Opinion – From Grão to Grão: Did the buyer of Globo’s headquarters get a good deal?


This Monday’s performance by the real estate fund Vinci Offices FII (VINO11) could indicate that the market did not like the acquisition, announced last Friday, of 100% of Globo’s headquarters in São Paulo. However, this superficial assessment can be hasty. Yesterday, I commented on the deal from the seller’s perspective. Today, I will comment on the transaction from the perspective of the buyer.

The property is very well located and has unique characteristics in the region.

This fact caused the price to be higher than the neighborhood average. As I mentioned yesterday, VINO11 will pay a total of R$ 522 million for the property, equivalent to R$ 13,369/m².

However, the rate of return on the negotiated rent and the term provide an excellent perspective of return and security as this is an atypical contract, as I explained yesterday. Globo will pay, for 15 years, a monthly amount of R$84.67/m², annually adjusted by the IPCA.

Thus, the fund will earn an annual return of 7.6% adjusted by the IPCA, just for the rent and considering the acquisition value.

The account is simple. Simply multiply the monthly rent of R$84.67/m² by 12 and then divide by the price per square meter paid in the acquisition (R$13,369/m²).

This remuneration presents a premium, compared to the average return on commercial rent in the region (6.9%+IPCA), informed by the FipeZap portal.

For that reason alone, it would be reasonable to say that it was a good deal. But, the fund has structured the payment so that the remuneration should be even higher.

The purchase will be partially leveraged. For payment, 35% of the funds are expected to be equity and 65% loan.

I’ve written in the past explaining under what conditions a financed purchase is interesting.

Whenever a reader asks me if it’s worth financing, I reply, compare the return on the asset with the rate on the financing.

If the return on the asset is higher than the financing rate, the purchase coupled with a loan will increase the return on your operation.

Otherwise, the return on your operation may even be negative.

In the case of this operation, the real return on the asset is 7.6% per year while the financing rate is expected to be 6.5% per year.

This differential leverages the return on equity to a real return of more than 8.5% per year.

For this simplified simulation, just subtract the interest rate cost from the annual rent (R$39.7 million – R$22 million = R$17.7 million). Then divide the resulting amount by the equity employed (R$17.7 million/ R$182.7 million = 9.7%). Subtracting the costs, the resulting rate should be between 8.5% and 9.7% per real year.

For reflection, try this account before financing your next property, or do it with the financing of your current property. Assess whether the return was leveraged up or down.

We usually believe that if a deal was good for one party, it means the other lost.

However, when the deal looks fair, they both make a good deal. This seems to be the case with this buy-and-rent operation which is commonly known by its English term, sale and leaseback.

Michael Viriato he is an investment advisor and founding partner of Investor’s House

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