Brazilian firms are targeting the South Florida regions to operate their businesses, as they look for opportunities that they wouldn’t get in their own country.
According to a report from the state’s commerce organization, SelectFlorida, Brazil ranks as Florida’s second-biggest Latin America investor. Also, more than 100 Brazilian firms operate 115 locations in The Sunshine State.
Stephan de Sabrit, managing partner of Leste Group, has taken note of this trend first-hand. While the firm is not based out of Brazil, de Sabrit along with founding partner Emmanuel Hermann were both born in the country.
A SECOND HOME FOR BRAZILIANS
So why are Brazilian companies looking at Florida in particular? After all, the country owns one of the largest GDPs in the world, and there’s a big opportunity there. But in de Sabrit’s point of view, uncertainties weigh in on why companies want to explore business overseas. He believes that the political cycles are too “extreme,” coupled with stricter rules and regulations for businesses. Plus, de Sabrit spoke highly of the strength of the US Dollar.
“The dollar is still number one by far,” he told GlobeSt., comparing the currency to other countries.
“So that’s, that’s the number one factor.”
Particularly with South Florida in regions such as Miami, wealthier Brazilians see it as a “second home,” according to de Sabrit. But it wasn’t always like that. In the 1990s, Brazilians used to see Miami as an attractive place to shop – and now things have evolved, he explained.
“Nowadays these Brazilians, just like me and my partner, see South Florida and the US as a business place, where we come to invest,” de Sabrit said.
“In my case, to raise my family, and multiple others who actually work here at our office.”
In its Miami office, Leste has 36 people. It also has an office in New York, with 10 employees.
Along with Miami, Brazilians are also attracted to Orlando.
“Brazilians want to be next to Disney World.
“And there’s a huge connection with the bright line, which is the fast train that gets out from downtown Miami [to Orlando].”
HELPING OUTSIDE THE COMFORT ZONE
Miami and Orlando have been two major markets that Brazilians have gotten comfortable with. Part of Leste’s responsibilities includes guiding Latin American companies through North American regions by utilizing its private equity strategy. Some of these goals include teaching them about other markets including Austin and Nashville.
“That is part of our value proposition as an investment platform for Latin Americans into the United States,” de Sabrit said.
In South Florida, multiple Brazilian firms have made investments through Leste including Avenue, Banco Bradesco, and BTG Pactual. Leste also teamed up with Opportunity Investimentos Imobiliarios last year to develop more than $1 billion in multifamily units over the next half-decade in the region.
Outside of Leste, Miami-headquartered Resia recently partnered with Brazilian digital bank Inter&Co to pour capital into affordable housing projects, according to a report from Citywire.
A BUYER TO SELLERS MARKET
With high interest rates, commercial real estate as a whole has suffered in the past year or so. However, with the Federal Reserve finally moving to start cutting rates, de Sabrit has recently seen deals in the space starting to pick up once again.
He is hearing a lot of folks in the industry say that “this might be the time to invest.” If the seller is that desperate, investors might be able to get “assets way below replacement costs,” the Brazilian native added.
But at the same time, de Sabrit noted that there hasn’t been much supply coming into the market. So eventually, maybe by the middle of next year, CRE sellers will have an advantage, with more supply getting absorbed, according to de Sabrit.
“Owners of commercial properties will have the strength to be able to push up rents and when interest rates are on a much lower base than where they are today,” de Sabrit said.
Overall, Leste manages $2.4 billion worth of assets. Mainly, the company focuses on the residential asset class.