Paper FIIs stand out with above-average yields; how long will the scenario hold?

SAO PAULO – A specific type of real estate fund fell in favor of investors this year. Popularly known as “paper FIIs”, portfolios that invest in real estate financial assets – such as LCIs (letters of credit) or CRIs (receivables certificates) – are attracting attention due to their above-market returns.

The return provided only by paying dividends – or dividend yield – of paper funds is, on average, at 11.3% per year. It’s more than the dividend yield average of funds included in the Ifix portfolio (index that gathers the most traded real estate funds on B3), which today is 9% per year. And it is almost double the 6.3% offered by “Brick REITs”, real estate funds that invest in physical properties.

The high return helps to understand investors’ growing interest in paper FIIs. In August, of the ten most traded real estate funds on the Stock Exchange, seven were real estate receivables. Among them, the highlights were FII Hectare – which alone accounted for 5% of the average daily trading volume of real estate funds on B3 in August – FII Iridium and FII Capitânia Securities II.

In addition to rich returns from the distribution of income, paper funds have also won the hearts of investors due to the lower volatility they have shown in the market over the last year. The assessment is by Fernando Gadelho, director of Hemifério Sul Investimentos, interviewed in this Tuesday’s episode (14) of the program League of REITs, produced by InfoMoney. Also participating were Maria Fernanda Violatti, research and real estate analyst at XP, and Thiago Otuki, economist at Clube FII.

The combination of lower volatility and high yields has worked well for shareholders, but the question that remains is: how long will this scenario remain for paper FIIs?

Gadelho recalls that the dynamics of most CRIs included in paper fund portfolios guarantee the current performance, at least in the short term. This is because, in general, real estate receivables certificates include contracts that are periodically readjusted by the IPCA and the transfer generated by the increase in the index occurs months after the disclosure.

“The yield of CRIs this month reflects the inflation of two months ago. In July, for example, the IPCA was 0.96%. In August, the index was 0.87%”, says Gadelho. “This monetary correction of the last two months will be reflected now. So in the short term, I would say yes. [os retornos dos fundos de papel devem se manter]”.

For next year, the manager foresees a natural reduction in the yield of paper funds, given the macroeconomic scenario and government signals regarding inflation control.

Dividend yield enough?

Although it is one of the great attractions of real estate funds, Gadelho recalled that the dividend yield it is just one of the elements that must be evaluated when choosing a portfolio to invest. For those interested in FIIs, the manager suggests making a more detailed analysis of each asset.

In a step by step, the first point to assess is the fund manager and how he monitors the opportunities. Next, the shareholder must analyze the fundamentals, such as the market value, the relationship between the price of the shares and their equity value, the daily liquidity volume, the number of shareholders, among others. It is also necessary to pay attention to the fund’s sources of income – that is, how the income has been generated.

In a second step, the investor must observe the administration and performance fees of the FII. In the end, it is necessary to analyze the assets of the paper fund, especially CRIs. Here, it is worth paying attention to points such as the bond’s debtor, the backing and the leverage ratio.


Once again, the League of FIIs presented its traditional real estate fund battle. This time, the comparison was between the Capitânia Securities (CPTS11) and CSHG Recebíveis Imobiliários (HGCR11).

In addition to the funds’ portfolios, analyst Maria Fernanda Violatti analyzed daily liquidity, accumulated earnings and the price/book value ratio.

Check out who won the battle and other tips and analysis from the experts here.

FII Talks 2021

To help FII investors navigate this market, the InfoMoney holds the main event of real estate funds in the country – FII Talks 2021 – between September 29th and 30th. The event will be broadcast on the YouTube channel of InfoMoney.

Online and free of charge, the panels of FII Talks 2021 will bring together some of the main managers and analysts in this market to discuss trends in the most diverse segments (logistics, commercial, hotel, residential and others). To register for the first day of the event, click here. To participate in the second, click here.

The best investment recommendations for 30 days free: meet the Expert Pass