BR Malls is expected to lead mergers and acquisitions activity in Brazil’s mall sector in the near to medium term as it looks to boost its stakes in top-tier properties, analysts said.
“They could sell two to three non-core mall assets this year as part of a strategy to lean down and increase their presence in large malls,” said Victor Tapia, analyst at Bradesco BBI in São Paulo.
His comments came as the company, which bills itself as Latin America’s largest shopping center operator, last week sold stakes in seven of its properties to a real estate investment trust owned by BTG Pactual for 696.4 million reals, or $176 million. It also bought a 25.5 percent stake in Shopping Iguatemi Caxias do Sul for 84 million reals.
Some of the assets BR Malls could unload include Amazonas Shopping Mall in Sao Paulo or Rio Anil Shopping in Rio de Janeiro, with those assets changing hands for $20 million to $30 million, Tapia estimated.
The company could then boost its ownership in a string of high-end shopping centers around Brazil, including North Shopping in Fortaleza; Shopping Villa Lobos, Mooca Plaza, and Shopping Jardim Sul in São Paulo, and Shopping Estação in Curitiba, Tapia said, adding that these exercises could cost $50 million to $100 million apiece. The recent sales left BR Malls with 32 malls across Brazil.
Tapia’s comments came as Aliansce and Sonae recently merged, creating the $2.5 billion operator Aliansce-Sonae, which boasts Brazil’s second-largest leasable area after BR Malls.
Tapia does not envisage another large tie-up in the near future, but said Aliansce-Sonae may move to sell noncore assets or buy new ones next year after fully combining its franchises.
“When we talk to companies, they all say they are looking for opportunities,” Tapia noted. “But, for now, most are looking to build new greenfield projects including Multiplan and Iguatemi [two other mall owners], which have properties planned in Rio de Janeiro and in São Paulo City, near Congonhas airport.”