Selected Case Studies in Real Estate
Financial advisory to BR Properties Board
G5 Partners advised the Board of Directors of BR Properties on the analysis of a non-solicited tender offer from GP Investments and the Abu Dhabi Investment Authority (ADIA), in 2016.
About BR Properties
Founded in 2006, BR Properties is focused in the acquisition, rental, management, and development of corporate offices and warehouses of high quality assets located in the most liquid and resilient markets in Brazil. Despite a national footprint, their core markets of operation remain São Paulo and Rio de Janeiro.
The company portfolio is comprised of nar 40 properties, totally 583.5k m² of GLA.
G5 Partners’s Role
- G5 Partners was BR Properties’ Board of Directors exclusive financial advisor for the analysis of the non-solicited tender offer from GP Investiments and ADIA.
- Second case ever in Brazil of a non-solicited tender offer for the acquisition of control of a company listed at the local stock exchange (B3).
- One of few true corporations in Brazil — i.e. with no defined controlling shareholder — with a Board of Directors composed by members with distinct backgrounds and perspectives on valuation.
- GP and ADIA acquired 172.4 mm shares in an auction at B3, reaching 70% stake in BR Properties.
- With the acquisition, the two companies secured control of BR Properties.
- The final price was R$11/share, a 10% premium when compared to the original offer price and a 23% premium when compared to the closing price of the previous day.
- BR Properties remained listed at B3 as a “Novo Mercado” company after acquired by GP and ADIA.
Case Study – Four Seasons Hotel Development
G5 Partners advised Iron House in the establishing a joint venture and on raising R$475 mm with Adia, in 2015.
About Iron House
Iron House is the subsidiary of Grupo Cornelio Brennand – a traditional Brazilian group founded 98 years ago, with a strong history of highly successful investments – focused on the development, investment and management of Real Estate related projects.
The company’s R$1.5 billion portfolio was managed by a team of experienced real estate professionals with a long term investment perspective.
G5 Partners’s Role
- G5 Partners acted as financial advisor to Iron House, Brennand family real estate investment firm, in forming its joint venture with ADIA (Abu Dhabi Investment Authority), a sovereign wealth fund from Abu Dhabi, to build the first Four Seasons Hotel in Brazil.
- G5 Partners not only prepared the studies and marketing materials but also identified potential investors who were willing to make a long term investment in the first Four Seasons in Brazil.
- Road shows were conducted at G5 Partners’s offices in São Paulo, Rio de Janeiro, New York, as well as other US, Middle East and European cities.
- G5 Partners led the assessment and negotiation of the transaction on Iron House’s side.
- Iron House was looking for the ideal partner and G5 Partners helped achieve the best one to fit the criteria of synergies, governance, capital availability and investment structure in order to protect and align interests of both sides.
- G5 Partners raised over R$400 mm with ADIA with the purpose of forming a joint venture to develop the Four Seasons Sao Paulo.
- Meeting potential investors and sovereign wealth funds gave Iron House the belief that its joint venture partner had the best profile with an appropriate structure and a long term perspective.
Fundraising for Shopping Malls Platform
G5 Partners advised Saphyr in the establishment a joint venture and R$425 mm fundraising with HSI in 2012.
The company was established in 2002 by Paulo Stewart, an entrepreneur with over 30 years of experience in the mall industry.
Before establishing Saphyr, Mr. Stewart worked for 18 years at ECISA, a development company founded in 1949 which became a mall developer during the 1970’s.
AS the CEO for ECISA, Mr. Stewart improved the company’s financial conditions and led the company to its sale to GP Investments and Equity International, when the company changed its name to become BR Malls.
G5 Partners’s Role
- G5 Partners acted as financial advisor to Saphyr Shopping Centers in forming its joint venture with HSI (Hemisfério Sul Investimentos), a private equity firm financed by the Singapore sovereign wealth fund, GIC, and Harvard Management Company.
- G5 Partners prepared both studies and marketing materials and, using its global platform, identified potential investors who were willing to make a long term investment in the Company.
- Road shows were conducted on G5 Partners’s office in Sao Paulo, Rio de Janeiro, New York, Chicago, Washington DC and other USA cities.
- G5 Partners led the assessment and negotiation of the transaction on Saphyr’s side.
- The high demand from potential investors allowed G5 Partners to choose the best candidate to invest all equity needed, structuring a joint venture in two separate holdings in order to protect and align interests of both sides.
- G5 Partners raised R$420 mm with GIC with the purpose of developing shopping centers throughout the Brazilian territory.
- Keeping the process competitive during the whole negotiation gave Saphyr the belief that its joint venture partner had the best profile, alongside with the appropriate structure and a long term perspective.
Hotel Development and Operating Terms
G5 Partners advised Hotel Emiliano in a R$100 mm equity fundraising, in 2012.
Hotel Emiliano is a pioneer in developing boutique luxury hotels in São Paulo. Emiliano offers not only luxury rooms but also restaurants, spas, cosmetics and other product and services to its clients.
Emiliano was expanding its operations and seeking to develop new hotels with the same concept, in selected new locations in Brazil. Ast he company did not have interest in owning the properties it entered an agreement with BTG Pactual to finance the acquisition of land and the construction of a new property in Rio de Janeiro.
G5 Partners’s Role
- G5 Partners advised Hotel Emiliano in developing an agreement with the BTG Pactual to operate a 98-room boutique hotel in Rio de Janeiro, to be developed and owned by the investor.
- G5 Partners advised in the structuring of the investment agreement, the shareholders’ and lease agreements that regulate the relationship between the Hotel Emiliano (operator) () and the the property owner (Banco BTG Pactual).
- Hotel Emiliano and BTG Pactual had the intention of partnering in a hospitality venture to be developed in Rio de Janeiro. G5 Partners advised Emiliano in designing the transaction (financing, compensation, shareholders’ agreement).
- The agreed financing was approximately R$36 mm to the acquisition of the land, plus the construction and internal fit out costs, estimated in approximately R$47 mm.
- Emiliano would operate the property for 20 years, to be renewed for the same period and would receive, as a compensation for its operation, a variable value according to the hotel’s revenues, and a performance compensation according to the cash flow of the hotel.