HDI Seguros Terminates Lease in Major Building on Chucri Zaidan, Affecting Two Funds Earnings

The property is owned by the HAAA11 and SARE11 funds
HDI has been in the building since 2017, back when it was owned by Brookfield

André Freitas, CEO and CIO of Hedge Investments

By: SiiLA News

11/11/2024

On Thursday evening (7th), Hedge announced that the insurance company HDI is ending its lease in Wing B of the WTorre Morumbi, vacating a total of 6.1 thousand m² of space.

The property is held by the HAAA11 fund, managed by Hedge, and SARE11, managed by Santander, which also issued a relevant notice on the case.

HDI has occupied the building since 2017, back when it was owned by Brookfield, and is currently the second-largest tenant.

According to released documents, the tenant is required to provide six months' notice and pay an early termination fee equivalent to 11 months’ rent, including condominium fees and property taxes.

Hedge’s fund owns 25% of the asset, and with HDI’s departure, HAAA11 will experience a negative impact of R$ 0.60 per share. Meanwhile, SARE11, holding 75% of the property, will see this vacancy impact 9.8% of its total revenue.

Source: SiiLA

REsource reached out to all parties involved in the lease termination, but none chose to comment.

WTorre Morumbi

WTorre Morumbi, Ala B, is a Class A+ asset with a vacancy rate of 27% and companies like Unilever, Stellantis, Veritas Brasil, and WeWork among its tenants. The market rent of the property stands at R$ 125.33/m², slightly above the Chucri Zaidan area’s average of R$ 101.61/m².

This isn’t the first controversy involving the property; in June, SARE11 reported WeWork as being in default, making it one of the first REITs to address this issue.

Latam

Brazil

São Paulo

Office

SPOT

Market Trends

ABOUT SiiLA

Founded in 2015, SiiLA is the industry leading REsource for comprehensive commercial real estate market insights, news and events across Latin America. The SiiLA suite of innovative products drive greater accuracy, efficiency, and strategic advantages for top players in the commercial real estate industry.