What Brazil Can Learn From U.S. Real Estate Credit

To assess opportunities for inspiration from the U.S. model, it is essential to clarify the structural differences between the two systems. Allegro highlights that the central discrepancy lies in the origin of capital and the diversity of funding sources:

“In the United States, financing is predominantly capital-markets-based and supported by a network of thousands of regional banks. In Brazil, credit is concentrated in a few retail banks and heavily dependent on earmarked funding sources such as savings accounts and the FGTS.”

Another important distinction involves liability structures. The U.S. market widely adopts non-recourse debt, in which collateral is limited to the property itself. In Brazil, financing structures still require corporate guarantees, bank sureties, and often additional shareholder backing — increasing both cost and credit restrictions.

According to the specialist, the abundance and predictability of credit in the U.S. stem from the depth of the secondary debt market. Through securitization instruments such as Commercial Mortgage-Backed Securities (CMBS), risk is distributed among global investors, freeing up banks’ balance sheets for new lending.

“In Brazil, volatility in the benchmark interest rate and legal uncertainty surrounding collateral enforcement create an environment of excessive caution.”

While in the U.S. predictability is supported by a relatively stable long-term yield curve — allowing financial planning horizons of 10 to 20 years — Brazil still operates within shorter timeframes, subject to abrupt cycles.

In the United States, regional banks form the backbone of local development:

“They finance mid-sized projects with deep knowledge of their markets, while capital markets — through debt funds and REITs — absorb larger-scale developments.”

In Brazil, banking concentration and regulatory costs make replication of this model more challenging. Still, the growth of private credit funds and real estate receivables funds (FIDCs) signals early steps toward decentralization.

In the U.S., Loan-to-Cost (LTC) ratios in construction financing typically range from 60% to 75%, often enhanced with mezzanine debt. In Brazil, LTC rarely exceeds 50% to 60%, limiting developers’ leverage capacity.

The U.S. risk assessment process is more technical and asset-focused. Metrics such as DSCR (Debt Service Coverage Ratio) and Debt Yield guide lending decisions by projecting the property’s cash flow generation capacity across different cycles.

“Brazil could evolve by depersonalizing credit and strengthening technical analysis of real estate fundamentals, such as structural vacancy, absorption rates, and building durability.”

In the U.S., pre-leasing is nearly mandatory for construction financing approval. Contracts signed with anchor tenants ensure predictable cash flow and reduce lender risk.

“In Brazil, speculative construction still predominates. The Built-to-Suit model already incorporates pre-contracting logic, but it could expand to multi-tenant projects, with credit released in tranches according to pre-leasing performance.”

The American market widely uses mezzanine debt, preferred equity, and sale-leaseback structures. In Brazil, although CRIs (Real Estate Receivables Certificates) have grown, liquidity for higher-risk securities remains limited.

“Real estate investment funds could act more strategically as mezzanine debt providers, filling the gap between senior credit and equity, creating more sophisticated capital stacks.”

In the U.S., capital markets account for a dominant share of real estate funding — in some segments, nearly half of the total. In Brazil, traditional bank credit still prevails.

To expand the capital markets channel, Allegro points to three essential steps: consolidation of securitization, greater data transparency, and contractual standardization.

The creation of robust price and vacancy indices would enhance confidence among institutional and international investors.

One of the greatest differentiators of the U.S. model lies in legal predictability. Collateral enforcement is fast and standardized. In Brazil, judicial delays and uncertainty surrounding fiduciary lien execution increase perceived risk.

To accelerate the development of Brazil’s commercial real estate market, the priority would be clear:

“Modernizing and streamlining debt securitization while definitively consolidating legal certainty around real estate collateral.”

According to Allegro, ensuring that creditors can repossess and liquidate assets efficiently would allow banks to transfer loans to capital markets more effectively — unlocking a new phase of funding for Brazil’s commercial real estate sector.