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SAO PAULO Nov 25 Aliansce Shopping Centers SA
is eyeing acquisitions across Brazil's mall industry as a way to
fuel growth in the near term, although prices seem too stretched
at this point, Chief Executive Officer Renato Rique said on
As part of that strategy, Aliansce could seek
partners to jointly bid for the 35 percent stake General Growth
Properties Inc has in upscale mall Shopping Leblon in
Rio de Janeiro, he said.
Aliansce has already held talks with investment firms
including Canada Pension Plan Investment Board and Singapore's
GIC Pte Ltd for a potential deal, he said at an investor
meeting, without elaborating.
The Rio de Janeiro-based mall landlord could also sell
non-essential assets such as land plots, buildings or malls that
cannot be expanded to help fund new purchases, he and other
executives said. Based on cash holding and future cash flow
estimates, Aliansce has 300 million reais ($87.6 million) at
hand to spend on acquisitions, Rique said.
"The involvement of other partners in potential acquisitions
would help us write a smaller check," Rique said.
His remarks underscored how mall M&A has gained momentum in
Latin America's largest economy this year, when gross leasable
area for the industry rose after last year's decline. Growth
happened almost entirely due to acquisitions, as a two-year
recession and high interest rates have discouraged the start of
Still, the weak economic backdrop has failed to weigh down
asset prices. This year, the disconnect between mall valuations
for listed players and M&A transactions has widened, prompting
some players to dispose of some assets to fetch a high price.
Bankers and analysts typically measure valuations in the
sector using the so-called capitalization rates. A lower implied
capitalization rate for M&A means investors are paying more to
tap a property's ability to throw off future income.
Analysts at Itaú BBA estimate that average compounded growth
in leasable mall area might have amounted to 1 percent between
2014 and 2016, compared with an average 21 percent expansion
between 2007 and 2014.
Aside from the potential divestments, Aliansce would
consider another capital increase, Rique said, alluding to a
recently concluded 600 million reais equity offering that
enabled it to buy a 25.01 percent stake in Shopping Leblon.
Alliansce shares fell 1.6 percent to 14.36 reais on Friday,
paring the stock's year-to-date gain to 35 percent.
(Reporting by Ana Mano; Additional reporting by Tatiana
Bautzer; Editing by Guillermo Parra-Bernal, Chizu Nomiyama and