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Equity International reduces stake in Brazil’s biggest mall company

The privately held investment company focused on real estate related businesses operating outside of the US, has reduced its stake in BR Malls in order to pay down debt used in its original investment in the company.

Equity International, the Chicago-based real estate investment firm co-founded by Sam Zell and Gary Garrabrant has completed a large share disposal in Brazil’s largest retail property company BR Malls.

In a statement, the firm said it had sold out of approximately 2.75 million shares in the Rio de Janeiro-based company. It said that the proceeds would be used to pay down 100 percent of the debt used in the firm’s first investment in the company in December 2006. This debt was scheduled to mature in June 2009.

The sale accounts for about 10 percent of Equity International’s stake in BR Malls. Following the transaction, made through its Fund II vehicle, the firm owned approximately 17.7 percent.

Equity International’s investment in BR Malls was one of five investments made by the firm in Brazil. Others include a 19 percent stake in homebuilder Gafisa and a five percent stake in homebuilder Construtora Tenda, an investment in logistics company AGV Logistica and in management company Bracor Investimentos Imobiliarios.

Garrabrant said: “Equity International remains an active and enthusiastic shareholder of BR Malls, and we look forward to capitalizing on opportunities in the Brazilian retail sector.”

In its statement, the firm said it regarded Brazil as under-supplied in the retail sector on a per capita basis and it predicted that the country’s growing middle class would drive “near to long term growth”.

Garrabrant said: “We foresee significant growth opportunities for the company both organically, through expansion and new development, and externally, through corporate combinations and property level acquisitions.”

BR Malls is the biggest retail property company in Brazil with nearly 1 million square metres of shopping mall space across 34 properties. The number of properties under management grew from six at the time of Equity International’s investment.