2023-05-05 19:44:53
BTG Pactual is structuring a new logistics fund to buy assets from Log Commercial Properties, creating a capital recycling alternative for the Menin family company and potentially establishing a benchmark vehicle in warehouses, people familiar with the matter told the Brazil Journal.
The first transaction was announced this morning, when Log said it was selling three warehouses to BTG for R$733.6 million, a transaction that includes a gross margin of 27.5% and a cap rate nominal 8.5%.
The warehouses object of the sale – in Fortaleza, Goiânia and Recife – are predominantly rented to Amazon and have tenants that include Assaí and Mercado Livre.
BTG is expected to open up funding for the new fund in the coming days, and sees the potential for an AUM of more than BRL 2 billion over time, according to people familiar with the matter. Log will be an investor in up to 10% of the fund and will provide management services.
The partnership achieves complementary objectives of the two players.
For Log, the structure frees it to focus on its competence core – develop projects – and increases your asset output security. For BTG, the fund manages to have a yield competitive with quality assets.
Today, when it wants to recycle capital, Log sells its warehouses to other funds or to institutional investors – but the market is practically closed because of the Selic.
If the new vehicle works out, when it is in the middle of a new development, Log will already be able to contemplate a sale, in the same way as another Menin company, Resia (formerly AHS), does in the USA.
BTG has more than R$23 billion in real estate assets under management.
Even though today’s transaction has a declared cap rate of 8.5%, the yield for the fund will be substantially higher, given the payment conditions.
Log is receiving 51% in cash and the balance in up to two years. Like this seller financemanagers estimate a yield around 15% for the fund in the first years. After full payment, two years from now, the yield declines to around 9-9.5% and continues to benefit from the contract’s inflation indexing.
The partnership comes at a time when Log has been doubling its asset sales each year – from BRL 245 million in 2021 to BRL 429 million last year – and wants to sell almost BRL 1 billion this year, a goal almost reached with today’s transaction.
With a debt 100% linked to CDI and a commercial demand for more investments, Log decided to accelerate its deleveraging. The company ended the first quarter with a net debt of 3.1x its EBITDA for the last 12 months.
In the first quarter, the company leased 220,000 square meters – the second best quarter in terms of new contracts closed, second only to the pandemic boom in the third quarter of 2020.
Geraldo Samor
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