A global welding equipment and supplies company sought to identify and secure a manufacturing facility to expand its presence in Brazil. Due to the dynamic nature of the San Paulo market, decisions needed to be made quickly as properties that were available one day were gone the next. The client had specific requirements, such as security and extremely heavy power needs, for their new facility. An additional challenge included tenant improvements, as most landlords in Brazil don’t finish out spaces. Lease negotiations were critical in order to get the landlord to provide improvements such as power upgrades and cranes.
As the company’s global real estate advisor, Allegro led the project and all phases of the transaction process. First, a number of local brokers were interviewed, a process that enabled Allegro to gain a firm understanding of the market customs. Once a local broker was chosen, Allegro worked with them to put together a market survey to identify potential opportunities. Since Brazil does not have a centralized lease database service, identifying opportunities can be challenging. Local brokers must maintain detailed records and communicate with landlords frequently to keep abreast of the dynamic marketplace. The initial list of sites was narrowed down and the client’s team traveled to Brazil to view the shortlisted properties. Customized RFPs that blended local real estate customs and the client’s U.S. corporate standards were issued.
Once a new space was chosen, another challenge arose. The final preferred option was in the midst of filing legal registration to condominimize, which is a difficult and time consuming bureaucratic process. Allegro worked closely with the client’s Brazilian legal counsel to strategically navigate the legal title and lease registry risks, ensuring lease amendments that protected the client until the proper registry was complete.
Allegro was also able to secure deal terms that included significant above-standard tenant improvements, strong renewal rights, and purchase option rights. Finally, Allegro assisted in identifying a local human resources company to find the right talent pool to support the new facility.
Despite setbacks and challenges, Allegro worked closely with the client’s entire team (both domestically and internationally) to ensure the project met the goals and objectives of the business. In the end, the client secured a facility that positioned them to meet their expected growth in the marketplace.