Prudential Real Estate Investors (PREI) has opened an office in Sao Paulo to help it source further deals in Brazil, particularly in the residential sector. The office, which opened three weeks ago, is the firm's second location in Brazil and currently employs three investment professionals. PREI has 40 staff members in its Rio de Janeiro office, which acts as the headquarters for the firm’s South American operations and funds.
PREI has raised $2.8 billion of equity through eight commingled real estate funds targeting Latin America since 2003 and has been investing in the region since 2000, with a large presence in Mexico City. Many of the firm’s funds are sector-specific, including its PLA series of vehicles targeting the residential sector. The firm also is believed to be in the process of raising its first dedicated Brazil fund.
Daniel Caulliraux, head of merchant banking at PREI, declined to comment on the firm's funds, but he told PERE on the fringes of the ADIT Invest 2011 conference in Fortaleza recently that the group was looking to source more opportunities in the residential, industrial and retail sector, as well as some office deals, with the Sao Paulo location.
PREI has four JV deals looking at the residential and industrial sector, with Caulliraux noting that finding the right operating partner was one of the biggest challenges for many Brazil-focused investors and managers. “It’s about a long-term relationship with developers, and that can take time,” he said. “There is a lot of interest in getting exposure to Brazil, but developing relationships with the best operating partners is not always easy.”
Indeed, another private equity real estate firm said on the fringes of the conference that it can take up to two years to develop a long-standing relationship with a local operating partner. Caulliraux added: “My impression is investors should consider investing with international managers, instead of going alone into new markets.”