Brookfield and Iguatemi near agreement on malls sale, say sources By Reuters

By Luciana Magalhaes

SAO PAULO (Reuters) – Canadian asset manager Brookfield and Brazilian shopping center operator Iguatemi SA are nearing an agreement regarding the sale of two Sao Paulo malls, according to multiple people familiar with the matter.

The companies have just set the price for the majority stakes Brookfield owns in malls Patio Paulista and Patio Higienopolis, aiming to finalize a deal by the end of December, a deadline that may be slightly extended due to the year-end holidays, two of the sources said this week.

The sale of the two shopping centers, valued at close to 2.5 billion reais ($410.5 million) when concluded, will mark Brookfield’s exit from the Brazilian malls sector, the same sources said, requesting anonymity due to the private nature of the negotiations.

The Canadian asset manager has decided to exit the malls sector in Brazil because it considered its investments in these commercial ventures were mature. The firm has invested in Brazilian malls since the 1980s.

According to a person familiar with the situation, other groups have also showed interest in the malls.

Brookfield and Iguatemi, which have been in exclusive talks regarding the deal, declined to comment.

Brookfield, managing around 200 billion reais in assets in Brazil, remains active in various other sectors in the country, including renewable energy, infrastructure, private equity, and real estate.

Funding for the transaction should be provided by Iguatemi and BB Asset, through a mall-focused investment fund, and possibly other real estate specialized funds, according to the sources.

As per their agreement, Iguatemi will complete the due diligence process with the goal of signing the final contract with Brookfield by the end of 2024.

Initially, the transaction was to involve only BB Asset and Iguatemi. However, the group has decided to possibly include additional investors due to current unfavorable market conditions for real estate investment funds seeking to raise new capital. Talks with these additional investors are ongoing, three of the sources said.

BB Asset declined to comment.

Earlier this year, BB Asset, through one of its funds, and Iguatemi also bought a stake in Shopping Rio Sul, in Rio de Janeiro, from Brookfield.

Brookfield, with approximately $1 trillion in assets across more than 30 countries, has its origins in a utility company founded in 1899 in São Paulo, Brazil.

($1 = 6.0896 reais)