TFI-Hines Brazil Income Real Estate Fund, a joint initiative of Barwa Bank subsidiary, The First Investor (TFI), and the US-based Hines International Real Estate Holdings, has announced its first seed acquisition by investing in the iconic World Trade Centre complex in Sao Paulo, Brazil.
Barwa Bank is a cornerstone investor in the fund, together with Hines International Real Estate Holdings.
Considering the unique nature of the asset, TFI “believes that the acquisition will greatly enhance the fund’s profile. The fund already has a strong pipeline of attractive investment opportunities,” its spokesman said.
Located in the heart of Sao Paulo, the World Trade Centre complex provides a unique service offering that includes office, retail, and hospitality components along with the largest convention centre in South America – all situated in a premier business location.
“The World Trade Centre complex, Sao Paulo, possesses an extremely diversified and high-quality revenue stream which has huge upside potential due to the synergies amongst the different business components of the complex. The asset will provide an attractive, long term income stream to investors,” Mohamed al-Saad, vice chairman of Barwa Bank Group, said.
Launched in March this year, the TFI-Hines Brazil Income Real Estate Fund is the first Sharia-compliant closed-end income generating fund in Brazil, offering investors substantial risk-adjusted returns through high quality, proprietary real estate investment opportunities.
The fund has a target size of $500mn and is expected to achieve a net leveraged IRR (internal rate of return) of 10.5% to 12.5% for investors. Furthermore, it targets to distribute an average annualized yield of 8% (quarterly distribution) on the invested capital over the life of the fund.
The fund has been structured to maximize returns to investors, the spokesman said, adding combining TFI and Hines resources and expertise, it would source and acquire attractive real estate assets in Brazil.
“The fund will focus on high-quality assets in premium locations with limited competitive supply. The Fund will seek assets with high-quality tenant credit to ensure stable and predictable cash flows and promising expectation for capital appreciation,” according to David McGinnis, chief investment officer for the fund.
With Brazil set to host the 2014 Football World Cup and 2016 Olympics, David Clarke, CEO of TFI, said the timing of this launch could not be more compelling. These events will further enhance the economics of the country and will help the fund to source even more attractive investment opportunities,” Gulf Times reported.
