MELK3 Melnick

Melnick is a real estate developer and construction company operating mainly in the state of Rio Grande do Sul, especially in the city of Porto Alegre and its 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 exit of the original partner, Melnick Construções Ltda. was created, with the proposal of expanding the scale of operations while preserving its positioning in 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 management professionalization, strategic planning and quality certifications, such as ISO 9001 obtained in 2001.

As the business matured, Melnick structured a more vertically integrated operation along the real estate chain, covering everything from land acquisition to project delivery. It created its own sales area, which gave rise to HousIn, an in-house broker responsible for a relevant share of sales in Porto Alegre. In 2003, the increase in construction volume, particularly in high-end developments, led to the creation of Eixo-M Engenharia, a division focused on providing construction services for diverse types 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, with portfolio expansion into commercial, mixed-use and mid-income projects. This partnership, which lasted for years and was considered relevant in the real estate market, was terminated in 2024, when Melnick began to operate independently and with a stronger capital base.

Melnick’s business model is centered on real estate development, which accounts for most of the launched volume and revenue. In 2024, the company reported that 72% of net revenue came from the development segment and 28% from the urban development segment, both based mainly on property sales. The company develops medium- and high-end residential and commercial projects, as well as subdivisions and master-planned communities. Its operations are characterized by an internal structure that follows all stages of the projects: land prospecting and acquisition, architectural design, technical and financial planning, licensing, construction, sales and post-sales relationship. The company combines intensive use of subcontractors in project execution with its own 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 Development arm, focused on developing 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 several cities in Rio Grande do Sul, with 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 for the Casa Verde e Amarela Program, increasing exposure to the emerging segment and housing targeted at middle- and low-income customers. Eixo-M provides engineering, planning and construction management services for third parties, with a portfolio that includes logistics centers, universities, malls and schools, while Housin 360 Imobiliária concentrates the commercialization of the company’s own projects and the management of 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 area, such as Canoas and Eldorado do Sul. In the urban development segment, operations extend to several cities in the interior of Rio Grande do Sul, in subdivision and master-planned community projects, including areas geared toward satellite towns and weekend 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, which reinforces its profile as a company regionally concentrated 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 that it is not dependent on individual clients, with no buyer accounting for more than 10% of net revenue in 2024. 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, the diversification of clients and projects reduces revenue concentration in a few specific contracts, although exposure to the regional real estate cycle remains relevant.

Melnick’s activities are subject to a broad regulatory framework in the real estate, urban planning, environmental and consumer protection fields. The company depends on licenses, permits and authorizations issued by municipal, state 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 with respect to condominiums, construction contracts and property acquisition. The company also benefits from and is subject to the Patrimônio de Afetação (asset segregation) regime and the Special Taxation Regime (RET) applicable to real estate development, which implies asset segregation for certain projects, individual accounting records and specific legal protection for funds allocated to construction. Additionally, municipal master plans, zoning and land-use laws, building codes and local environmental regulations shape the development and profile of projects.

On environmental, social and governance topics, Melnick has been structuring a formal agenda through sustainability reports. The company published its Sustainability Report for 2023, prepared based on GRI Standards and sectoral 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 takes into account UN Global Compact principles 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, reducing inequalities, promoting diversity and institutional integrity. Although it has not yet carried out a formal greenhouse gas emissions inventory or fully adopted TCFD recommendations, the company reports having hired a specialized consultancy to improve social and environmental management and transparency, with action plans under development. Governance is strengthened by its status as a publicly held company with dispersed ownership, audited by independent firms, with MELK3 shares traded on B3 since 2020.