Company Gazit Globe Postpones the issuance of its real estate activity in Brazil “in light of market conditions” in the country. According to the company, it has decided not to publish a final prospectus of its activity in Brazil, on the recommendation of the bank accompanying the offering.
To carry out the offering, the company last year hired the services of BTG Pactual and Banco Bradesco, which are among the leading investment bankers in Brazil. According to Gazit Globe, it intends to work again to renew the IPO process when market conditions in Brazil allow it.
The main stock exchange in Brazil operates in the city of Sao Paulo, and the flagship index of this exchange is the IBOVESPA index. At the beginning of July 2021, the index climbed to a new high, but since then it has changed direction and has so far lost about 18.5% of its value. At the same time, during this period, the Brazilian real currency lost about 15% against the Israeli shekel, which led to an erosion in the shekel value of Gazit Globe’s assets in Brazil.
Negative return of 30% in two years
Gazit Globe, controlled by Haim Katzman, operates around the world in the field of income-producing real estate, and especially in the field of malls and commercial centers. , But a negative return of 30% in two years. This is while the real estate index yielded a positive return of 60% and 45%, respectively, in those periods.
As of the end of September 2021, Gazit Globe owned seven income-producing properties in Brazil (including Sao Paulo) with a total built-up area for rent of 179,000 square meters, and worth NIS 2.4 billion. These properties constitute 15% of Gazit Globe’s total assets according to their book value. To the end of September 2021), or 16% according to the calculation of the market value of the Company’s tradable holdings.
As part of preparations for an IPO on the Sao Paulo Stock Exchange, Gazit Globe has decided to combine part of its assets in Brazil under a Brazilian real estate investment fund called Gazit Malls FII, which is wholly owned by Gazit Globe. In February 2021 the fund submitted a draft public prospectus for the initial listing (IPO) of its participation units on the Sao Paulo Stock Exchange.
The offering was planned to take place through an offer of a sale by Gazit Globe to institutional and private investors In Brazil, of 25% -49% of the fund’s participation units. When the draft prospectus was published, Gazit Globe estimated that it would be able to sell these participation units for 1,040-530 million Brazilian rials (NIS 582-325 million), and at a value of 2.1 billion rials (NIS 1.2 billion) to the fund.
The fund raised in May a debt of 650 million reals
As part of the move, the fund also completed in May 2021 a secured debt raising in Brazil amounting to 650 million Brazilian rials. In October 2021, the Brazil Securities Authority received approval for the prospectus, following which the fund was given 180 days to carry out the offering, which today was decided not to be completed at this time.
When publishing the draft prospectus, Gazit Globe announced last year that the investment fund would own the shopping centers: Internacional (80.1%), Mais Shopping (100%), Morumbi Town (100%), Shopping Light (100%) and Prado Boulevard (98%). , Which were then listed in the company’s books at a fair value of 2.6 billion Brazilian rials (about 1.5 billion shekels).
Gazit Globe was to continue managing the fund’s assets in exchange for an annual management fee of 0.9% of the fund’s market value, plus a success fee, in an amount contingent on the achievement of acceptable standards. At the same time, Gazit Globe planned to continue to directly own full ownership of additional assets in Brazil that are not part of the investment fund, and which were listed in the books last year at a value of about 1.4 billion Brazilian rials (NIS 786 million).