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SAO PAOLO, BRAZIL- HCB Interests LP, a new fund formed by Hines and the California Public Employees Retirement System, plans to spend $200 million in South America. Using $100 million of equity and $100 million of debt, investments will be made in the office, industrial and residential sectors. The fund will focus on Brazil and may also invest in Argentina and Chile.Hines entered the Brazilian real estate market in 1998 and has developed about three million sf of office and industrial space there. Hines’ Brazil-based VP Steve Dolman tells GlobeSt.com the life of the CalPERS fund is eight years, which means the money will be invested over the first three or four years and then liquidated prior to the end of the eighth year.

“We strongly believe that the domestic market will reveal several industrial and office development opportunities in the next three years,” he says. “This fund positions us well to take advantage of them.”

The fund already has landed one office building and two industrial build-to-suit deals. The office acquisition was the Burity Building, a 90,000-sf asset in Sao Paulo that is fully leased to General Motors. Hines’ stated plans for the asset include renovation of common areas and mechanical systems to accommodate GM. Hines has not revealed the acquisition price or the length of GM’s lease commitment, which is believed to be between five and seven years.

The two build-to-suit deals are with the third-party distribution company Excel, for which Hines developed the 1.2-million-sf Louveira Distribution Park in 2001. The first project in the Curitiba suburb of Araucaria will be a 500,000-sf building. The second building for Excel will be a 350,000-sf warehouse in Louveira, which is located in the interior of the State of Sao Paulo. Hines says Excel will use both of the facilities to “serve the logistics needs of a multinational consumer goods company.”

Concurrently, Hines says it will develop a 215,000-sf speculative building on the Louveira property and consider a similar gamble at the Araucaria site. To date, Hines largest industrial tenant in Brazil has been Excel. Its largest office tenants there are the oil company Petrobras, which anchors an office building in Rio de Jenerio, and Santander Bank, which anchors an office development in Sao Paolo.

Looking forward, Dolman says the fund will enter the workforce housing market. Generally, the fund plans to develop high-rise condominium buildings for the low end of the market, says Dolman.

CalPERS is the nation’s largest public pension fund with assets totaling approximately $196 billion. About 6.5% of that total, or about $11 billion, is invested in real estate.

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