Gazit Globe Ltd (NYSE:GZT) Cuts Its Stake In BR Malls

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Gazit Globe Ltd (NYSE:GZT) has decided to cut its stake in BR Malls to less than 5%. The remaining position in BR Malls is valued at about $23 million. The stake that GZT sold was worth about $56 million.

The management of Gazit Globe didn’t explain in detail why it decided to reduce the company’s stake in the Brazil-based BR Malls. However, it can be taken as part of Gazit Globe’s asset portfolio rebalancing because the company has used the proceeds from the sale of BR Malls stake to invest in another property in Brazil.

Gazit Globe sold a portion of its stake in BR Malls for about $56 million, a move that significantly reduced its claim to the asset to just about $23 million or less than 5% of the share value of the mall.

But Gazit Globe is not done with real estate investment in Brazil. The company used about $47 million from the sale of the BR Malls stake to acquire an office building together with a parking lot at Top Center Shopping, which is located at a busy Sao Paulo commercial avenue.

According to Gazit Globe, it has acquired two parking garages located above and below Top Center Shopping with a capacity of 370 cars. The company further said that estimates show that more than 1.5 million people who live in Sao Paulo commute daily to Paulista Avenue on which the shopping center is located.

Furthermore, Paulista Avenue is home to many financial institutions and the Top Center Shopping building itself has major tenants who include Procter & Gamble Co (NYSE:PG), Dow Jones, the Consulate of Japan and Goodyear Tire & Rubber Co (NASDAQ:GT) among others.

According to GZT, the shopping center currently has 100% occupancy.

Financial performance

Gazit Globe swung into a loss of about $72.5 million in 1Q2016 compared to a profit of about $97.4 million in the year ago quarter. Revaluation of Gazit Globe’s financial derivatives was the cause of the quarter loss.

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