Arrow Portugal – “We like to invest in destinations not single hotel units”
When it comes to funds and investing in Portugal prime real estate assets, Arrow Portugal is certainly the largest one in the country, investing around €12.5 Bn to date across various verticals through local platforms.
Which is why it was interesting to hear from John Galvão, 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 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 billion of euros invested like KKR or Apollo, but it certainly punches above its weight in Portugal and other Southern European markets, a diference achieved precisely through its use of local platforms.
For example, Arrow has White Star, which is its servicing 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 Vidiaco that produces furniture, fixtures and fittings for its hotels as well as Alleluia which produces tiles, all of which contribute to a vertical supply chain.
Why does it have to be all so “complicado”
John is a person who likes to view problems as challenges rather like a glass half full than 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 use the words “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 inefficient and 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 and Troia.
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 marinas.
“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.
€12.5Bn of assets under management
Arrow has also put together a fund aimed at Golden Vida applicants, particularly Americans and Canadians looking to relocate to Portugal and discover the Algarve – that alternative Florida in the sun – called Restart SCR and marketed as Pathway to Portugal.
“We manage over €130Bn of assets across eight geographies, employing over 8,000, and investing around €2.5Bn 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 €12.5Bn 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 other 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.
A big shout out to Anne Brightman of luxury realtors Brightman Group and Sheree Mitchell of bespoke travel experiences, Immersa Global for organising the event at which John Galvão, who is raising the bar of quality tourism and living experiences in Portugal, gave such a lively and entertaining talk.
Text and Image: Chris Graeme
