Brazil’s Cyrela Commercial Properties agreed to swap office assets for logistics properties with Canada Pension Plan Investment Board (CPPIB). They also announced joint venture investments for up to US$400m in the office sector. Cyrela also agreed to sell 50% of its warehouse business to Prologis, pending the finalization of its transaction with CPPIB.
(Reuters) Cyrela said in a securities filing on Tuesday that it had signed a non-binding agreement regarding the transfer of a 33 percent equity stake in its office buildings in exchange for CPPIB’s 25 percent stake in Cyrela’s warehouse business.
Shares of Cyrela were flat at 10 reais after falling as much as 1 percent in morning trading on the São Paulo Stock Exchange.
The deal, which would lay the groundwork for a new round of investment, underscores investors’ hopes that falling interest rates will trigger a new round of investment in Brazil’s beleaguered commercial real estate sector.
Brazilian offices and warehouses have suffered from high vacancies and steep discounting during a recession that has lasted more than two years.
Cyrela also outlined a separate non-binding agreement to sell a 50 percent stake in its warehouse business to a subsidiary of U.S.-based Prologis Inc “at market prices,” without indicating the value of the transaction.
After the deals close, Prologis will own 75 percent of the warehouse business, with Cyrela owning the remaining 25 percent, the company said. Cyrela added that the closing of each deal is conditional on the completion of the other.
The transactions are also subject to approval by Brazilian antitrust agency Cade and shareholders, the filing said.
Cyrela Commercial Properties resulted from a spin-off of homebuilder Cyrela Brazil Realty SA‘s commercial properties division in 2007.