For Salles, the arrival of vaccines is leading experts to bring forward their forecasts for the recovery of the global economy.
A Miami resident and Vice President of Capital Markets at Ativore Asset for the past year, André Salles became interested in real estate investment after moving from IBM's commercial division to the team of a shopping-center startup, today the largest company in the sector in Latin America, brMalls.
In this interview, the executive, who was also part of the Driftwood team, discusses the main challenges and opportunities he sees in the U.S. real estate segment for 2021. “The current moment could not be better, with a huge opportunistic acquisition window because of the pandemic, combined with interest rates at their historic lows (both in Brazil and in the U.S.).”
Ativore magazine — when and how did you begin your career in the real estate segment?
André Salles — It was in 2007, when I left IBM after 10 years in the commercial division and accepted the challenge of joining what was, at the time, a startup in the shopping-center segment, brMalls, today the largest company in the sector in Latin America. At the time, I had the opportunity to lead and participate in the acquisition, development and operation of various malls in Brazil, in addition to having had close contact with Simon, the largest mall company in the world, which brought me great learning experiences. After that, I went through experiences with multifamily assets, hotels and office buildings in the U.S., allowing me to develop a fairly broad view of the international real estate segment.
AM — what drives you in the international real estate segment?
AS — I think anyone who studies the U.S. real estate market a bit more deeply ends up concluding that this type of investment is a “no-brainer” for several reasons: the protection and appreciation of wealth in a strong currency, with income generation; low interest rates, which make high returns viable for projects thanks to leverage; legal security for investors; the best risk-return profile among the investments available in the U.S., with low volatility. All of this within the context of the sector's strong track record of returns in the U.S. over many years, showing that it is a market strong enough to successfully overcome any crisis, such as those faced in recent decades: the 2008 credit crisis, September 11 in 2001, and so on.
“We have an incredible product, generating enormous interest from investors and even from major banks.”
AM — after a few years at Driftwood, you came to Ativore Asset to take on the Vice Presidency of Capital Markets. what motivated you to make this change?
AS — First and foremost, the Ativore team. For some years, I had maintained a relationship with Ativore, since Driftwood's approval as an accredited operator, and during that period, I was always struck by the competence, professionalism and objectivity of the entire team. Even when Ativore decided not to approve one of Driftwood's projects for its investors, the communication was done very clearly and with quite detailed technical grounding on the reasons that led to such a decision, which, in fact, generated a great deal of learning for us.
In addition, I always thought Ativore's pioneering spirit was brilliant, in shaping this business model that opens the doors of the best U.S. real estate investments to Brazilian investors. And the current moment could not be better, with a huge opportunistic acquisition window because of the pandemic, combined with interest rates in Brazil at their historic low, leading the Brazilian investor to seek better investment opportunities.
AM — how would you assess these six months you have been at Ativore Asset?
AS — Experienced leadership makes all the difference. The decision to ease off the gas during the pandemic, look inward and prepare Ativore for future challenges proved entirely correct. Today, we are stronger and better prepared for the challenges. We have an incredible product and an enviable level of service, generating enormous interest among the investors we have been talking with, from individuals to major banks.
AM — what are the main challenges to be faced in the U.S. real estate private equity segment in 2021?
AS — I believe the greatest challenges lie in the hands of operators in restoring pre-pandemic activity levels. The most competent ones knew how to structure their projects well and will be able to get through this phase unscathed, even if they go some period without distributing dividends to their investors. The hotel sector, in particular, has a major recovery challenge ahead. However, with the arrival of vaccines, with each passing day, we see experts bringing forward more and more their forecasts for the recovery of global economic activity.
“Specialized and independent advisory ensures that the investor's interests are prioritized according to their profile, maximizing the chances of success.”
AM — what opportunities do you see for this year?
AS — I believe 2021 will be a fantastic year for real estate private equity in the U.S. As in past crises, we have a huge window of opportunity with assets for sale, at stressed prices and interest rates at their historic lows. As one of our accredited operators said, the coming years will deliver incredible returns for those who invest now. Just recall the success stories of those who invested during the 2008 crisis and ended up multiplying their resources impressively.
AM — any tip or advice for the Brazilian investor thinking about diversifying their portfolio into international real estate?
AS — Do everything right from the start to avoid headaches in the future. Make sure to set up a structure that is tax-efficient and optimized for inheritance and succession cases, protecting your wealth. And be sure to consult an advisor who specializes in this segment before moving forward with any investment. The market offers countless opportunities, but many conceal great risks. Specialized and independent advisory ensures that the investor's interests are prioritized according to their profile, maximizing the chances of success.
AM — to finish, will you take on a quick round?
AS — Let's go.
AM — a book...
AS — Leadership, by Rudolph Giuliani. The former mayor of New York describes in detail his actions in response to the September 11 terrorist attacks and draws a parallel with the corporate world. A lesson in leadership.
AM — a movie...
AS — The Right Stuff. With a fantastic cast, it shows everything from the U.S. Air Force's obsession with breaking the sound barrier with its test pilots to the selection of the first seven astronauts of the Mercury program, which was the first step of the U.S. space program. A must-see for anyone fascinated by the conquest of space who believes that human beings have no limits when they define a goal, plan it well and execute it with precision.
AM — a quote...
AS — “By failing to prepare, you are preparing to fail,” by Benjamin Franklin. In times when the world demands ever-faster responses and offers tools for accelerated execution, we cannot lose sight of the fact that all execution must be preceded by very careful planning.
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