November 2024 - Page 3 of 4 - Murray Advogados

Brazil’s fiscal risk, global headwinds keep investors on edge

Post-U.S. election relief fades as currency, interest rates, and stocks remain pressured; Finance Ministry’s fiscal package in spotlight

11/11/2024

The post-U.S. election relief that buoyed Brazilian assets last week has now faded. As the government delays announcing the spending cuts promised by the Ministry of Finance, concerns about fiscal risk continue to mount, compounded by an increasingly challenging global backdrop. Early signs indicate that the Trump administration may adopt more protectionist trade policies, which, alongside recent disappointments in Chinese stimulus, is creating a harsher environment for emerging markets, pushing Brazilian assets to maintain high risk premiums.

The currency’s volatility illustrates the recent market instability. Last week alone, the exchange rate ranged between R$5.63 and R$5.83 per dollar, closing Friday in the middle of that band. Now that the post-Trump-election technical adjustment has passed, the market faces an adverse external outlook. Paired with Brazil’s unresolved fiscal issues, these factors are driving higher risk premiums for domestic assets.

The delayed release of Finance Minister Fernando Haddad’s fiscal plan, aimed at maintaining the country’s fiscal framework over the coming years, has fueled market uncertainty. Expectations that some previously expected programs may be dropped from the package add to investor unease.

“The government must understand that the current debt-to-GDP trajectory is completely unsustainable. A primary deficit that appears small but is maintained through temporary measures will only lead to a massive nominal deficit,” said Bruno Marques, partner and co-manager of XP Asset Management’s multimarket funds. For Mr. Marques, the government should focus on more structural solutions to reduce debt levels. The external backdrop, marked by a strengthening dollar and rising interest rates, complicates matters further.

The potential for the Trump administration to adopt a protectionist stance is already affecting financial markets. The possibility of Robert Lighthizer’s return as U.S. trade representative has raised concerns that the threat of tariffs, a hallmark of Donald Trump’s first term, could once again become reality.

“If tariffs are imposed on Europe, China, and Mexico, this will strengthen the dollar and impact currencies worldwide,” said Fernando Fenolio, chief economist at WHG. He added that rising external pressure calls for a reduction in the domestic risk premium, which is currently a primary factor in the Brazilian real’s depreciation.

“If we don’t see improvement locally while global risks rise, the exchange rate will continue to depreciate, pushing beyond recent highs,” Mr. Fenolio warned. “With the global environment under stress, investors will demand clearer and more stable local policy,” he said, noting that even an increased interest rate differential between Brazil and the U.S. may not be enough to sustainably support the real.

Last week, expectations were high for an announcement on the spending cuts package. Despite numerous meetings, the government failed to reach an agreement between the economic team and ministers from social sectors, who have resisted cuts to their budgets. Market concerns are growing over the likelihood of a watered-down spending reduction plan.

“We’re entering a phase where fiscal dominance is becoming a concern. In such cases, no interest rate can stabilize the currency because market players start doubting the government’s ability to repay its debt,” Mr. Fenolio explained. Typically, an interest rate hike would lead to currency appreciation, but in times of crisis, this relationship can reverse, as seen in 2014 and 2015. “Since March, we’ve seen this reversed correlation, with interest rates rising alongside a depreciating currency,” he said.

By the end of last week, Brazilian assets reflected high risk premiums across the board, even with expectations of an increased interest rate differential. The exchange rate hovered around R$5.73 per dollar, mid- and long-term interest rates neared 13%, and long-term inflation-linked bonds (NTN-Bs) remained above 6.5%.

“We hope the package is announced soon. Overall, we expect the government to aim for the original fiscal framework’s intent by implementing rules and restrictions to limit government spending growth to around 2.5%,” said Tiago Berriel, chief strategist at BTG Pactual Asset Management and a former Central Bank director.

In his monthly scenario review, Mr. Berriel noted that some elements being discussed are politically difficult to implement, such as changes to social spending. “The initiative is good, but we’ll need to see if Congress will back it and if it’s politically sustainable. It’s quite challenging,” he added.

A favorable fiscal package could trigger a relief rally in Brazilian assets, “but any rally is likely to be temporary,” said Paulo Clini, chief investment officer at Western Asset in Brazil. He noted that the strength of the U.S. economy and the outlook for higher long-term rates dampen foreign appetite for emerging markets, including Brazil. Without foreign investors, a sustained domestic rally seems unlikely.

