Fitch: Iguatemi's Acq. of 14% Stake in Iguatemi JK Mall Neutral to Credit Quality
NEW YORK--(BUSINESS WIRE)--Fitch Ratings views Iguatemi Empresa de Shopping Centers SA's (Iguatemi) recent announcement that the company has executed an agreement to acquire an additional 14% stake in the Iguatemi JK Mall as neutral to credit quality.
The acquisition will bring Iguatemi's total interest in this mall to 64%. The company had a cash position of BRL1.3 billion and total debt of BRL1.9 billion as of Sept. 30, 2013, and LTM September 2013 adjusted EBITDA was BRL328 million. Net leverage, measured as total net debt/EBITDA, during LTM September 2013 was 1.9x. On a pro forma basis considering the announced transaction, Iguatemi's net leverage is estimated at 2.4x, which is in line with expectations previously incorporated in the ratings.
Iguatemi and WTORRE entered into an agreement concerning the acquisition of WTORRE's 50% stake in the JK Iguatemi Mall. As part of this agreement, Iguatemi agreed to acquire 14% of JK Iguatemi, while TIAA-CREF, a U.S.-based financial services organization, agreed to acquire the remaining 36% stake. The total amount for the 50% stake is BRL636 million; the amount to be paid for the 14% stake being acquired by Iguatemi is BRL178 million. The closing of the transaction is subject to certain regulatory and other customary approvals.
JK Iguatemi Mall, located in the city of Sao Paulo, is 35 thousand square meters (m2) large and reached a net operating income of BRL71 million during LTM September 2013, and 2013 NOI is expected to be around BRL90 million. JK Iguatemi Mall's asset valuation is BRL1.2 billion (64% equal to BRL768 million); all the assets are unencumbered.