The São Paulo office of Hines, one of the largest real estate organizations in the world, and the California Public Employees' Retirement System (CalPERS), announced today the closing of an agreement that created HCB Interests LP. The new fund will have a combined debt and equity capacity of $200 million with an eight-year term to invest primarily in Brazil's office, industrial and residential markets, with the option of extending its reach to Argentina and Chile.
The fund also announces the commitment of resources to three new projects, including the acquisition of the Burity office building, a 90,000-square-foot building in São Paulo, which is fully leased to General Motors. Plans include renovation of common areas and mechanical systems to accommodate for GM's long-term tenancy.
In addition, two separate built-to-suit projects for Exel, one of the world's largest distribution companies, will be developed in Curitiba and Louveira, respectively, both of which will serve the logistics needs of a multinational consumer goods company. The first project in the Curitiba suburb of Araucária will be a 500,000-square-foot industrial building, while the second building in Louveira, located in the interior of the State of São Paulo, will provide Exel with 350,000 square feet of industrial space. Hines will also develop a 215,000-square-foot speculative building on the Louveira property and is considering a similar possibility for the Araucária project.
Brazil-based Hines Vice President and fund manager Steve Dolman said, "CalPERS' commitment to this new venture speaks to its enduring faith in Hines, building another real estate portfolio with our firm, and to the growth and potential of the Brazilian real estate market. We strongly believe that the domestic market will reveal several industrial and office development opportunities in the next three years, and this fund positions us well to take advantage of them."
Doug Munro, Hines in country managing partner, added, "These three projects represent several important steps for Hines do Brazil, Ltd. While the GM Burity building is our first acquisition in Brazil, the built-to-suit projects will continue our existing relationship with Exel, for which we developed the Louveira Distribution Park in 2001. Additionally, we are expectant that our move into Araucária will create a platform to expand more fully in the southern region of Brazil over the coming years."
Hines entered the Brazilian real estate market in 1998. Since then the firm has developed more than three million square feet of premier office and industrial space in the country and currently manages 4.5 million square feet. Hines has operations in four markets throughout Argentina and Brazil, including Buenos Aires, São Paulo, Louveira (suburban São Paulo), and Rio de Janeiro.
CalPERS is the nation's largest public pension fund with assets totaling approximately $196 billion, of which $11 billion is invested in real estate. The System provides retirement and health benefits to more than 1.4 million State and local public employees and their families.