Standard Life adds to South American property presence
Standard Life Investments, one of the largest property investors in Europe, have announced on behalf of its Select Property Fund the completion of a further two key acquisitions in Brazil at a combined price of nearly R$110 million (£40m).
With the addition of these prime holdings, the Select Property Fund now has 48% of its portfolio allocated to direct commercial property markets across the globe.
The latest acquisition is the refurbished Bela Paulista Building, situated at 2421 Avenue Paulista, São Paulo, one of the most prestigious offices addresses within Brazil's commercial capital. Purchased at a price of R$54.5m (£19.9m), the property has a total lettable area of 6,542sq.m with retail space at ground and mezzanine levels and an additional 14 floors of office space above. The office tower is nearing completion of a major refurbishment and letting is progressing well with 50% of the floor space let to four strong international and Brazilian domestic tenants. The acquisition represents a revisionary net income yield of 12.1%.
The second purchase is the Madison Building2, located at Vila Olimpia, São Paulo. It sits in close proximity to two of the city's most prominent office avenues, Faria Lima Avenue and Marginal Pinheiros. The building is arranged over six floors, with a 1,500sq.m floor plate and a total lettable area of 8,432sq.m. It was acquired for R$52m (£18.9m) representing a net reversionary yield of 11.2%. The property is 100% let to four strong international and Brazilian domestic tenants.
In October 2009, Standard Life Investments made its first direct investment in the Brazilian real estate market with the R$15m acquisition of the Alana II Building, a multi-let office property in São Paulo.
Andrew Jackson, Manager of the Select Property Fund, Standard Life Investments, said: "We are particularly positive about the prospects for the Brazilian economy and its associated commercial real estate market, so its great news for our investors that with the assistance of our Brazilian partner, Eccelera, we've acquired two such sought after properties. These acquisitions reinforce our view that the global property market has the potential to generate strong returns over the medium term, particularly in Asia-Pacific and the Americas.
"The Select Property Fund is a rare offering within the investment industry - a hybrid structure offering investors both direct and indirect international exposure. These two prime quality additions mean that the portfolio now has approaching 50% in direct exposure to international property markets, thereby cementing the fund's unique positioning within the marketplace."
The first of its kind in the marketplace, the Select Property Fund offers both institutional and retail investors access to global property markets. The £671m fund accesses commercial property markets via direct investment, unquoted specialist property products and stock exchange listed property vehicles globally. Despite recent volatility, the performance of the fund has been improving with the retail accumulation unit price rising 23.1% over the last 12 months, compared to the IMA Property Sector average of 20.9%.