Fact or Fake: Have Brick-and-Mortar REITs Become Fixed Income in Disguise?

In practice, brick-and-mortar FIIs remain variable-income assets, even with monthly income distributions. Investors are still exposed to real estate risk, which directly affects cash flow and distributed earnings.

The main example is vacancy: if the fund loses tenants or takes time to fill vacant space, the impact on revenue is immediate.

“If there is vacancy, that will consequently impact the income the investor receives,” says Verissimo.

Additionally, operating costs, maintenance expenses, and potential capital expenditures can pressure distributions — something that does not occur with the same intensity in a traditional fixed-income bond.

Although the “fake” label applies to traditional FIIs, the perception of fixed income in disguise has strengthened with the rise of structured real estate vehicles outside the B3 environment.

Verissimo points out that some recent offerings, distributed in alternative platforms, have been structured with virtually contracted returns.

“There are new funds traded in alternative environments that come with pre-fixed returns. In that case, the structure resembles fixed income more closely,” he says.

Caio Nabuco adds that the phrase may also be linked to “CETIP-registered” brick-and-mortar funds, whose structures resemble credit products. An example would be offerings with senior and subordinated tranches, in which the senior tranche may offer a fixed return to investors, even though the underlying portfolio consists of properties.

“The senior tranche guarantees a fixed return, such as inflation (IPCA) + 8.5% per year. In that sense, it would be a brick-and-mortar portfolio with fixed remuneration,” he explains.

For Verissimo, a significant part of the issue lies in the behavior of retail investors, who still dominate the Brazilian FII market.

“Retail investors generally do not look at real estate fundamentals. They want to know how much the fund pays per month and whether it is recurring.”

In practice, this means that many investors overlook important indicators — such as price per square meter, asset quality, supply-demand dynamics, and segment vacancy — to focus almost exclusively on monthly dividends.

Another central point in the debate is the dominance of dividend yield as the key metric. Although it is a relevant indicator, it can mislead investors when analyzed in isolation.

“Dividend yield is a backward-looking indicator. If the investor looks only at that, they can completely distort their risk assessment,” says Verissimo.

Caio Nabuco reinforces that there is room for superficial analysis. According to him, the indicator may capture one-off events — such as portfolio recycling or non-recurring distributions — artificially inflating yield.

“Those who look only at dividend yield when buying a real estate fund may end up disappointed over time,” he warns.

To conclude, Verissimo emphasizes:

“Investors need to understand that the real estate market is cyclical. There will be ups and downs, and they need to learn how to navigate different phases.”

Caio Nabuco adds:

“In 2026, lower interest rates may reduce migration toward fixed income, FIIs could become more attractive, and there is room for repricing, rent increases, and higher income in some sectors. On the other hand, the year should still bring elevated volatility, influenced by geopolitical factors, Brazil’s elections, and instability in monetary policy guidance.”