The Jobby, Brazil, and Nuveen

WHERE THERE’S SMOKE, THERE’S FIRE: HOW EDINBURGH GOT INTO BED WITH A US INVESTOR LINKED TO WHOLESALE DEFORRESTATION IN BRAZIL
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WHAT connects the burning of the Amazon rain forest with Edinburgh?
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The answer lies at the top of Leith Walk, where they are building a veritable Babylonian ziggurat. Actually, it’s a new hotel – as if the capital needed another one. But the inappropriate and megalomaniac bronze-coloured design of this monstrosity is fitting given the developer is one the world’s nastiest private equity funds.  In truth, the new St James Centre is a monument to a city transformed by runaway development – aided and abetted by the local council – into a poster for neoliberalism.
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The company behind the £850m ziggurat (plus the inevitable retail space and luxury flats) is called Nuveen Investments.  You’ve probably not heard of Nuveen.  It is the working arm of TIAA, an American financial services conglomerate that just reached an out of court settlement with clients who sued because of alleged mis-selling – so what’s new in the world?
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Chicago-based Nuveen/TIAA is one of the world’s top three asset managers, along with BlackRock and Vanguard.  These are companies that invest in property and shares on behalf of rich clients. Nuveen has nearly a trillion dollars under management, roughly the GDP of the Netherlands.  What does Nuveen do with this cash and why is it in Edinburgh?
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Sadly for capitalists, the global economy is not what it used to be.  Profit rates are down thanks to excess competition, especially from China.  Plus central banks have spent the last decade printing money to keep interest rates rock bottom, which means that investing in government bonds yields next to nothing. So what do you invest your billions in?
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Nuveen thinks the answer lies in land and commercial property, both of which yield rent. Rent is safe, sustainable and can be ratcheted up year-on-year. Besides, there are another three billion extra folk expected on the planet by 2050 and God isn’t making any more land – a point Nuveen makes forcefully in its presentations to clients.
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Hence Nuveen is putting its cash pile into high-end commercial property developments (such as St James Centre) and particularly… agricultural land. Nuveen is now the world’s biggest private owner of farmland, which it rents out. For instance, it is the second biggest owner of vineyards in the United States by acreage.  And in Brazil, Nuveen is now the biggest foreign holder of land, which it snaffling-up hand over fist.  It owns 300,000 hectares in Brazil, equivalent to four per cent of Scotland.
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SOMETHING’S BURNING IN BRAZIL
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Since 1970, over 700,000 square kilometres of the Amazon rainforest have been logged or burned – often illegally and often stolen from indigenous peoples.  The cleared space has been turned into farmland, especially for soybean cultivation and cattle ranching, both for the global export market. As well as murder and loss of biodiversity, the loss of forest adds to global warming by depleting the world’s biggest natural carbon sink.
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Nuveen has been attacked by local activists for purchasing farms whose ownership was subject to legal proceedings concerning the validity of land titles – farms which have seen high rates of deforestation. Alert to criticism and the threat of legal action, in 2018 Nuveen announced it would not burn rainforest habitat in Brazil or buy land that had already been burned.
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However, in 2019 a coalition of environmental organisations – including Friends of the Earth, GRAIN, National Family Farm Coalition, and Rede Social de Justica e Direitos Humanos – accused Nuveen of duplicity.  Using satellite photographs, they claimed that Nuveen was culpable in the extension of illicit land burning to Brazil’s tropical savanna lands in the Cerrado region, south of the Amazon basin.
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Savanna is mixed grassland and woods, rather than dense rainforest. The Cerrado is the largest and most biodiverse tropical savanna on the planet, and a major sink CO2.  In recent years it has become the main frontier for the expansion of large-scale, industrial plantations in Brazil. Over the past decade, the Cerrado has seen 50% more deforestation than in the Amazon, with the loss of over 40,000 square miles of habitat.
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Within the Cerrado, Nuveen has already purchased 25 farms covering 288,000 acres.  Satellite images show this Nuveen land overlaps with areas where there has been a heavy concentration of forest fires.  In the past year, according to this satellite data, the number of illicit fires in the has actually doubled.
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Nuveen’s alleged prohibition on deforestation is carefully framed as referring to the Amazon, not the Cerrado. It is also in this region where major land ownership disputes with local peasants are ongoing.
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GETTING EDINBURGH’S FINGERS BURNED
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Nuveen’s business model is to drive up financial returns by raising rents everywhere. That counts for its tenant farmers in Brazil and for anyone renting property in the St James Centre. Yes, there will be (low paid) retail jobs and making beds in the luxury hotel at the new St James Centre. But the mega-profits sucked out of the development will head to the US, and thence to Nuveen’s Asian investors.  Edinburgh is being sold for the proverbial mess of potage. Just like Brazil’s poor peasants.
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Here’s the really sad thing.
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Nuveen is the world’s biggest owner and investor in commercial property. Yet the Scottish Government (through its Futures Trust) and Edinburgh City Council were persuaded to put £60m of public cash into the St James project, supposedly to “unlock” Nuveen’s money by proving free surrounding public infrastructure.  Even with a conservative annual yield, Noveen and its Dutch partner will make £60m every year in rentals.

