How CVM's decision on Maxi Renda may affect real estate funds


Within the country's real estate fund industry, two types of assets are potentially the most affected if the CVM's decision regarding the interruption of dividend payments, if there is an accounting loss, covers the entire market: funds of funds, backed by shares of other real estate funds, and some brick funds, assets backed by real estate.

However, the atmosphere in the real estate fund segment is confusing because the market is still waiting for a clear signal if there will be a change. The new understanding is, for now, restricted to Maxi Renda (MXRF11), from BTG, to which the decision of the CVM collegiate refers in the rule for the rest or if it is a specific situation of a single fund. Currently, real estate funds distribute monthly dividends based on cash gain; they distribute 95% of the result of the difference between what comes in with rent for their tenants and what comes out of cash to cover administration expenses.

According to the CVM's understanding of MXRF11, if there is an accounting loss, if there is a fall in the value of assets in the books, the fund would not be able to distribute dividends because it had no accounting profit. The distribution, in this case, would be labelled as amortization and would be subject to taxation. BTG, MXRF11's administrator, must appeal the decision.

"The biggest problem is that of legal uncertainty. The entire real estate industry is based on the long term. If you can't predict the entire investment cycle because the rules change midway, why should you invest in it?" asks Giancarlo Nicastro, president of SiiLA, a company specialized in analyzing data for the Latin American real estate market.

WHY THIS IS IMPORTANT: Real estate funds have become a very popular asset in Brazil in recent years. Today, 1.5 million people hold this type of investment.

Managers and analysts interviewed by Bloomberg Línea consider that the most impacted segments could be funds of funds, as they currently have greater discounts since their portfolio is made up of shares of other real estate funds, whose prices fell significantly in 2021 with the increase of the Selic rate.