Aussie Mall Operator Shops in Brazil

Westfield Group has agreed to buy 50% of Brazilian mall operator Almeida Junior Shopping Centers, at a total price of BRL740m ($466m). It is the first entry into EM for the Australian mall operator that counts itself among the world’s largest. The transaction values Almeida at BRL1.48bn, representing an 11.2x Ebitda multiple on first-year forecast earnings, Westfield says. “This is a regional buy, small on a national scale. It doesn’t change the competitive landscape much,” notes a Brazil-based equity analyst covering the sector. He adds, though, that it could be the base of an expansion in Brazil by Westfield, given that Brazil is still quite underpenetrated in this sector and there is room for growth from all players. Local heavyweights including BR Malls and Iguatemi are already battling other international names, such as Sonae Sierra and Brookfield in the space. The purchase price includes a direct capital investment of BRL400m, allowing the combined company to have no net debt and the capacity to grow. The joint company will own and operate three existing malls and two under construction in southern Brazil. Westfield will now operate in 5 countries, and expects to achieve an unlevered internal rate of return in excess of 15%. Almeida, led by founder and CEO Jaimes Almeida Junior, has been operating shopping centers in Brazil since 1993. Credit Suisse advised Westfield on the transaction, while Rothschild and law firm Mattos Filho advised Almeida. The deal follows Monday’s announcement of BR Malls’ purchase of 70% of mall owner Alvear for BRL791m.