The Fund purpose is to have a diversified portfolio of malls in terms of location, GLA (gross located area), participation in ventures, consumer profile and mall administrator.
The Vinci Shopping Centers FI adopts a flexible acquisition strategy, with preference for the following characteristics:
- Located in urban centers, where land scarcity and prices are natural barriers to the development of new entrants;
- Cities with more than 250,000 inhabitants;
- Regions with qualified demand in the area of influence of the mall compatible with the gross marketable area of the venture, considered established and under development peers;
- Gross marketable area of more than 15,000 sqm;
- Developments with real growth potential through management policies
In the case of acquisition of minority interests, the Fund seeks to identify and, when applicable, negotiate governance conditions that ensure that the Fund will have rights over the mall’s strategic decisions.
The Fund does not carry out development of greenfield malls and focus it’s growth strategy through acquisitions.
The Fund does not develop greenfield shopping malls and is focused on the strategy of expanding its real estate portfolio through acquisitions.
The development of shopping malls has a very long cycle and poses more risk. The time between the decision to acquire a site and the moment the asset first generates revenue is, on average, four to six years. In the acquisition strategy, the investment cycle is extremely short: we begin earning revenue as soon as the acquisition is completed. With a short cycle, it is easier to find the right time to make the investment and, especially in Brazil, where economic and real estate market cycles are highly volatile, we believe getting the timing right is the most important driver of returns.
The Fund adopts a flexible acquisition strategy, covering all Brazilian regions, with stakes ranging from control of each mall to minority interests, which may or may not entitle the Fund to elect the mall’s manager. This flexible acquisition strategy enables the Fund to have access to potential larger transactions, with less competition, and make transactions with better returns.
The Fund and Vinci do not and do not intend to act as managers of the shopping malls, which allows the Fund to establish strategic partnerships with other mall managers in order to make acquisitions and manage the malls in the Fund’s portfolio.
Vinci actively manages the Fund, which involves selecting, negotiating and acquiring its assets, as well as actively managing the Fund’s mall portfolio. Vinci supervises mall managers and influences strategic decisions related to the assets. Vinci constantly promotes the sharing of good practices among managers of the shopping malls in our portfolio, creating value for the Fund. This is only possible because the fund has a diversified portfolio in terms of mall managers.
Team with extensive experience in the industry, having led mall acquisitions totaling R$3.5 billion over the last 10 years. Our team is led by a manager with 22 years of experience in the real estate market, who has worked during several economic and industry cycles and implemented several types of strategies.
The Fund’s management team benefits from the Vinci Partners platform, which has a solid reputation and excellent credibility supported by a long track record of business partnerships. With offices in Rio de Janeiro, São Paulo and New York, Vinci Partners is composed of senior professionals with different backgrounds and skills, who bring their complementary expertise to the Fund.
Shopping malls have characteristics that both protect them at times of crisis and enable further growth during economic recovery compared with other real estate segments.
In general, shopping malls have a very fragmented revenue base, with the main lessors accounting for an insignificant share of total revenue. This segment also has a substantial entry barrier, given that, in addition to requiring a large site, the process for approval of shopping malls is usually complex.
Traditional shopping mall leasing agreements provide for the payment by tenants of either a minimum rent or a percentage of sales, whichever is higher; therefore, when sales are low, malls receive the minimum rent and, when sales are high, malls received a percentage of sales.
Shopping malls also have other sources of revenue, which are more strongly correlated to economic activity levels, such as parking, kiosks and merchandising.