May 30, 2024

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FII Central: Real Estate Funds Track the Market While Ifix Reports Eighth Consecutive Decline

FII Central: Real Estate Funds Track the Market While Ifix Reports Eighth Consecutive Decline

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São Paulo – Thursday (28) session was bearish as well for most real estate funds. Ifix, the most traded FIIs index on the Brazilian stock exchange, followed Ibovespa and closed the trading session in the negative field. On the eighth consecutive day, the index ended its day with losses of 0.26%, at 2,673 points. In the week, the Ifix index is down 1.41% and in the month it is down 1.53%. In the year, the index registered a decrease of 6.83%.

Experts suggest caution to real estate fund investors who are concerned about the increasing rates of interest rate hikes in the country. The Monetary Policy Committee (Coboom) of the Central Bank decided, unanimously, on Wednesday (27) to raise the basic interest rate for the national economy, Selek, by 1.5 percentage points, to 7.75% annually.

Copom’s decision marks the sixth consecutive increase in Selic, which was at 2% in January, and is now at the highest level since September 2017. It was also the largest rate increase since December 2002, when Selic increased by 3% points and was set at 25% annually .

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Traditionally, Selic increases encourage the migration of real estate fund shareholders to fixed income investments, which become more profitable and offer less risk. However, the behavior is questioned by experts who suggest a discipline and investment strategy.

“You shouldn’t invest more or less in real estate funds because of just one index movement,” advises Marcus Baroni, head of research in FIIs at Suno Research. “If you are committed to owning 20% ​​or 30% of the equity in the real estate trusts, you must maintain the position regardless of the Selic rate at 6%, 7% or 8% per annum,” he says.

In Baroni’s assessment, if investors are unsure of what to do in times like the current one, it is because the investment strategy they have adopted is fragile. “If you are making a decision because of a change in interest rates, which is a short-term change, you are definitely in trouble. He estimates that his conviction is fragile from an investment strategy standpoint.

Thursday’s Biggest Highs (28):

tape Noun section Variance (%)
(TGAR11) real active TG Aharon 2,84
(HGCR11) CSHG Real Estate Receivable Nicknames and Val. mob. 2,01
(AIEC11) Autonomous buildings corporate panels 1,86
(FEXC11) BTG Pactual CRI Fund Nicknames and Val. mob. 1,68
(OUJP11) Ourinvest JPP Nicknames and Val. mob. 1,66

The largest number of victims this Thursday (28):

tape Noun section Variance (%)
(RFOF11) RB Capital Nicknames and Val. mob. -2.51
(SPTW11) SB Downtown corporate panels -2,19
(XPCM11) XP Corporation Macae corporate panels -2,05
(RZAK11) Reza Akin Nicknames and Val. mob. -1,83
(BPFF11) Absolute plural form in Brazil Nicknames and Val. mob. -1,69

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BTG Terras Agrícolas buys farms in Mato Grosso, Risa pays R$70m to buy property in Goiás and more news

Check the latest information revealed by real estate funds in the relevant facts:

BTG Pactual Terras Agrícolas (BTRA11) invests 101 million Rls in two farms in Mato Grosso

BTG Pactual Terras Agrícolas entered into an agreement with the Bergamasco Group and acquired the Três Irmãos farm, in Tapurah (MT), for R$80 million, and Colibri, in Nova Mutum (MT), for R$21 million. The real estate area is about 2,100 hectares and the total value of the operation is 101 million Brazilian Real.

According to the Mato Grossens Institute of Agricultural Economics, the state currently tops the national rankings in production of soybeans, corn and cotton.

The farms will be leased to the seller for ten years. The monthly wage will be about R$ 1.01 million and will be adjusted annually by the IPCA (National Broad Consumer Price Index)

The rents will be paid semi-annually by the tenant in advance, and the contract structure also has the option to buy back the property in favor of Bergamasco Group, which may or may not be executed at the end of the lease term.

With the purchase of real estate in Mato Grosso, BTG Pactual Terras Agrícolas estimates the monthly impact on income at R$0.30 per share.

In order to identify risks and opportunities in real estate, the fund reported that it had conducted an ESG (Environmental, Social and Governance) assessment. The study indicated the positive aspects in the characteristics, but also the need for adaptation in the points related to the social and environmental part.

Riza Arctium Real Estate Company ( ARCT11) 70 million Brazilian reals for property in Goiás

Riza Arctium Real Estate has entered into a commitment with Aspam Participações and Goiazem Armazéns to purchase a 124,000 square meter property in Goiânia (Goiás). The area is divided into a main area of ​​about 93 thousand square meters, and another complementary area of ​​​​31 thousand square meters. The total value of the deal is 70 million Brazilian riyals.

Initially, the fund paid R$46 million for the main area and the remaining amount will be deposited after space audit and other steps in the procurement process.

The property is currently leased to Aspam, which pays R$345,000 per month for the main area and R$180,000 for the supplementary area, totaling R$525,000.

According to Riza Arctium, the title deed in Goiás provides a purchase option for the tenant, which can be exercised throughout the lease term.

Trisul terminates its contract with Patria Corporate Buildings (PATC11) in Sao Paulo

Trisul has expressed its intention to terminate the contract it entered into with Pátria Edifícios Corporativos for the lease of blocks 205, 207 and 208 of Edifício Cetenco, on Avenida Paulista, in São Paulo (SP). The tenant occupies 1.1 thousand square meters of the property, or 9.4% of the total leasable area (GLA) of the fund.

The lease agreement provides for 6 months’ notice, plus payment of the termination penalty and return of the resource granted as a grace period at the beginning of the lease.

With contractual guarantees, Pátria Edifícios Corporativos states that it will only be affected by termination from November 2022, if the property remains vacant until that date.

The potential dividend reduction as a result of the vacancy in the Cetenco building is approximately R$0.04 per share.

Real estate turnover: iRental inflation is rising again and accumulating 21% in 12 months

The IGP-M (General Price Index – Market), which acts as a benchmark for the readjustment of property leases, rose again in October after falling 0.64% in September. According to Getulio Vargas, the rate is up 0.64% this month.

André Braz, Coordinator of FGV Price Indices, says the less steep drop recorded in the iron ore price, from -21.74% to -8.47%, contributed to the acceleration of the IGP-M. It also indicates an increase in the price of diesel by 6.61%, which in this case has not yet taken into account the adjustment announced on Monday (25).

As a result of October, rent inflation, as the IGP-M is known, accumulated an increase of 16.74% in the year and 21.73% in 12 months. In October 2020, the index rose 3.23% and accumulated an increase of 20.93% in 12 months.

Urban construction inflation, which the INCC measures, actually accelerated in October, rising 0.80%, versus 0.56% in September. The three groups composing the index reported the following differences in the past two months: materials and equipment (0.89% to 1.68%), services (0.56% to 0.36%) and labor (0.27% to 0.10%).

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