Real estate funds suffer from retailers crisis – 03/12/2023 – Market

The financial crisis experienced by companies in the retail sector such as Americanas, Marisa and Tok&Stok, in the midst of a scenario of high interest rates and low economic growth, has also been reflected in the real estate funds market.

Struggling to meet all their obligations in view of the accumulation of debts, companies stopped paying off installments of rents for warehouses and stores, which make up the portfolio of some of the main real estate funds in the market.

This is the case of Vinci Logística Fundo de Investimento Imobiliário (VILG11), with assets of approximately R$ 1.7 billion distributed among 157,000 shareholders.

On February 15, the fund informed that it had filed an eviction action against Tok&Stok, for non-payment of the January rent of the property “Extrema Business Park I”, located in the Minas Gerais municipality of Extrema.

Rent represents around 14% of the fund’s revenue as a whole, and non-payment had a significant impact on the distribution of dividends, one of the main attractions of the category. After having paid a dividend of R$ 0.67 per share in January, remuneration dropped to R$ 0.53 in February, a decrease of almost 21%.

On March 7, the manager responsible for the fund, Vinci Real Estate, informed that Tok&Stok paid the February rent, however, the payment for January remained open and, therefore, the eviction action is still in progress. progress.

Despite the current situation, VILG11 is included in Itaú BBA’s recommended portfolio of real estate funds.

Real estate fund analyst at Itaú BBA, Marcelo Potenza says that, despite Tok&Stok’s default, and a residual exposure of 3% to Americanas, the fund has a portfolio of 16 high-quality and well-located warehouses, and would be able to find new tenants without major problems, in case any of the tenants remain in default for longer.

The analyst adds that, after the Tok&Stok case, the bank began to seek greater portfolio diversification and included Kinea Renda Imobiliária (KNRI11) among its recommendations to investors, which totals R$ 3.9 billion in equity and around 242 thousand shareholder.

However, on February 17th, the day after inclusion in the portfolio, the Kinea fund informed that it had not received the amount of rent owed by Marisa for the month of January, referring to the CD Itaqua, distribution center in Itaquaquecetuba, in São Paulo.

Revenue from the retailer’s contract represents only 4% of the fund’s revenue, and it was not enough to cause a negative impact on the distribution of dividends in the amount of R$ 0.95 per share relative to February. “Kinea’s fund shows the strength of a diversified portfolio. It is necessary to look at the portfolio as a whole”, says the Itaú BBA analyst.

Also on February 17, the Brasil Varejo real estate investment fund (BVAR11), with around 70 shareholders and R$740 million in equity, also reported not having received Marisa’s January rent. In this case, however, the retailer is responsible for around 80% of the fund’s real estate revenue, with default having a negative impact on the fund’s result of R$5.95 per share.

Administrator of BVAR11, Rio Bravo said in a statement that “it has not received any prior communication from the lessee about non-payment”, and that it is adopting the appropriate measures for the collection and preservation of the rights of the fund and its shareholders. When contacted, Rio Bravo said it would not comment.

“The company is in the process of improving its business model and decided to prioritize payments and/or renegotiate contracts, affecting rents (predominantly properties belonging to the company’s control group). Payments will soon be normalized”, informed Marisa in note.

The Itaú BBA analyst says that, despite the default situation among some tenants, he still supports the thesis of logistical warehouses, given the growth of e-commerce in the wake of the pandemic, but also recognizes that it is not possible to rule out new negative impacts for funds real estate in view of the situation of financial difficulties faced by retailers.

“The market will pay more attention to diversification and portfolios with quality and well-located properties.”

With regard to Americanas, which has filed for bankruptcy protection, Potenza says that it has in Itaú BBA’s recommended portfolio of real estate funds the VBI Logístico funds (LVBI11), with 65,000 shareholders and R$ 1.4 billion in equity, and Bresco Logística (BRCO11), which has 112,000 shareholders and R$1.8 billion in equity.

In the case of LVBI11, Americanas did not fully pay the rent for January, which corresponds to approximately R$0.07 per share, and the amount paid was R$0.04. Bresco Logística, in turn, informed that it is on the list of creditors presented by Americanas in the judicial reorganization process, with credits in the amount of approximately R$ 670 thousand.

Revenue from properties leased to Americanas, however, is approximately 7% and 3%, respectively and, despite the fact that the retailer’s situation is obviously not positive for funds, the reduced size of the exposure made Itaú BBA chose to keep them in the recommended portfolio, considering good quality portfolios and management, capable of mitigating negative effects, says Potenza.

The Itaú BBA analyst also says that VBI Real Estate, manager of LVBI11, even filed an eviction action against Americanas because of non-payment of rent on the property occupied in Salvador. At first, the court decreed the eviction of the retailer, but the decision ended up being later reversed. The fund informed that it will proceed with the appropriate measures aiming at the continuation of the action.

XP real estate funds analyst, Maria Fernanda Violatti says that, among the main funds in the market, Max Retail (MARX11) is the one with the greatest exposure to Americanas, with approximately 34% of revenue, with stores occupied by the retailer in Taguatinga (DF), Vitória (ES), Belém (PA) and Maceió (AL). The fund has around 4,200 shareholders and R$140 million in equity.

Managed by BTG Pactual, MARX11 reported on February 15 that Americanas did not pay the rent in full in January. The amount represents approximately BRL 0.53 per share, and the amount paid corresponds to approximately BRL 0.28.

“The administrator informs that it is actively monitoring the unfolding of the Judicial Recovery case of Americanas SA to take all appropriate measures”, said the bank in a statement. When contacted, BTG Pactual said it would not comment.

“Americanas informs that it continues to advance in the design of an agreement with its creditors”, informed the retailer in a note, in which it also says that the payments due follow in a normal regime for events subsequent to the beginning of the judicial recovery.

“The company reinforces that the rental amounts due and not paid by the date of the Judicial Recovery request constitute debts that will follow the requirements of the process, which prevents it from making payments whose origin event is prior to the beginning of the request made”, adds the retailer.

“It is important to remember that when we talk about real estate funds, we are talking about real assets that are real estate and that have an intrinsic value, which is very different from analyzing a company’s isolated operation”, says the XP analyst.

For this reason, adds the specialist, even though some retailers are facing a difficult situation at the moment, fund managers have the prerogative of filing an eviction action and, if the property is well located and of a high standard, they should be able to find new tenants without much difficulty.