Rio Grande do Sul Faces Climate and Humanitarian Crisis Affecting Entire Industry, Including Industrial Properties

One of the most significant climate tragedies in Brazil is unfolding in Rio Grande do Sul. The combination of an intense wind current, known as a trough, a moisture corridor from the Amazon, and an atmospheric block caused by the heatwave has resulted in heavy rains and floods in the metropolitan region of Porto Alegre.

Data released today, Thursday (9), by the Civil Defense of Rio Grande do Sul reveals that 425 municipalities are affected, with 164,583 people displaced and over 1.4 million citizens directly impacted, along with 107 confirmed deaths and 136 missing.

In addition to the irreparable human tragedy, a partial survey by the National Confederation of Municipalities (CNM) revealed that the storms, which began in late April, have generated over R$ 6.3 billion in financial losses.

A study by SiiLA shows that the metropolitan region of Porto Alegre has 47 mapped industrial developments, with 35 within the risk area disclosed by the Civil Defense of Rio Grande do Sul.

According to the CNM, the private industrial sector is accumulating losses of R$ 183.3 million. In the public sphere, the infrastructure sector (bridges, roads, pavement, urban drainage, etc.) has incurred R$ 1.4 billion in damages, and the transportation system has suffered R$ 39.8 million in losses.

In a market announcement, VINCI stated that one of its assets, the CD Eldorado, located in the city of Eldorado do Sul, is in a risk area. The asset is an isolated warehouse of 15,000 m² representing 3.9% of the VILG11 fund.

"Given the calamitous situation in Rio Grande do Sul, we inform that the CD Eldorado asset, located in the state and representing 3.9% of the portfolio, is in an area directly affected by floods. The management team is monitoring the situation in the region, which currently has limited access, so it is not yet possible to determine the property damages, which is insured. The asset is a single-tenant property leased under an atypical modality to Ambev, with expiration in 2029," the statement said.

Another company that has spoken out is Bresco. On Wednesday (8), the owner of Bresco Canoas informed that their asset was directly affected by the rains and floods. The asset represents 5% of the fund and has Natura and FM Logistics as tenants and is part of the BRCO11 fund.

"Bresco Canoas, located in the municipality of Canoas-RS and responsible for 5% of the Fund's monthly revenue, was directly affected by the flood that took over the region, and the activities of our tenants are temporarily suspended. The property insurer has been contacted, and our real estate management team is closely monitoring the developments of this incident together with the tenants and their employees.

In the coming days, as it becomes possible to access the property, we will assess the extent of the damage and spare no effort to minimize the impact of the floods and resume operations together with our tenants," concludes.

In XP Investimentos quarterly presentation, where they report the balance of their assets, it was informed that the warehouse located in Cachoeirinha, XP Log Cachoeirinha, was not affected. However, the Belo Horizonte shopping mall, Praia de Belas Shopping Center, was directly affected by the events.

Thus far, other funds with properties in the region have not commented on the matter.