Top headlines and news impacting Latin America, Africa and Southeast Asia commercial real estate.
Be Grande announced the acquisition of 2,000 apartments through the 50% purchase of six properties in Mexico City and Monterrey. Be Grande has operated in Mexico for 19 years. American multifamily developers have not succeeded in profitably building luxury apartments in Mexico. They built too expensively and assumed unachievable rents in their models.
The seller, ALLOS, sold 60% of Jardim Sul Shopping (R$ 343.8 million) and 43% of Boulevard Shopping Bauru (R$ 100.6 million). ALLOS owns 53 malls, with 11k+ stores, across 2.5 million m² (i.e., 27 million ft²) of GLA. The purchaser is the publicly traded Hedge Brazil Shopping fund (Ticker: HGBS11) with a market cap of around $450 million. Both malls are in the state of Sao Paulo.
The Jardin Anatole opened in Mexico City last year. Timber is more expensive than traditional construction materials but has the advantage of speed. Fire risk of using the material is manageable, and the oak timber is flexible so can more easily withstand earthquakes which occasionally occur in Mexico City.
To buy votes, the Peronist government has suspended income taxes for some until after the election. It has refused to make required payments to the IMF until after the election. The chart below show the market value of the currency (orange) and the “official” rate (white) which has flatlined due to controls implemented on August 26. Very dishonest to wait until after the election to allow the Peso to devalue to its fair value.
The firm’s fourth fund purports to be focused on Colombia multifamily investments in Colombia, a sector decimated by high interest rates and removal of some housing subsidies by the Petro administration. The enormous nature of this capital raise for Colombia should not be understated. Oddly, media attention is scant as are details of the new fund. We know the new fund was funded largely by existing investors.
David Rubenstein and Bill Conway are among the investors in the Alterra Capital Partners Fund which plans to raise $500 million after recently achieving its first closing of $140 million. Plans to invest in telecommunications, technology, logistics, healthcare, consumer and retail sectors. This is essentially the spinout of Carlyle’s fund in Africa which did not fare well.
Once an enthusiastic applicant, the north African nation is now of the opinion that, “BRICS, in its current format, is not of interest to Algeria anymore... The issue of the BRICS group is completely off the table.” We told you in August that the BRICS expansion was a “nothingburger”.
Silicon Valley-based KoBold Metals, whose backers include Microsoft's Bill Gates and Amazon's Jeff Bezos, said it aims to start producing copper and cobalt at a project in Zambia within 10 years. The company uses AI to search for copper, cobalt, nickel and lithium. KoBold is spending about $150 million to accelerate its search for more deposits at the Mingomba project, located along the fabled African copper belt.
The $1.5 billion market cap REIT has been listed on the JSE since 2011, and has properties in South Africa, Western Europe with additional GLA in Australia. The spinout from Investec necessitated a brand change and eventually new offices. Investec’s stake has dwindled to now below 25%. Investec was also involved in the creation of Growthpoint, now South Africa’s largest property company.
American chain 7-Eleven dominates in Thailand and one seems to be on every corner in major cities, and in every small town throughout the country. It is owned and managed by the Chearavanont family, with a fortune of $28 billion. There are more than 14,000 7-Eleven outlets in Thailand, or nearly 3/4 of the total number of convenience stores. Leading the assault on the market leader is Thailand’s richest man ($11.5 billion net worth), liquor mogul Charoen Sirivadhanabhakdi. He has a franchise model that he thinks can entice 30,000 mom-and-pop shops to join. There are others.
Real Estate has been the second largest recipient of FDI into Vietnam so far in 2023 exceeding $1.94 billion, or 9.6% of total FDI which is up over 7% from last year this time. Most of the real estate investment is to support the thriving manufacturing industry which receives support largely from Singapore, China and Japan.
Concerns over China’s real estate sector are causing anxiety about the country’s overall economic health and viability. Public debt levels for the communist government are high at 267% of GDP. Labor costs are soaring in China at the same time as youth unemployment sits above 20%. The post-lockdown consumption recovery really hasn’t happened in China as was hoped. Exports from China are down dramatically (-17.4% to America), and China is receiving fewer investments from foreign firms. Western and Japanese corporations continue to diversify manufacturing out of China and into countries such as Vietnam, India and other emerging markets. HP has moved from China to Thailand, and Apple some capacity to Vietnam and India.
The Washington State Investment Board pension (AUM $183 billion), through Crane Capital, has taken ownership of 8M Real Estate, a Singapore property investor and manager. The developer specializes in shophouse investments in Singapore and has thus far made $1.02 billion worth of acquisitions. In Singapore shophouses are structures built on long and narrow plots, with varied and integrated facades, with a shared walkway creating an attractive streetscape.
