Gazit-Globe (GZT) to Acquire Minority Stake in Brazil's Shopping Cidade Jardim

November 11, 2016 8:34 AM EST

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Gazit-Globe (NYSE: GZT) announced that it has entered into a binding agreement to purchase 33% of Shopping Cidade Jardim in Sao Paulo, Brazil, for R$ 410 million (approximately USD 130M), excluding closing costs.

Shopping Cidade Jardim is one of Sao Paulo’s highest quality shopping centers located in the affluent neighborhood of Morumbi. The shopping center is situated alongside one of the city's major ring road highways and integrates with nine high-end residential buildings and three office towers. Approximately 665,000 inhabitants live within a 5-kilometer-radius of the property with an average annual household income of R$ 165,000, which is more than double the city's average.

Shopping Cidade Jardim was opened in 2008 with approximately 200 stores, including Chanel, Prada, Louis Vuitton, a fitness club, cinemas and high-end restaurants. The total GLA of the mall is approximately 39,000 sqm, it includes 1,170 parking spaces with a 97% occupancy.

The remaining 67% stake in the mall will continue to be held by JHSF (Bovespa: JHSF3). Founded in 1972, JHSF is controlled by the Auriemo family, and is recognized for its ability to identify and develop state-of-the-art real estate assets in major cities in Brazil.

The purchase agreement includes a right of first offer in favor of JHSF to acquire up to 33% interest in an asset owned by Gazit Brasil, in the event of the redevelopment or sale of that asset. In consideration for this right of first offer, Gazit Brasil will be granted an option to acquire a 33% ownership stake in the potential retail development to be carried out on the two parcels of land which are adjacent to the Shopping Cidade Jardim mall.

Rachel Lavine, CEO of Gazit-Globe: “We are pleased with the opportunity to increase our portfolio in our wholly owned subsidiary in Brazil by acquiring this urban property, which is one of the highest quality malls in the country. In recent months, we sold the principal part of our holdings in BR Malls representing a gain of approximately NIS 150 million, and this transaction demonstrates the further implementation of our business strategy to increase the private real estate component in our portfolio. The economic environment in Brazil is now improving and we are beginning to see the fruits of our investment in recent years.”

Gazit Brasil CEO, Mia Stark: “Shopping Cidade Jardim is the most elegant open mall and part of a mixed-use project that offers an exceptional experience due to its natural daylight and garden-front shops of fashion, leisure and world class gastronomy. The acquisition of Shopping Cidade Jardim represents another milestone for Gazit Brasil focused strategy and includes this dominant asset to its urban portfolio in the business capital of South America, Sao Paulo, one of the alpha cities in the world.”

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