LOG announced last Friday (22) a strategic shift aimed at expanding its operations beyond logistics warehouse development. During a presentation to investors and the press, the company led by Sergio Fischer said it plans to broaden its presence in investment management, insurance, administration and real estate funds.

Named LOG Capital, the initiative seeks to transform the company into a broader platform of financial and real estate solutions focused on the logistics sector, creating new recurring revenue streams and reducing dependence on the sale of assets developed by the company.

Currently, LOG has around 1.2 million sqm of gross leasable area (GLA) under advisory across four funds. The annualized contracted revenue from this operation totals approximately R$9.5 million. The company expects to accelerate this vertical over the coming years, with the launch of one to two new development funds per year through 2030. According to the company, this move could generate potential growth of more than R$1 billion per year in assets under management (AUM) within income funds.

The strategy includes structuring income funds focused on Class A logistics properties, development funds, real estate receivables funds and co-investment operations in new projects.

In an interview with REsource, Fischer said the company’s thesis remains intact even in a scenario of lower interest rates, which, according to him, could further accelerate capital recycling and demand for logistics assets.

“If interest rates are lower, I think there will be greater ease in recycling capital. There will be more value creation in recycling these development funds [...] there is already strong demand and demand could even increase further. I believe our business is shielded from macroeconomic issues. What are the two main drivers of our demand? The flight to quality, which is already underway [...] And, on top of that, e-commerce is not slowing down,” the CEO said.

Asked by REsource about the potential impacts of Brazil’s tax reform on the logistics sector — especially given the expected reduction of regional tax incentives — Fischer said the changes could increase demand in regions where the company already has consolidated operations, although LOG will remain more selective regarding geographic expansion.

“I think demand will increase in the markets where we are already investing. Over the past two years, we have raised the bar in terms of developing new markets. We are looking for operations that serve at least one million people within a consumption area [...] In new markets, you won’t see us entering. You will see us developing the third, fourth or fifth project in markets where we already operate,” he said.

In addition to expanding its management business, LOG also plans to monetize part of its assets by selling stakes to its own funds, while retaining management of the developments and capturing recurring revenues tied to origination, structuring, management and distribution activities.

During the presentation, executives highlighted that the goal is to migrate toward a more asset-light model, reducing the amount of proprietary capital directly allocated to developments while improving balance sheet efficiency. According to the company, this could increase return on equity (ROE) and enhance capital recycling capacity for new projects.

Currently, LOG fully funds its projects with its own capital. Under the new strategy, the company intends to attract partners to invest in project SPVs, sharing the capital required for construction.

In one example presented by the company, a 50,000 sqm project developed entirely with proprietary capital would generate a multiple on invested capital (MOIC) of 1.7x. Under the partner-investment model, projected returns would increase to 2.8x, even with LOG retaining only a 20% stake in the investment.