TGAR11 Cuts Dividend to R$ 0.46 and Lowers Range to R$ 0.40–R$ 0.60: What September’s Report Shows

The Brazilian real estate fund (FII) TGAR11 will pay R$ 0.46 per unit for October, down from R$ 0.70 in September—a 34.3% decrease. The fund's manager, TG Core, also lowered its distribution guidance for the next six months to a range of R$ 0.40 to R$ 0.60 per unit per month, compared to the previous range of R$ 0.70 to R$ 1.00. The detail that makes the announcement unusual appears in the very same report: in September, the fund generated a cash flow of R$ 1.84 per unit, more than two and a half times what it distributed.

Updated on 10/30/2026 at 9:00 PM, incorporating information from the 3Q26 earnings webcast hosted by the management team earlier that evening.

How Much Will TGAR11 Pay in Dividends?

TGAR11 will pay R$ 0.46 per unit for October (with a record date of 10/30 and payment on 11/16/2026). For the six-month period through March 2027, the manager now estimates monthly distributions of R$ 0.40 to R$ 0.60 per unit, down from the previous range of R$ 0.70 to R$ 1.00.

Both documents were published on FundosNET (via B3 and CVM) on 10/30/2026 at 5:25 PM, after the market close: the distribution notice and the September management report. The unit closed the day at R$ 40.32, indicating the market had not yet reacted to the announcement. To put that in perspective, an annualized monthly payout of R$ 0.46 based on that price yields roughly 13.7% per year (simple math, excluding reinvestment).

In the words of the report, the guidance is "prudential in nature," "does not represent a promise or guarantee of returns," and "may be reassessed as visibility over the macroeconomic environment improves, including upward adjustments if the scenario evolves more favorably." This works both ways: the range can be revised either up or down.

Why Did the Manager Cut the Dividend?

The stated reason is the post-election macroeconomic scenario rather than fund operations. The manager's letter states:

The report outlines market movements during the first trading session following the second round of elections on 10/26/2026: the DI interest rate futures contract for January 2028 moved from approximately 12.86% to 14.80% per year, and the January 2031 contract rose from about 12.64% to 15.19%. The U.S. dollar climbed 8.21% to near R$ 5.40, the Ibovespa dropped 13.88% (triggering a circuit breaker), and the IMOB real estate index fell about 28.6%. TGAR11 units dropped from R$ 51.95 on 10/23 to R$ 43.10 on 10/26, a 17.0% decline.

The manager connects this environment to the business through two channels. First is buyer financing: according to the report, Bradesco raised the rate on its primary real estate financing line from TR + 11.70% to TR + 15.00% per year starting on 10/26, and Itaú increased its rate from TR + 11.99% to TR + 12.95% per year effective 10/29. The manager notes this could affect the pace of sales and bank transfer closings for development projects. Second is sales velocity, which was already trailing expectations: net sales for the third quarter of 2026 reached R$ 140 million, up 42.9% from the third quarter of 2025, but down 11.4% from the previous quarter and below the manager's projection of over R$ 200 million.

The manager describes the fund's current phase as "unequivocally cyclical in nature" and states, "we remain confident in a return to higher distribution levels as the economic cycle evolves."

What September's Cash Figures Show and Why the Cut Stands Out

The report details month-by-month cash results, representing the actual cash generated by the fund during the period prior to distributions. September figures surged following gains realized from the sale of three developments.

In September, the cash result reached R$ 43.39 million, while the fund distributed R$ 16.50 million. The difference—R$ 1.14 per unit—went into the reserve fund, which stood at R$ 0.03 per unit in August and closed September at R$ 1.17 per unit. For the second half of the year through September, the report shows R$ 3.23 per unit generated and R$ 2.12 distributed.

Where the R$ 1.84 Came From

Of September's result, R$ 1.67 per unit came from equity holdings in developments, R$ 0.09 from credit, R$ 0.16 from fixed-income funds, and R$ 0.02 from exchange-traded assets, offset by R$ 0.10 in expenses. Equity investments totaled R$ 39.27 million in September. During the same month, the fund completed the sale of three developments—Quintas das Cerrado, Park Bahia, and Sunny Park—for a total of R$ 76.82 million. The transaction generated a gain of R$ 58.94 million: R$ 38.84 million was recognized in September, while another R$ 20.10 million is scheduled for recognition within 90 days following commercial registry filings. The manager reported a consolidated internal rate of return (IRR) of 2.47% per month (34.02% per year) with sales executed above book values.

