Brazilian real estate developer BR Properties SA will sell its industrial warehouses and logistics facilities to WTGoodman IBP Participacoes, a joint venture between Australian real estate firm Goodman Group Pty Ltd and local developer WTorre, according to a securities filing.
The transaction is valued at 3.18 billion reais ($1.38 billion), BR Properties said, and is subject to regulatory approval and the conclusion of due diligence by WTGoodman.
WTGoodman was set up as a 50/50 venture late last year to develop logistics and industrial properties in Brazil, according to a press statement released at the time.
Cash generated by the sale, which includes 34 properties, will be used to cut debt and pay dividends, BR Properties said.
The asset sale reflects a trend across Brazil’s corporate landscape in recent months as the country’s biggest companies cut back operations to shore up balance sheets in the face of tougher economic conditions ahead.
BR Properties reported a 65 percent drop in third-quarter profit from a year ago. Investors were especially concerned with a decline in “leasing spreads” for industrial properties, or the difference between what the company earns from leases on properties and what it pays for the mortgages on those assets.
“The transaction should reduce the company’s indebtedness level, provide for higher dividends and potentially speed up share buyback,” Credit Suisse analyst Nicole Hirakawa wrote in an investor note, while cautioning that the industrial segment may currently provide better opportunities than Sao Paulo’s office market.
A spokesperson for BR Properties said the company would not exit the industrial segment despite the sale, but declined to provide further details.
While the company has made efforts to reduce its debt burden since early 2012, net debt at the end of September was nearly unchanged from a year earlier at 4.5 billion reais. (Reuters)