* Blackstone, Patria to pay $657 million for 70 percent stake
* Deal to help Gafisa reduce debt burden, boost investment
* Purchase subject to regulatory approval
By Asher Levine
SAO PAULO, June 7 Brazilian homebuilder Gafisa SA agreed to sell a 70 percent stake of its high-end Alphaville unit to private equity firms Blackstone Real Estate Advisors LP and Patria Investimentos Ltda, according to a securities filing on Friday.
Under the deal, Blackstone Group LP and Patria agreed to pay 1.4 billion reais ($657 million) in cash for the stake.
Gafisa, which had held 80 percent of Alphaville, also said it had acquired the remaining 20 percent from the company's founders for 367 million reais, leaving it with a 30 percent stake after the transaction.
In October 2011, Gafisa embarked on a turnaround after a rapid expansion into unfamiliar markets led to huge cost overruns, sales cancellations, big quarterly losses, and a debt burden among the highest in Brazil's construction sector.
Selling the stake in Alphaville, Gafisa's most profitable unit, will help the company reduce its debt-to-shareholder-equity ratio from 94 percent at the end of the first quarter to about 53 percent, according to the filing.
The private equity firms will maintain Alphaville's management team, the filing said, and Gafisa will hold two spots on the company's six-seat board.
The transaction is subject to regulatory approval, which Gafisa expects to occur by the end of the year.