Investors in Real Estate Funds (FIIs) go through moments of uncertainty after the CVM (Securities Commission), which regulates the market in the country, questioned the volume of dividends distributed by Maxi Renda (MXRF11). The fund is the largest in the country in terms of the number of shareholders traded on B3.
The issue ended up raising concerns about the future of the sector and made investors start to question the permanence of this asset class in the portfolios.
The case started last week, when the CVM questioned the fact that the MXRF11 fund had distributed to shareholders a volume of dividends greater than what had been calculated in the accounting profit in the annual balance sheet for 2021. The issue raised discussions about the possibility of this movement reaching all funds.
Since then, the MXRF11 fund has already accumulated a drop of almost 10%, fueling investor fears with the interruption of dividend distribution.
“Imagine that a brick fund has a property valued at R$ 1 million. This property suffered a negative equity valuation of R$ 500 thousand. The distribution, without considering the revaluation, would be R$ 100 reais per share. If this revaluation caused the accounting profit to fall by half, the fund would only be allowed to distribute R$ 50 per share”, exemplifies Luis Nuin, an analyst at Levante.
Market agents questioned the decision since about a third of the FII market uses this strategy. As a result, fears spread that the CVM could question other funds.
“The point is that this reassessment is done in the books. It’s like a loss for a company that has dollar debt in a given quarter, but the debt matures in 4 years. It’s just accounting. Accounting losses are common, for example, in brick funds”, says Nuin.
The expert explains that, by law, FIIs are required to distribute at least 95% of the profit calculated on a cash basis. “The point is that there is no accounting definition for cash income, because profit is calculated on an accrual basis, not on a cash basis, after a recent decision by the autarchy’s collegiate”, he adds.
Even after these questions, the CVM reinforced the understanding and stated that it applies to other FIIs in a similar situation. However, he informed that the decision on the MXRF11 does not prevent the FIIs from distributing to the shareholders amounts above the accounting net income, but guided that the payment be divided between dividend and capital amortization, which helped to calm the mood a little.
Fund managers should appeal the decision, while market agents await a signal of what may happen.
If the CVM extends the understanding to the others, some FIIs may stop distributing dividends and the autarchy could even make a retroactive charge to what has already been paid to investors so that these FIIs qualify for the accounting change.
What to do?
According to experts consulted by the CNN Brasil Business, the moment is one of caution. “To be hasty is, historically, the worst decision an individual investor makes. There is an imminent risk, but it is also an old discussion,” said Caio Ventura, real estate analyst at Guide.
For Ventura, the CVM is a regulatory institution that also values the stability of the market, so he believes that the decision is not final.
“The market has organized itself and discussions should intensify next week. At the moment, nothing has been defined, including the fund has the right to appeal the decision in court. These processes are long and involve many variables, so I believe investors should exercise caution,” he said.
Bruno Komura, an analyst at Ouro Preto Investimentos, reinforces that the best thing to do is not to despair and not sell all the FIIs, as the decision is not yet final.
“In the end, it’s not worth it for the investor to leave now. The best thing is to wait for the definition of what will happen (after the entire process of analysis and/or judicialization) and then make the decision. It is important to monitor closely because if there is an unfavorable result, the market will react quickly”, he said.
For him, if the CVM insists on charging, the FIIs market will suffer. So for outsiders this is not the best time to buy this asset class.
“If this change is applied from now on, the attractiveness of FIIs will certainly be reduced, and it may make sense to sell,” he said.
Luis Nuin, from Levante, agrees that investors who already have FIIs need to be aware of the CVM’s next steps.
“It’s time to keep calm. The market does not appear to have reacted catastrophically to the news. This is not the time to make hasty decisions. This theme must still have new chapters. Obviously, it’s more on the radar now than ever,” he said.
Source: CNN Brasil
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