Brookfield Set to Sell Majority Stakes in Two São Paulo Malls to Iguatemi for $410 Million

Brookfield, a leading Canadian asset manager, is on the verge of finalizing the sale of its majority stakes in two prominent São Paulo malls, Patio Paulista and Patio Higienopolis, to Brazilian shopping center operator Iguatemi SA. The deal, valued at approximately 2.5 billion reais ($410.5 million), is expected to be concluded by the end of December, although sources suggest the timeline could be extended due to the year-end holidays.

This sale signifies Brookfield’s decision to exit Brazil’s mall sector, a market in which it has been involved since the 1980s. The company, which has made significant investments in the Brazilian retail space over the years, views its holdings in these malls as mature investments. Despite this exit, Brookfield remains a major player in Brazil, managing a diverse portfolio across sectors such as renewable energy, infrastructure, private equity, and real estate. The transaction is set to be funded by Iguatemi and BB Asset, a major Brazilian asset manager. The funding will likely come through a mall-focused investment fund, with talks underway to possibly involve additional real estate-focused funds. The deal marks a continuation of the growing relationship between Iguatemi and Brookfield, as earlier this year, BB Asset and Iguatemi jointly purchased a stake in Shopping Rio Sul, a mall in Rio de Janeiro, from Brookfield. Sources familiar with the transaction noted that other groups had expressed interest in acquiring the two malls, but Brookfield and Iguatemi have been in exclusive talks regarding the deal. The sale is expected to provide Iguatemi with a significant expansion in the São Paulo retail market, where both Patio Paulista and Patio Higienopolis are prime properties in high-traffic areas.

Brookfield, which oversees around 200 billion reais in assets across Brazil, is shifting its focus to other sectors that offer higher growth potential, including renewable energy and infrastructure. The company’s exit from the Brazilian mall sector represents a broader trend in the global real estate market, where investors are reassessing their portfolios amidst challenging economic conditions. As part of the deal, Iguatemi is working through the due diligence process, with the goal of signing the final contract by the end of 2024. Sources added that additional investors may be brought in to help fund the acquisition, as current market conditions for real estate investment funds have made it challenging to raise new capital. This sale will likely have long-term implications for the Brazilian mall market, with Iguatemi poised to strengthen its position as one of the country’s leading shopping center operators. Despite Brookfield’s exit from this particular market segment, its diversified operations across other high-growth sectors ensure its continued presence in Brazil’s dynamic investment landscape.