Charges against TRX founders add pressure on REIT amid falling share price and billion-real deal cancellations

According to the MPF, a real estate stake held by the FIP was sold in 2015 for R$23 million to a company related to TRX’s corporate structure. Investigators allege that the asset had an economic value of approximately R$36.6 million. 

Authorities are also investigating interest-free loans with no inflation adjustment between companies held by the fund and businesses linked to the group. TRX says the matters are still under review by Brazil’s Securities and Exchange Commission, the CVM, and that the merits of the charges have not yet been judged. 

See TRX’s statement in full: 

“TRX and its executives fully reject the unfounded accusations and false allegations of irregularities and state that the transactions in question — carried out more than ten years ago, before TRXF11 itself was established — were conducted transparently and in full compliance with the legislation and regulatory rules in force at the time. 

The facts covered by the charges remain under review by the CVM, with no conclusion to date, and the merits of the charges filed with the courts will only be assessed after the complaint is formally accepted and the evidence-gathering stage takes place, should the case proceed. 

TRX and its executives remain confident about the regularity of their conduct and, should the charges be accepted, will present their defense before the appropriate authorities, confident that the clarifications will demonstrate that the transactions were properly carried out.”

In August, TRXF11 was pursuing a strategy involving R$4.2 billion in new assets, projects and negotiations, while at the same time carrying out a new share issuance priced at R$94.39 per share.

On August 24, the fund’s share price fell to R$70.65, bringing its year-to-date decline to 31.9%. Market specialists also raised questions about the pricing of the issuance and the pace of acquisitions.

Shortly afterward, parts of the expansion strategy began to fall apart. First, TRX and Catuaí canceled a R$1.033 billion transaction involving stakes in Pátio Victor Malzoni and Vista Faria Lima.

Days later, a potential transaction worth approximately R$2.14 billion with Cyrela was also canceled. In less than a week, more than R$3 billion was removed from the asset manager’s deal pipeline.