Union Investment Real Estate (UIR), advised by CBRE Group, has completed the first ever sale of a single-owner office portfolio in Chile at USD225m to local property fund Aurus Renta Immobiliaria.
The portfolio of five properties all located in Santiago, the Chilean capital, comprises 55,725 square meters of rentable office, retail and leisure space. Tenants include international banks and government agencies, multinational corporations and major companies in technology, communications, pharmaceuticals and mining.
CBRE has worked with the German investment fund in Chile since 2005 to acquire and build a strategic office portfolio in Chile, more recently advising on the optimal disposal strategy, structure and timing. The sale of the buildings, all of which are recently constructed or renovated, attracted a high level of bids from both domestic and international buyers.
Tim Gifford (pictured), senior vice president of CBRE Global Capital Advisory Group, says: “Chile’s growing popularity for international investment is demonstrated by the fact that this is the first ever sale of a single-owner office portfolio in the country, and also by the significant international interest generated in the sale.
“UIR has built a strategic portfolio in Chile that is well balanced across all industries - government, mining, financial, tech, legal – and with high quality tenants. When UIR first entered Chile the market was extremely fractured and there were no significant office owners - firms only owned floors in office buildings. The strategy was to create value by developing one of the markets best quality and most strategically diversified office portfolios. The fund decided to liquidate the portfolio and realise its gains, selling for an approximate 67 per cent return in Euro terms.”
Global investors are increasingly attracted to Chile’s dynamic business culture, solid macro-economic indicators and full integration into international markets. Chile offers both the lowest cost of capital in the region and the lowest risk premiums in Latin America, with office vacancy rates below 1.5 per cent. Low lending rates (typically between 4.3 per cent and 4.5 per cent), increasing market rents and the highly liquid real estate investment market are also key factors which attract international investment.