What happened with the KORE11 Brazilian REIT in July 2026?
Tenant Fast Card vacated the 7th and 8th floors of Corporate Plaza in São Paulo. The 8th floor was immediately re-let to Vocare; the 7th remains empty. As a result, KORE11's physical vacancy climbed from 4.52% to 5.61% and the fund's cash earnings per unit fell to R$0.614 (approximately US$0.12 at current rates).
Corporate Plaza and the Fast Card exit
Corporate Plaza is the smallest of KORE11's four buildings: 10,489 m² of leasable area, of which the fund holds an 89% stake (roughly 9,335 m² effective), valued at R$95.5 million. It was already the portfolio's weakest performer on vacancy — 9.46% financial vacancy in July — precisely because of this departure.
Fast Card occupied two full floors of the building: the 7th and 8th. In July 2026, the company handed both back at once. For a building of that size, two corporate floors are not a footnote. A single tenant's exit moved the vacancy metrics for the entire fund, not just for Corporate Plaza.
Context helps frame the relative weight: 60.57% of KORE11's revenue comes from Rio de Janeiro (Centro Empresarial Botafogo) and 39.43% from São Paulo — where Alameda Santos, Morumbi Office Tower, and Corporate Plaza compete for the same pool. Corporate Plaza is a smaller piece of the São Paulo bloc, yet it drove all of July's vacancy deterioration.
Vocare took the 8th floor — the 7th is still empty
The fund manager moved quickly on half the problem: the 8th floor was re-let to Vocare, a new tenant, within the same month. The 7th floor, however, has no signed contract yet. Management stated it is actively prospecting the market for a replacement tenant.
In practice, KORE11 replaced only one of the two floors it lost. That is why vacancy increased rather than held flat: the 8th floor is back under contract, but the 7th is generating zero revenue. Financial vacancy — the share of potential rental income not under contract — rose from 4.08% (Jun) to 4.74% (Jul), a direct reflection of that uncovered half-floor.
Why is "adjusted vacancy" (5.99%) higher than financial vacancy (4.74%)?
The monthly report lists three vacancy figures for July, and the gap between them is not a mistake — each measures something different.
| Metric | July/26 | What it measures |
|---|---|---|
| Physical vacancy | 5.61% | % of floor area (m²) with no tenant |
| Financial vacancy | 4.74% | % of potential rental income not yet contracted |
| Vacancy adj. for rent-free periods | 5.99% | financial + floors leased but not yet paying full rent |
A rent-free period (carência in Portuguese) is a standard concession in Brazilian commercial leasing: a new tenant signs a contract and moves in, but pays no rent — or reduced rent — for an initial period, typically one to three months. Vocare, newly installed on the 8th floor, fits this profile: the floor is "leased" on paper but has not yet generated full cash flow. That is why adjusted vacancy (5.99%) exceeds financial vacancy (4.74%) — it adds floors under contract-but-not-yet-paying on top of truly vacant space. That deferred revenue should flow into cash results as the rent-free periods expire.
July cash results: from R$0.635 to R$0.614 per unit
Cash earnings per unit declined from R$0.635 (Jun/26) to R$0.614 (Jul/26). The income statement in the monthly report explains the drop.
| Cash P&L (Jul/26) | Amount (R$) |
|---|---|
| Rental income (cash basis) | 6,238,158 |
| Financial income | 536,605 |
| Total expenses | -865,760 |
| Cash earnings | 5,909,004 |
| Distribution (R$0.60/unit) | -5,775,000 |
| Retained as reserve | 134,004 |
Rental revenue fell roughly R$249,000 compared to June — consistent with one floor no longer generating rent. Expenses for the month (R$865,760) covered condominium fees (R$142k), property tax (R$103k), and other items (R$620k). Even so, cash earnings of R$5.9 million comfortably covered the R$5.775 million distribution. The R$0.60/unit payout was funded entirely by the month's cash generation — no reserve drawdown was required.
