GIC in 5.5b Mexican peso JV to develop and operate rental apartment buildings in Mexico

The logo for Singapore's sovereign wealth fund GIC seen on a building on July 6, 2017.
The logo for Singapore's sovereign wealth fund GIC seen on a building on July 6, 2017.PHOTO: REUTERS

SINGAPORE - Singapore's sovereign wealth fund GIC has entered a 5.5 billion Mexican peso (S$387.8 million) joint venture (JV) deal to develop and operate for-rent multi-family buildings in Mexican cities like Mexico City and Guadalajara.

GIC's partner in the join venture is CCLA, a tie-up between CIM Group and Compass Group, which is focused on owning, developing and operating real estate in Latin America.

The joint venture targets a portfolio of mid to high-rise buildings, each comprising of approximately 250 to 400 rental units. CCLA will develop and operate the buildings, GIC said.

Said Lee Kok Sun, chief investment officer of GIC Real Estate: "As a long-term value investor, we are attracted by the sustainable risk-adjusted returns of purpose-built apartments. This asset class provides a compelling option for a large and growing population of renters within our target income and geographic segments."

"Given current and expected demographic trends, we believe this asset class in Mexico will follow the same trajectory as in the US," he added.

Meanwhile, Avi Shemesh, co-founder and principal of CIM Group commented: "We are seeing tremendous opportunities for an experienced owner and operator like CCLA to bring much needed institutional-quality residential assets and operations to Mexico's gateway cities as our existing assets have proven.

"CCLA believes that the growth of the middle-class and the cultural shift in favour of city-living is rapidly transforming the residential demand in urban centres," said Manuel Balbontin, founding partner of Compass Group.

A day earlier, GIC announced the sovereign wealth fund and other investors had acquired a 55 per cent stake in AccorHotel's property business arm AccorInvest for 4.4 billion euros (S$7.13 billion).