brazil brazil at a glance brazil all three major us rating agencies have upgraded brazil to...
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Brazil
Brazil at a Glance Brazil
All three major US rating agencies have upgraded Brazil to investment grade status
With reserves close to $200 billion, Brazil has become a net external creditor
After being slightly devalued during the global economic recession, Brazil’s currency has strengthened against the dollar
Inflation has remained under control at the targeted ranges of 4-6%
Source: The Economist
Major Office Sub-markets - São Paulo
Brazil
Centro
Paulista
Jardins
Marginal Pinheiros
Major Office Sub-markets - São Paulo
Brazil
Submarket Inventory (usable m2)
Share per Submarket
Vacancy Rate
Production Sqm
Absorption Sqm
Average Lease Rate Class A
(US$/sqm/month)
Over 5.7 million square meters of stock in São Paulo’s main office submarkets
Source: CB Richard Ellis
Marginal Pinheiros 2,186,900 38% 8.00% 21,400 55,600 $40.00 Paulista 1,023,900 18% 5.30% 31,600 $52.85 Jardins 951,200 16% 4.00% 14,000 $67.14 Centro 362,400 6% 3.30% 89,755 2,300 $11.71 Others 1,225,700 22% 2.80% - 16,200 $34.28 Total / Average 5,750,100 100% 4.68% 111,155 119,700 $41.20
Nestlé Building, São Paulo Brazil
Vacancy remains fairly flat
Market Statistics - São PauloBrazil
Absorption remains flatRental rates continue to rise since the economic crisis
Source: Cushman & Wakefield
Market Statistics - São PauloBrazil
With the tightened vacancy rate, rental rates are expected to rise Despite the global economic recession, Brazil rebounded quickly and resumed new construction
Source: Cushman & Wakefield
Recent Lease Transactions - São Paulo
Brazil
Icon Faria Lima E-TowerFaria Lima Financial Center
E-Tower $60.00 JK 1455 $60.57 JK 1455 $60.57 Faria Lima Financial Center $60.00 Faria Lima Square $62.85 Icon Faria Lima $68.57 San Paulo $51.42
Building Lease Rate US$/sqm
Source: Capright Property Advisors LLC
Major Office Sub-markets –Rio de Janeiro
Brazil
Centro
Botafogo
Flamengo
Barra da Tijuca
Zona Sul
Source: CB Richard Ellis
Submarket Inventory (usable m2)
Share per District
Vacancy Rate
Production Sqm
Absorption Sqm
Average Lease Rate Class A
(US$/sqm/month)
Major Office Sub-markets –Rio de Janeiro
Brazil
Over 2.7 million square meters of stock in Rio de Janeiro’s main office submarkets
Centro 1,714,600 63% 1.80% - 36,900 $74.28 Botafogo 354,400 13% 2.70% - 10,200 $74.28 Barra da Tijuca 313,300 12% 5.90% 9,800 9,200 $55.71 Zona Sul 144,100 5% 6.50% 4,000 5,400 $85.71 Flamengo 51,500 2% 7.10% - 14,000 $62.85 Others 148,000 5% 5.60% - 1,700 $42.85 Total / Average 2,725,900 100% 4.93% 13,800 77,400 $65.95
Market Statistics–Rio de JaneiroBrazil
Demand for office space has been strongRates have increase nearly 30% since the 3Q 2008
Source: Cushman & Wakefield
Market Statistics–Rio de JaneiroBrazil
Net absorption has out-paced delivery of new stock
Source: Cushman & Wakefield
Recent Lease Transactions - Rio de Janeiro
Brazil
Building Sqm Tenant Lease Rate US$/sqm
Ventura Tower I Torre AlmiranteTorre Vargas
Ventura Tower I 45,642 Petrobras $62.85 Torre Almirante 41,110 Renewal of Petrobras $47.26 Ventura Tower II 20,500 BNDES $77.14 Ventura Tower I 9,365 University of Rio Permuta, leased to BNDES $60.57 Torre Vargas 6,300 Oi $48.57 Source: Capright Property Advisors LLC
Office Market ConclusionsBrazil
Due to the lack of real estate development in the 20 years preceding Brazil’s recent economic recovery, demand continues to outpace supply
Fundamental demand for most types of real estate has persisted throughout the global economic recession (construction is back to pre-2008 levels)
Due to substantial FDI and the evolving capital markets, the scale of construction continues to increase
Rental rates continue to increase
Eldorado Business TowerMarginal Pinheiros - São Paulo
• April 2009
• 33,500 square meters
• Sale price: R$ 290 Million / U$S 164.5 Million
• R$ 8,657/SM --- U$S 4,492/ SM
• Buyer: Brazilian Capital Real Estate Fund I
• Seller: São Carlos Empreendimentos
• Cap Rate: 12.0%
Asset TransactionsBrazil
Source: Capright Property Advisors LLC
Asset TransactionsBrazil
Torre AlmiranteCentro - Rio de Janeiro
• March 2009
• 41,649 square meters
• Sale price: R$ 404 Million / U$S 229 Million
• R$ 9,697 / SM ---- U$S 5,501 / SM
• Buyer: Brazilian Capital Real Estate Fund II
• Seller: Hines
• Cap Rate: 12.0%
Source: Capright Property Advisors LLC
Nestlé BuildingMarginal Pinheiros - São Paulo
• June 2007
• 38,000 square meters
• Sale price: R$300 million• U$S 170 Million
• R$ 7,895 /SM --- U$S 4,479 / SM
• Buyer: Hines/CalPERS
• Seller: Banco Itau
• Cap Rate: 9.5%
Asset TransactionsBrazil
Source: Capright Property Advisors LLC
ChallengesBrazil
Absolute necessity to work with local companies due to cultural differences
Due to the strong influx of foreign capital, competition for projects has increased
Finding available land in key markets
Other Opportunities Brazil
Brazil is currently short 6 to 8 million housing units, according to government reports
Rising wealth of the middle class has increased demand for office space, retail outlets, residential space, hotels, and manufacturing facilities
Residential developments in the greater Sao Paulo market have been receiving high leveraged returns at the project level on equity investments - 2 to 3 year hold period
Source: Capright Property Investors
Other Opportunities Brazil
In little more than a decade, the number of major shopping centers went from 150 to 400
More than 200 million shoppers frequent the malls each month
•54,000 satellite and anchor stores •1,300 theaters
Brazil is still vastly undersupplied with retail space
400 shopping centers, or one for every 500,000
Source: National Real Estate Investor
United States has 90,000 or one per every 3,300 people
Other OpportunitiesBrazil
Mixed-Use ProjectsCommercial BuildingsIndustrial / Warehouse
Thank You
Anthony DiBiaseNove International LLC1006 S. Michigan Ave, Suite 225
Chicago, IL 60605+1 708 462 2010