BRMalls Plots Equity, PDG May Follow

The pipeline of Brazilian real estate companies looking to issue equity is swelling rapidly, and bankers say there is more to come. BRMalls is the most recent name to file. The company says it plans to issue around BRL800m worth of shares, BRL300m of which will be secondary. MRV and Gafisa have also stated intentions to raise cash. The rationale for each issue is different, says a real estate analyst at a large US-based mutual fund who asks not to be identified, as his fund is participating in some of the deals. In the case of BRMalls, a question mark hangs over the fact that GP Investments is divesting some of its holdings, says the analyst. “Are they telling the market that the stock is now expensive?” he asks. MRV is raising cash for new projects as it ramps up production for a large government sponsored low-income program. The secondary shares in its offering are rumored to come from US fund Autonomy capital, which is heard facing redemptions. “Gafisa is issuing to repair its balance sheet,” says the analyst. A Brazil-based banker sees more real estate companies preparing filings, including PDG Realty, which last issued equity in October 2007. PDG officials were not immediately available to comment. BRMalls is led by UBS Pactual, Itau BBA and Santander. BRMalls shares closed Wednesday at BRL16.39. Thursday was a market holiday in Brazil.