Log CP Announces Share Buyback Amid Unattractive Real Estate Investment Moment
- The company plans to purchase 5.5 million shares
- The executive director explains that the current capital market is not advantageous for real estate companies
On Friday, July 5th, a sunny day, B3 saw over 3 million stock trades, with more than R$ 20 million in transactions. On the same day, in Belo Horizonte, Minas Gerais, Log CP announced, by statement, the repurchase of 5.5 million company shares.
This is not the first time the company has made such a move. In February 2023, Log CP announced a share buyback program, during which 3.4 million shares were acquired. That operation ended on the 5th to make way for the new program.
André Luiz Vitória, Executive Director of Finance and Investor Relations, explains that after a good period for the development of high-standard assets, the capital market is not favorable for real estate companies. Thus, the share buyback helps to demonstrate confidence.
“We are currently experiencing a great period in terms of developing Class A assets, with returns at record levels. The capital market has significantly discounted the shares of all companies in the real estate sector, which are undervalued compared to their fair value. In this context, the buyback also aims to show our shareholders our confidence in our business model and the potential appreciation of our shares,” said Vitória to REsource.
Vitória explains that this operation aligns with the goal of reaching 500,000 m² by 2028. According to the executive, Log CP's market value is R$ 2.5 billion, and the share buyback will positively contribute to these numbers.
“This is another way to ensure shareholders—and the market—that we are 100% prepared to meet the goal of delivering about 500 thousand m² per year until 2028, which represents almost 25% of all new projects planned in Brazil. The investment will be R$ 850 million to R$ 900 million per year. Since the beginning of this year, Log's shares have already increased by 12.7%, resulting in a market value of R$ 2.5 billion. This buyback should positively contribute to our shares,” Vitória concluded.
Future
According to the company, these operations did not significantly impact the composition or control of the company's shareholders or administration. The repurchased shares will be held in treasury, canceled, or resold on the market, a decision yet to be made.
Additionally, the logistics asset developer announced the cancellation of shares in treasury, effectively canceling 5 million shares that would have been issued. Now, the company's share capital is divided into 97 million common, registered, book-entry shares without par value.
Asset Sale
Last Wednesday (10th), Log CP announced the sale of two assets: LOG Viana I and LOG Gaiolli, to its own fund in partnership with Banco Inter, the LOGCP Inter Real Estate Investment Fund. According to the announcement, the transaction totaled R$ 119 million.
With this transaction, 31 thousand m² of gross leasable area (GLA) were acquired. According to data gathered by SiiLA's intelligence team, the fund acquired 35% of LOG Viana I and 31.2% of LOG Gaiolli, paying R$ 76.7 million and R$ 40.7 million, respectively.
The transactions resulted in a stabilized Cap Rate of 7.43% for LOG Viana I and 7.30% for LOG Gaiolli. As the fund already held a stake in these developments, it now owns 80% of both assets, while the remaining 20% are owned by Log CP.
The payment will be made in three installments: the first, corresponding to 50% of the total amount or R$ 59.8 million, will be paid upon signing the contract. The second and third installments, each worth R$ 29.9 million, will be paid in 12 and 24 months, respectively.
