COLOMBIA - Finance
President, Pei Asset Management
Jairo Corrales is the President of Pei Asset Management, manager and administrator of Pei, the leading real estate investment vehicle in the country. Corrales has a degree in civil engineering from Los Andes University and a specialization in finance from the same university. With more than 25 years of experience in the industry, he has been part of the organization since 2009. As head of Pei Asset Management, he has led the significant growth of the vehicle from COP $0.4 trillion to nearly COP $8 trillion of assets under management.
TBY talks to Jairo Corrales, President of Pei Asset Management, about pioneering moves in Colombian real estate, international investment, and infrastructure development.
What makes Pei Asset Management innovative and a pioneer as an investment manager in the Colombian real estate industry?
15 years ago, Pei Asset Management structured and introduced to the Colombian market a real estate investment vehicle that was completely different to what was available. Pei Asset Management is a company that works with long-term vision investors by offering long-term investment opportunities. One of the biggest premises we offer when structuring the vehicle is to serve both institutional investors and retail investors. In an important growth achievement, we have an investor base of 4,800 clients. Pei Asset Management has been exclusively dedicated to managing this vehicle. However, we also have a long-term vision of adapting ourselves to have a multiple-funds structure. We will always have our base in real estate, though our vision is to offer our investors different alternatives.
What are the advantages of investing in Pei?
Investors do not have to worry about managing the real estate, and Pei Asset Management takes care of the commercialization, contracting insurances, and doing maintenance and repairs. We take care of the management and do all the work for investors’ benefit. Investing in real estate is attractive in terms of property but is generally linked to illiquidity, because there are few buyers for a large-sized real estate. On the other hand, when an investor buys securities from Pei, they have the great advantage of having physical assets that are stable and generate asset appreciation; at the same time, they are represented by securities that can be sold at any moment through the Colombian stock exchange. Therefore, they generate liquidity, which is a great advantage, so they can be invested at any moment.
What are the unique advantages of real estate investment?
For a long time, investing in real estate has been the preferred choice among investors not only in Colombia but also globally. It is tangible, which reassures investors, and it generates permanent cash flow, which is also an important characteristic. In addition, as it is managed professionally, investors do not have to actively manage the asset, and furthermore, because of the size of the portfolio we can diversify the risk, which is extremely important. As a single owner, if a real estate is vacant, you cannot collect rent, and there are costs to cover. When an asset invested through Pei becomes vacant, investors will still have cash flow from the investment due to its size.
What makes Colombia an interesting jurisdiction for international investors?
The main reason is diversification and having exposure to a high-growth country. Investors see developing markets as interesting in terms of diversifying their portfolios. Furthermore, Colombia has clear rules for investors, which makes the country attractive. Investors also value the qualities of the manager, and if there is a vehicle managed by an expert that has the knowledge and track record as the leader, that makes it interesting for investors. An international investor also will not want to come and invest USD100,000 or USD200,000; they want a ticket of at least USD10 million. Currently, Pei offers a portfolio valuated in USD2 billion of assets under management, and the tickets can be higher than those of pension funds. An international institutional investor has the possibility of complement their investment strategies, which also makes Colombia attractive to international investors. One important theme is that Colombia has a big population: when a foreign investor sees the demography of Colombia, they see 50 million consumers, it is one of the few countries in South America that has more than 20 urban centers with more than 100,000 habitants.
How does Pei contribute to the infrastructure development of the country?
In these 15 years, Pei has created important partnerships with the main construction businesses in the country. In the beginning, we could only buy stabilized assets. We reformed our prospectus and the vehicle, and at present, we can invest in assets that are in a development stage. That has allowed Pei, in partnership with construction companies, to hold new assets with best and updated characteristics in different regions with an important effect of generating jobs. One of the industries that generates most jobs in Colombia is construction. At present, we have more than 1 million leasable square meters, of which 40% are assets that have been developed. There has definitely been a positive impact in terms of generating jobs. For example, we recently completed Pei’s first hotel in Barú, Cartagena, and the majority of people involved in the construction are Raizals, the local community there. Building distribution centers with high specifications in Palermo (Huila) or Florencia (Caquetá) have generated jobs and made a positive impact on the country. Finally, a strategic pillar of Pei Asset Management is sustainability; more than 20% of the assets that belong to Pei’s portfolio have environmental certificates. We have golden LEED certificates in almost all the real estates that belong to this 20%. Our goal is for a significant majority of our assets to have a LEED certificate.
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