Latin Investors Buying Commercial Sites
Written by Marilyn Bowden on October 11, 2012
By Marilyn Bowden
Latin American investors, long active in Miami’s residential market, are turning their attention to all kinds of commercial properties.
Alex Zylberglait, vice president in investments at Marcus & Millichap and director of the firm’s National Office and Industrial Properties Group, recently returned from a real estate expo in Argentina attended by about 20,000 investors.
The response, he said, was "pretty positive. There is an element of education involved because it is a different market from residential, but there is interest, curiosity and appreciation for the opportunity to invest in the US, which has historically been a safe haven for them."
Marcus & Millichap, the only local commercial brokerage to attend the expo, chose to go because of a recent uptick in buyers from Latin American countries, he said.
"They are investing in all kinds of property types — apartments to single-tenant retail to office," he said. "I just closed a deal for three office buildings to a Latin American who is hiring a local partner to manage and lease them. We sold another office building to a Peruvian high-net-worth individual.
"The reasons are obvious: economic conditions in many Latin American countries are unstable. Some that were doing well are slowing down. As investment vehicles domestically become less attractive, markets are recovering here, and they are looking to place equity in markets that are more predictable."
While not every lender is willing to lend to a foreign national, Mr. Zylberglait said, many of these deals are all-cash, something more common in Latin countries than it is here.
"We sell commercial properties all over the country," he said, "and among Latin Americans, there is definitely a bias towards Miami-Dade because that’s what they know and are comfortable with.
"Some will look at the tri-county area, but the preference is to stick to Miami as much as possible. That’s part of the reason Miami-Dade is a much more competitive market than even Broward or Palm Beach: there’s a bigger pool of buyers."
The influx of Latin American capital into the county via commercial property deals is probably much larger than can easily be traced, he said, because often the buyer has a local partner who is the face of the deal, or may live here himself part of the year.
Maria Pulido, a Keyes associate based in Doral, recently sold the five-story, 50,000-square-foot Kendar office building at 1550 Madruga Ave. in the South Gables market for $10.3 million to a Central American buyer.
"I’m working right now with four other Latin American investors," she said. "Clients come from all over — Argentina, Colombia, Peru, Central America.
"They come for a lot of different reasons. One of the main ones is the political situation at home, which can shift from one day to another, so they look at safe-harboring their money overseas.
"Also, a return of 6%-9% is much better than the 2%-3% they will get from a bank — in Europe, 1%-2%, which is even worse."
Buying condos to rent as an investment invites problems, Ms. Pulido said; commercial properties are more stable.
"Most commercial tenants are long-term; they won’t get that constant in-and-out of a residential property," she said.
"And they are expecting the values to come up a lot on the properties they are buying."
Many establish a business in the US, or invest heavily in an existing one, in order to qualify for an investor visa, she said, that will allow them to bring their families north as well.
"Mainly," Ms. Pulido said, "they focus on retail and office. Some want a whole building; others just a one-tenant retail property. We have to design a unique program for each client based on their situation."
Fabio Faerman, Fortune International Realty’s commercial director, said high-net-worth individuals who five years ago would have financed through banks now prefer buying with cash.
"Closing is faster, and there are fewer headaches," he said. "We require the same reports on the property as the banks do."
Most, he said, prefer triple-net properties or free-standing buildings "anywhere in South Florida, but preferably in Miami-Dade and Broward.
"We believe the Mexicans have the most money to invest here, but they are not investing at the same pace as Argentineans or Brazilians. I think Mexicans represent the next growth on the commercial side."
Recently, Mr. Faerman said, Latin Americans have also been looking at land sales in the Miami area.
"That takes more speculation and some guts," he said. "A triple-net property is a safe investment with a reasonable return of 5%-8%. On the land side, there is more risk, but they can make a lot more money.
"Some have sold to developers for double what they paid one or two years ago. Also, some — mostly Argentineans — are looking to do some new development on the side."To read the entire issue of Miami Today online, subscribe to e -Miami Today, an exact digital replica of the printed edition.