Brazil Real-Estate Stocks Gain on Rossi Sales, BTG Ratings

Brazilian real-estate companies advanced after homebuilder Rossi Residencial SA (RSID3) reported a jump in sales and Banco BTG Pactual SA recommended buying brokerages LPS Brasil Consultoria de Imoveis SA (LPSB3) and Brasil Brokers Participacoes.

Rossi gained 2.2 percent to 11.50 reais at 4:15 p.m. New York time. Lopes was unchanged at 33.30 reais after jumping as much as 2 percent earlier, while Brasil Brokers increased 0.7 percent to 7.35 reais. The BM&FBovespa Real Estate (IMOBBV) Index climbed 0.7 percent, its second advance in the past 12 sessions. The benchmark Bovespa index rose 0.4 percent.

Rossi, Brazil’s sixth-biggest homebuilder by revenue, said in a filing that preliminary second-quarter contracted sales rose 24 percent to 882 million reais ($563.8 million) from a year earlier. Lopes and Brasil Brokers were initiated with “buy” ratings at BTG as they offer “safer ways to play the housing space at this point, while offering unique exposure to the attractive secondary market,” according to a note to clients dated yesterday.

“With higher returns and less risk, we believe the brokers deserve premiums vs. the builders, while they also look attractive when compared to most domestic consumer-related sectors,” BTG analyst Marcello Milman said in the note. Rossi “was able to increase launches significantly maintaining good sales performance,” he wrote in a separate report today.

Property companies have led declines in Sao Paulo this year on concern rising interest rates will hurt demand while record- low unemployment will boost labor costs. The benchmark real- estate index lost 21 percent this year through yesterday, compared to a 15 percent decline for the Bovespa.

To contact the reporter on this story: Alexander Cuadros in Sao Paulo at acuadros@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulous@bloomberg.net

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