Hines, CalPERS to channel $800m to Brazil

Amidst heightened interest in Latin America's largest country, the joint venture would be the third such fund formed by the two partners.

Hines and the $250 billion (€171 billion) California Public Employees’ Retirement System may create an $800 million fund to invest in the Brazilian property market, according to a recent Bloomberg report.

Douglas Munro, chief executive of Hines do Brasil Empreendimentos, said the fund may debut in August this year.
The venture represents the third between Hines and the California pension to target investments in Brazil. Last summer, the Hines CalPERS Brazil II (HCB II) fund, the pair’s second Brazil-focused fund, acquired the 29-story BankBoston building, located in the Marginal Pinheiros submarket of São Paulo, from Banco Itaú. HCB II was established to invest primarily in Brazil’s office, industrial and residential markets, with the option of extending its reach to Argentina and Chile.

Within Brazil, Hines plans to expand from the country’s biggest cities such as Sao Paulo and Rio de Janeiro to other mid-sized cities like Santos—home to Latin America’s biggest port—in the next two to three years, Munro added.

The Houston-based firm entered the Brazilian real estate market in 1998. Since then it has developed more than 11 million square feet of office, industrial and residential space, in the country, and currently manages 9.5 million square feet. The firm has operations in six markets throughout Brazil, including São Paulo, Louveira and Embú (suburban São Paulo), Rio de Janeiro, Curitiba and Campinas.

Over the past year, a number of private equity real estate firms have been active in the Brazilian property market. In October 2007, The Carlyle Group’s Latin America real estate team, led by Eduardo Machado, made its first real estate investment in Brazil by investing in local property developer Scopel. Three weeks after Carlyle’s announcement, New Jersey-based Prudential Real Estate Investors announced it had formed a joint venture with Racional Engenharia to target investments in Brazil’s industrial property market. Local players have also upped their game. Brazilian private equity firm GP Investments recently closed on a $1.3 billion private equity fund targeting Brazil and Latin America.