CCP Crafts Management, Development Role

Cyrela Commercial Properties (CCP) has crafted a new kind of role for itself in the $400m JV pool it has set up alongside Singapore’s GIC and Canada’s CPPIB, say people eyeing the deal. While the vehicle has a performance fee similar to what some real estate and private equity funds have, the agreement is understood to reward CCP, the general partner (GP) of the fund, much more based on its work as a developer rather than as a manager of a portfolio, says a person with knowledge of the transaction. The joint venture, which has a 10-year agreement, will target total returns north of 10%, says Bruno Laskowsky, CEO, declining to specify the target. The length of each investment can be determined by the three participants in the fund, adds the CEO. The deal is also being viewed as a win-win for all participants, say executives both on the deal and at competing shops away from it. CCP obtains a large pool of cash with which it can conduct its business without having to raise on a project by project basis. It also allows the Brazilian entity the ability to diversify its pipeline, giving it a more stable profile, says CCP in a statement. For limited partners GIC and CPPIB, the fund-JV structure gives them direct access to new deals in Brazil at a lower entry cost, since the performance fee is understood to be relatively small, and the ability to rely on CCP to provide high quality development services, something that generally presents foreign investors with a number of challenges when done on a one-off basis, or with local firms they are less familiar with.