By Christopher Doman '15
During Columbia Business School’s spring break from March 14 through 22, a group of 22 real estate students and faculty members traveled to Bogotá and Mexico City to understand more about these emerging markets, their real estate dynamics, and doing business in these cultures. On the docket were full days of visits with local real estate players such as Terranum Capital in Bogotá and Thor Urbana Capital in Mexico City, in addition to city tours and visits to historical sites and museums. The students were accompanied by Professor Lynne Sagalyn, Earle W. Kazis and Benjamin Schore Professor of Real Estate, and Executive-In-Residence, Leanne Lachman. The trip was sponsored by the Jerome A. Chazen Institute of International Business and the Paul Milstein Center for Real Estate, and was organized by Juan Agudelo '15, Jonathan Hajar '15, Alexander Jugant '16, and Minna Koo '15.
Bogotá and Mexico City were chosen for this year’s trip due to their emergence as real estate capitals in Latin America, and the major amount of capital flowing into the regions for real estate development. Real estate firms in these cities are working to implement concepts that are taken for granted in America, such as professionally-managed rental apartments and CBD office towers owned entirely by one institution. Strata title, the practice of selling off individual pieces of buildings to sometimes hundreds of owners, makes assembling large blocks of office space extremely difficult when so many parties are involved. Firms in both cities are now attempting to implement a more institutional model in both office and multifamily ownership and development, but it will take many years before the entire real estate industry adopts these practices.
Bogotá
The group’s first day in Bogotá was full of cultural sites and museum tours. The group first toured the old city and then took the incline up Mount Monserrate, from which one could view the entire city. Bogotá itself is much more spread out than a city such as New York. It is twenty miles long and has a population of over eight-million people. With so many people, traffic is one of the city’s greatest problems, and it can take an hour just to drive a few kilometers. From there, the group visited the Museo Del Oro, which houses a large collection of gold pieces that were extremely important to many of the indigenous groups of Colombia. Finally, the group moved on to the Museo Botero, which has many paintings and sculptures of the great Colombian artist, Fernando Botero. Botero is famous for exaggerating the proportions of people and objects, often intended as political satire.
The remaining two days in Bogotá were both full of company visits, speaking with some of the most dynamic real estate development and investment firms in all of Latin America. Monday began with a discussion with Gregorio Schneider '96, the Founder of TC Latin America Partners. His firm partners with local developers to construct for-sale apartments, which there is a large shortage of in Bogotá. Later in the day, the group met with Avenida Capital, co-founded by Michael Teich '00. Avenida also focuses on for-sale apartments, but also partners with developers to create retail and office space across Latin America.
Tuesday was spent with Terranum Capital, founded by Jose Ignacio Robledo. Mr. Robledo spoke at length about Terranum’s business platform, which includes residential housing, commercial office development, and hospitality. Terranum both develops and acquires its properties, and has its own architecture and property management arms. Mr. Robledo is a pioneer in the real estate market in Colombia, having worked with government authorities to create the first REIT structure. Terranum’s REIT, PEI, was created in 2006 and is currently the only REIT on the Colombian Stock Exchange. From there, Terranum’s team gave a tour around its new developments, including Connecta, a mixed-use development near the airport that is setting the standard for commercial office space in the city.
Mexico City
After a travel day to Mexico City, the group hit the ground running with an all-day visit with Reichmann International and its head of Mexico, Rick Ricker. Mr. Ricker first moderated a panel on the state of the Mexican real estate market with executives from CBRE, HSBC, and FibraUNO. Topics included opportunities outside of Mexico City, ventures into new property types such as multifamily rental buildings, the state of the construction lending market, and the establishment of the Fibras (Mexico’s first REITs). From there, Mr. Ricker and his team gave the entire group a tour of Torre Mayor, one of the most technologically advanced office buildings in Mexico City, which Reichmann International developed in 2003. Torre Mayor incorporates world-class shock absorbers to balance the movement of the building during earthquakes, a great problem for tall buildings in Mexico City due to its location within an earthquake-prone lakebed area. Mr. Ricker also gave the group a tour of Torre Diana, an under-construction 33-story office building a few blocks from Torre Mayor, in the city’s Reforma District. Later in the afternoon, the group returned to Torre Mayor, where they spoke with Mexplorer Capital and Grupo Sordo Madaleno, two firms which are collaborating to create the tallest office tower in Latin America. The group enjoyed speaking with Diego Baños Garcia '13 from Mexplorer Capital about his firm’s focus on developing high-end retail and mixed-use projects throughout Mexico. Finally, Mr. Ricker concluded the evening by hosting a dinner for the group and invited guests from the Mexican real estate industry. The dinner included games involving the Mexican economy and performances from a live Mariachi band!
The group followed up the day with Reichmann International with a visit to Fibra Hotel Group, Mexico’s largest lodging Fibra (REIT). Fibra Hotel is focused on institutionalizing the Mexican hotel market and helping established brands such as Marriott increase their presence in Mexico. The group then met with Thor Urbana Capital, a joint venture between Joseph Sitt’s Thor Equities and Mexican developer GFa Grupo Inmobiliaro, that was founded by two Columbia Business School graduates, Jaime Fasja '10 and Jimmy Arakanji '11. Thor Urbana Capital has many high-end retail developments underway in Mexican resort destinations such as Playa del Carmen, and it is attempting to move the Mexican retail market away from the strata title model. The group’s final business visit was with Greystar, the prolific American multifamily developer and investor. Greystar emerged in the Mexican market in the last few years and has numerous multifamily rental properties in the Santa Fe submarket of Mexico City, and has plans to develop millions of square feet of multifamily properties in Mexico over the next decade.
The trip provided a great opportunity for the group of up-and-coming real estate professionals to understand these Latin American emerging property markets better. By the end, many were already planning their return visits!
2015 REA/Chazen International Study Tour Photo Slideshow (Trip Photographers: Charles Griffith '16, Cherilyn Knaupp '15, and Jop Weterings '16)