Bloomberg News

Brasil Brokers Plans Acquisitions to Expand in Secondary Market

August 23, 2012

Brasil Brokers Participacoes SA (BBRK3), the country’s largest real estate broker by contracted sales, is completing due diligence in two acquisition targets and plans to buy as many as three more companies this year as part of a strategy to expand in the secondary housing market.

The Rio de Janeiro-based broker plans to boost revenue from sales of existing homes to 35 percent of total in five years, from 15 percent currently, Chief Executive Officer Sergio Newlands Freire said in an interview in Rio de Janeiro on Aug. 22.

“The secondary real estate brokerage market in Brazil is made up of small companies, so acquisitions to consolidate this market are part of our growth strategy,” Freire said.

Housing demand in the South American country will increase as growing credit and near full employment lead more consumers to buy homes, he said. Improvements in infrastructure and security in the company’s largest markets of Sao Paulo and Rio will also continue to boost sales, Freire said.

The two companies that are close to being acquired are based in Sao Paulo, which is the main focus of Brasil Brokers’ growth strategy, Freire said. The company, which has about 250 million reais ($124 million) in cash, won’t need debt to finance the acquisitions, the executive said, declining to provide the amount the company plans to spend in the acquisitions.

After a first half with slowing housing credit amid weakening economic growth, new projects and sales of existing units will increase in the second half, Freire said. Brazil’s gross domestic product will expand 1.75 percent this year, its second-weakest performance in nine years, according to economists in a survey by the central bank published Aug. 20.

Brasil Brokers had net income of 21 million reais in the second quarter, a 34 percent drop from the 31.7 million reais posted a year earlier, according to a regulatory filing on Aug. 14. Contracted sales fell 8 percent to 4.6 billion reais.

On March 1 the company said it agreed to buy 65 percent of real-estate broker Miranda Imobiliaria for 6.6 million reais. On Feb. 14, the company signed a contract to buy 55 percent of Bamberg Planejamento & Empreendimento Imobiliarios for an estimated 25.5 million reais. It has committed to acquire the remaining 45 percent of Bamberg over a period of four years from the initial acquisition.

To contact the reporter on this story: Adriana Brasileiro at abrasileiro@bloomberg.net

To contact the editor responsible for this story: Helder Marinho at hmarinho@bloomberg.net


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