“Global investors are holding back, and they typically drive the yield curve term structure. This trend isn’t exclusive to Brazil but is impacting emerging markets broadly, including Mexico, Colombia, Chile, parts of Southeast Asia, and Eastern Europe,” Mr. Clini said. Mr. Trump’s policies, which could increase inflation and interest rates in the U.S., reinforce the concept of “American exceptionalism,” he added.

“With the ‘Republican wave,’ checks and balances are diminished. Trump holds considerable power, and a Republican Congress is unlikely to counterbalance his agenda,” Mr. Clini explained. Given local investor concerns over fiscal policy and limited foreign interest in emerging markets, “it’s hard to believe that the market will recognize any excess in the risk premium soon,” he concluded.

There’s also the chance that the government’s fiscal package may disappoint, cautioned Fernando Rocha, chief economist at JGP. “The market will scrutinize the details. If we see R$50 billion in cuts, but only through superficial adjustments, the reception may not be favorable.”

*By Arthur Cagliari, Bruna Furlani, Gabriel Caldeira, Maria Fernanda Salinet, Victor Rezende — São Paulo

Source: Valor International

https://valorinternational.globo.com/

11 de November de 2024/by Gelcy Bueno

Murray News

Companies sell minority stakes to fund expansion

Deals account for 35% of M&A activity this year through October, up from 6% in 2021

11/11/2024

With the Brazilian stock market closed to new listings for over three years, a group of companies is resorting to selling minority stakes to raise funds for expansion. As of October this year, minority transactions accounted for 35% of mergers and acquisitions (M&As), compared to 23% in 2023 and 16% in 2022.

In 2020 and 2021, when the market was fully open due to ample liquidity, even for smaller deals, the percentage was 7% and 6%, respectively, according to a study carried out by Seneca Evercore for Valor.

According to experts, some companies are also seeking a preliminary valuation before going public, anticipating a reopening of initial public offerings (IPOs), which is currently projected for 2025. Others aim to improve their capital structure, as was the case with steel maker CSN, which decided to sell a stake in its subsidiary CSN Mineração.

Among the cases in progress, pharmaceutical company Cimed has hired J.P. Morgan to find a buyer for a minority stake, expected to attract private equity funds, according to market sources. Brazilian chocolate brand Trento, owned by Peccin, has appointed UBS BB to facilitate the sale of a stake, as reported by Valor. The companies declined to comment.

Another notable case is Compass, the gas division of sugar and energy company Cosan, which was in line for a public offering and also plans to sell a minority stake. Rubens Ometto, founder and chairman of the conglomerate, told Valor there is investor interest.

The trend is also seen among fintechs. Act Digital is seeking a partner for expansion. Contabilizei sold a stake to Warburg Pincus, and MeuTudo is also looking for an investor with a bank involved in the process, according to sources. Agibank, waiting for a market window for an IPO, is working with Goldman Sachs on a minority sale. The companies declined to comment.

Daniel Wainstein, a partner at Seneca Evercore, noted that the rise in minority transactions is also due to shareholders deciding to sell their companies. However, with asset values down, they are currently opting to sell only a stake. “The current market perspective is that transactions initially considered for full control have shifted to minority stake sales, partially meeting shareholder desires and reserving a 100% sale for a more favorable market moment.”

Anderson Brito, director at UBS BB, said that the bank currently has about 10 transactions involving minority stake sales in its pipeline, including fintechs, consumer sector companies, software companies, data centers, and firms related to energy transition. “We also see companies that could enter the capital markets now needing to scale up. Others need to see a recovery in multiples and are conducting pre-IPO rounds,” he said.

Mr. Brito noted that companies are also seeking funds to continue expansion plans. In other cases, minority stake sales involve funds that have reached the maturity stage of their investments and need to divest.

Private equity funds and foreign groups are traditionally viewed as investors for companies seeking partners to grow their businesses, said Guilherme Monteiro, a capital markets partner at law firm Pinheiro Neto Advogados.

“Without IPOs, private placements, common in the U.S., gain traction in this scenario. Companies strengthen by bringing a significant partner into their shareholder base,” Mr. Monteiro said. With these private placements, he adds, companies tend to be seen as having a more sophisticated capital structure, even for future IPOs.

For Guilherme Bueno Malouf, an M&A partner at Machado Meyer, private equity funds are the most obvious route, as this format allows for primary investment—capital directed to the company. “These resources enable companies to prepare for larger ventures,” Mr. Malouf said.

