WTGoodman JV Buys Warehouse Portfolio in Brazil for $1.4B
- Dec 06, 2013
With the FIFA World Cup coming to Brazil next summer, and the Olympic Games set for Rio de Janeiro in 2016, the country has seen a few years of economic upswing, spurred on by the development necessary to make the next few years a success.
With increased development activity in the area, investors are calculating their endeavors hoping to profit from the country’s improving industrial sector. However, Brazil’s overall economy has recently lost some of its steam, with a lowering economic growth rate now than the 7.5 percent it saw in 2010 when it made investors flock to South America.
The industrial market has seen one of the largest increases, and heightened activity from foreign capital is also clearly visible. Due to its growing appeal, approximately a year ago, WTorre SA and the Goodman Group created a joint venture that would focus on the industrial real estate market. WTGoodman is the result of that partnership and the entity is now set to move on the market to acquire a massive warehouse portfolio in a transaction worth approximately $1.38 billion.
The buyer is set to purchase the 34 properties that comprise the portfolio from current owner, BR Properties. The seller is set to exit the industrial market and focus on its office assets, which according to The Financial Times, have seen better days. The industrial component of its portfolio was the healthiest with small vacancy rates compared to its office properties. BR has also seen its shares drop over the past 12 months, with profits lowering when compared to 2012.
The joint venture was created back in November 2012 when the two companies agreed to enter the Brazilian real estate market. Back then, the objectives of the JV included a development-led investment strategy focusing on prime logistics and industrial properties, with WTorre contributing four existing development land sites in Sao Paulo and Rio de Janeiro, totaling 8.7 million square feet and a completion value of approximately $1.1 billion.
“Low vacancy rates and a lack of supply in core markets makes this an opportune time to enter Brazil,” said one of the members of the Board of WTGoodman and former CEO Continental Europe with Goodman Group, Danny Peeters.
The JV is now looking to achieve those objectives with the massive portfolio acquisition, as well as the completion of the partnership’s first development project, also set to be unveiled by the end of the year.