2023-11-09 15:52:19
Valora Investimentos — a specialized credit manager with R$15 billion in assets — is buying five commercial buildings from a BTG fund that will give rise to the house’s first brick real estate fund.
The acquisition is being made for R$750 million, a cap rate of 8%, slightly below the average of brick FIIs listed on the Stock Exchange, which trade at around 9%.
The seller was FII BTG Pactual Corporate Office (BRCR11), which decided to dispose of the assets to reduce its leverage.
Valora will pay 70% upfront and the remainder in two annual installments. The part in cash will be paid half with equity and half with the fund’s leverage, which will be done with the issuance of a CRI.
Now, the manager will begin efforts to raise the new fund and, given the market scenario, the idea is to raise the funds from professional investors (who have more than R$10 million in liquidity) and institutional investors. When there is a window, Valora plans to make a new offer to bring the product to retail.
Alessandro Vedrossi, Valora’s co-head of real estate funds, told Brazil Journal that the manager always wanted to get into brick-and-mortar assets, but never found a suitable window for this movement.
“This is a market that, when it is ‘hot’ and you can capture it, the assets are very expensive. And when the market is bad and assets are cheap, you have a hard time raising money,” he said.
Now, however, Alessandro said he managed to marry the two things, finding assets at an attractive price and managing to finance the acquisition partly with debt and seller financing.
In a statement to the market, BRCR11 said that it sold the assets because it has R$920 million in debts related to acquisitions, and that 67% of them mature next year. The fund also said that, given market expectations for the Selic terminal rate in 2024 (close to 9%), the cost of debt would be higher than cap rate of assets.
BTG highlighted, however, that the sale was made above the equity value of the properties.
The properties involved in the transaction are the Cidade Jardim Building, a triple-A building located in Itaim and which has tenants such as Pátria Investimentos and Banco ABC Brasil; O Brazilian Financial Center, a building A located on Avenida Paulista; and the buildings Burity, Transatlantic e Volkswagenwhich are located in more peripheral locations in the city and have only one tenant each (Volkswagen, Banco Pan and General Motors).
Alessandro said that the Paulista building faces Cidade Matarazzo, the complex where the Hotel Rosewood is located. “It is the area that is growing and gaining the most value in Paulista,” he said. “We see a lot of room for rent growth and appreciation of all these assets.”
Given its leverage, Valora’s new real estate fund — which does not yet have a name — should start with a dividend yield high.
According to the manager, the expectation is that the fund will operate with a yield of 14-15% in the first year, and above 10% in the second. The expectation is that over the years the yield stabilize around 8%.
“It is a yield which today does not seem so attractive, with NTN-B close to 6%, but which is very interesting on a longer horizon,” he said. “If NTN-B drops 100 basis points the business already makes sense.”
Alessandro said that Valora’s expectation is that the brick-and-mortar strategy will become relevant within the management company. The idea is that this vehicle is the platform for brick-and-mortar growth, and can even purchase assets from other segments, such as logistics.
Valora manages R$4.5 billion in real estate funds, of which R$4.1 billion is in credit and fund of funds (FoFs). The remaining R$400 million are in two small brick funds that came with the acquisition of Mogno Capital.
Pedro Arbex
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