He noted, however, that private equity funds have reduced these types of transactions due to the ongoing high-interest rates and geopolitical tensions. “In this context, investments become more conservative, with shifts towards fixed income.”

“There’s also a challenging scenario for companies seeking these investments, with the domestic environment still fraught with fiscal uncertainties,” he added.

Ricardo Thomazinho, a partner at Urbano Vitalino Advogados, confirms that such transactions are reaching the firm, often involving funds as buyers since strategic investors mostly prefer acquiring control.

He noted that strategic investors might initially acquire a minority stake but often with a pre-arranged agreement for future control purchase.

Currently, Mr. Thomazinho said, minority stake sales are also being pursued by companies needing to balance their books. “Many companies are seeking solutions after enduring high interest rates for an extended period,” he said.

Maintaining control of these deals is also crucial for business owners. Renato Stuart, a partner at RGS, said that when a company goes public, one of the goals is to retain control. “That’s why, when they opt against an IPO, they generally prefer selling to a minority fund,” he said.

*By Fernanda Guimarães, Mônica Scaramuzzo — São Paulo

Source: Valor International

https://valorinternational.globo.com/

11 de November de 2024/by Gelcy Bueno

Murray News

Brazil says it has nearly cleared gold miners from Amazon Yanomami reservation

September 14, 2024

Item 1 of 2 Yanomami indigenous people play football at Surucucu village, in Yanomami indigenous land, Roraima state, Brazil August 26 2024. REUTERS/Amanda Perobelli

[1/2]Yanomami indigenous people play football at Surucucu village, in Yanomami indigenous land, Roraima state, Brazil August 26 2024. REUTERS/Amanda Perobelli Purchase Licensing Rights, opens new tab

SURUCUCU, Brazil, Sept 14 (Reuters) – Brazil has almost squashed the illegal gold rush that led thousands of wildcat miners into the Yanomami reservation in the Amazon rainforest and caused a humanitarian crisis of disease and malnutrition, the man in charge of operations said.

The Yanomami, South America’s largest Indigenous group living in isolation, have returned to a normal way of life, cultivating crops and hunting game, Nilton Tubino told Reuters in an interview on Friday.

Tubino runs the government office set up by President Luiz Inacio Lula da Silva to coordinate action by police and military forces, environmental agents and health workers on the reservation the size of Portugal in the remote Amazon, where 27,000 Yanomami live.

“We are seeing many of them bathing in the rivers and out hunting again, and clearings being planted for food,” he said.

In hundreds of operations since March, army and navy troops, backed up by environmental and Indigenous protection agencies, have destroyed mining camps and gold prospects.

They have dynamited 42 clandestine airstrips used by the miners in the rainforest, set fire to 18 aircraft, seized 92,000 liters of diesel, sunk 45 dredging barges, destroyed 700 pumps, and dismantled 90 Starlink dishes that allowed the miners to warn each other about enforcement teams, Tubino said. A radar has been set up in the reservation to monitor clandestine planes.

Tubino said deaths from malaria brought by the miners were down, and malnutrition had been controlled with government food parcels. The government has reopened medical outposts and is planning to build a

A Reuters photographer in Surucucu earlier this month saw evidence of illegal miners inside the reservation still, but with the situation improved from last year.

Junior Hekurari, head of the Yanomami health council Condisi, said the government had evicted the miners and overcome the health crisis, but that the mining had affected their ability to obtain food, with river waters polluted by mercury.

“The waters are poisoned and there are no fish,” he said. “Our people believe the earth has been contaminated and that is why the crops are not growing.”

Shortly after taking office, Lula launched a massive enforcement operation in February 2023 to evict some 25,000 gold miners from the Yanomami territory. With backing from the armed forces, the government action succeeded in expelling 80% of the miners.

But once the military withdrew, miners started to return, joining others who had hidden in the forest.

Tubino said the number of miners remaining is unknown, but this year’s operations had significantly reduced their presence and eliminated more than half the gold prospecting areas.

Work is still needed to shut down the supply line that keeps the miners in business, from fuel and food to the buying of their gold nuggets, Tubino added.

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Reporting by Amanda Perobelli in Surucucu and Anthony Boadle and Ricardo Brito in Brasilia; Editing by Rosalba O’Brien

Our Standards: The Thomson Reuters Trust Principles.

