GTIS JV commits almost $300m of equity to Brazil

GTIS Partners is looking to invest up to $293 million in a slew of new projects in Rio de Janeiro after forming a joint venture with Brazilian development firm Ager Incorporacoes.

The New York-based firm, previously known as GoldenTree InSite Partners, said it had formed a R$500 million (€221.3 million; $292.4 million) joint venture with Ager to acquire and develop office, some residential and industrial warehouse assets in and around the city.

Josh Pristaw, senior managing director, said in an interview that the firm expected to close between five and six deals, representing between R$200 million and R$250 million of equity, in the next 60 days. GTIS and Ager predominantly will target developments, including speculative projects, as well as some retrofits, particularly in the Barra da Tijuca borough of Rio de Janeiro.

There are mounting concerns an equity bubble is forming in Brazil, as an increasing number of investors eye the potential for outsized returns from the country’s real estate markets. However, Pristaw said there was a disconnect between the amount of capital being raised for Brazilian real estate and the noise emanating from prospective capital.

“There has been a massive recapitalisation of the equity markets, but it has concentrated on a relatively few public companies,” Pristaw said. “There hasn’t been much liquidity for many local private and some smaller public companies, but they still have attractive projects in their pipeline that need equity partners.”

Even in the office sector, which is renowned for its tenant-friendly leasing laws, Pristaw said strong returns are on offer. He said GTIS was eyeing unlevered returns on cost of between 16 percent and 18 percent for one speculative office deal. The Ager JV also will mark GTIS’ first industrial investment in Brazil.