Gazit-Globe sees opportunity in Brazil currency drop

Mon Feb 24, 2014 6:39am EST

* Brazil accounts for 1 pct of Israeli firm's assets

* Also sees buying opportunities in Europe

* Focus in U.S. is on developing existing assets

By Tova Cohen and Steven Scheer

TEL AVIV, Feb 24 (Reuters) - Gazit-Globe, Israel's largest real estate investment company, may triple the scale of its presence in Brazil after declines in the country's currency and capital markets created buying opportunities, the company's president said.

The company owns five shopping centres in Brazil, most of them located in the densely-populated Sao Paulo state.

But Gazit-Globe has only just begun to penetrate the country, which accounts for about 1 percent of its 76.9 billion shekels ($21.96 billion) in assets under management. President Roni Soffer said that proportion could easily double or triple.

"It doesn't make sense to build companies that will be just $200-$300 million. We are looking at $1 billion total gross asset in markets we operate. I want to get to critical mass," he said in an interview.

Soffer said the currency fall and weakening Brazilian markets were prompting some international investors to start selling assets, which created good buying opportunities.

Gazit-Globe, which has a market value of $2.2 billion, focuses on supermarket-anchored shopping centres in major urban areas, where growth is often double or triple the country's overall rate. Soffer pointed to Stockholm, where it owns the Kista Galleria, as an example.

The company's total assets under management have edged up from 76.5 billion shekels at the end of 2012, and have doubled since the start of the financial crisis in 2008.

It operates in the United States through its subsidiary Equity One and in Canada through First Capital Realty Inc.. It is also the largest shareholder in Finland's Citycon and in shopping mall developer Atrium European Real Estate.

It has 584 properties in 20 countries, with the U.S. and Canada accounting for 53 percent of its operations.

Soffer also saw buying opportunities in Europe this year, while in North America it plans to development and redevelop sites in its existing portfolio.

"It makes sense to me ... to buy prime real estate but I will buy it in big capital cities - even if I know I am paying a little bit more, but I know there is liquidity," he said.

In the first nine months of 2013, Gazit-Globe invested 4.7 billion shekels in acquisition and development of properties and disposed of assets worth 1.8 billion shekels.