Lehman Brothers Real Estate Partners, the private equity real estate arm of the US investment bank, has formed a joint venture with publicly traded Brazilian private equity firm GP Investments and six other firms to invest in the Brazilian real estate market as the country continues to draw interest from opportunistic property investors.
GP Investments will hold a 30 percent stake in the new company, called BR Properties. Other firms in the venture include Sandell Asset Management, Tudor Group, Banco Safra, Talisman Special Purpose Fund, the Peter Malkin family and Belfer Managment, according to a statement released by GP Investments.
BR Properties will initially be funded with an investment of $100 million (€76 million), which represents 25 percent of the total investment. The new company will primarily invest in existing office buildings, warehouses and retail stores, excluding shopping malls.
Last year, GP Investments became the first publicly traded Latin American private equity firm when it launched a vehicle on the Luxembourg Stock Exchange, raising $350 million in the process. The firm, which invests across sectors, has been an active investor in the Brazilian property markets. In 1997, it acquired Sao Paolo-based homebuilder Gafisa, which went public last year after receiving a $50 million investment from Equity International, the private equity real estate firm affiliated with Sam Zell. At the end of 2006, Equity International and GP Investments teamed up again to make a controlling investment in ECISA Group, a Rio de Janeiro-based owner and operator of Brazilian shopping centers. Funding for BR Properties will come from GP Capital Partners III, which closed on $250 million in 2005.
The new venture is believed to be the first investment by Lehman Brothers Real Estate Partners in Brazil. The firm joins a growing number of investors targeting the region, from private equity real estate firms such as The Carlyle Group and Morgan Stanley to large-scale developers such as Hines and Tishman Speyer to Canadian institutions like Caisse de depot, Cadillac Fairview and Ontario Teachers. Investors have been drawn to the country in recent years amid a stable economy, a growing middle class and declining interest rates.
“We are getting a lot of new private equity capital in Brazil,” Steve Dolman, a Sao Paolo-based vice president with Hines, told PERE earlier this year. “It’s a signal that investors are comfortable with the Brazilian real estate market.”