More Sophisticated, Less Bank-Driven Credit: How Financial Services Are Reshaping Corporate Real Estate in Brazil
- The expansion of CRIs, funds, structured credit, and independent platforms is transforming how corporate projects are financed in Brazil.
The transformation of corporate real estate financing in Brazil did not happen abruptly—it has been developing for over a decade.
In the past, bank credit was the dominant force. Today, however, the sector operates in a much more diversified environment, with a strong presence of capital markets and structured solutions. According to Filipe Abdalla, partner at IGC Partners, this shift began back in the 2010s:
“In corporate real estate, access to cheaper bank funding started to decline between 2010 and 2013. With the growth of CRIs, real estate funds, and dedicated investors, banks became less representative.”
According to him, between 2016 and 2020 there was a significant leap in volume, conditions, and structural diversity, laying the foundation for the current model. Since then, evolution has been more incremental than disruptive, especially in the corporate segment.
Bank Retrenchment and the Rise of Capital Markets
While the shift started earlier, it has intensified recently. According to Rodrigo Sotero, Associate Partner at VERT Capital, the latest trend is clear:
“The main change is the retreat of banks from directly financing projects, forcing developers and builders to seek alternatives.”
In this context, capital markets and credit fintechs have taken on a central role. The result is straightforward: more funding options, but also greater technical requirements. For Martim Fass, real estate fund manager at Daycoval Asset, bank credit still exists but is no longer dominant:
“It remains relevant, but there is increasing diversification. Funding today is much more linked to structured credit than to the traditional model.”
The New Standard: More Complex and Segmented Structures
With changes in capital sources, the way capital is structured has also evolved. One of the key trends is the development of the capital stack, with clearer divisions between risk levels. According to Martim Fass:
“Structures with senior, mezzanine, and subordinated tranches are being used more frequently. This is already common abroad and is gaining ground here.”
This model allows different investor profiles to participate in the same project, each assuming a specific position within the risk-return structure. In Rodrigo Sotero’s view, this sophistication is inevitable:
“Transactions have become more complex and creative, requiring higher levels of control, monitoring, and governance.”
Additionally, hybrid structures are emerging, challenging traditional classifications. Abdalla highlights a recent trend:
“We’re seeing financing structures that are not formally classified as debt but have fixed-income characteristics.”
More Access to Capital, More Complexity
The advancement of financial services has brought a dual effect to the sector. On one hand, it significantly expanded access to capital. On the other, it increased operational complexity.
“There is a democratization of capital, but also a significant increase in complexity,” summarizes Rodrigo Sotero.
This process has been driven by new intermediaries: independent platforms, financial advisors, family offices, and specialized structuring firms. According to Martim Fass, many deals now occur outside traditional channels:
“There has been growth in deals structured within advisory networks, without going through large banks or public offerings.”
These transactions, often ranging from BRL 30 million to BRL 100 million, have become particularly relevant for mid-sized developers and investors.
Brazil’s Structural Limitation: Risk and Predictability
Despite the progress, Brazil still faces significant barriers compared to more mature markets. The main issue lies in the predictability of real estate income. Fass explains:
“Lease agreements in Brazil allow tenants to exit more easily, which increases risk for lenders.”
This factor limits the adoption of common structures abroad, such as bullet debt (principal repayment at maturity), higher leverage levels, and longer-term financing. Additionally, high interest rates make it harder to balance debt costs with asset income generation.
The Invisible Risk: Rising Leverage
The increased availability of capital also brings risks. One of the main concerns is the potential rise in leverage across the sector.
Rodrigo Sotero offers a direct warning:
“With more flexible structures, the risk of debt stacking increases. This requires greater discipline from companies.”
In response, investors have raised their standards. Key evaluation criteria now include: equity-to-debt ratios, collateral quality, borrower track record, and cash flow generation capacity.
