Vacant buildings as a territory for profit in São Paulo Real Estate- Financial Complex

Authors: Isabel Martin*, Labcidade FAU USP - São Paulo, Raquel Rolnik, Labcidade FAU-USP, Paula Freire Santoro, Labcidade FAU-USP, Pedro Henrique Rezende Mendonça, Labcidade FAU-USP
Topics: Urban Geography, Economic Geography, Urban and Regional Planning
Keywords: Real Estate, Trusts of trusts, Vacancy, Finance, Territorial expansion fronts
Session Type: Paper
Day: 4/11/2018
Start / End Time: 1:20 PM / 3:00 PM
Room: Riverview I, Marriott, River Tower Elevators, 41st Floor
Presentation File: No File Uploaded

The investigation about the participation of global players in the Real Estate-Financial Complex in São Paulo, Brazil – defined as investment funds and transnational companies specialized in real estate that enter financial markets not only to diversify assets and mitigate risks, but also to enable their action in geographic locations, creating vector of expansion (Aalbers, 2104; Rolnik, 2016) – showed the persistence of this capital concentrated in a "traditional" real estate frontier, over corporate towers, shopping centers and hotels, assets well known and recognized by international capital (Santoro et al., 2016; Martin & Rezende, 2016).
The deepening of this investigation on corporate buildings has shown that high vacancy on triple A buildings is seen as a lever for high returns by structuring a new kind of Real Estate Investment Trusts (REITs), known as “Trust of trusts” (in Portuguese, Fund of Real Estate Investment Funds - FOFIIs), a new modality of real estate funds. These, for example, buy cheap shares of a REIT that owns triple A buildings that faces a bad period (for instance, are vacant), and captures returns from it when economic growth returns.
This paper aims to deepen the comprehension of these Trusts of trusts’ strategies and the territory where these can happen through mapping the real estate vacancy in corporate buildings versus FOFIIs returns or earnings expectations. The hypothesis is that vacant buildings and its territories are the basis for these new operations, putting the vacant city in the focus of the new real estate frontier

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