Real Estate Funds and the Capital Market
Real Estate Funds (FIIs) are an investment option that has been gaining more and more prominence in the Brazilian capital market. They allow individual or corporate investors to acquire shares in real estate developments without the need to buy an entire property, making access to this type of asset more democratic and diversified.
The capital market is the environment where the purchase and sale of securities, such as stocks, debentures and, of course, shares of Real Estate Funds take place. It is fundamental to the economy, as it allows companies to raise funds to invest in their businesses and for investors to participate in the profits of these companies.
How do Real Estate Funds work?
The Real Estate Funds are constituted as "closed condominiums", that is, their quotas can be traded in the capital market, but cannot be redeemed. The equity of a FII is divided into shares, which are acquired by investors. This equity can be composed of commercial, residential, rural or urban properties, real estate debt securities or even shares of other FIIs.
The profitability of Real Estate Funds comes from two sources: the appreciation of shares and the income distributed to shareholders. Appreciation occurs when the price of shares in the market rises, while income comes from renting real estate or interest on real estate debt securities.
Why invest in Real Estate Funds?
Investing in FIIs brings a number of advantages. First, they allow the investor to participate in the real estate market without the need to spend large sums to buy a property. In addition, FIIs are managed by professional managers, who have the expertise to select the best assets and negotiate rents.
Another advantage is liquidity. Unlike a property, which can take months to sell, shares in an FII can be easily traded on the stock exchange. In addition, FIIs are obliged to distribute at least 95% of their profits to shareholders, which can guarantee a monthly income for the investor.
Risks of Real Estate Funds
Like any investment, FIIs also have risks. The main one is market risk, which is related to fluctuations in share prices. If the real estate market goes through a crisis, for example, the price of shares may fall.
Another risk is vacancy, which occurs when the fund's properties are vacant and do not generate rental income. There is also the credit risk, in the case of FIIs that invest in real estate debt securities, which is the risk of the security issuer not fulfilling its obligations.
For this reason, it is important that investors get to know the FII well before investing and diversify their portfolio to reduce risks.
Conclusion
Real Estate Funds are an interesting alternative for those who want to invest in the real estate market, but do not have the resources to buy an entire property. They offer diversification, professional management and liquidity, in addition to being able to guarantee a monthly income for the investor. However, like any investment, it is important to know the product well before investing and always diversify your portfolio.
