INSUBCONTINENT EXCLUSIVE:
October marked a challenging period for real estate investment funds (FIIs) in Brazil, as they faced their most significant downturn in
history.The Ifix index, a benchmark for this sector, fell by 3.06%, marking the steepest decline since November 2022
This drop brought the value of fund shares close to their historical lows from March of the previous year.The backdrop to this decline is a
complex economic environment characterized by fiscal policy uncertainties and rising inflation control concerns.These factors have led to
increased interest rates on future market contracts, diminishing the appeal of FIIs as investors shift towards more stable government
bonds.Long-term NTN-B rates, which have a strong correlation with FIIs, have reached new highs this year, exceeding 6.5% plus inflation
(IPCA).Brazilian Real Estate Funds Face Record Downturn in October
(Photo Internet reproduction)Gabriel Barbosa, manager of TRX Real Estate (TRXF11), one of the largest players in the market with assets
worth R$ 2.15 billion and 184,000 shareholders, highlights the abrupt shift in market conditions.Until August, the outlook was positive,
with plans for new issuances underway
However, by September, these plans were shelved due to market instability.FII Market DynamicsThe decline in FII values has been more
This figure is slightly better than the historical low of 17% seen last March.Corporate office funds have suffered the most, with discounts
In contrast, shopping centers and logistics warehouses have seen discounts of 18% and 11%, respectively.Despite these challenges, some fund
managers see opportunities amidst the turmoil
TRXF11 capitalized on market conditions by issuing R$ 224 million in real estate receivables certificates (CRIs) at attractive rates.The
fund also increased its cash reserves to R$ 400 million to weather the storm
Santander predict continued volatility until late December.He anticipates a potential recovery in the second quarter of 2025, driven by
strategic reinvestments and seasonal investor behavior.In summary, FIIs face significant headwinds due to macroeconomic uncertainties and
investor shifts towards fixed income securities.However, strategic adaptations by fund managers highlight the resilience and potential
growth opportunities in this challenging landscape.