*By Amanda Perobelli and Anthony Boadle

Source: Reuters

11 de November de 2024/by Gelcy Bueno

Murray News

New Zealand aims to double agricultural trade with Brazil

Agriculture and trade minister sees potential to introduce New Zealand tech to Brazilian producers

11/08/2024

Brazil’s diplomatic partner in international agricultural matters, New Zealand, aims to double its agricultural trade with Brazil over the next decade. This goal was outlined by New Zealand’s minister of agriculture and trade, Todd McClay, during his October visit to São Paulo—his first trip to Brazil—where he met with industrial leaders, signed agreements between New Zealand companies and Brazilian clients, and toured a JBS facility.

The primary purpose of Mr. McClay’s trip, however, was to attend ‘pre-G20’ alignment meetings in Brasília, an invitation extended due to New Zealand’s recognized expertise in leading multilateral trade discussions at the WTO and other international bodies.

“We want New Zealand to emerge as a prominent trading partner for Brazil,” Mr. McClay said, acknowledging that this ambition is substantial given New Zealand’s comparatively smaller production scale.

Currently, New Zealand imports about $270 million annually in Brazilian agricultural products and exports around $246 million worth of goods to Brazil. Mr. McClay is optimistic that New Zealand’s agribusiness sector can cater to specific areas of Brazil’s import demands, including kiwi fruit. He anticipates an expansion of New Zealand exports to Brazil by 2025.

In his discussions with Brazilian Vice President Geraldo Alckmin, Mr. McClay highlighted the potential for New Zealand to offer Brazil more than educational tourism, focusing on agricultural technology.

“Brazil presents significant opportunities, particularly in agtech, energy, and security,” he said, emphasizing the suitability of New Zealand’s agriculture technology for Brazil’s agribusiness sector.

Bilateral trade between the two nations reached $520 million last year, reflecting a 36% increase over the past decade.

Approximately 40 New Zealand companies have established operations in Brazil, with the number of export agreements quadrupling since 2019.

Dairy products, New Zealand’s third-largest export to Brazil, generated $16 million in sales in the year ending June 2024, following tourism ($82 million) and pharmaceuticals ($60 million).

Mr. McClay is eager to engage in bilateral talks with Brazil on sustainable development, investment, food security, and reducing non-tariff barriers. These discussions are expected to continue at the G20 meeting in Rio de Janeiro on November 19.

Both nations share a stance on revising the European Union’s anti-deforestation law. Like his Brazilian counterpart Carlos Fávaro, Mr. McClay advocates for postponing the law’s application, criticizing its “inflexible standards” for small producers. He describes the rule as “not only protectionist but also impractical for compliance.”

Another shared priority is reducing agricultural taxes. Earlier this year, Mr. McClay removed a livestock emissions tax set to expire in 2022, arguing that the tax hindered producers’ ability to invest in decarbonization. With this policy shift, Mr. McClay aims to influence the global dialogue on reducing agricultural subsidies and easing financial burdens on industry players.

*By Isadora Camargo — São Paulo

Source: Valor International

https://valorinternational.globo.com/

8 de November de 2024/by Gelcy Bueno

Murray News

Vinci acquires control of Outback owner Bloomin’ Brands in Brazil

Blockbuster deal valued at R$2bn; plan aims to double restaurant locations

11/08/2024

Vinci Partners has finalized the purchase of a controlling stake in Bloomin’ Brands’ Brazilian operations. Through its fourth private equity fund, Vinci will hold 67% ownership, while the U.S. company will retain a 33% share.

Bloomin’ Brands currently operates nearly 200 restaurants in Brazil under three brands: 174 Outback locations, 17 Abbraccio units, and two Aussie restaurants. The transaction valued Bloomin’ Brands Brazil at R$2.06 billion, including both equity and debt (enterprise value)—representing a 6.5x multiple on 12-month EBITDA. Bloomin’ retains a put option on the remaining stake for 2028.

The deal was sealed Wednesday night in New York, celebrated with Outback’s iconic frosty beer mugs by Carlos Eduardo Martins, co-head of private equity at Vinci, and Pierre Berenstein, Bloomin’s executive vice president of global customer strategy and former CEO of the Brazilian operation.

“Outback is an iconic brand with a unique value proposition rarely found in other businesses in Brazil,” Mr. Martins told Pipeline.

Vinci brings a strong track record in the food sector, previously serving as a major investor in Burger King Brazil, where it helped expand the chain from 100 to over 900 locations. Vinci’s strategy with Domino’s was to double digital sales, while for Camarada Camarão, it expanded from a regional presence in Northeast Brazil to a national footprint. “We’ve already shortened the learning curve,” Mr. Martins noted.

