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CPPIB, Singapore SWF target Brazil

The Canadian pension CPPIB has teamed up with GIC Real Estate and a local property company to target Brazilian real estate.

The Canada Pension Plan Investment Board (CPPIB) has teamed up with the real estate investment arm of the Government of Singapore Investment Corporation to invest in Brazilian real estate.

The pair have formed an investment vehicle that also includes local firm, Cyrela Commercial Properties, to develop, acquire and manage “institutional-quality” commercial properties, according to a statement.

CPPIB said it was contributing up to $250 million to the venture, although it will initially invest $150 million.

Its partner, São Paulo-based Cyrela, is the operating partner which owns and manages commercial properties in the country, including a portfolio of Class A offices in São Paulo, as well as shopping centres and industrial properties.

This is the first time CPPIB has entered the Brazilian real estate market. Indeed it is the first agreement it has stuck in South America despite having a sizeable international portfolio. Eighty-nine per cent of the pension plan’s $6.9 billion property portfolio is invested in developed markets, while 11 per cent is invested in select emerging markets including Mexico, Turkey and China.

Graeme Eadie, senior vice president of real estate investments, said in a statement that Brazil was the “leading economy “ and was one of the world’s dominant emerging markets. “The anticipated growth in the country’s middle class will continue to drive demand for commercial real estate across a broad range of sectors,” he added. “The venture’s principal strategy will be to develop and manage high-quality office buildings, shopping centres and distribution facilities.” The venture will also look to acquire high quality existing properties.

Notification of the regional debut is in marked contrast to recent revelations by PERE that JER Partners is closing its Latin American fund and shutting down operations in Brazil and Mexico owing to “market conditions.”

However, Equity International is considering entering Brazil’s financing sector to help supply capital to developers and investors.