Ivanhoe Cambridge enters Brazilian real estate market with Ancar Gestao stake

17:02:47 EDT Sep 18, 2006

Canadian Press: LUANN LASALLE

MONTREAL (CP) - Canadian real estate giant Ivanhoe Cambridge has entered the fragmented Brazilian shopping mall market with a stake in three malls and a mall-management company and a goal of market consolidation in that country.

Ivanhoe Cambridge president and CEO Rene Tremblay said Monday there's a burgeoning Brazilian middle class and good retail sales growth in malls that are sophisticated and comparable with those in North America.

"There's an opportunity there to consolidate the ownership of shopping malls, which is very fragmented and very different from what we see in many other countries," Tremblay said in an interview with The Canadian Press.

"We want to be part of the consolidation."

Ivanhoe Cambridge now has part ownership in shopping-centre management company Ancar Gestao, which will continue to manage the three malls.

Tremblay said the Brazilian company has "a very professional approach to managing shopping malls, the North American way."

"We want to expand on this relationship and build a significant presence in the Brazilian market," Tremblay said.

Ivanhoe Cambridge has either a 50-per-cent stake or a minority stake with Ancar in three well-established regional malls: Conjunto Nacional shopping centre in Brasilia; Shopping Iguatemi in Porto Alegre in southern Brazil; and Nova America in Rio de Janeiro.

Financial details were not disclosed but Tremblay said, "you could say we invested $100 million in equity on that deal."

The Brazilian interests are also part of Ivanhoe Cambridge's strategy of geographical diversification, which began a decade ago, Tremblay said.

Based in Montreal, Ivanhoe Cambridge is a real estate subsidiary of Quebec's Caisse de depot et placement, the largest pension fund manager in Canada. It's one of Canada's top property owners, managers, developers and investors, focusing on shopping centres located in urban areas.

Ivanhoe Cambridge, with assets of about $9.3 billion, is also active in the United States, Asia and Europe and its holdings include 65 shopping centres.

Retail analyst John Winter said Ivanhoe's investment in Brazil is a sound strategy because it has a middle class of about 30 million to 40 million who want to shop and spend money.

"There are great masses of poor but the growth potential in Brazil is tremendous," said Winter of John Winter Associates Ltd. "The competition is not as strong as in the U.S. and Canada. It's a good emerging market. It makes a lot of sense."

Tremblay said the Brazilian shopping-centre industry was started more than 30 years ago and "to some extent it's more sophisticated than many other countries."

"The only thing that was missing was foreign capital and availability of capital," Tremblay said, noting that Brazilian malls are either family owned or owned by local interests.

He said Brazilian malls have international retailers, such as Zara clothing, and others are coming but there are more local, regional retailers than consumers would see in a country such as the United States.

Ancar said in a statement that it's pleased to work with Ivanhoe Cambridge and "we look forward to continue managing these upmarket properties in order to further strengthen their position in their respective markets."

Tremblay said he's not interested in acquiring malls in other South American countries at this time.

He also said that he sees further Canadian expansion in Alberta and British Columbia.

Among the malls in which Ivanhoe Cambridge has ownership or an ownership stake are: Vancouver's Oakridge mall, Edmonton's Southgate mall and Montreal's Rockland mall.

Ivanhoe Cambridge is one of several Canadian property owners controlled by pension funds. Cadillac Fairview is owned by the Ontario Teachers Pension Plan Board while Oxford Properties is a unit of the OMERS, the Ontario-based pension plan for municipal government employees.

© The Canadian Press, 2006