Patria sells Rio office property at 34% loss, highlighting office market challenges

Patria Investments announced that its office FII, Patria Properties (RBRP11), has completed the sale of its stake in the Castello Branco Building, located on Avenida República do Chile in downtown Rio de Janeiro. The transaction, however, resulted in a significant loss for the fund.

The property was acquired in August 2015 and received total investments of R$7.2 million, including the acquisition price, transaction costs, and capital improvements. More than a decade later, the asset was sold for R$4.8 million—34% below the fund's total invested amount. As a result, RBRP11 recorded a realized cash loss of R$2.4 million, equivalent to R$0.20 per unit.

The discount was not limited to the historical acquisition cost. The sale was also completed at a price 27% below the property's 2025 appraised value, underscoring the difficulty of converting the asset's book value into the price the market was ultimately willing to pay.

Beyond the capital loss, the transaction also reduces the fund's recurring income generation. With the transfer of ownership, the monthly rental income of R$42,397 will no longer contribute to RBRP11's cash flow.

In its filing, the manager stated that the sale is part of its portfolio recycling strategy, prioritizing the disposal of assets in which the fund holds relatively small ownership stakes and that are located in regions considered more challenging from a vacancy perspective.

The FII's ownership interest in the property was limited, and its office suites were leased to coworking operator Dezker.