Brookfield to buy stake in Brazilian office portfolio

The deal marks BR Properties’ second private equity real estate sale in a week.

Brookfield Asset Management has agreed to buy an interest in an office portfolio from BR Properties, one of the largest Brazilian commercial real estate companies, for R$2.08 billion (€530.45 million, $590.68 million). Approximately R$800 million of the purchase price includes debt that will be assumed by Brookfield, according to a statement from BR Properties earlier this week.

The portfolio will include seven newly built office buildings in the cities of Rio de Janeiro and São Paulo. Brookfield is making the acquisition on behalf of its latest global real estate fund, Brookfield Strategic Real Estate Partners II.

“Notwithstanding the short-term problems the country is facing, the growing middle class, evolving economy and maturing political system have given Brookfield the ability to earn excellent returns by staying committed to our long-term, disciplined and value-oriented approach,” Brookfield Property Partners chief executive Ric Clark wrote in a letter to shareholders last week. “Given the headwinds created by the weakness in commodity prices, we are currently seeing numerous opportunities to invest in real property in Brazil.”

The transaction marks BR Properties’ second private equity real estate sale in a week. Last Friday, PERE reported that The Blackstone Group had agreed to buy 10 real estate assets from the São Paulo-based listed company for R$1.07 billion (€275.8 million, $301.28 million). The deal was made on behalf of Blackstone’s global opportunistic real estate fund, Blackstone Real Estate Partners VII.

The Blackstone transaction, meanwhile, followed the collapse of Brookfield’s bid to take BR Properties private in partnership with Brazilian investment bank BTG Pactual. Brookfield and BTG launched a tender offer for the company’s shares in February but BR Properties disclosed last month that the transaction would not proceed because the buyers failed to fulfill certain conditions within a specified deadline. In the disclosure statement, however, the company said that it was continuing discussions with Brookfield on the potential sale of assets.