Brazilian billionaire Jose Isaac Peres is considering expanding his mall operations overseas as the nation's trade barriers for consumer goods and rising interest rates limit options to grow locally.
Peres, who owns 31 per cent of Multiplan Empreendimentos Imobiliarios SA, the country's largest mall operator, said he has met with Peter Lowy of Australia's Westfield Group and executives from Indianapolis-based Simon Property Group Inc. as he seeks opportunities abroad. Chile and Uruguay are attractive markets, Peres said.
Westfield, which has also said that South America was an attractive market, declined to comment on the speculation.
"We have the size and the muscle to look abroad and easily compete," Peres, 73, said in an interview at Bloomberg's office in Sao Paulo.
"The big obstacle of Brazilian companies is that the macroeconomic situation doesn't help local businesses."
Brazil, the biggest emerging economy after China, is failing to fulfill its potential because the government maintains high import duties, steep interest rates and excessive regulation, Peres said. The economy will expand 2.45 per cent this year and next, less than the Latin American average for a fourth straight year, according to a Bloomberg survey.
Brazilian imports represented 14 per cent of GDP in 2012, compared with 34 per cent for Chile, 32 per cent for India and 34 per cent for Mexico, according to World Bank data. The US Trade Representative's office threatened last year to retaliate against what it called a "protectionist" push by Brazil that led to tariff increases on more than 100 goods.
While Peres foresees consolidation among Brazilian mall operators, he said he sees no good acquisition or merger opportunities for Multiplan. For example, Peres said local developer WTorre SA is seeking about 800 million reais ($346 million) for its 50 per cent stake in luxury mall JK Iguatemi, an asset that probably cost WTorre about 200 million reais.
"If there's a good mall for sale, we'll buy it, but we won't buy a mall just to increase our gross leasable area," said Peres, who founded Multiplan in 1975.
The Ontario Teachers Pension Plan is the second-biggest shareholder with a 23.1 per cent stake, according to Bloomberg.
Brazilian retail sales have averaged 3.8 per cent annual growth in the first nine months of this year, down from 8.6 per cent in 2012, as the central bank increases interest rates to tame inflation.
Multiplan's sales are outperforming general retail demand. Its malls tend to attract higher-income consumers.
"They are still putting up 8 per cent growth, which is all but unheard of in the rest of the world," said Sam Lieber, the chief executive of Alpine Woods Capital Investors LLC in Purchase, New York, which has about 950,000 shares in Multiplan.