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The increase in the basic interest rate to 14,25% changes the scenario for real estate funds. The profitability of conservative alternatives gains strength, while FIIs may suffer from adjustments in quotas
A Brazil's basic interest rate returned to the level of 14,25% after decision of the Cup. For those who invest in real estate funds (FIIs), the scenario is mixed, with advantages and disadvantages.
On the one hand, paper funds benefit from the increase. On the other hand, brick funds lose value. Even so, there is room for strategies.
Paper funds — higher returns, but with risks
Paper funds, which invest in real estate credit securities, tend to benefit from high interest rates.
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Many of these assets have returns tied to inflation or Permanent. With the Selic rate at a high level, the CDI rate follows suit. This increases the return on funds. When these securities are indexed to the CDI, the increase in the Selic rate increases payments. This generates more dividends for investors.
However, it is important to highlight one point of attention: The CRI debt is paid by the debtor. And the debtor feels the high interest rates. This can increase the risk of default.
The rise in interest rates on paper funds takes about a month to be reflected in the value of the shares. After that, the movement tends to attract more investors.
Brick funds — negative pressure, but with opportunities
Brick funds, which invest directly in real estate, feel the negative effects of the high Selic rate more.
The main reason is the impact on the real economy. High interest rates reduce consumption and make credit more expensive. This can affect companies that rent properties.
With less consumption, businesses face more difficulties.
This can lead to a drop in the occupancy rate of the fund's properties. Lower occupancy means lower revenue, which affects the distribution of dividends.
Despite this, some analysts see opportunities in brick-and-mortar funds because brick-and-mortar FIIs are the ones with the biggest discount in relation to the fair price.
In other words, when interest rates rise, property values tend to fall. For those who are thinking long-term and want to generate dividends, this could be a good time to invest.
With the Selic rate high, properties continue to exist, and rental contracts continue to generate revenue. If the share is cheap, the percentage return may be interesting for those who hold on to the investment.
Risk and opportunity go hand in hand
The Selic rate at 14,25% has changed the game for real estate funds. Paper funds benefit directly, but they need to deal with the risk of default. Brick funds suffer from interest rates, but they offer discounts and can be good long-term bets.
Investors seeking passive income must evaluate their profile and the risks involved.
For those looking for immediate returns, paper funds are the most obvious option. Those looking to the future may see brick-and-mortar funds as an opportunity with attractive prices.
Finally, the recent movement of Ifix shows that part of this scenario is already being absorbed. The market is adjusting, and so are investors.
Volatility still exists, but opportunities have not stopped appearing.
