SAO PAULO (Reuters) – Odebrecht SA is in talks to sell a real estate project in São Paulo worth up to 400 million reais ($117 million), two people with knowledge of the matter told Reuters, as the Brazilian conglomerate keeps unloading assets after a graft scandal.

Developer Eztec Empreendimentos e Participacoes SA EZTC3.SA and real estate investment firm Hemisferio Sul Investimentos SA (HSI) are among those in talks with Odebrecht Realizações Imobiliarias, the real estate arm of the engineering group.

The companies are discussing a possible purchase of construction rights for three towers in a large mixed-use development in Sao Paulo, according the sources over the past week. They requested anonymity because negotiations are private.

The total value of the three towers, when completed, is expected to reach 1.2 billion reais, one of the sources added.

Much of the value in the project, located in an affluent business district, comes from the land, permits and certificates known as CEPACs whereby the city waives zoning laws in certain situations. The towers are part of an 80,000-square-meter complex called Parque da Cidade.

The real estate deal would be the latest in a string of asset sales by Odebrecht in recent years to reduce debt after its involvement in a massive graft scandal that stretched across Latin America.

Former Odebrecht executives said in plea bargain testimony last year that the company paid the son of a city official $1.8 million to speed up the approval process for Parque da Cidade.

One of the sources said bidders would start discussing legal risks in the deal during the due diligence process, which has not yet begun.

Odebrecht Realizações declined to comment. Parent company Odebrecht SA said it had recognized the error of its prior corrupt practices and paid fines as part of a leniency deal with Brazilian authorities.

Representatives for Eztec and HSI did not respond to requests for comment.

Several commercial real estate companies in Brazil have been hunting attractive acquisitions in recent years, as struggling developers have been forced to sell at a discount to cut hefty debt loads after a recent downturn.

The recent recession led to significantly overbuilt office space in affluent parts of southwest Sao Paulo, where Parque da Cidade is located.

Eztec, a mid-market to high-end developer operating mainly in metropolitan Sao Paulo, has said it saw merger and acquisition opportunities in the short-term, as have rivals such as BR Properties SA BRPR3.SA.

In 2016, HSI acquired a different tower in Parque da Cidade, which it later sold to Chinese conglomerate Fosun International Ltd 0656.HK.

Reporting by Gram Slattery and Carolina Mandl; Editing by Richard Chang


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