Gains from real estate sales do not occur every month. The site's metric for recurring cash generation (the median from April to September) stands at R$ 0.71 per unit per month; the R$ 0.46 dividend and the new R$ 0.40 to R$ 0.60 range both fall below that level. The manager notes that principal proceeds from the sales will be directed toward portfolio needs, such as capital contributions for ongoing construction and new opportunities in real estate receivables certificates (CRIs).

What the Manager Says Has Not Changed

The report asserts that the shift in the environment "does not alter the fundamentals of the assets comprising the portfolio." Key figures presented by the manager include:

• Construction: By September, over 80% of the portfolio had completed construction; roughly R$ 208 million in construction costs remain to be executed (R$ 207.59 million according to the report's table), covered by construction financing and cash flow from completed sales, with no need for a new unit offering.
• Receivables Portfolio: R$ 2.24 billion in present value (87% already performed) and R$ 3.21 billion in nominal value.
• Delinquency: Averaged 4.57% at the end of the quarter, remaining below the fund's historical average and 0.40 percentage points lower than a year earlier.
• SPE Debt (the special purpose entities for developments in which the fund holds a stake): Outstanding debt balance of R$ 461.65 million in September, down from R$ 484.65 million in August, equivalent to 18.17% of equity of R$ 2.54 billion.

The three main priorities outlined by the manager for the coming months are completing construction, reducing debt, and maintaining discipline in distribution payouts.

What the Manager Said on the Webcast

During the 3Q26 earnings webcast broadcast on TG Core's YouTube channel, the management director answered unitholder questions for approximately 90 minutes. The following details are drawn from management's remarks, transcribed from the video.

How Management Explained the Cut

• First time outside guidance: Management noted this is the first time in the fund's history that a dividend has been announced outside the guidance range. It was "a prudential decision" discussed throughout the week following the elections.
• No asset issues: Management stated there are no defaults or "structural problems in the portfolio" and that September was a strong month for cash generation.
• September cash is not recurring: Management explained that project sales represent extraordinary revenue and that distributing R$ 1.84 per unit based on a single strong month while ignoring the changing environment would be imprudent. September's cash stemmed from selling projects to other developers rather than individual units.
• How they arrived at R$ 0.46: When asked why the payout wasn't set at R$ 0.50, management responded that they spent the week rerunning projections and cash flow stress tests across more than 150 projects, with no single metric dictating the exact figure.
• Impact on unit price: Management acknowledged that the cut could create selling pressure on units in the short term while framing it as medium-term capital protection.

When Dividends Might Change

• No set timeline: Management stated they will not commit to a date for raising distributions. Key indicators to watch include the long-term interest rate curve, the new administration's economic policy, and the cost of real estate credit.
• Lower rates help: Management noted that lower interest rates accelerate the sale of completed inventory, bank financing transfers, and debt settlements, which tends to push dividends higher; a higher interest rate curve may prolong this process.
• Horizon: The next three months and the first 100 days of 2027 were cited as the period that will determine the trajectory. When asked if 2027 distributions will fall below R$ 0.46, management declined to give a definitive answer, reiterating that this is not a return promise.
• Mandate: Management noted they target an average distribution horizon of three to five years and that distribution volatility is normal in real estate development.

Where the Cash Is Going

• Priority order: Complete construction, reduce debt, and only then distribute what remains. Management described the cash reserve as a "cushion" to avoid extending construction timelines or straining debt during a shock, noting intentions to reinforce it.
• 95% Rule: Management recalled that the fund is required to distribute at least 95% of its semiannual earnings, and that November and December results will be evaluated. They neither confirmed nor ruled out a higher distribution.
• Capital returning from SPEs: Management explained that capital amortizations from development partnerships cannot be distributed to unitholders and are instead reinvested, primarily in CRIs.
• Construction: Management noted that roughly 15% of projects remain under construction, representing about R$ 200 million in remaining expenditures, with plans to complete the vast majority within roughly 12 months.

