MELK3

Melnick is a real estate developer and construction company operating mainly in Rio Grande do Sul, especially in the city of Porto Alegre and the surrounding metropolitan area, with common shares traded on B3 under the ticker MELK3, listed on the Novo Mercado segment. The company’s origins date back to 1970, with the founding of Melco Construções e Incorporações Ltda., focused on renovations and small-scale projects. In 1992, after the departure of the original partner, Melnick Construções Ltda. was created, with the proposal of expanding the scale of operations while maintaining a focus on higher-quality developments. Over the following decades, the company consolidated its presence in the real estate development market in Rio Grande do Sul, especially in the high-end segment, investing in professionalized management, strategic planning, and quality certifications, such as ISO 9001 obtained in 2001.

As the business matured, Melnick structured a more vertically integrated operation across the real estate chain, covering everything from land acquisition to project delivery. It created its own sales arm, which gave rise to HousIn, an internal broker responsible for a significant share of sales in Porto Alegre. In 2003, the increased volume of projects, particularly in high-end developments, led to the creation of Eixo-M Engenharia, focused on providing construction services for a variety of buildings such as shopping malls, distribution centers, universities, and hospitals. In 2008, the partnership with Even, under the name Melnick Even Incorporações e Construções S.A., marked a new growth cycle, expanding the portfolio to commercial, mixed-use, and middle-class-oriented projects. This partnership, which lasted for years and was considered significant in the real estate market, was terminated in 2024, when Melnick began operating independently with a strengthened capital structure.

Melnick’s business model is centered on real estate development, which accounts for most of the launches and revenue. In 2024, the company reported that 72% of net revenue came from the development segment and 28% from the urbanization segment, both based mainly on property sales. The company develops mid- and high-end residential and commercial projects, as well as subdivisions and master-planned communities. Its operations are characterized by an internal structure that monitors all stages of the projects: land prospecting and acquisition, architectural design, technical and financial planning, permitting, construction, sales, and after-sales relations. The company combines intensive use of subcontractors for construction with in-house technical supervision, standardized construction systems, and detailed control of costs and schedules.

Melnick’s operating segments are organized into five main fronts. The core of the business is the Developer, dedicated to residential and commercial projects in Porto Alegre, with architecture and differentiating features tailored to each neighborhood and target audience, including club-style condominiums and convenience solutions. The Urban Development arm, operated in partnership with Arcadia Urbanismo, has been active since 2014 in developing subdivisions and master-planned communities in various cities in Rio Grande do Sul, supported by a landbank dedicated to this type of project and launched PSV already exceeding R$ 1 billion. The Open brand, launched in 2019, focuses on projects eligible under the Casa Verde e Amarela Program, increasing exposure to the emerging housing segment targeting middle- and low-income households. Eixo-M provides engineering, planning, and construction management services to third parties, with a portfolio that includes logistics centers, universities, shopping malls, and schools, while Housin 360 Imobiliária concentrates on selling in-house developments and managing small partner real estate agencies.

Melnick’s geographic presence is predominantly regional, focused on the Rio Grande do Sul market. Real estate development is concentrated in the city of Porto Alegre, with expansion into municipalities in the Metropolitan Region, such as Canoas and Eldorado do Sul. In the urban development segment, the company operates in several cities in the interior of Rio Grande do Sul, in subdivision and master-planned community projects, including areas aimed at satellite cities and second homes. In 2022, the company expanded its geographic reach by entering into partnerships to develop residential projects in the metropolitan region of Porto Alegre and in the city of Curitiba, in the state of Paraná. All revenue is generated in Brazil, with no operations or sales abroad, reinforcing its profile as a regionally focused company within the Brazilian real estate market.

Melnick’s clients are essentially buyers of residential and commercial units, as well as purchasers of lots in urban development projects, with diversification across middle-, high-, and emerging-income segments. The company reports no dependence on individual clients; in 2024 no buyer accounted for more than 10% of net revenue. In the third-party engineering segment, Eixo-M serves developers and companies from different sectors, such as retail, industry, and services, but this business has a smaller weight in consolidated revenue. From a financial and risk management standpoint, a diversified base of clients and projects reduces revenue concentration in a few specific contracts, although exposure to the regional real estate cycle remains significant.

Melnick’s activities are subject to a broad regulatory framework in real estate, urban planning, environmental matters, and consumer protection. The company depends on licenses, permits, and authorizations issued by municipal and state authorities and, in some cases, specific environmental agencies such as FEPAM in Rio Grande do Sul. Real estate development is governed mainly by Laws 4,591/1964 and 4,864/1965, with recent amendments, as well as Law 6,766/1979, which regulates the subdivision of urban land, and the Civil Code regarding condominiums, construction contracts, and property acquisition. The company also benefits from and is subject to the Patrimônio de Afetação regime and the Special Taxation Regime (RET) applicable to real estate development, which implies segregated assets for certain projects, separate accounting records, and specific legal protection for funds earmarked for construction. In addition, municipal master plans, zoning and land-use laws, building codes, and local environmental regulations shape the development and profile of its projects.

On environmental, social, and governance topics, Melnick has been structuring a formal agenda through sustainability reports. The company published its 2023 Sustainability Report, prepared in accordance with GRI Standards and sector-specific references such as the GRI G4 Construction and Real Estate Sector Disclosures and SASB standards for engineering and construction services and residential developers. The document considers the principles of the UN Global Compact and links the company’s material topics to Sustainable Development Goals relevant to the business, such as sustainable cities and communities, responsible consumption and production, decent work and economic growth, reduction of inequalities, promoting diversity, and institutional integrity. Although it does not yet perform a formal greenhouse gas emissions inventory or fully adopt TCFD recommendations, the company reports having hired a specialized consultancy to improve socio-environmental management and transparency, with action plans under development. Governance is reinforced by its status as a publicly held company with dispersed ownership, audited by independent firms, with MELK3 shares traded on B3 since 2020.