HGRE11 Rescinds Land Sale, Retaining R$ 2.25M in Fees

Brazilian real estate fund HGRE11 (Pátria Escritórios) has terminated its agreement to sell a central São Paulo property, returning the asset to its portfolio while pocketing R$ 2.25 million in non-refundable compensation and extension fees. The fund, managed by Patria Investimentos, signed a consensual rescission agreement ending a transaction that was originally initiated in June 2023.

The deal involved a vacant plot located on Rua da Alegria and Visconde de Parnaíba in the Brás neighborhood, which had been slated for a R$ 70 million redevelopment project. The transaction was cancelled because the buyer failed to secure the necessary urban planning and municipal approvals within the contractually mandated timeframe. Under the terms of the rescission, HGRE11 will return the R$ 2.212 million down payment to the buyer. However, the fund retains R$ 2.25 million, consisting of R$ 750,000 in indemnity for the period the land was off the market and R$ 1.5 million in extension fees paid by the developer.

The central São Paulo land returns entirely to HGRE11’s portfolio, where management plans to evaluate new strategic alternatives, including potential negotiations for a future sale or alternative development projects. While the fund has not announced any immediate impact on its distribution yield or net asset value, details of the termination will be outlined in its upcoming monthly management report.

This portfolio movement comes amid broader fluctuations in the Brazilian financial markets. On the B3 exchange today, the Ibovespa index (IBOV) edged down 0.25% to 172,020.69. Among major blue-chip equities, state-run oil giant Petrobras (PETR4) rose 1.77% to 38.44, mining giant Vale (VALE3) slipped 2.04% to 76.2, and financial heavyweight Itaú Unibanco (ITUB4) fell 0.31% to 42.43.