(Bloomberg) -- Banco BTG Pactual SA, the biggest independent investment bank in Latin America, plans to more than triple its real estate investments in Europe to about €1 billion ($1.1 billion) in coming years.  

The Brazilian bank, which has almost €6 billion in wealth under management in Europe, has raised funds in recent years to purchase historic hotels in Portugal, where it’s also building a portfolio of shopping malls as part of a strategy to revamp and sell them over a five-year horizon.  

“The bank attracts a lot of investment offers, more than 150 since we started planning to buy real estate in Europe during the pandemic,” said Michel Wurman, BTG’s partner responsible for real estate. “We’re taking advantage of those opportunities.” 

BTG’s storming of the old continent is part of a strategy that began with serving wealthy Brazilian clients living abroad and now targets other Latin Americans and Europeans on their home turf with private-banking services. The Sao Paulo-based firm has offices in London, Lisbon and Madrid, and is building a bank in Luxembourg after acquiring a lender last year. 

The idea is to be opportunistic, and to be quick in offering immediate cash on so-called “trophy assets,” properties that are rare and in high demand, said Rui Ruivo, a partner at BTG based in Lisbon. BTG already has three real estate funds with a total of €320 million invested in Portugal, generating returns of 10% to 20% annually in euros. 

The idea is to keep buying properties there and also expand to Spain, with an initial focus on logistics, Wurman said.

“We discovered we have a sweet spot between €50 million to €150 million in investment for projects, since they are usually too big for an individual to buy and at the same time are too small to attract big international funds,” Wurman said. The idea is to buy two to three projects a year for “our private-banking clients, other family offices and partners from BTG.”

Distressed opportunities are also on BTG’s radar, according to Ruivo. 

In 2022, BTG bought the Estoril Eden Hotel in Cascais, Portugal. With a total investment of €120 million, it is being remodeled in a partnership with Portuguese developer Luis Godinho Lopes to include 20 private residences. Those units are being sold for around €22,000 per square meter.

“We thought we would sell it 20% lower than we’re now getting,” Wurman said. 

In partnership with Renato Rique, chairman of the board of Rio de Janeiro-based shopping center operator Allos SA, BTG is also backing shopping centers in Portugal. So far, about €50 million has been invested. “The idea is to do a relevant portfolio of small and medium shopping centers,” Wurman said. “We’re getting attractive yields of up to 10%.”

BTG also spent €150 million to acquire the Oitavos, a luxury hotel in Cascais that’s close to where soccer legend Cristiano Ronaldo has built a new home. BTG is retrofitting the hotel building and adding 40 private residences connected to it with help from French architect and designer Philippe Starck. Only about 50% of the investors are from Latin America, with the rest from Europe and the US, said Ricardo Borgerth, head of wealth management in Europe for BTG. 

“Portugal is becoming a desired location for the rich, with good restaurants and hotels,” Borgerth said.

About 80% of the wealth under management BTG has in Europe is from Latin American families and the rest are European.

“After the success in Portugal, we’ve started to replicate it in Spain, where we saw a huge flow of our clients from Peru, Colombia, Argentina and Mexico going to Madrid, taking advantage of tax benefits,” Borgerth said. 

BTG completed the €21.3 million acquisition of FIS Privatbank in Luxembourg in September. The bank can now offer credit and do custodian services for European clients, and has about 50 employees including back-office workers. It has 20 employees in Lisbon, 10 in Madrid and 45 in London.

The bank, founded by billionaire Chairman Andre Esteves, has seen total assets at its wealth-management units soar to 756 billion reais ($140 billion) as of the end of the first quarter, up 33% from the same period last year. The lender’s shares have returned 193% in the past five years including dividends, and the market value sits at 127 billion reais. 

As England cuts the period in which non-domiciled residents have tax benefits, many BTG clients are moving to Portugal and Italy, Borgerth said, adding that that’s one reason BTG is considering an office in Italy. “That’s still in a very embryonic stage,” he said. 

Globally, BTG has 30 billion reais in real estate investments under management, including properties in Brazil, Chile, Mexico and Colombia. 

In the US, the bank’s partners and clients are investing in distressed real estate through funds managed by the Madison Capital Group. 

“We’re looking at other vehicles in order to understand the market there better,” Wurman said. “The real estate market has a lot to do with local players.” 

BTG’s real estate business is already luring wealthy clients from across Europe, including France, Germany, Switzerland and Austria, Borgerth said.

“We want to position ourselves as the Latin American bank in Europe,” Borgerth said. “But we also have the ambition of serving more and more European clients.”

©2024 Bloomberg L.P.