Equity International plans additional Brazil investments

The Chicago-based firm co-founded by Sam Zell and Gary Garrabrant categorically rules out investing in the US but says it wants to grow its five investments in Brazil real estate operating companies to at least seven or eight. The firm is also looking to China, Vietnam and Egypt for future deals.

Equity International is planning to boost its investments in Brazilian real estate by almost a third, according to the firm’s chief executive officer Gary Garrabrant.

Speaking to PERE magazine, Garrabrant said the firm was still very much focused on investments in the Latin American country, after making five investments in property operating companies over the past decade.

He said that number could increase to “seven or eight”, with Equity International possibly creating some of those platforms. The Chicago-based firm, co-founded by Sam Zell and Garrabrant in 1999, has already created several companies in Latin America, including starting the development company Bracor, which it created in 2006 with Carlos Betancourt, Banco Itaú and Capital Trust. Capital Trust has since exited its position.

Featured in the June issue of the PERE magazine, Garrabrant said of the 21 investments Equity International has made in 18 different companies, around a third have been focused on Brazil.

However Garrabrant said Equity International wasn’t Latin America-centric. “We are agnostic, we don’t have a Latin theme. We have just seen such great opportunities in the region,” he said.

The chief executive officer said subscribing to an “artificial diversification model” was “hieroglyphics. You cannot say to investors ‘We’re going to be 12 percent Japan, 19 percent China etc’ and say you’re opportunistic. It’s a corruption of the word. You have to allow opportunities to drive your investment activity, not the geography.”

Equity International is also looking at opportunities in China, after investing in two homebuilders in Beijing and Shanghai and a warehousing and logistics company in Shanghai. “China is more complicated than Brazil or Mexico, but the urbanisation trend is very powerful indeed there,” Garrabrant said.

The firm is also researching opportunities in Vietnam as well as Egypt, Saudi Arabia and other Persian countries, where the Equity International team have made numerous visits.

But Garrabrant categorically ruled out investing in the US. Although Zell is personally contemplating corporate distressed debt investments, Garrabrant said for Equity International, emerging markets were the way forward. “Frankly from our first fund forward we’ve consistently had high enthusiasm for emerging markets,” Garrabrant added. “I don’t think there is any comparison between emerging markets and developed markets in terms of the growth potential for real estate-related businesses.”

Read more in the June issue of PERE magazine.