São Carlos Empreendimentos e Participações S.A. (SCAR3) announced last Tuesday (19) in a relevant fact statement that they have completely sold four commercial properties for R$ 865 million (US$ 175 million). According to the information released by the property investment and management company, the sale value was 14.6% below the Net Asset Value (NAV). Following the transaction's completion, the company's portfolio will consist of 95 properties valued at R$ 4 billion (US$ 81 millions).

The statement revealed that 42.5% of the payment will be made upon the signing of the purchase and sale deed, 9% in the second installment, and 48.5% in the final installment within 24 months from the deed. The operation also includes withholding 5.5% of the transaction value in the first installment for guaranteed minimum income for the Fund. Up to 18.7% of the final installment can be paid in Fund units.

About the Sold Assets

One of the properties involved in the transaction is the Centro Empresarial Botafogo, located in the neighborhood with the same name in Rio de Janeiro. According to data from the Market Analytics platform, the property is classified as A, with over 17,000 m² of private area and an 8% vacancy rate, with a diversified tenant roster.

The other three buildings are situated in the city of São Paulo. One of them is the Corporate Plaza in Chácara Santo Antônio, with 10.8 thousand m² and a 6% vacancy rate. Also in the southern region, the Morumbi Office Tower, with 19,311 m² and a 17% vacancy rate, and the Alameda Santos 2477 in Jardim Paulista. The asset recently underwent a retrofit, upgrading its classification from category C to B.

This is not the first time São Carlos Empreendimentos e Participações S.A. has undertaken such transactions. In June, the company sold Edifício João Brícola, located in downtown São Paulo, for R$ 71.5 million. In March, another million-dollar transaction occurred, involving the sale of a commercial building in Jardim Europa for R$ 150 million (US$ 30 million).

"Companies with similar operations often conduct these transactions due to strategic changes, portfolio recycling, among other reasons", said Emerson Komesu, Commercial and Research Manager at SiiLA, a multinational focused on commercial real estate data and analysis.

In the recent transaction involving the four commercial buildings, the buyer was not disclosed by São Carlos. Kinea was suggested as a potential buyer, but when contacted by the REsource team and in a market announcement, the company denied any involvement in the transaction.

In response to the editorial inquiries, São Carlos stated that the fund acquiring the properties was not disclosed due to the confidentiality clause in effect, and the purpose of the asset sale is portfolio recycling.

"The recycling of assets is part of São Carlos' business. The traded assets have high occupancy rates and have reached maturity. They are consolidated properties where returns have already been captured. The sale prices are attractive, with a real after-tax return of 27.3%. We do not disclose the fund's name due to the confidentiality clause in the contract", the company stated.

Consulted experts say it is still not possible to determine who acquired the properties. It is unlikely to be a real estate fund listed on B3 since, if so, a material fact would have to be disclosed to inform about the acquisition in line with CVM (Comissão de Valores Mobiliários) regulations. If it was a fund, there is the possibility it was either an unlisted fund or a private fund.

*Real to dollar exchange rate as of September 22, 2023, at 6 p.m.