The Brazilian operation, launched in the 1990s, is profitable and continues to grow, with 18 new units opening last year. The ownership structure has varied over time, from master franchise agreements to joint ventures and local ownership. The Vinci deal is primarily a secondary transaction, providing funds to Bloomin’ in the U.S. for debt reduction, along with a primary tranche to support expansion in Brazil.

“We are aligned with Vinci on the company’s future and remain committed to the Brazilian operation, which is why we are staying on as shareholders,” Mr. Berenstein told Pipeline. He pointed out that dining out accounts for nearly 70% of U.S. food spending, compared to only 33% in Brazil—suggesting significant growth potential.

The plan is to double the Outback chain, Bloomin’s flagship brand, while also expanding the other two to establish them further. “Outback is a category leader with high demand, and we’re careful with our expansion, ensuring a reliable supply chain for every item, like our signature onion,” said Mr. Berenstein.

Interestingly, most of the onions are imported from Chile and Spain, with 10% sourced from a Brazilian producer in São Paulo who spent over 20 years perfecting the variety for Outback. Similar supply trials are underway in other regions of Brazil.

Vinci plans to maintain the current management led by Mauro Guardabassi. “This venture stands on three pillars: Vinci, Bloomin’, and the existing management, which has done a fantastic job, and we’ll work closely with them,” said Mr. Martins.

Vinci outpaced Advent in the final stretch of negotiations. This marks the third investment for Vinci’s VCP IV fund, which is expected to include at least eight assets.

Vinci was advised by Itaú BBA and the law firm Tauil & Chequer Meyer Brown, while Bloomin’ received advisory services from Bank of America and Lefosse.

*By Maria Luíza Filgueiras, Pipeline — São Paulo

Source: Valor International

https://valorinternational.globo.com/

8 de November de 2024/by Gelcy Bueno

Murray News

With rising interest rates, real estate fund posts worst October on record

As conditions worsen, fund managers offload assets and boost cash reserves

11/06/2024

Real estate funds (FIIs) experienced their worst October on record, with the Ifix—the sector’s benchmark index—plummeting by 3.06%. This marks the largest monthly decline since November 2022, leaving share values nearing historic lows last seen in March last year. The analysis, conducted by Clube FII’s research team at Valor’s request, covered both “brick funds,” which invest directly in real estate, and “paper funds,” which invest in debt securities.

In response to the challenging landscape, fund managers are adjusting strategies, halting transactions, and selling stakes to bolster cash reserves as capital raising has become increasingly difficult.

“Until late August, our outlook was positive, and we were gearing up for a new issuance with promising deals in the pipeline,” said Gabriel Barbosa, manager of TRX Real Estate (TRXF11), one of the largest funds with R$2.15 billion in assets and 184,000 shareholders. “Since September, the scenario has collapsed.” Both issuance plans and negotiations have been suspended. “It’s better to wait for market stabilization because, right now, visibility is limited,” he adds.

The funds’ devaluation stems from rising interest rates in the futures market amid fiscal and inflation concerns. Long-term rates on B-Series National Treasury Notes (NTN-B) bonds, which serve as sector benchmarks and are theoretically risk-free, have reached yearly highs, surpassing 6.5% of Brazil’s benchmark inflation index (IPCA). These rates are luring investors away from FIIs, said Danilo Barbosa, partner and head of research at Clube FII. “Long-term NTN-B rates are far more correlated with FIIs than the Selic rate,” he notes.

According to the Clube FII study, paper fund shares are trading at an average 7% discount to asset values as of October 31, slightly above the 10% record in March 2023. Brick fund shares show a deeper 16% discount, close to the 17% historic low from March last year, while Ifix sits at a 12% discount (its record was 13% in 2023).

Corporate office buildings are the hardest hit among real estate types, with a 33% discount, followed by shopping centers at 18%, logistics warehouses at 11%, and urban rental properties (such as pharmacies and supermarkets) at 7%. For shopping malls, the discounts are even higher than in November 2021 during the pandemic, when the average discount hit 20%.

According to Clube FII’s Danilo Barbosa, the market may still face further declines, given that long-term NTN-B rates are currently higher than they were at past lows. “The 2035-maturity NTN-B now offers IPCA plus 6.64%, compared to 6.48% in March 2023. If this were the sole factor, it could suggest further downside for fund values.” However, he believes share values are now attractive to buyers.

