When it comes to funds and investing in Portugal’s prime real estate assets, Arrow Global Portugal is certainly the largest in the country, investing €12.5 billion in assets across various verticals through local platforms.
Which is why it was interesting to hear from John Calvão, Partner and Fund Principal at Arrow (Southern Europe), overseeing Arrow’s Southern European investments, and who spoke to members of The American Club of Lisbon at the Luso-American Development Foundation (FLAD) on Friday, February 20.
American by birth and Portuguese by family background, John said that Arrow Global might not be as large or prolific on the international stage in terms of hundreds of billions of euros invested like KKR or Apollo, but it certainly punches above its weight in Portugal and other southern European markets, a difference achieved precisely through its use of local platforms.
For example, Arrow has Whitestar, which is its servicer platform for debt services and distressed loans. Then it has Norfin, which is its real estate development and asset management arm. The latter currently managing 27 hotels and 12 golf courses in Portugal through its platform Details, and all of these different ventures employ around 3,000 people.
It even has a company called Viriato that produces furniture, fixtures and fittings for its hotels as well as Aleluia which produces tiles, all of which contribute to a vertical supply chain.
Banning the word “complicado”
John is a person who likes to view problems as challenges, rather like a glass half full than half empty. And he says that his success in Portugal is down to the fact that he knows the Portuguese mindset and is prepared to hang around when other funds, which need quick actions and results, get bogged down in red tape and the legal system, and give up.
“The Portuguese always like to say ‘é complicado’ to explain all the reasons why it is difficult to get a project off the ground in Portugal,” he remarked.
But, as he says, “I’ve banned the word ‘complicado’ from my office”. Where there’s a will, there’s a way, and John always manages to get around seemingly unsurmountable obstacles to get things done.
The fund manager is not a huge fan of Portugal’s overly complex legal system, and the slapping of what he calls “frivolous injunctions and lawsuits” is a particular bête noire of his.
He has the ear of ministers who matter, even the prime minister Luís Montenegro, who has admitted that the cumbersome legal system is so deeply entrenched that even he can’t simplify it, even with the best will in the world.
Of course, two of Arrow’s most ambitious projects to date are the distressed assets it picked up during Portugal’s Great Recession over 10 years ago – Vilamoura (Algarve) and Troia (West Alentejo Coast).
As he says, “in Portugal, we buy resorts”, and it doesn’t get better or more ambitious than Vilamoura where plans are underway to create an entire world, including luxury and premium apartments, sports centres and leisure facilites, a shopping centre, an equestrian centre, golf courses and hotels to add to the marina.
“Our iconic asset of Vilamoura is an important story that shows how we invest – how we invest in hospitality and in particular in Portugal. We buy destinations, not a hotel in the city, and Vilamoura is the biggest example of a destination that is a town resort,” he explained.
“It’s not going to become another Quinta do Lago or Vale do Lobo, but the idea is to create an entire community – a town to cater to HNWIs of all ages with loads of activities and events all year round.
“You want to get affluent people in because they spend money and that’s the only way I know that generates wealth and employment,” he insists.
John Calvão, who initially had wanted to become a sports coach and history teacher, says that sports tourism and hosting sports events are still largely unexplored to their full potential in Portugal, and he wants to change that beyond traditional golf tournaments.
High-value, experience-driven approach
Arrow Global has also put together a fund aimed at Golden Visa applicants, particularly Americans and Canadians looking to relocate to Portugal and discover the Algarve – ‘the Florida of Europe’ – called Restart and marketed as a pathway to Portugal.
“We manage over €130 billion of assets across eight geographies, employing over 8,000, and investing around €2.5 billion of equity a year in Portugal, which means an even bigger amount if that investment is leveraged,” he said, adding, “we do own and manage a lot of assets in Portugal”.
And that’s €12.5 billion to be exact, which for a country that has 10.5 million people is “a big number”.
That’s across the board and includes distressed assets and their servicing, hospitality, and real estate assets, including affordable housing.
In fact, he’d like to do more affordable housing but says the margins are too tight and the government needs to make more land available at close to zero cost to make it even vaguely profitable because, after all, they are a business and have to offer returns to their investors.
John Calvão, who is raising the bar of quality tourism and living experiences in Portugal, certainly gave a lively and entertaining talk at this event organised by Anne Brightman of Brightman Group and Sheree M. Mitchell of Immersa Global.
Source: Essential Business
