What Happened to MFII11?
The wait has grown even longer. The July 2026 management report from the real estate development fund MFII11 (Mérito Desenvolvimento Imobiliário) confirmed that the distribution of R$ 0.30 per unit is here to stay in the short term and, worse, pushed the start of revenues from Consórcio Cortel SP—its largest bet—from 2027 to 2028.
Until now, our investment thesis for MFII11 accepted the recent drop in distributions (which plummeted from R$ 0.91 to R$ 0.30) on the promise that the São Paulo cemetery concession would begin generating cash in 2027. The new official document throws cold water on that timeline: due to persistent bureaucratic hurdles with the City of São Paulo, management has adopted a more conservative scenario and now only projects tomb maintenance revenues starting in 2028.
In practice, investors who buy or hold MFII11 today must be aware that the "valley of tears" of low yields has been extended by another twelve months. The turnaround thesis remains intact, but Mérito Investimentos' clock has been pushed back once again.
Why Did MFII11's DPU Fall to R$ 0.30?
Due to two operational bottlenecks. The first is bureaucratic delays in inspections by the City of São Paulo for the cemetery concession (Consórcio Cortel SP); the second is a slower-than-expected sales pace in large subdivision projects such as Damha Fit II and Reserva da Ilha.
The fund's recent distribution history shows the scale of the drop. In December 2025, MFII11 paid R$ 1.07 per unit. That figure fell to R$ 0.91 between April and June 2026 and finally collapsed to R$ 0.30 in July 2026—a 72% decline compared to the end-of-year level. The monthly dividend yield, which reached 1.75% in June 2026, pulled back to 0.61% in July.
Management confirmed that this distribution of R$ 0.30 per unit will be maintained as a fixed guidance for July, August, and September 2026 (the entire third quarter). There is no room for immediate improvement because the results generated in the quarter ending in June came in systematically below plan.
Note: The July management report does not separate the month's financial results from the distributed yield. For this reason, it is not possible to state with precision how much cash the fund actually generated during the month, only what it effectively distributed (R$ 0.30 per unit).
What Changes with the Delay of Consórcio Cortel SP to 2028?
It postpones the turnaround thesis. The 35.0% stake in SPE Consórcio Cortel SP S.A. represents 25.6% of MFII11's entire portfolio, making it the fund's heaviest asset.
This 25-year concession involves Block 2 of São Paulo's cemetery services. The major issue is that, to begin charging tomb maintenance fees, the consortium requires inspections and approvals from the City. Construction on the Santo Amaro Cemetery was completed in November 2025, but municipal inspections have not yet taken place. Meanwhile, construction on the Araçá Cemetery was only approved in April 2026.
Because the projected cash flow for the SPE in 2026 is negative at -R$ 10.17 million, MFII11 will continue to be required to make financial contributions to the project without receiving anything in return in the short term. Previously, a positive cash flow of R$ 321.54 million was expected between 2027 and 2035. Now, with the start postponed to 2028, the Consórcio Cortel team is already preparing documentation to request an economic and financial rebalancing of the contract with the City.
How Stands the Fund's R$ 974.5 Million Inventory?
Tied up in mature projects. MFII11 carries R$ 974.5 million in real estate inventory, but the sales velocity for Damha Fit II (5.2% of the portfolio, located in Uberaba, Minas Gerais) and Reserva da Ilha (5.9% of the portfolio, located in Sertaneja, Paraná) is below plan.
These two developments are middle- and upper-class subdivisions in advanced stages of construction. In real estate development funds, profits only turn into distributable cash as buyers pay their installments. If sales stall or slow down, cash remains tied up in land and construction, preventing the distribution of dividends to unitholders.
Below, we detail the composition of MFII11's main portfolio assets to understand where the fund's wealth is allocated:
| Asset | Type | Location | Portfolio Weight (%) | Total GDV (R$) |
|---|---|---|---|---|
| Consórcio Cortel | Cemeteries (SPE) | São Paulo - SP | 25.6% | Concession |
| Vilas do Rio | Subdivision | Campinas - SP | 7.5% | 90,591,754 |
| Terras da Estância | Subdivision | Paulínia - SP | 7.0% | 328,998,161 |
| Reserva da Ilha | Subdivision | Sertaneja - PR | 5.9% | 219,000,000 |
| Avenida Corifeu | Residential | São Paulo - SP | 5.6% | 89,588,757 |
| Luar de Rio Largo | Subdivision | Rio Largo - AL | 5.3% | 55,056,573 |
| Damha Fit II | Subdivision | Uberaba - MG | 5.2% | 128,069,682 |
| Damha Fit I | Subdivision | Uberaba - MG | 4.7% | 77,418,671 |
Do New Minha Casa Minha Vida (MCMV) Launches Save Cash Flow?
They help, but over the long term. The fund launched three affordable residential projects under the Livus brand in 2026, totaling more than R$ 160 million in GDV (Gross Development Value).
Recent launches include:
- Livus Estilo Oratório (Vila Prudente, SP): 190 housing units with a GDV exceeding R$ 61 million, financed by Caixa Econômica Federal via Minha Casa Minha Vida.
- Livus Essencial Patriarca (Patriarca, SP): 184 housing units with a GDV exceeding R$ 54 million, also under the MCMV model.
- Sapopemba Land Plot (SP): Recently acquired with studies projecting 184 units and an estimated GDV of R$ 45 million.
Although these affordable housing projects have excellent sales traction and financing guaranteed by Caixa, they remain in early stages (initial construction or landbank). Meaningful cash flow from these developments will take months to materialize and is not strong enough to offset the vacuum left by the delay of Consórcio Cortel SP in the short term.
Is MFII11 Worth It at the Current Price of R$ 31.55?
Only for those who accept extreme risk. Trading at R$ 31.55, the fund is priced at a brutal asset discount of 70.0% (P/BV of 0.3237, compared to a net asset value of R$ 97.47 per unit).
This discount reflects the market's loss of confidence in management's ability to meet deadlines. Management itself drastically revised its net cash generation projections:
- Expectation for 2026: Plummeted from R$ 30.6 million to R$ 9.2 million (a cut of R$ 21.4 million).
- Expectation for 2027: Was reduced from R$ 87.1 million to R$ 46.5 million.
If the turnaround actually materializes starting in 2028, unit prices tend to head toward much higher levels over the long term (our previous projection estimated R$ 80 in five years in case of success). However, if the recovery fails and the distribution remains stuck at R$ 0.30 per unit indefinitely (a scenario to which we assign a 35% probability), the unit price could pull back toward the R$ 20.00 range.
Rico aos Poucos Verdict: HOLD
We maintain a HOLD recommendation for investors who already own MFII11 units in their portfolios. Selling now, at the historical low of R$ 31.55, means accepting a disproportionate capital loss, given that the fund holds R$ 663 million in real and audited net assets (R$ 662,776,461.34), along with R$ 974.5 million in physical real estate inventory.
However, we do not recommend new contributions. Confidence in management's projections is extremely low, and the postponement of Cortel SP revenues to 2028 requires patience that most retail investors do not possess. Let the money already there work for you, but do not place more chips on this table until the City of São Paulo's inspections move from paper to reality.
