Trump Towers Rio, the $2.1 billion office project in downtown Rio de Janeiro, is offering work for Brazilian builders after construction for 2016 Olympics in Rio will be winding down.
Even Construtora & Incorporadora SA, the Sao Paulo-based home and office builder and equity partner in the project, will have rights of first refusal for three of the five towers, Stefan Ivanov, chief executive officer of the project, said in an interview. Construction of the first two towers will start in the second half of this year and probably will be completed in 2017, he said.
The Trump development is part of Rio’s efforts to turn the downtown port area into a business and residential hub with a new road network, a light-rail system and close proximity to the city’s two airports. The towers will help meet rising office demand in Brazil’s largest city after Sao Paulo. A shortage of high-quality space has discouraged many foreign companies from setting up operations, Ivanov said.
“This will be exactly the time when the major construction events for the Olympics will be winding down, so developers will be past their most occupied days,” Ivanov said in a telephone interview. “It will be perfect timing for them.”
Trump Towers Rio is a joint venture of Sofia, Bulgaria-based MRP International—which is building urban developments from London to Istanbul—Salamanca Group and Even. The partners licensed the Trump Towers brand for the project, and Donald Trump isn’t providing funding. Possible builders include Odebrecht SA, the engineering and construction conglomerate that last year won contracts ranging from airports to highways, Ivanov said.
“There is a tremendous need for a project of this size and caliber as Rio de Janeiro has one of the lowest office vacancy rates in the world,” Donald Trump Jr. said in an e-mailed response to questions. “With extensive research conducted by our leasing agent, Cushman & Wakefield, we are pleased to confirm that Trump Towers Rio is currently the largest urban office complex in the BRIC Countries,” referring to the group of nations that includes Russia, India and China.
Even has the highest analyst rating of the nine Brazilian builders with a market value of more than $418 million. Of 12 analysts tracked by Bloomberg, 11 have buy recommendations on Even shares and one has a hold recommendation. The company has the lowest price-to-earnings estimate of the nine homebuilders and construction companies tracked by Bloomberg.
Even referred all questions on Trump Towers Rio to Ivanov. Odebrecht didn’t respond to e-mails seeking comment on its interest in building the towers. Trump declined to comment on the value of the licensing agreement.
“We will tender each of the five towers to large construction companies based in Brazil, and based on how aggressive they are with the timing, this is going to determine the exact delivery date,” said Ivanov, who also is head of MRP’s Brazil operations. “Sometime in 2017 we should finish the first two towers.”
Each tower will be worth about $418 million after space in the buildings is rented to large Brazilian and international corporate tenants, Ivanov said. He declined to provide construction-cost estimates.
“Perhaps some of them will be built by Even, but not necessarily,” he said. “They certainly know what they are doing in terms of commissioning.”
The Rio government is predicting $3.34 billion in investments, much of it ahead of the Olympics, to refurbish a 2-square-mile section of the port area where the Trump Towers will be built. Across the street, Solace, a consortium of Brazilian construction and engineering firms, is building a 1,330-unit residential tower that will house visiting media and staff for the Olympics and then be sold.
Highway manager CCR SA began blasting a 1.1-mile tunnel in November for the $627 million TransOlympica bus route that will connect the Olympic headquarters in the Barra de Tijuca suburb with an area in the northern end of the city that will host modern pentathlon, mountain-biking, fencing and marksmanship events. Odebrecht is a partner in that project. In April, a group led by CCR won a $668 million contract to build six light-rail lines and 42 stations in the downtown area in time for the games.
“The infrastructure will be in place before most of the construction work,” Fabio Terepins, a Rio-based director at Even, said at a Dec. 12 seminar in Rio.