as the investment advisor for the partnership and manage the day-to-day operations, while CPPIB will sit on the investment committee, which approves all investments made by the venture.
“This opportunity provides us with an attractive entry point to the Brazilian residential market as we continue to expand our real estate portfolio in Brazil,” said Peter Ballon, CPPIB’s vice president and head of real estate investments for the Americas, in a statement. “The fundamentals of Brazil’s residential development sector are compelling as a growing middle class, increased economic activity and favorable demographic shifts drive increased demand for new housing.”
The venture, which will invest capital alongside local residential developers, will use BTG’s experience in the Brazilian residential market and its position as one of Brazil’s leading investment banks. Ballon described BTG as “a well-aligned and experienced local partner with a proven track record in the residential sector.”
Most recently, CPPIB invested in Latin America’s largest real estate market in July with the purchase of a 27.6 percent interest in Aliansce Shopping Centers, a publicly-traded Brazilian retail real estate operating company, for $480 million. As of September 30, CPPIB’s Brazilian real estate portfolio was valued at C$1.5 billion, comprising interests in retail, office and logistics properties totaling more than 4.1 million square meters (44 million square feet), including development assets.
“Brazil remains a strategic market for CPPIB over the long term, and we will continue to seek attractive investment opportunities through partnerships with top-tier local partners,” Ballon added.