GIC to open São Paulo office

A growing direct real estate portfolio in Brazil is a major reason that Singapore’s sovereign wealth fund has decided to establish its first Latin American location, for which it recently hired initial property staff.

The Government of Singapore Investment Corporation (GIC) is anticipated to open an office in São Paulo – its first in Latin America and tenth worldwide – next year. The new location will oversee the sovereign wealth fund’s real estate and private equity investments in Brazil.

In conjunction with that decision, GIC Real Estate, the real estate subsidiary of GIC, has hired two Brazilians, Gustao Valente and Marcos Lima de Freitas Filho, over the past few months to serve as its initial in-country staff at the new office. Valente most recently worked at Brazilian investment bank BTG Pactual, which acquired his former employer, Brazilian Capital, the real estate investment management business of Brazilian Finance & Real Estate, last year. Both Valente and Lima are expected to work out of GIC’s New York office for the next year before returning to Brazil to help open the São Paulo office.

Adam Gallistel will remain senior vice president and head of Brazil for GIC Real Estate. PERE understands that no decision has been made yet on whether he will relocate to São Paulo or continue to be based in New York. If Gallistel does not relocate, Valente is expected to head up the sovereign wealth fund’s real estate operations in Brazil.

The sovereign wealth fund has been investing in Brazilian real estate for about seven years and has targeted all commercial property types in the country, with the exception of hotels. Initially, it was predominantly a fund investor through managers such as Hemisferio Sul Investimentos (formerly Prosperitas Investimentos) and Brazilian Capital.

However, GIC Real Estate increasingly has been going direct in recent years, forming joint ventures with Brazilian real estate developers such as Cyrela Commercial Properties, SDI and Tishman Speyer. Additionally, it backed Global Logistic Properties’ R$2.9 billion (€1.14 billion; $1.45 billion) acquisition of two large logistics portfolios in Brazil last year, which involved GIC assuming an approximately 20 percent stake in both portfolios. This increase in direct investments is said to have necessitated an in-country presence for GIC.

GIC’s real estate forays in Latin America have not been limited to Brazil, however. It holds ownership interests in various Mexican ventures and also is said to be looking to gain a foothold in Colombia. After the São Paulo office opens, the sovereign wealth fund’s Mexican property investments will continue to be managed by its San Francisco office, while prospective Colombian investments will be handled out of New York.

GIC currently is ranked by the Sovereign Wealth Fund Institute as the fifth-largest sovereign wealth fund in the world, with $247.5 billion in assets. While the Americas accounts for the largest percentage of GIC’s overall portfolio, Latin America represented just four percent of total holdings as of March 31, 2012, according to the sovereign wealth fund’s most-recent fiscal year report. Real estate made up 10 percent of its overall portfolio as of that date. In addition to its headquarters in Singapore, GIC has offices in San Francisco, New York, London, Mumbai, Beijing, Shanghai, Seoul and Tokyo.