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Ivanhoe goes shopping in Brazil

Ivanhoe goes shopping in Brazil

MONTREAL - The already strong Canadian presence in Brazil’s retailing industry is growing, with the Ivanhoe Cambridge Group to announce an estimated $300-million shopping centre investment Thursday.

The real estate wing of Quebec’s pension fund manager, present in Brazil since 2006, is to announce the construction of a 352,800 square foot shopping mall in the northern city of Fortaleza, along with the expansion of two existing malls.

“There’s a lot of room to grow,” noted Claude Sirois, senior vice-president, emerging markets for Ivanhoe Cambridge, the real estate arm of the Caisse de dépôt et placement du Québec.

It’s the latest investment in a shopping centre industry where two of the largest five players involve Canadian pension funds. Ivanhoe Cambridge – which operates as Ancar Ivanhoe in Brazil with a local private partner – is the third-largest shopping centre owner in Brazil, statistics from the International Council of Shopping Centres show.

In January, Ancar Ivanhoe and Canadian Pension Plan manager CPP Investment Board acquired a 49-per-cent interest in a shopping centre in Rio de Janeiro. The seller, in that deal, was Brookfield Brasil Shopping Centers Ltda., a division of Brookfield Financial.

And Ontario Teachers’ Pension Fund manager Cadillac Fairview has almost a 30-per-cent stake in Multiplan Empreendimentos, Imobiliários S/A – the second-largest mall owner in the country, according to ICSC data.

“The Canadian pension and other players have been the most active in the last seven years in Brazil – at least in the retailing industry,” said Jorge Lizán, vice-president, business development for the ICSC. “It’s one of the most dynamic markets in Latin America.”

Between 2008 and 2011, the number of malls in Brazil has grown from 377 to 429. Between 2010 and 2011, retailing sales at stores open at least a year grew by more than 10 per cent, ICSC data show.

By comparison, same store sales in Ivanhoe Cambridge’s Canadian malls have grown by about three per cent during that same period, Sirois said.

Like other emerging markets, retailing demand in Brazil is being driven by the growth in the population’s purchasing power, Lizán said. Between 22 million and 30 million people have made the transition from poverty to becoming consumers over the past 12 years, he said.

Sirois recalled a 2008 investment by Ancar Ivanhoe to build a two-storey shopping centre in an area where the only retailing consisted of an airport food court and high end stores. When the mall first opened, customers came to try out the escalators, in addition to shopping.

“It was the first time these people had seen escalators,” Sirois said.

Outside of Brazil, Sirois said Ivanhoe Cambridge’s shopping centre division is still committed to growing its presence in the United States, where only about three per cent of its assets are located.

“I think it’s a matter of the opportunities presented to you,” he said.