Analysts Like WTorre, BTG Deal

Equity analysts approve of BTG’s acquisition of around 70% of WTorre’s property portfolio. “I see it as a win-win,” says one Sao Paulo-based equity analyst covering the property development sector. “Walter Torre was really out of luck with the IPO. The company was really leveraged.” BTG is said to be acquiring the assets for BRL1.8bn, and assuming BRL1.7bn in debt. According to local press reports, BTG will form a new vehicle consisting of the majority of WTorre’s property assets, which it values at around BRL5.3bn. According to a report in Valor Economico, the deal will consists of a 50% stake in its Ventura property, a 40% stake in the Brookfield property, two towers of the JK Complex, undeveloped land in Marginal Pinheiros, a project in Porto Maravilha, the Petrobras headquarters, 50% of a commercial building in Martinal Pinheiros, and several other buildings. “The outcome for WTorre was just as good as it was for BTG. And obviously BTG was able to get a valuation much lower than Walter Torre had in mind at the time of the IPO,” the analyst says. WTorre had filed for an IPO in March 2010 in Brazil’s domestic market through Bank of America Merrill Lynch, BTG Pactual and Itau. The developer eventually pulled the IPO citing poor market conditions. Analysts were uncertain how to value the portfolio, since some of the buildings have yet to be completed. The undeveloped land in Marginal Pinheiros, for example, could have wildly different values depending on how it is developed. Still, most analysts were positive on the deal. When asked if the portfolio would indeed be worth the BRL5.3bn that has been suggested, another Sao Paulo-based equity analyst covering the sector says it is likely. “It is very very possible,” the analyst says. Most of the buildings named in the deal are AAA rated buildings. “He was looking for a partnership to develop his projects,” says the analyst. The analysts were unable to calculate a valuation multiple for the BTG deal since WTorre does not