What Happened to HSLG11?
A partial payment that failed to end the legal dispute. The real estate fund HSLG11 announced via a material fact on Thursday (10/15/2026) that Casas Bahia paid R$ 2,931,835.36 covering September rent for the HSI Log Contagem warehouse in Minas Gerais, but left R$ 1,429,571.75 in unpaid rent for the São José dos Pinhais property in Paraná. Even after pocketing nearly R$ 3 million, HSI's management kept active eviction lawsuits in place against the retailer for both distribution centers.
The conflict between the fund and its primary tenant—which single-handedly accounts for 30.9% of total real estate revenue—has escalated. After Grupo Casas Bahia filed for judicial reorganization on 08/16/2026 and defaulted on its August rent, the market expected subsequent payments to continue, as rents falling due after a filing hold post-petition status with priority payment by law.
That expectation broke in early October. The retailer fell behind on the entirety of September rent, totaling R$ 4,303,920.14 in outstanding balances. In response, management took swift action, filing eviction lawsuits on Aug 10, 2026. The payment made on 10/14/2026 provided immediate cash flow relief, but did not restore operational peace.
Why Is the Eviction Lawsuit Continuing Despite the Contagem Payment?
Because late payment after a legal notice does not automatically dismiss the lawsuit. As HSI's material fact pointed out, because the deposit of R$ 2,931,835.36 occurred only after the distribution of the judicial eviction lawsuit, the late settlement does not constitute statutory legal purgation of default under the Tenancy Law. This allows the fund to continue demanding the return of the keys if it chooses to do so.
In practical terms, to purge default in court and halt an eviction, a tenant must settle all procedural liabilities, including court costs and legal fees set by the judge, within the statutory deadline. Casas Bahia merely transferred the nominal rent plus a 2% late-payment fine (R$ 57,486.97 based on R$ 2,874,348.39), leaving the formal pending issue open in the Civil Court.
More than just a technical formality, maintaining the lawsuit serves as HSI's primary negotiating leverage. Without the threat of eviction hanging over the retailer, Casas Bahia could simply kick the can down the road on subsequent rents. By keeping the lawsuit active, the fund signals to the creditors' committee and the judicial reorganization court that it will not accept informal moratoriums on its Class A assets.
Rent of R$ 2.87M + fine of R$ 57.4k paid on 10/14. Eviction maintained due to lack of statutory default purgation.
Full delinquency maintained. No amount deposited, and the eviction lawsuit is moving forward at a fast pace.
What Is Happening at the São José dos Pinhais Property?
The Paraná warehouse remains 100% delinquent. While the Minas Gerais property had its principal debt regularized, the HSI Log. São José dos Pinhais asset carries an uncollected gap of R$ 1,429,571.75 for September, without any charges, interest, or late-payment fines calculated yet.
The distribution center in São José dos Pinhais is strategic for retail logistics in the south, but Casas Bahia's cash retention indicates that the distressed retailer is operating at its limit. The company appears to have prioritized the Contagem asset—larger and vital for its Minas Gerais operations—while leaving the Paraná facility uncovered in the 10/14 payment.
Management reported that the eviction lawsuit for this property is proceeding through regular channels. If Casas Bahia fails to fully purge the default on the Paraná property in court, HSLG11 could secure a preliminary injunction or a repossession order, forcing the search for a new tenant in the Curitiba metropolitan area.
Is HSLG11's R$ 0.75 Distribution in Danger?
Yes, the safety margin has shrunk considerably. Although the fund has consistently distributed R$ 0.75 per unit since July 2026 (after paying R$ 0.74 in May and June), this stability has been supported by accumulated reserves and cash built up during the first half of the year, when the fund generated operational surpluses.
The distribution math now faces two simultaneous bottlenecks that squeeze financial cash flow:
- The R$ 1.43 million gap in São José dos Pinhais: This amount represents approximately R$ 0.11 per unit in unrealized revenue for the billing month, putting pressure on net cash generation.
- August rent still pending: The first unpaid monthly installment from when the judicial reorganization was filed (August 2026) remains stuck in the bankruptcy court process, forcing the use of legacy reserves.
- The inflow of R$ 2.93 million from Contagem: This averted an immediate disaster at the close of October, securing the liquidity needed to honor mandatory expenses.
- The fixed cost of Real Estate Receivables Certificates (CRIs): HSLG11 carries R$ 408 million in debt linked to the IPCA and CDI, punctually consuming roughly R$ 4 million per month (around R$ 0.32 per unit) with no flexibility to cut costs.
