Brazil's Largest Residential Broker on Expansion Kick
With $124 million in the cash register (250 million reais), Brasil Brokers Participacoes SA (BBRK3), the country's largest real estate broker, has contracted to buy two brokerages in Sao Paulo that is expected to increase its revenue from sales of existing homes to 35 percent in five years, from 15 percent today.
Brasil CEO Sergio Newlands Freire, made that estimate in an interview with Bloomberg. Freire said he is banking on that revenue increase from buyers who are now obtaining more bank credit for home purchases. Near full employment in the country should also stimulate buyer demand, he said.
Brasil has contracted to buy 65 percent of real-estate broker Miranda Imobiliaria for 6.6 million reais ($3.2 million US) and 55 percent of Bamberg Planejamento & Empreendimento Imobiliarios for an estimated 25.5 million reais $12.6 million US). It has committed to acquire the remaining 45 percent of Bamberg over four years.
Brasil plans to buy at least three more companies this year as part of a strategy to expand in the secondary housing market.
"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 told Bloomberg.
But current economic figures don't exactly support Freire's optimism. The first half of the year was marked by slowing housing credit amid weakening economic growth.
Brazil's gross domestic product will expand by only 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.
Freire, however, is confident new projects and sales of existing units will increase in the second half, he told Bloomberg.
The company's largest markets remain in Sao Paulo and Rio de Janeiro.
Bloomberg reports Brasil Brokers had net income of 21 million reais ($10.4 million US) in the second quarter, a 34 percent drop from the 31.7 million reais ($15.6 million US) posted a year earlier, according to a regulatory filing on Aug. 14. Contracted sales fell 8 percent to 4.6 billion reais ($2.27 billion US).