BR Properties FO Draws Interest

Brazilian commercial real estate developer and manager BR Properties is on the radar screens of LatAm equity investors heading into the week of its scheduled IPO. The company hopes to issue 57.5m primary shares and 14.4m secondary units at a midpoint of BRL16.00, which, if added to a greenshoe and a hot issue, could yield BRL1.5bn. Analysts at funds and portfolio managers say they are looking at the deal with interest, though it is too early to say whether it will enjoy hefty oversubscription. Price is scheduled for March 4. Investors note 2 peers for BR Properties: Sao Carlos and Cyrela Commercial Properties. “At the low end of the [14.00-18.00] range, BR Properties’ discount to its fair value [as defined by an independent consultancy whose results are in the prospectus] is 17%,” says a Rio-based fund manager studying the offering. This appears smaller than the discount that CCP and Sao Carlos trade at, of 25%, he adds, concluding valuation appears ambitious. A Sao Paulo-based equity manager meanwhile believes the company has very strong management. He adds that valuation of the portfolio and business as a whole appears attractive. However, questions remain as to the commercial property industry outlook and the company’s business model, which involves retrofitting portions of buildings. The company is on a roadshow in the US this week ahead of pricing. The deal is led Itau BBA, the global coordinator, and joint-leads Bradesco BBI, Goldman Sachs, Safra and Santander.