Equity International weighs entering Brazil financing sector

The Chicago-based private equity real estate firm is reportedly considering launching a financing company in Brazil to provide capital to real estate developers and investors.

Equity International may consider creating a real estate financing company in Brazil in a bid to help boost liquidity to developers and investors, according to a Bloomberg report.

Chief strategic officer Thomas McDonald said the firm was seeking partners to grow Brazil’s “still nascent” real estate financing market.

If a partner cannot be found, Equity International may launch its own business, he said during an interview in São Paulo.

This wouldn’t be the first time the firm, co-founded by Sam Zell and Gary Garrabrant, has created its own real estate operating platform in Latin America.

In 2006, Equity International, together with Carlos Betancourt, Banco Itaú and Capital Trust, founded São Paulo-based developer Bracor Investimentos Imobiliarios. Capital Trust has since exited that investment. And in 2000, Equity International teamed with Denver-based Black Creek Group to launch Mexican industry property company, Corporate Properties of the Americas (CPA).

According to the report, McDonald said: “Real estate specialty financing is a sector that is still nascent in Brazil and there are opportunities here that aren’t being met in a scalable way.

“We haven’t yet found the right platform to do that. At some point we’ll find the right one or we’ll create it ourselves.” McDonald didn’t give a timeline for the potential investment, but he added that real estate financing in Brazil was largely “tenant-based” as opposed to property-orientated.

“The banks have to get an understanding of real estate and look beyond the tenant,” he said. “We’d love to help jumpstart that.”