The fund was structured to enable the company’s capital reduction and was born as one of the largest commercial office FIIs in the country.

This Wednesday (5), BR Properties finalized the first listing of a real estate fund (FII) created by the company BRPR Corporate Offices. The portfolio is now traded on B3 with ticker BROF11.

The FII was registered with the CVM on December 26, 2022. The public share distribution offer of the 1st issue of the Fund was intermediated by BTG Pactual and 11,610,812 shares were distributed, for an amount of R $106.35 each, totaling the amount of R$1,234,809,856.20, with limited distribution efforts. BR Properties owned 100% of the shares until the IPO.

what is the background

According to the CEO of BR Properties, Martin Jaco, “the fund was structured to allow the capital reduction of the company and has already been born as one of the largest commercial FII offices in the country”.

The fund financed two buildings, Passeio Corporate, in downtown Rio de Janeiro, and the Águas Claras complex, in Nova Lima (MG).

With the listing, BR Properties becomes the real estate adviser to the FII and BTG Pactual becomes the portfolio manager, ie the agent responsible for most of the fiduciary duties towards the shareholders.

“This FII idea was something we had been studying for a long time at BR Properties,” says Jaco. “Since 2017, we have been discussing a way to continue to be a great investor, but in a lighter way, with an ‘asset light’ profile”, he adds.

Failed pandemic plans

The managing director of BR Properties explains that the company has already set up several real estate funds during its 16 years of operation, but “those FII belonged only to the company”.

According to the CEO, the IPO of a company-structured FII could have happened a few years earlier. “But the pandemic arrived and we ended up pushing it back a bit,” he says.

“The company has gone through a series of significant events, the main one being the sale of BRL 6 billion of assets last year and now, between June and July, we will receive the last installment. This transaction has proven very successful because the interest rate deteriorated a lot and with cash we paid off all our debts and became a debt-free company.

Brookfield bought properties from BR Properties

In May 2022, Canadian property group Brookfield completed the purchase of 12 properties from BR Properties for BRL 5.92 billion.

The portfolio acquired included developments such as Parque da Cidade and Tower B of the JK Iguatemi complex, in São Paulo.

With the receipt of the first installment in July last year, BR Properties has fully settled the outstanding balance of three issues of real estate debentures and credit notes for 1.17 billion reais.

The latest payment received from Brookfield by the company is estimated at nearly 3 billion reais.

The sale of the 12 buildings in 2022 represented an 80% reduction in the portfolio. The listing of the FII will continue the capital reduction movement led by BR Properties.

“We can make a capital reduction via FII quotas, taking advantage of the opportunity to enter this segment that we already wanted”, underlined the chief financial officer (CFO) of BR Properties, Andre Bergstein.