Comments (11)

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  1. David Allan says:

    i’m H.A.P. P. Y – I’m H.A.P. P. Y – I know i am , I’m sure I am ——– George much as I admire you contributions can you possibly write a piece that spreads a wee bit more optimism !

    Reading this is not helping my mojo!

    1. Alistair Taylor says:

      Oh, for the good old days of Private Frazer and John Laurie.

      We’re doomed.

  2. Grafter says:

    Same thing has happened in Aberdeen where our pea brained councillors have sold out to Aviva in the shape of grotesque slab monolithic constructions of glass and concrete defacing the area completely. 46 trees in our Union Terrace Gardens have been cut down to make way for another ghastly “user friendly” scheme. Councils are clearly not the people who should be the decision makers in these “developments” in the name of profits for the wealthy.

  3. David McGill says:

    How times must have changed? When I was involved in building projects it was customary for the developer to provide some level of public infrastructure as part of the consent.

    1. MBC says:

      Section 75s still exist. Don’t know what happened here.

  4. Wul says:

    These schemes are utter folly.

    If we know that God ain’t making any more land, then surely it behoves every public body to retain as much of it as they possibly can? Otherwise future citizens will own nothing, eventually paying rent just to use the pavement ( en route to their bed-making job in The Golden Jobby Hotel).

    One anxiety I have in a future independent Scotland is that a shower of entrepreneurial “Wealth Makers” try to take over the running of our small country. We shall need to watch out for them, have laws to curb their power and be resilient enough to get by without their “investment”*

    *These funds don’t really “invest” at all do they? If they are taking a profit out of us and our land, then we are losing resource. Simple.

    1. Wul says:

      The council’s solicitors, planners, estate managers and Councillors are totally outclassed by the monied “suits” that act for these big funds. I’ve seen the shiny, black Range Rovers swing into the council HQ car park for “infrastructure ” meetings.

      Councils say that they always do a cost-benefit analysis before disposing of public assets. In truth they give away public land for a pittance. Any public asset handed to a developer is lost for all time to local people. It’s value and amenity to the community should be calculated in centuries if it is to be anywhere near realistic.

      Where I grew up, the Depute Chief Executive for Place, Neighbourhood and Corporate Assets
      (Salary £100k+ /year) is busy giving away those same “corporate assets” (public buildings and land) to developers on the cheap, in order that the council’s books will balance at year end.

      His successors will have no community assets left to give away. But never mind. He will be in a different job by then, or safely, hansomely retired (perhaps living in a “Luxury, Executive Apartment” built on the site of my former primary school and providing a fat profit or eternal rental income for the “investor”. Stashed away tax-free natch)

      1. Alistair Taylor says:

        Well said, Wul.

  5. w.b. robertson says:

    what may I ask is the SG doing about this? Or are they too busy planning Indy? Cos by then the country`s real estate may have been sold off to the Philistines.

    1. Peter Hurrell says:

      This is SG policy in action. This is what they mean when they say “Scotland is open for business”.

  6. David J Black says:

    Good digging George, but it’s much worse than that. TIAA, Nuveen’s parent, which looks after the pensions of US professors and teachers is also, for good measure, investing in small arms manufacturing. which rather upset a number of its contributors in the wake of the Sandyhook school massacres. Professor Rebecca Dyer has written about this scandal in the US publication Inside Higher Education.

    In The New York Times it has been associated with alleged Brazilian ‘land-grabbers’ such as ethanol billionaire Rubens Ometta Silveira Mello (nickname ‘The Tractor’) who some allege has sanctioned business practices which include clearfelling rain forest, forging land title documents, the brutal eviction of subsistence farmers and their families, threats of violence and even assassination.

    Roger W Ferguson’s 2018 compensation as TIAA’s CEO was just over $5.3 million, though he has other sources of income, such as the $410,708 he receives as an independent director of Google parent, Alphabet inc. He has stated;

    ‘Our Code of Business Conduct embodies the high ethical standards that are the foundation for our values, our brand and our reputation. The Code is not a series of edicts or directives. Instead, it embraces the core principle of “doing the right thing.” – The Code is the foundation for our formal Ethics Program – – introduced in 2012. The Ethics Program embraces all of our values — putting the customer first, valuing our people, acting with integrity, delivering excellence, taking personal accountability and operating as one team. – By holding ourselves to the highest standards of conduct and integrity, we can continue to make a difference for those who make a difference in the world. ‘

    The worst thing about this deal, which was set up at the infamous ‘Beer ‘n Hookerfest’ (Private Eye) MIPIM conference in Cannes, is that by buying into the deal the Scottish Government and Edinburgh Council have forfeited their independence as planning authorities so TIAA can walk all over us – they even objected to a film studio out at Straiton!

    The Scottish press of course is so feeble it can’t be bothered with investigative journalism any more. We’ve had it.

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