Property Investors Eye South America Haven in Return-to-Work Bet
(Bloomberg) -- A group of Uruguay’s top real estate investors is planning to raise $165 million to wager that demand for office space is about to take off as foreigners flock to the nation known as the Switzerland of South America.
Investors including architect Ernesto Kimelman and construction executive Eduardo Campiglia are seeking to sell hybrid securities through a real estate trust, Fideicomiso Financiero Platinum. The cash raised through the sale will go toward building two office towers and a 98-unit apartment building expected to house locals and newcomers to the nation of 3.5 million people.
“We’re in the middle of a region that unfortunately has lots of issues. There are problems in Chile, in Argentina, in Peru. Things aren’t good in Brazil,” Kimelman said in an interview. “That probably means many companies or independent workers view Uruguay as a place” to do business.
Wedged between Argentina and Brazil, Uruguay has leveraged its economic and political stability to persuade companies like chemicals producer BASF SE and oil-trading giant Trafigura Group to open local offices. The government is also offering generous tax breaks to attract skilled immigrants, and revive investment and the broader economy.
Kimelman said he expects the tiny nation to capture more foreign companies in the global services business, which would mean more demand for offices and living space by immigrants. Uruguay exported global services like accounting, IT and consulting for almost $1.9 billion in 2018, according to government data. Last month, Google bought a 30-hectare property near the capital, Montevideo, for a data center.
Uruguay saw its first billionaires emerge in recent weeks from the sector with the initial public offering of cloud-based payment platform Dlocal Ltd. The company -- which allows businesses like Amazon.com Inc. and Microsoft Corp. to bill clients in emerging markets -- now trades with a market capitalization of about $14 billion.
To be sure, the pandemic is far from over in Uruguay, with the nation only recently ceding its global lead, by one measure, of per capita deaths. Its vaccination program has delivered two shots to more than 42% of the population.
Covid-19 spurred Kimelman and his partners to add more windows and ventilation to their project. But Kimelman shrugged off the dire predictions that the pandemic has made offices obsolete. He pointed to the emotional and logistical strain of juggling work and home life in the small apartments common in Montevideo.
Two-and-a-half years after the project was first pitched to local pension funds, the central bank on June 16 authorized Fideicomiso Financiero Platinum to sell as much as $165 million in securities that will pay interest and distribute profits.
“We expect there will be one or two important institutional investors,” Kimelman said.
The project’s backers, including Kimelman, plan to purchase as much as 30% of the securities. They already spent several million dollars of their own to buy and excavate an approximately 10,000-square-meter (107,000 square feet) property next to the World Trade Center complex in Montevideo, which will be the site of the project.
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