Brookfield Incorporacoes SA (BISA3), Brazil’s fourth-largest homebuilder by revenue, fell to the lowest level in three years, leading a plunge among real-estate stocks, as first-quarter profit declined 94 percent.
Brookfield dropped 15 percent to 4.18 reais in Sao Paulo, the lowest close since July 2009. It was the worst performer on the benchmark Bovespa index, which fell 3.2 percent. Rossi Residencial SA (RSID3), the fifth-largest, plunged 9.5 percent to 6.47 reais, the lowest since April 2009. PDG Realty (PDGR3) dropped 10 percent to 4.07 reais.
Brookfield’s net income declined after an increase in the number of potential buyers who pulled out of contracts at the same time that building and operational costs rose, the company said in a statement. Earnings sank to 4 million reais ($2 million), from 65.8 million reais a year earlier, trailing the 61.1 million reais average estimate of six analysts surveyed by Bloomberg. Revenue dropped 8 percent to 672 million reais.
“Results were weak,” analysts at Credit Suisse Group AG including Guilherme Rocha wrote in a note to clients. “Despite recognizing management’s efforts to put the company on the right track, we find that there is still potential for further cost overrun.”
The BM&FBovespa Real Estate Index retreated 4 percent, paring its 2012 gain to 7.1 percent.
Homebuilders have rallied this year on lower Brazilian borrowing costs. Policy makers cut the benchmark rate by 75 basis points, or 0.75 percentage point, to 9 percent on April 18 to revive growth that slowed to 2.7 percent last year from 7.5 percent in 2010. The central bank has lowered its target rate 350 basis points since August.
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