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 Senior Managing Directors 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 vertically 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 investment opportunities in i) onshore wind development; ii) solar pv development, 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 40 major markets in the ‘smile’ of the country with above average fundamentals. The US residential portfolio comprises 130- plus 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 84 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

LONG-TERM RECOVERY PAUSED BY THE PANDEMIC

  • Brazil entered 2020 on a recovery path with positive GDP and employment growth, tamed inflation, record-low interest rates, fiscal discipline, and market-friendly government reforms
  • COVID -19 abruptly paused the economic recovery, and the federal government and central bank responded with a combined R$3.5trn in pandemic relief to support the economy
  • Economic indicators stabilised and started to recover in Q2 2020 following government relief efforts, while Congress continued to push forward on privatisations and reforms
  • Record-low fixed income yields have spurred a rush for cash flowing alternatives such as real estate and infrastructure, but capital remains limited for more opportunistic strategies

‘Buy Vacancy, Sell Cash Flow’

Financial markets globally and locally in Brazil have diverged from the real economy. While employment has remained challenged post-COVID, financial markets have staged a recovery back to near pre-COVID levels. Investors searching for growth have propelled an IPO boom and strong demand for yield alternatives such as Fundos de Investimento Imobiliários (FIIs), or externally-managed Brazilian ‘REITs’. However, foreign institutional capital for opportunistic strategies remains muted, providing limited capital competition for vacant and development assets with capital markets visibility on exit once stabilised.

GTIS Assessment: The long-term impact of COVID -19 may be positively transformative for logistics real estate demand due to rising e-commerce sales as both retailers and consumers are forced to migrate to online fulfilment. Long-term affordable housing demand is driven by structural factors such as population growth, urbanisation, rising living standards, and a large existing housing deficit that supports affordable housing demand irrespective of economic cycles. A GTIS proprietary bottom-up housing demand analysis estimated a total annual need for 340,000 housing units in São Paulo between 2020 and 2030 compared to a peak of 82,800 units launched in any one year.

We are closely monitoring the office sector for changes in tenant requirements post-COVID. Undercapitalised, lower credit quality tenants may not be able to fulfill their lease obligations. However, multinationals have invested significantly in Brazil over recent years and remain committed to expanding their local presence. Unfortunately, the hospitality sector has been more directly impacted by COVID -19 due to the shutdown in tourism. Many hotel owners are facing imminent liquidity challenges despite owning irreplaceable assets with low leverage, providing a potential opportunity to acquire high- quality assets at distressed pricing.

We believe that capital markets dislocation created by COVID -19 has created a compelling investment opportunity in Brazil for longer-term, patient capital with expertise in opportunistic strategies. Limited capital competition combined with strong demand for cash flowing assets have increased the opportunity for real estate managers to add value at the asset level. Despite the COVID -19 crisis, the government has remained vigilant in its push for long-term growth-oriented reforms, providing growth upside for the real estate sector on the other end of the COVID -19 crisis.

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 & 2020).

“GTIS Partners continues to outperform its peers and has once again received the top three rankings in South America in the GRESB 2019 Results,” remarked Dan Winters, GRESB Head of the Americas. “With eight consecu- tive years of benchmarking their ESG performance, GTIS has proven to be an industry leader making outstanding progress with its sustainability programs and continues to set the bar higher for the sector.”

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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