TRXF11, which holds 53 properties across 11 states—primarily large retail stores—secured a major deal in July with a R$621 million contract to build a “built-to-suit” hospital for the Albert Einstein chain, a landmark 20-year lease for the fund. In the first half of the year, TRXF11 successfully raised R$250 million, twice the anticipated amount. Now, with limited prospects for additional funding, Mr. Barbosa has decided to boost the fund’s cash position, which currently stands at R$400 million.

To capitalize on strong investor demand in the private credit market—where high interest has driven down rates on corporate debt securities—TRXF11 is issuing R$224 million in 15-year real estate receivables certificates (CRIs) at IPCA plus 6.9%. “When public offerings aren’t favorable, we raise capital through debt securities to maintain liquidity and secure quality investments. When the environment improves, we’ll issue shares to balance the books,” the fund’s representative said.

Known for its portfolio rotation, TRXF11 sold ten properties this year, generating R$750 million. Although the fund employs a multi-strategy approach, its primary focus remains on real estate assets (“brick” investments), holding just R$120 million in CRIs. Currently trading at a 2% discount, the fund has mostly stayed above its asset value throughout its history. This recent dip has pushed its dividend yield to 11%, above its historical average of 9%.

“Retail investors tend to have a short-term view, which doesn’t align with real estate’s long-term nature,” said Felipe Gaiad, managing partner of HSI Fundos Imobiliários, highlighting that around 75% of FII investors are individuals. “When interest rates rise, investors shift from FIIs to government bonds, causing quotas to drop excessively. However, the fundamentals remain unchanged.”

Earlier in the year, HSI raised R$450 million for its HSI Malls (HSML11) fund, which it used to prepay debt and strengthen cash reserves. “Initially, we focused on organic growth, but with reduced liquidity, we’ve redirected investments.” The fund now emphasizes acquiring minority stakes and expanding assets, including mall developments, with a 25% discount on asset value and an 11.5% dividend yield.

RBR Asset has strengthened its cash position, allocating 15% of its largest listed fund, RBR High Grade (RBRF11), to real estate credit bills (LCI). This fund, with R$1.2 billion in net assets, is a strategic move, according to Bruno Nardo, the company’s partner and multi-strategy manager. “We leveraged the favorable market conditions in March to build cash reserves and ensure liquidity. Since we haven’t yet made substantial use of these funds, we’re comfortable holding and waiting,” he explains.

The fund invests in other funds and in CRIs, the core focus of the manager’s strategy. According to Mr. Nardo, the bleak outlook has prompted banks to pull back, though companies still have a strong demand for credit. “As expectations have soured, interest rates have worsened rapidly over the past four weeks, and high cash flow is a helpful buffer,” he explains. Currently, RBRF11 shares trade at a roughly 22% discount, with an annual dividend yield of 10%.

The RBR Plus Multiestratégia (RBRX11) fund, with the flexibility to invest in FIIs, CRIs, and equities, originally planned to allocate R$100 million from its March public offering to other funds. However, facing a more challenging market, its focus has shifted to CRIs and preferred equity. Currently, its shares trade at a 15% discount, with a 12% annual dividend yield. The portfolio maintains a more defensive stance in RBR’s exclusive funds for pension and multifamily offices. “We view this period as an opportunity to acquire quality assets at attractive prices,” says Mr. Nardo.

In August, amid challenging market conditions, Inter Asset launched a fundraising effort for its logistics fund, INLG11, which holds R$450 million in shareholder equity. Targeting R$100 million, the offering secured R$82 million. Currently, the fund trades at a 20% discount with an annual dividend yield of 11.6%. “Share prices are one thing, and real estate assets are another. It’s a long-term play,” remarks Mauro Lima, a partner and director of real estate investments, who joined Inter Asset last year to expand the FIIs segment, develop new funds, and reposition existing ones.

According to Flávio Pires, an FII analyst at Santander, the market is unlikely to see recovery in the immediate term. He anticipates continued volatility through November, followed by a traditional December rally seen in FIIs since 2019, with individual investors reinvesting their thirteenth salaries and managers repurchasing shares of their FIIs through other funds. However, he foresees potential instability continuing until at least the second quarter of 2025. “Shares are currently undervalued and present a good entry point,” he observes.

Mr. Pires adds that investors are not entirely exiting their funds but are trimming positions to shift toward fixed income. He notes there are resilient segments within FIIs, particularly urban income. “Few funds warrant an exit solely due to adverse macroeconomic conditions. Most have solid portfolios, sound management, and sufficient liquidity,” he said.

*By Liane Thedim — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

6 de November de 2024/by Gelcy Bueno