If Casas Bahia normalizes the São José dos Pinhais payment in the coming days, the yield of R$ 0.72 to R$ 0.75 remains fully viable through the end of the semester. If the default in Paraná extends into October, the fund will need to choose between burning through its remaining reserves or lowering distributions to the R$ 0.65 range seen in early 2025.
HSLG11 investors should not panic-sell on the market at a 21% discount to book value (price-to-book of 0.79 with units at R$ 87.12 versus a net asset value of R$ 110.03). The R$ 2.93 million rent received wards off the risk of an immediate, abrupt cut in October, but the monthly return rate now carries real legal noise. Do not increase positions betting on an easy dividend yield of nearly 10% a year without first seeing the outcome of the lawsuit in São José dos Pinhais.
Is the Fund's R$ 408 Million Debt at Risk From This Delinquency?
There is no default risk, but leverage ties management's hands. The fund holds five tranches of CRIs issued for a consolidated value of R$ 408 million (with a net Loan-to-Value of around 20.9%), of which R$ 167 million is tied to IPCA + 7.68% per year and R$ 241 million is exposed to CDI + 2.10% and IPCA + 7.85%.
Because CRI interest and amortization require about R$ 4 million every month, HSLG11 does not have the luxury of forgoing rental revenue from its anchor tenants for long. Among other relevant tenants, Mercado Livre accounts for 13.8% of revenue with a long-term BTS lease, and Bemol represents 13.5% with an atypical warehouse in Manaus (whose cash flows are directly plugged into servicing that unit's debt).
For this reason, receiving the R$ 2.93 million from Contagem was vital: it ensures that CRI debt service continues to be paid on time without consuming working capital or forcing renegotiations with securitization creditors.
Attention to post-petition credits: The R$ 1.43 million debt from São José dos Pinhais and future Contagem rent enjoy legal priority (Articles 49 and 67 of Law 11.101/2005). If Casas Bahia goes bankrupt or stops paying, these credits take precedence over ordinary restructuring creditors. The risk for HSLG11 is not a permanent default, but rather the time delay in collecting those funds.
Can HSLG11 Quickly Re-lease Properties if It Evicts Casas Bahia?
In Contagem, yes; in São José dos Pinhais, the process could be slower. HSI's management had already been executing a transition project from single-user warehouses to multi-user structures since April 2025 precisely to mitigate excessive dependence on Casas Bahia (30.9% of revenue).
The Contagem warehouse is located in Minas Gerais' most competitive logistics ring, where vacancy for Class A warehouses sits at historically low levels. Furthermore, management's own analyses show that Casas Bahia's legacy contracts in São Paulo and Minas Gerais were 25% to 30% below current market prices. Retaking the property and subsequently re-leasing it to new logistics operators could, over the medium term, unlock a rental value per square meter higher than what the retailer currently pays.
In Paraná, however, the absorption of large areas requires longer grace periods and initial leasing discounts. A preliminary eviction would generate immediate physical vacancy, depriving the fund of its R$ 1.43 million monthly revenue for a few quarters until new companies occupy the vacant modules.
What Should HSLG11 Unitholders Monitor Going Forward?
The immediate focus is on court decisions over the next 30 days. Management's aggressive reaction ended the phase of passivity and forced the issue to the negotiating table. Keep an eye on these three decisive points:
Legal default purgation in Contagem — Monitor whether Casas Bahia will complement the court-ordered deposit for legal costs and fees to dismiss the eviction lawsuit, or if the judge will uphold the order to vacate the Minas Gerais warehouse.
Destination of the R$ 1,429,571.75 from São José dos Pinhais — Check upcoming notices to see if there will be a voluntary deposit of the overdue installment or if a preliminary order for forced vacation will be granted by the Paraná court.
Dividend guidance moving from October to November — Check whether the fund will maintain its distribution of R$ 0.75 per unit by drawing on surplus reserves or temporarily adjust the level to R$ 0.68–0.70 until the dispute is resolved.
Verdict: Hold / Wait for further developments. The unit price of R$ 87.12 embeds an excessive 21% discount to book value (NAV of R$ 110.03) that already prices in much of the operational stress with Casas Bahia. HSI's firm stance in pursuing legal action and keeping the eviction active defends the fund's assets, preventing the FII from becoming a free lender to its tenant's judicial reorganization. Current unitholders should hold and monitor the recovery of the pending R$ 1.43 million.
