The Canada Pension Plan Investment Board (CPPIB) continues to expand its property portfolio in Latin America’s largest real estate market with the planned purchase of a 27.6 percent interest in Aliansce Shopping Centers, a publicly-traded Brazilian retail real estate operating company, from US mall owner General Growth Properties (GGP). The pension plan has agreed to pay $480 million in equity for the stake, the purchase of which is scheduled to close this fall.
“This transaction represents a significant expansion of CPPIB’s real estate portfolio in Brazil, which remains a strategic market for us over the long term,” said Peter Ballon, head of real estate investments in the Americas, in a statement. “We will continue to seek attractive investment opportunities across the retail, logistics and office sectors through partnerships with top-tier local partners.”
Rio de Janeiro-based Aliansce owns or manages a retail portfolio of more than 800,000 square meters, or 8.6 million square feet. These holdings consists of 17 stabilized assets and two development projects located in São Paulo, Rio de Janeiro, Salvador, Belem and Belo Horizonte.
“Acquiring an interest in Aliansce allows us to gain scale in a key target segment with a diversified portfolio of high-quality, modern shopping centers located throughout Brazil, including the economically dominant Southeast and fast-growing Northeast regions,” Ballon added. “We look forward to working with Aliansce's experienced management team, whom we know well, as we look to expand our retail platform in Brazil.”
Prior to acquiring a stake in the company, CPPIB already had held a 15 percent interest in one of Aliansce’s properties, Shopping Iguatemi Salvador. The pension plan’s other Brazilian retail real estate investments include a 25 percent interest in Botafogo Praia Shopping through a joint venture with Ancar Ivanhoe and a commitment of up to $250 million to a joint venture with Cyrela Commercial Properties to develop retail, logistics and office properties. In November, CPPIB also committed $343 million through a partnership with Singapore’s Global Logistic Properties to own and develop industrial assets in Brazil.
Prior to this transaction, CPPIB’s property portfolio consisted of more than C$900 million ($876.68 million) invested in interests in retail, office and logistics properties totaling more than 3.3 million square meters, or 35 million square feet. The majority of its Brazilian real estate holdings are fairly evenly divided between retail and logistics, with a small allocation to office.
CPPIB’s acquisition of the ownership stake in Aliansce, meanwhile, signals GGP’s exit from the shopping center operator, which was formed in 2004 through a joint venture between the company’s CEO and founder, Renato Rique, and GGP. In its second quarter earnings results yesterday, GGP said it sold its ownership stakes in Aliansce to CPPIB and, in a separate transaction, to Rique Empreendimentos e Participações, an entity represented by Rique and the company’s senior management, for a total of approximately $690 million.
GGP now has sold the majority of its holdings in Brazil, as its property portfolio in the country primarily consisted of its ownership of Aliansce, which Bloomberg reported to equal about 40 percent of the company. GGP is more than 40 percent owned by Toronto-based alternative asset manager Brookfield Asset Management and its consortium of investors.