Corporate Overview

GTIS Partners is a leading real estate investment firm in the Americas, headquartered in New York with offices in São Paulo, San Francisco, Los Angeles, Atlanta, Paris and Munich. GTIS was founded in 2005 and is managed by President Tom Shapiro and Partners Thomas Feldstein, Josh Pristaw, João Teixeira, Rob Vahradian and Amy Boyle.

The leadership team is comprised of seasoned real estate professionals with deep expertise in investment, development, asset management, legal and operations across multiple economic cycles. The collective experience of the leadership team allows GTIS to pursue and lead verti- cally integrated operating businesses in each of its chosen markets in the United States and Brazil. Most recently in 2018, GTIS established a Brazil Renewable Energy Infrastructure platform to pursue invest- ment opportunities in i) onshore wind development; ii) solar PV devel- opment, and iii) operational renewable energy assets.

GTIS’ dedicated research professionals work hand-in-hand with its investment teams to identify macro trends early, including investing in Brazil in 2005, United States residential in 2009 and single-family rental as an emerging asset class in 2010. GTIS has emerged as a leading residential investor in the US post-crisis, with a portfolio footprint in 42 major markets in the ‘smile’ of the country with above-average fundamentals. The US residential portfolio comprises 150 assets across four primary strategies: homebuilding, land development, urban infill acquisition and development, and single-family rental.

GTIS takes a local approach to real estate investing with on-the-ground teams in six key markets with 80 employees and $4.1bn of gross real estate assets under management. With broad expertise in structuring, design, development and asset management, GTIS professionals oversee projects in residential, office, industrial/ logistics and hospitality from concept to completion.

Sector forecasts

MACRO OUTLOOK

Entering 2020, Brazil’s economic outlook was improving with inflation under control, the political situation stabilising and several key economic and fiscal reforms making slow but steady progress toward implementation. As a result of these tailwinds, the country was ranked as the top emerging market investment opportunity in 2019 by a survey of economists conducted by Bloomberg.However, the COVID-19 pandemic rapidly changed the picture, leading to a severe public health crisis and sparking widespread economic turmoil. A year later, with vaccines finally available in sufficient numbers to mount a country-wide vaccination campaign, Brazil is just now beginning to emerge from the pandemic and the associated economic shock.

While risks remain elevated and uncertainty abounds as Brazil sets out on the road to recovery, there are several reasons to be optimistic. Using other countries as a guide, vaccines appear to spark a second phase of recovery after the initial jump in activity following the end of lockdown measures.

The second phase is already underway in Brazil as of mid-2021, but further vaccinations should help increase the pace and scope. Inflation is not likely to spiral out of control as the BCB has moved swiftly and aggressively to combat price increases through rate hikes and guidance. The bank’s credibility as an independent, apolitical entity is stronger as a result. Even with rates rising, the forecasted level is expected to stay within the long-term target band.

Commodity prices have risen sharply on the back of the global economic recovery, rising vaccination rates and sweeping stimulus measures around the world. Given Brazil’s position as a net exporter, commodity prices have a strong positive correlation with Brazil’s economic health and the Real. On a similar note, the trade outlook is bright given these higher prices and stronger global growth.

Lastly, the core financial system remained remarkably resilient during the unprecedented shock that occurred in 2020. Bank balance sheets remain healthy, non performing loan exposure is low, and credit provision has returned to pre-pandemic levels. Scepticism remains around the Bolsonaro administration’s ability to pass the promised fiscal and economic reforms, but there is evidence that some of the measures are crawling through the legislative process and that the core of the reform agenda is still intact.

REAL ESTATE OUTLOOK

GTIS has identified several sectors that should continue to benefit even if COVID -19 continues to drive short to medium term political and economic volatility. The transition to e-commerce is inevitable at this stage and will require vast amounts of investment in logistics real estate and infrastructure. On the residential housing front, the housing deficit remains near all-time highs while low mortgage rates have boosted affordability, providing attractive opportunities for affordable housing development. As such, industrial logistics and residential investment will be the focus of our investment strategy in the near to medium term as we safeguard the value of the commercial office and hotel portfolios through proactive asset management measures, aggressive leasing negotiations and cost savings measures across the firm’s Brazil investment platform.

Investment principles & strategy

SUSTAINABILITY: A CORE GTIS INVESTMENT PRINCIPLE

GTIS is committed to making a long-term positive impact in Brazil and GTIS managed funds have been ranked in the top three for sustainability in Latin America for five years in a row (2016, 2017, 2018, 2019 and 2020).

“We are proud to recognise the 2020 GRESB ‘Sector Leaders’ and ‘Most Improved’ for their clear commitment and meaningful action to improve their ESG performance,”said Paulvan Tongeren, co-founder of GRESB. “Your efforts continue to shape the future of sustainability leadership and play a critical role in driving the transition towards sustainable real assets.”

STRATEGY OVERVIEW

Industrial/Logistics

  • Focus on urban logistics opportunities

Residential

  • Affordable housing development in São Paulo Hospitality
  • High-yield, low-leverage debt/deep value acquisition

Renewable Energy

  • Onshore wind/solar development
  • Operational wind/solar projects

GTIS BRAZIL OPERATING MODEL

  • Integrated real estate platform: In-house design, construction and devel- opment and asset management expertise, supported by in-house legal, operation, compliance, finance and reporting
  • Flexible capital allocation: Hybrid allocator/operator model designed to focus on the best risk-adjusted opportunities as market conditions change. Diversified strategy seeks to unlock value the ‘pure play’ competitors cannot easily capture
  • Research and creative origination: Proprietary research at the macro, sector and local market levels
  • São Paulo/NY joint execution: Local expertise and sourcing capabilities, combined with US Institutional best practices

Supporting documents

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