After the first video with Jive Investments, discussing the Jive House space, today we continue with the conversation between the CEO of SiiLA, Giancarlo Nicastro, and Jive Investments Partner, Diego Fonseca. To watch the first video, click here.

This time, the interview focused on the origin, activities, and perspectives of the asset manager firm. Here are some highlights from the conversation:

Giancarlo Nicastro: Please explain in detail the roles and activities of Jive Investments.

Diego Fonseca: We began our investment journey by investing our own capital, the well-known "family and friends money", in defaulted bank credits, especially in the space of unpaid corporate debts. From this activity, we derived two other important theses. The first was investing in the real estate market, as more than half of the recovered credits were properties. We took these properties to monetize and sell when the bank could not execute the guarantee or when the company delivered the property as a form of payment. Additionally, we engaged in buying judicial assets, such as court orders and payment titles, using technology to locate assets and obtain information for scalable pricing.

GN: Location is a key factor in the real estate market. How important is it to be in the Faria Lima region?

DF: Being in the Faria Lima region is important due to its strategic location, public transportation, and surrounding infrastructure, facilitating logistics and employee access. It is a cost-efficient and convenient combination.

GN: What is Jive's view on Real Estate Investment Funds (REITs) currently?

DF: Real Estate Investment Funds have the potential to become a significant investment vector. However, I believe we will still undergo a slow process to attract more investments through these funds. In Brazil, we have faced the challenge of funds composed of only one asset, such as a building or warehouse. This limits active management opportunities and puts managers in a difficult situation, as they cannot sell the single asset and end the fund. I think it took a little longer for our market to develop larger funds with better-prepared managers who can manage various assets in both the physical real estate market and the paper market, like the funds Mauá does with CRIs.

In my opinion, the winning model is one where funds are larger and have multiple management of various assets, allowing the purchase and sale of properties and papers to generate more results and evolve the portfolio. However, there are still many listed funds in Brazil that are single-asset or have only two assets. Over time, I believe there will be mergers between some funds and asset managers, combining more assets in their portfolios and making the market more efficient. Additionally, it is important to have more institutional investors in real estate funds, such as pension funds and large traditional managers, operating in this market. This would also bring more efficiency and drive growth.

I believe strongly in the potential of real estate funds as a super-efficient investment mechanism, and I am confident that we will see significant growth in this sector in Brazil. Of course, in times of major interest rate changes, like we are experiencing now, there may be some challenges. However, when interest rates start falling again, as expected soon, we will see a new supply of funds, and I am sure we will have a positive fundraising season for this market.

GN: The Multifamily or Built to Rent segment is gaining strength in Brazil. What is your perspective on it?

DF: It is a very large market that is still developing in Brazil. We have already seen initiatives from some players who launched funds, still small, on the stock exchange to buy this type of property, for residential rental, which is driving growth. We believe this will continue, and we even hope to sell part of our assets that have undergone a retrofit to this type of player.

Multifamily is very efficient, and as the investor's perspective matures over time, more people will invest in this asset class.