The RMG reserve and the R$850,000 asset purchase
KORE11 still holds a Renda Mínima Garantida (RMG) — a minimum guaranteed income mechanism under which a third party tops up distributions to a floor level. In July, the RMG balance fell from R$6.6 million to R$5.75 million. The R$850,000 drawdown was used for an asset acquisition, not to support the distribution. The fund's overall cash balance at July 31 stood at R$45.96 million.
The RMG has a long history with this fund. At the December 2023 IPO, vendor São Carlos Empreendimentos contributed R$93 million in RMG to sustain a R$1.25/unit distribution for 24 months (January 2024 through December 2025). When that support ran out in December 2025, the distribution was cut to R$0.60/unit from January 2026 — a 52% reduction. The R$5.75 million remaining is the residual of that original mechanism, now winding down.
Context: KORE11 has been absorbing tenant departures all year
The Fast Card exit is not the first material vacancy event of 2026. In May, telecom company OI S/A returned three suites in Morumbi Office Tower, pushing physical vacancy from 2.82% to 4.52%. July's Corporate Plaza move followed the same script: another departure, another step up in vacancy.
That track record tells a story about re-absorption speed. Morumbi Office Tower still showed 5.20% financial vacancy in July — two months after OI S/A's exit, those suites had not been fully re-let. Commercial office space in Brazil does not fill overnight. That pattern is relevant context as the 7th floor of Corporate Plaza now enters the same prospecting pipeline.
On the asset side, the annual appraisal in June lifted the fund's NAV by roughly 1%, taking the per-unit book value to R$107.25 (+0.08% from June). With the market price at R$66.49, the discount to NAV is 38% (P/NAV 0.62×). Total return since the December 2023 IPO stood at -0.42% in July, recovering from -5.57% in June.
Deferred income coming: the August–October schedule
The report itemizes how much revenue is temporarily held back by rent-free concessions and when those amounts are scheduled to enter cash flow.
| Month | Deferred rent to release |
|---|---|
| August/26 | R$77,278 |
| September/26 | R$35,000 |
| October/26 | R$35,000 |
| Total | R$147,278 |
These R$147,000 represent revenue already contracted and committed — not new deals to be won. As each rent-free period expires, the cash flows into the fund. That provides some buffer against the Fast Card shortfall, though it does not replace the 7th floor's rent, which has no contract at all.
The 2026 lease wall
61% of contracts expire in 2026. KORE11's lease maturity schedule is heavily front-loaded: 2026 = 61%, 2027 = 19%, 2028 = 5%, 2029 = 4%, and the rest later. The weighted average remaining term is 3.30 years (against 8.41 years at signing). Each expiry is a renegotiation — which may result in renewal, rent adjustment, a downward revision, or another vacancy. Contracts are indexed to IPCA (Brazil's CPI, 63.99% of the portfolio) and IGP-M (a broader inflation index, 36.01%).
What to watch next
The July filings identify concrete, dated events to monitor in coming monthly reports:
- 7th floor of Corporate Plaza: whether management announces a new tenant or the floor remains dark. Every month without a contract keeps downward pressure on financial vacancy.
- Rent-free expiries (Aug–Oct/26): whether the R$147,000 in deferred rent flows into cash results as scheduled.
- Morumbi Office Tower: whether the suites returned by OI S/A in May are finally re-let — 5.20% financial vacancy has persisted for two months.
- 2026 lease renewals: how the 61% of contracts expiring this year are resolved.
- R$0.60/unit distribution: whether it continues to be fully covered by monthly cash generation without drawing on reserves.
- Management fee increase: the fee rises from 1.06% to 1.20% per annum in January 2027 — a higher fixed cost on the same asset base.
July's documents record facts: one departure, one partial replacement, a higher vacancy, a distribution maintained without reserve use. What is not yet written is whether the 7th floor returns to cash-flow-generating status — and how long that takes, given that re-absorption in this portfolio has, so far, measured in months.