Real estate and logistics investments in Brazil are on Blackstone Group and GIC Real Estate’s shortlist of interesting opportunities, according to speakers at the Pension Real Estate Association’s 25th Annual Institutional Investor Real Estate Conference in San Francisco on ThursdayOct. 1.
Brazil is one of the countries most challenged by the commodity cycle and its currency, the real, has dropped close to 70% against the U.S. dollar in the past 12 months, said Jonathan Gray, global head of real estate at alternative investment manager Blackstone.
“It’s not for the faint of heart. You can’t borrow there,” Mr. Gray said. “It should be a place with real opportunity.”
Adam Gallistel, deputy regional head-Americas at GIC Real Estate, speaking on a separate panel, said the real estate arm of the Singapore sovereign wealth fund is a net seller “so we don’t see great value anywhere in the world.”
Still, Brazil has been a “big topic of conversation” lately, Mr. Gallistel added.
“I like to invest capital where capital is dear, and there is nowhere where capital is dearer than in Brazil,” Mr. Gallistel said.
Economists J. Bradford DeLong, professor of economics at the University of California, Berkeley, and Gita Gopinath, professor of economics at Harvard University, also mentioned Brazil in a discussion on the global economy that kicked off the conference.
However, each warned that investors in that country would have to suffer through about five years of what Mr. DeLong called “ugly numbers.”
Brazil was not the only area of interest for Blackstone Group. Mr. Gray also said he expects more real estate investment trusts to be taken private because the stock price is less than the value of some REITs’ underlying real estate.
There is also likely to be more deals in which REITs sell interests in some of their properties. Mr. Gray noted that shopping center REIT The Macerich Co. announced Thursday that it had sold interests in eight properties for $2.3 billion to GIC, which has estimated assets of more than $300 billion and real estate money manager Heitman.