US REITs Join Brazil Gold Rush

Several US REITs are looking at Brazil, some for the first time, as paltry returns at home lead them to seek greener pastures. First timers like Weingarten Realty, based in Houston, are heading to Sao Paulo and partnering up with locals to develop commercial properties, including malls and industrial facilities. Also rumored among new arrivals are Simon Properties, General Growth Properties and Duke Realty. “The development opportunities in the US are extremely limited for a couple for reasons,” says John Blumberg, founding partner of Black Creek Capital, a holding company with a number of US REITs and Mexican housing vehicles worth some $6.3bn. Blumberg is looking to raise a fund for Brazil. Among the established players are AMB, which has set up a JV with Cyrela Commercial Properties, and Kimco Realty, in partnership with local developer REP to build outdoor mall areas in suburban regions. Prologis, one of the largest REITs specializing in logistics centers and facilities, also has a small but growing portfolio of real estate assets in Brazil. The risk for all new arrivals is similar to those faced by seasoned locals. However, beyond cultural and language barriers, lack of familiarity with local tax and licensing policy can lead to unexpected delays and costs, say Brazilian developers.