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 36 major markets in the ‘smile’ of the country with above average fundamentals. The US residential portfolio comprises 120-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 86 employees and $4.6bn 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

US MACRO THESIS: 

Real Estate Market Supported by a Strong Households 

  • Continued employment and wage growth
  • Falling interest rates have improved for-sale housing affordability
  • Favourable demographic trends continue to support demand across sectors
  • Sun Belt markets leading the US

…However

  • High geopolitical uncertainty.
  • Affordability concerns in certain markets.
  • Homebuilding margin compression from rising construction costs.
  • Fears of a global slowdown impacting sentiment

US RESIDENTIAL MARKET OUTLOOK:

Demand

1.Strong residential demand broadly across single-family/multifamily forsale/ rental supported by millennials

2. Accelerating income growth supporting price and rent increases

3. Office tenant demand from TAMI and other new economy sectors driving outperformance of midsize, boutique office properties in supply-constrained markets

4. E-commerce growth has resulted in a reconfiguration of the supply chain and a need for high-quality, consumption-focused warehouse and distribution assets serving population centres 

5. Long-term secular tailwinds in opportunity zones, a provision created by the 2017 Tax Reform, with an estimated $6.1trn of unrealised capital gains that could be tapped for transformative long-term development

Supply 

1. Housing supply constraints such as a shortage of skilled labour limit total residential production and have resulted in single-family housing undersupply in nearly all major markets

2. Office vacancy continues to compress nationally, and new supply is concentrated in a select group of markets. New York, Washington DC, and Chicago comprised roughly 33% of total new stock under construction nationally as of Q1 2019 data from JLL

3. There are 8,700 opportunity zones nationally and not all zones are created equal. Zone selection will be an integral part of a successful investment strategy

GTIS Assessment: Continued undersupply in the housing sector suggests a long-term need for new production, particularly in the entry-level and active adult segments. However, the economic expansion cycle appears to be in the late innings and affordability concerns require a laser focus on controlling costs and downside protection. GTIS believes that the residential sector provides one of the best risk-adjusted opportunities in the real estate market today with limited supply, favourable long-term growth tailwinds, and a strong household sector with income growth supporting price and rent increases. Commercial real estate markets benefit from continued end-user demand. However, significant capital availability during the middle to late cycle have led to overbuilding in concentrated submarkets within a select group of urban gateway markets. Meanwhile, new economic growth industries have led to increasing demand for boutique office space in supply-constrained markets, and the long-term growth of e-commerce continues to drive a need for high quality, consumption-focused logistics real estate.

Investment principles & strategy

US INVESTMENT STRATEGY OVERVIEW

1. Underwrite greater margins of safety and focus on downside protection in a late-cycle environment
2. Focus on property types and markets with identified, long-term sustainable growth drivers
3. Identify ‘geographic arbitrage’ opportunities where attractive real estate investments on a standalone basis reside in opportunity zones with long-term transformative potential
4. Invest in income-generating existing assets to mitigate costs of new development

COMPONENTS OF GTIS US STRATEGY

1) Opportunistic/Growth Strategies

Homebuilding

  • Closer-in communities with demonstrated new home demand
  • Markets or segments (such as active adult housing) with constrained supply
  • Shorter duration (3-5 years) with existing or approved infrastructure

Land Development

  • Growth markets with identified long-term population and job drivers (ie, access to jobs, good schools, retail and amenities)
  • Builder commitments upon closing mitigates risk
  • Longer duration (6 years) mitigated by phasing and capital recycling
  • Greater weighting on equity multiple

Industrial/Logistics 

  • Develop modern warehouse and distribution assets to meet local demand
  • Focus on key distribution hubs with strong strategic regional importance
  • Meet the needs of companies servicing the demands of the local market
  • Size ranges of 250,000 to 800,000 sq ft
  • Target markets include population centres in Texas and Florida

2) Focus on Income and Yield 
Class B Multifamily Rental

  • Class B in A locations below replacement cost with good supply/demand
  • Strong affordability
  • Value-add through upgrade/renovation
  • Good financeability

Single-Family Rental

  • Less impacted during economic downturn due to positive demographics and limited supply similar to for-sale housing
  • Shifting preferences due to both desire and need (ie, consumers with difficulty qualifying for mortgage credit)
  • Industry consolidation opportunity
  • High barrier to entry for scalable platform

Office

  • Midsize, boutique office properties in supply constrained markets
  • Appeal to high growth users in the ‘TAMI’ and other new economy sectors 
  • Limited near-term exposure to significant vacancy or rollover

3) Early Mover in Areas with Positive Transformative Development Opportunity Zone Focus

  • Geographically defined areas with proven growth potential balanced between established gateway cities and growth markets
  • Diversified strategy to manage market and sector-specific risk
  • Not all opportunity zones are created equal – deep market research and submarket selection is critical to identify successful opportunities

Supporting documents

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