IGUATEMI EMPRESA DE SHOPPING CENTERS S.A. PRESS RELEASE
São Paulo, October 1st, 2015 - Iguatemi Empresa de Shopping Centers SA (Iguatemi) [Bovespa: IGTA3], one of the largest full-service companies in the shopping center industry in Brazil, announces the acquisition of a 8.4% stake of Pátio Higienópolis Mall, located in the city of São Paulo, SP.
About the Acquisition
On October 1st, 2015, Iguatemi acquired an 8.4% stake in Pátio Higienópolis Mall (SPH) from Fundação Conrado Wessel and now holds a total stake of 11.2% of the consolidated asset.
In response to an offer made on the asset, and to the fact that some partners did not exercise their right of preference, Iguatemi acquired a stake above its right on SPH1 and became a stakeholder on SPH2.
Iguatemi's involvement in the asset started in November 2013, when it was chosen, among a variety of other mall operators, including other publicly traded companies, to manage the mall. The quality of services rendered in managing the mall, as well as the partnership established with the various asset owners in revitalizing the mall, led to the owners consenting to Iguatemi's entering the asset in June 2015 with a 3.75% stake in SPH1.
The total value of the transaction amounts to R$ 125 million, of which R$ 88.3 million refers to SPH1 and R$ 36.8 million refers to SPH2. This amount will be paid as follows: (i) R$ 75.0 million up front; and (ii) 50.0 million in February 25th, 2016 (adjusted by 100% of the variation of the CDI in the period).
In 2014, SPH reached R$ 104.9 million of total revenues (R$ 79.3 million from SPH1 and R$ 25.6 million from SPH2) and a NOI of R$ 98.2 million (R$ 74.0 million from SPH1 and R$ 24.2 million from SPH2).
Considering the 2014 NOI, without taking into account any future improvements, the transaction has an implicit multiple of 15.2x the mall's 2014 NOI (cap rate of 6.6%).
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Table: Financial Information of the Mall
SPH1 | SPH2 | Consolidated | |
GLA (m2) | 25,800 | 8,300 | 34,100 |
Transaction Value (R$ mn) | 88.3 | 36.7 | 125.0 |
Stake acquired | 8.15% | 9.15% | 8.4% |
Iguatemi's stake after the acquisition | 11.9% | 9.15% | 11.2% |
2014 NOI (R$ mn) | 74.0 | 24.2 | 98.2 |
Acquisition NOI Multiple (2014) | 15.2x | ||
Cap rate (2014) | 6.6% |
About Pátio Higienópolis Mall
Pátio Higienópolis Mall opened in October 1999, in the district of Higienópolis, and became one of the most important and traditional malls in the city of São Paulo and in Brazil. It soon became a gathering point and reference for the A and B+ consumers of the Higienópolis district, presenting in 2014 revenues per square meter among Brazil's top 10 mall (R$ 2,326/sqm).
The mall is comprised of 309 stores, 6 movie theaters e 1 traditional theater. Its tenant mix is composed of high end stores and it has been improving throughout the years.
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About the Region
Pátio Higienópolis Mall is located in the city of São Paulo, which is the most important consumption region in Brazil and amounts to ~12% of Brazil's GDP. The area of influence of Patio Higienópolis, one of the oldest and most traditional of São Paulo, is densely populated with a highy qualified demand. In 2014, according to IBOPE, the average monthly income of a family in the primary area of the mall reached R$ 11.2 thousand.
The Higienópolis neighborhood, with 87.8 thousand inhabitants, generates a high flow of vehicles and pedestrians to the mall, as a consequence of not only its qualified residential housing, but also to the existence of, among other, (i) public security institutions, (ii) a consulate, (iii) middle schools and high schools, (iv) medical centers, (v) cultural centers, (vi) churches and synagogues.
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Iguatemi Empresa de Shopping Centers S.A. ('Iguatemi') is one of the largest full service companies in the Brazilian shopping mall sector. Its activities cover the whole range of the business, from conception, through planning, to development and management of regional shopping malls, outlets and mixed-use real estate complexes with office towers. Iguatemi has equity holdings in 17 shopping malls, 1 premium outlet and 3 commercial towers, with a total GLA of 715 thousand sqm; and an own GLA of 442 thousand sqm (including the acquisition of this stake in Patio Higienópolis Mall). Iguatemi participates in the management of 16 of its 17 shopping malls, its premium outlet and its office towers. It also has 3 greenfield premium outlet projects, 2 expansions, and 1 office tower in progress.
Iguatemi's stock is traded on the Novo Mercado of the São Paulo Stock Exchange (BM&FBovespa).
IR CONTACTSInvestor Relations Coordinator
IR Analysts
Tel.: +55 (11) 3137-6872/6877
ri@iguatemi.com.br
www.iguatemi.com.br
Any statements on the outlook for the business, estimates for operational or financial results, or the growth outlook for Iguatemi, that may be expressed in this report are projections, and as such are based exclusively on the expectations of Iguatemi's management in relation to the future of the business, and its continuing access to capital to finance the Company's business plan. Such statements are subject, substantially, to changes in market conditions, government rules, competitive pressures, the performance of the sector and the performance of the Brazilian economy, among other factors, and are, therefore, subject to change without prior notice.
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