PVBI11: VBI Prime Properties

Launched in 2020 by VBI Real Estate and now managed by Patria Investimentos, PVBI11 holds a portfolio of seven premium office towers in São Paulo. In today’s oversupplied market, it’s worth examining each property more closely.

The fund has a market capitalization of approximately R$2.1 billion, representing 1.49% of the IFIX index and 3.46% in the HERT11 ETF.

Last updated: June 29, 2025.

PVBI11 Key Facts

Metric	Value
Fund Name	VBI Prime Properties
Gestor	Patria Investimentos
Management Fee	1.0% of Market Capitalization
Manager Website	https://realestate.patria.com/tijolo/pvbi11/
Inception	July, 2020
Setor	Escritórios
Valor	R$2.1B
Number of Properties	7 Office Towers
Gross Leaseable Area (ABL)	~83K sqm.
Current Price	R$75.26
Price-to-Book Value	0.72
Dividend Yield (Trailing 12M)	8.87%
Auditor (Last Annual Report)	PWC
Appraiser	Binswanger Brazil
Index/ETF Inclusion	IFIX, HERT11

Performance Track Record

The chart below, sourced from Patria, shows PVBI11’s total return with dividends reinvested since inception in July 2020. The fund has delivered an annualized return of 2.7%, underperforming both the IFIX benchmark (5.2%) and the CDI rate (9.8%).

Source: May 2025 Management Report

Portfolio Overview

PVBI11’s portfolio includes seven office towers totaling approximately 83,000 square meters of Gross Leasable Area (GLA). In some cases, the fund holds less than full ownership. All properties are located in São Paulo and are listed below in order of their share of the fund’s total book value.

• Faria Lima 4440 (20.9%): 22,111 sqm., Class ‘AAA’
• Park Tower (20.1%): 22,340 sqm., Class ‘AAA’
• Cidade Jardim (14.1%): 6,852 sqm., Class ‘AA’
• Vera Cruz II (13.5%): 7,202 sqm., Class ‘AA’
• The One (11.4%): 7,842 sqm., Class ‘AA’
• Vila Olimpia Corporate (10.6%): 12,630 sqm., Class ‘AAA’
• Union Faria Lima (9.5%): 5,024 sqm., Class ‘A’

Note on Building Classifications:
In some cases, the building classifications reported in the latest management report are higher than those shown on Patria’s individual property webpages, which tend to use more conservative ratings. For consistency, the classifications referenced here follow the website unless otherwise supported. Third-party sources generally aligned with the website’s rating, with one exception: Vila Olímpia Corporate, listed as ‘AA’ on the site, was identified as ‘AAA’ by external sources. These discrepancies may stem from different evaluation criteria or reporting timelines, but taken together they offer a helpful view of the portfolio’s quality and positioning.

The chart below shows the fund’s rental income and book value by building.

Source: May Management Presentation

The fund’s portfolio is heavily concentrated in healthcare (41%), with 26% of total rent coming from a single tenant, Prevent Senior, a healthcare provider focused on the 60+ age segment. Financial services make up the next largest sector, including a 3% lease exposure to Patria itself.

Tenant quality is generally high: 80% are classified as ‘AAA’ and 20% as ‘AA’. Many are well-known names in Brazil, which supports income stability. Still, Prevent Senior’s size creates tenant concentration risk. However, the company is headquartered in Park Tower, a ‘AAA’-rated building, which helps reduce relocation risk in the near term.

Separately, China Construction Bank (CCB) is vacating the flagship FL 4440 building, increasing the fund’s overall vacancy above 20%. Although FL 4440 is among São Paulo’s 10 most expensive properties, and considered a ‘trophy’ asset, re-leasing such a large space could take time despite the high rental potential.

All leases are classified as ‘typical’ and are indexed to inflation: IPCA (61%), IGP-M (35%), and IPC/FIPE (4%).

Source: May Management Presentation

Sector Comparison & KPIs

📈 Market Cap & Yield

PVBI11 is the largest pureplay office FII, with a market capitalization of R$2.1 billion. It currently offers a 12-month dividend yield of 8.87%, below the office FII median of 12.09%. However, as the largest fund in the sector, it’s essential to evaluate its specific building mix, asset classes, and tenant concentrations before drawing conclusions.

🧮 Valuation

PVBI11 trades at a price-to-book ratio of 0.73x, in line with the median for office FIIs in the IFIX. While its portfolio is concentrated in São Paulo properties rated ‘AA’ or ‘AAA’, vacancy remains a key concern. As of May, 2025, three buildings representing 31.5% of the portfolio’s book value had vacancy rates between 20% and 81.5%. Union Faria Lima, completed in 2023 and currently 81.5% vacant, has shown only marginal improvement since June 2024, when vacancy stood at 84.7%.

Despite this, Patria’s 2024 valuation (based on appraisals from Binswanger Brazil) applied conservative cap rates between 7.50% and 8.00%, suggesting the fund’s properties are still viewed as high-quality. Notably, there was little difference in cap rates between the flagship FL 4440 (7.50%) and the largely vacant Union Faria Lima (7.75%).

As of May 2025, the fund’s portfolio was valued at just over R$19,000 per square meter, which is significantly below typical pricing for ‘AAA’ assets in prime locations like Faria Lima. A proper asset-by-asset analysis would be required to confirm value, but the current valuation could present some upside.

🧠 Outlook and Sector Context

Valuation ultimately hinges on one question: will the São Paulo office market recover?

If so, PVBI11 could lease vacant space and raise rental rates, particularly in ‘AAA’ properties. If not, rising vacancies and softer rents could lead to further NAV erosion.

Long-term structural trends remain uncertain. Hybrid work continues to reduce demand for ‘A’ assets, and advances in AI may shrink white-collar headcount, such as junior legal or finance roles.

On the other hand, in April, São Paulo recorded its lowest office vacancy rate since the pandemic and rental prices rose 15% in 2024. While citywide vacancy remains elevated at 18.3%, premium submarkets like Nova Faria Lima have rebounded, with vacancy rates as low as 6%.

💸 Dividend Pattern

PVBI11 has struggled to maintain dividends in a challenging post-COVID office market, with payouts now below 2021 levels. The current monthly dividend of R$0.50, which may be difficult to sustain, implies a yield of 7.9%. This suggests the market is pricing in expectations of long-term recovery.

Management notes a potential to increase income by R$0.12/unit by filling existing vacancies. The fund has also been able to increase rent significantly in its trophy FL 4440 property, in 2024 seeing the opportunity to increase rent 20% to $R250/sqm., nearly double what it was in 2020 ($R135/sqm.).

However, vacancy could rise from 13.4% to 22.4% by September, if two large tenants are not replaced. One of them, China Construction Bank (CCB), has given notice it will vacate FL 4440, which could reduce monthly income by R$0.06 starting in June if not backfilled.

In May, the fund paid a distribution of R$0.50, which represented 100% of income. It also held R$0.16 in undistributed reserves, likely excluding R$0.16 to be received from CCB as part of its lease termination. This suggests PVBI11 may be able to sustain the R$0.50 dividend for several months, though visibility is limited after that.

Looking further ahead, many lease renewals and rent reviews are scheduled for 2027. This could support stronger cash flows, but also poses risk in an oversupplied office market. In addition, new zoning rules passed by São Paulo city hall in 2024 may allow taller buildings in Faria Lima, increasing future supply and competition with existing ‘AAA’ inventory.