PDGR3

PDG Realty S.A. Empreendimentos e Participações, known in the market as PDG Realty or Grupo PDG, is a Brazilian real estate developer with common shares traded on B3 under the ticker PDGR3. Incorporated in 1998 in the city of São Paulo, it began its trajectory as a privately held company and underwent a significant change of control in 2004, when it was acquired by the Pactual Desenvolvimento e Gestão I Private Equity Fund, then linked to Banco Pactual S.A. Its IPO took place in 2007, on the former BM&F Bovespa, a milestone that expanded the company’s access to the capital markets and consolidated its presence as one of the listed companies in the real estate sector. Over the following years, PDG Realty pursued expansion through acquisitions, operational restructurings, and successive capital increases, seeking to adjust its size and financial structure to conditions in the Brazilian real estate market.

PDG Realty’s expansion was marked, in 2010, by the merger of AGRE Empreendimentos Imobiliários S.A. shares, a transaction that reinforced its scale and diversification in the domestic real estate market. In 2011, the company expanded its presence in the segment of convenience centers, services, and commercial developments through the acquisition of control of REP – Real Estate Partners Desenvolvimento Imobiliário S.A., in which it already held a minority stake. From 2012 onward, it began a broad restructuring process, with changes in management, a review of its strategic positioning, consolidation of structures, and the implementation of management models aimed at cost control and streamlining operations. Between 2014 and 2016, it focused on delivering launched projects, reducing costs to be incurred, selling assets considered non-strategic, and renegotiating debt with financial creditors.

The deterioration of the Brazilian macroeconomic environment, combined with rising contract cancellations, higher interest rates, scarcity of funding, and debt pressure, had a significant impact on PDG Realty. The company faced construction stoppages, increased payables to suppliers and condominium obligations, as well as growth in contingencies. In 2017, after out-of-court attempts to adjust its capital structure, the group filed for judicial reorganization in the District of the Capital of São Paulo, covering hundreds of companies that are part of Grupo PDG. The approved reorganization plan involved, among other measures, lengthening of debt over long terms, limitation of charges on reorganization credits, and the possibility of converting part of the indebtedness into shares, which resulted in a capital increase through the capitalization of credits from certain creditors in 2018. Since then, the company has focused its activities on operational continuity, project completion, and asset and liability management within the context of the judicial reorganization.

PDG Realty’s business model covers virtually the entire real estate development cycle, from land prospecting and acquisition through project development, development activities, construction, and unit sales. The company acquires land through different structures, such as swaps for future units, revenue-sharing swaps, cash payments, purchase and sale commitments, payment in kind, or combinations of these mechanisms. The development stage involves defining the architectural project, finishing standards, price range, unit layout, and physical-financial schedules, with the participation of technical, legal, marketing, and sales areas. Construction can be carried out by the company’s own engineering team or by third-party builders and contractors, under contracts that establish a maximum cost, delivery schedule, and quality standards. In compliance with Brazilian legislation, PDG Realty offers a limited five-year warranty for structural defects after project completion.

PDG Realty’s main operating activities are focused on the development and sale of residential properties, commercial units, and land subdivisions. The company states that its main source of revenue comes from the sale of apartments, plots, stores, and commercial rooms resulting from its development and construction activities. In 2024, all of its net operating revenue, totaling R$ 120 million, originated from the property sales segment, highlighting the predominance of real estate development in its revenue generation. The company’s current focus is primarily on affordable and mid-income products in the São Paulo real estate market, operating in income brackets that require strong sensitivity to price, financing conditions, and optimization of construction costs.

PDG Realty’s commercial strategy combines its own sales structure with partnerships with local real estate agencies and brokers. The launch process involves feasibility studies, pricing tables, marketing campaign planning, and preparation of documentation for registration and the start of sales. The sales routine includes proposal analysis, credit checks in line with banking system practices, and follow-up through contract execution. Developments typically feature on-site sales stands at the future project location, furnished model apartments, scale models, and visual materials to present the product. Marketing uses channels such as social media, newspapers, direct mail, and leaflet distribution in the areas surrounding the developments. The customer base is diversified, without any material concentration of revenue in a single buyer, and no customer accounted for more than 10% of net revenue in 2024.

From a market perspective, PDG Realty operates in a highly competitive and fragmented environment, especially in the state of São Paulo, where it concentrates most of its current operations. The company has developed projects targeting different income segments and product types—affordable, mid-income, upper mid-income, high-income, subdivisions, and commercial—although, at present, its stated focus is residential development for affordable and mid-income segments in the São Paulo region. Factors such as location, price, availability of financing, finishing standards, and delivery track record are decisive when competing with other developers and construction companies. The seasonality of the real estate market is reflected in lower activity volumes during school vacation months and periods with long holidays, which tend to delay purchase decisions and temporarily affect the sales pace.

PDG Realty is not subject to a specific sector regulation for the general conduct of its activities, but each development depends on a set of urban planning and environmental licenses and permits issued by municipal, state, and, in some cases, federal agencies. These requirements include approval of architectural and urban planning projects by city governments, obtaining building permits, certificates of occupancy (habite-se), and, when applicable, preliminary, installation, and operating environmental licenses. The company is subject to environmental legislation at multiple levels, which can generate additional costs, delays, and, in extreme cases, make certain real estate projects unfeasible. As part of its due diligence practices, it conducts land assessments before acquisition, focusing on environmental risks related to the presence of waste or hazardous substances.

In terms of corporate governance and sustainability practices, PDG Realty prepares and publishes an annual Sustainability Report, available on Grupo PDG’s Investor Relations webpage. The report is prepared based on Global Reporting Initiative (GRI) standards and uses its own materiality matrix, which prioritizes relevant topics in governance and economic performance, environmental management, and social responsibility. Material topics include issues such as anti-corruption, materials management, energy, water, emissions, waste, working conditions, occupational health and safety, diversity, equal opportunities, and impacts on local communities. The company declares adherence to various United Nations Sustainable Development Goals (SDGs) considered relevant to its business, including sustainable cities and communities, clean energy, decent work, reduced inequalities, and climate action. The group also conducts an annual greenhouse gas emissions inventory, covering direct and indirect emissions under scopes 1, 2, and part of scope 3, disclosing the results in its Sustainability Report, although this report has not yet been audited by an independent entity.

In addition to its core development activity, PDG Realty holds interests in companies related to the real estate sector and is the controlling shareholder of PDG Companhia Securitizadora, a publicly held company focused on the securitization of real estate receivables. This subsidiary operates in the acquisition and securitization of mortgage and real estate financing credits, issuance of Certificados de Recebíveis Imobiliários (CRI), and execution of related transactions, including hedging instruments to cover risks in its portfolio. However, from the standpoint of consolidated revenue generation, real estate development and property sales remain the group’s economic core, while the other activities function as complementary businesses, integrated into the financing and monetization structure of the real estate assets developed by PDG Realty, whose shares PDGR3 remain listed and traded on B3.