General Growth Properties is following its peers and investing in retail properties outside U.S. borders, though at a more cautious pace than rivals Mills Corp. or Simon Property Group. The Chicago-based REIT, currently the second largest owner of U.S. retail space, announced plans this week to commit $100 million to joint ventures in Brazil and Costa Rica.

In Brazil, General Growth is putting $32 million into a 50/50 partnership with locally based Nacional Iguatemi Group (NIG), which owns and manages nine properties totaling 3.2 million square feet. General Growth is acquiring a controlling interest in NIG's property management business. In Costa Rica, the company is committing $70 million for a one-third interest in a ground-up development project in the capital city of San Jose. Venezuela-based construction company and property owner Grupo Sambil and Costa Rican investor Genesis Fund are the REIT's local partners. The venture will develop, own and manage the shopping center, which is due for completion in about 3 years.

In the South American markets General Growth is entering, cap rates are currently in the double digits, significantly more favorable than in the United States. Fragmented ownership in these countries also indicates the potential for General Growth to participate in consolidating those markets, says JP Morgan analyst Michael Mueller.

The move is less of a commitment than Mills' and Simon's excursions into Europe, which involve more capital and more properties. Much like General Growth's South American deals, Simon's involve local partners, with the U.S. REIT acting mainly as a capital source. Mills, on the other hand, is actively participating in ground-up development, a strategy that provides more of a risk/reward payoff, says Citigroup Smith Barney analyst Jonathan Litt. "The ground-up model is superior for the long-term building of a viable business that can be valued and eventually monetized at a higher level than a group of asset-level investments," he says in a report. "The ground-up model also allows for the REIT to access third-party capital sources to fund the growth of its expansion."

To date, General Growth has put only $17 million to work in these ventures. Today, the REIT celebrates the grand opening of its mammoth Jordan Creek Town Center near Des Moines, Iowa, where the company was founded.