Sales, Credit, and Pricing

• Sales: Management stated that September and October saw no acceleration in sales velocity and that the pre-election slowdown was broad-based across the sector, according to conversations with other developers.
• Bank financing transfers: When the Selic rate was near 12% three to four years ago, 90% of the portfolio was transferred to bank financing within three to four months; today, transfers take an average of 9 to 12 months. Project debt is only settled after the transfer is complete, at which point the fund can distribute proceeds.
• Pricing: Management stated the fund does not sell inventory at any cost, preferring case-by-case negotiations in target markets and price table reviews roughly every three months. They also noted they are evaluating partnerships with local developers under the "Minha Casa, Minha Vida" program for completed lots.
• Unrealized expectations: Management admitted that buildings whose construction began in 2020 and 2021 reached the financing transfer stage with the Selic rate at 14% to 15%, conceding that they "could have foreseen this better."

Units, Debt, and Net Asset Value

• Offerings and buybacks: The fund has not conducted a unit offering in about two years, and management classified the likelihood of a new offering as "practically zero." Unit buybacks are debated by the committee, but "for now, no."
• Net Asset Value (NAV): Management expressed confidence in a net asset value above R$ 100 per unit because the year's stake sales were executed above book value. Lots are valued at cost and are only reevaluated upon sale, without external appraisal reports. Management stated they are uncomfortable with the current market price while noting they cannot predict unit valuations.
• Project sales: Management mentioned that other sales negotiations were underway and were placed on hold during the cautious post-election week, with potential for resumption.

How TGAR11's Analysis on the Site Has Changed

Following the October 30 disclosures, the site revised its analysis of the fund. Figures below reflect site estimates rather than management projections.

• Site Rating: 6.3 (up from 6.22), maintaining a "Hold" verdict.
• Model Fair Value: R$ 42.53 per unit, compared to R$ 59.16 in the previous analysis, which was based on the R$ 0.70 dividend. This is 5.5% above the market price of R$ 40.32. Valuation models diverge: R$ 34.53 based on required yield, R$ 35.71 on discounted cash flow, R$ 40.45 on peer fund yields, and R$ 82.84 based on historical P/NAV.
• P/NAV: 0.37, calculated against the net asset value of R$ 107.80 per unit from the September monthly report. The fund's previous low in the site's historical series was 0.41.
• Dividends Over the Next 12 Months: R$ 5.50 cumulative in the base case (averaging R$ 0.46 per month), ranging from R$ 4.38 in the pessimistic scenario to R$ 6.02 in the optimistic scenario. Over the 12 months ending in September, the fund distributed R$ 9.43 per unit.
• Guidance History: Across 13 distribution guidance announcements, the fund has historically paid out the floor of the range on a median basis.

What to Monitor Going Forward

• November and December: Management noted that the rule requiring a minimum distribution of 95% of semiannual earnings will be evaluated during these months, pointing to the next three months and the first 100 days of 2027 as critical periods for dividend direction.
• The R$ 0.46 payment on 11/16/2026 and trading activity following the announcement (units closed at R$ 40.32 prior to the disclosure).
• The recognition of the remaining R$ 20.10 million from the sale of the three developments, expected within 90 days.
• The upcoming management report: October cash results, reserve levels, and whether the R$ 0.40 to R$ 0.60 guidance range is maintained.
• Fourth-quarter 2026 net sales compared to the R$ 140 million recorded in the third quarter, alongside the impact of new real estate credit rates on bank transfers.
• The interest rate curve and exchange rate movements in the coming weeks, which management cited as primary drivers of their decision.

The previous article from 10/29, Will TGAR11 Cut Its Dividend?, was written prior to the announcement and examines factors protecting the fund's asset base; the yield trajectory up to this point is covered in TGAR11 Cuts Yield Following August Cash Drop. Complete and updated analysis for the fund is available on the TGAR11 fund page. This text compiles information from official documents and does not constitute an investment recommendation.

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Autor do artigo Edinei Bauer

Investidor e fundador do Rico aos Poucos.

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