XP Malls is the Most Traded Real Estate Fund on B3; Executive Comments on Market Outlook, Plans, and Aspirations

Felipe Teatini, head of investor relations at the company, states that XPML11 has tripled in size over the past 18 months and that the FII team will "remain alert to good opportunities and, if they arise, we will return to the market to raise funds."

Felipe Teatini, head of investor relations at XP Malls

By: SiiLA News

07/23/2024

According to the latest B3 FII Bulletin, among the ten most traded funds in June, shopping mall FIIs (Real Estate Investment Fund) appear twice on the list, in first and fifth place. In a 12-month span, the most traded REIT is also a shopping mall fund.

Leading the monthly and 12-month rankings is XP Malls (XPML11). In June, trading of the XP fund dedicated to shopping malls accounted for 6.3% of the 5.7 billion funds traded on the stock exchange.

Felipe Teatini, head of investor relations at XP Malls, explains that several factors are contributing to these results. However, "without a doubt, the main reason for this is the issuances," he reveals.

"Every time there is an offering, it creates a certain buzz in the market, and this generates greater liquidity," adds the executive.

XP Malls has been heavily investing in acquiring new properties. At the end of June, the fund acquired a percentage of six properties from SYN for R$ 2.1 billion. The transaction involved properties such as Cerrado, Cidade São Paulo, and Tietê Plaza shopping malls.

In July, the fund invested R$ 273 million in a new acquisition, which included the Bela Vista, Ponta Negra, and the third expansion of Catarina Fashion Outlet.

"There are excellent acquisition opportunities in Brazil. In the short and medium term, our job is to absorb these acquisitions we've made — the fund has tripled in size over the last 18 months. Looking to the long term, we will remain alert to good opportunities and, if they arise, we will return to the market to raise funds," he indicates.

Market Evolution

Shopping Mall Sales Volume by Asset Class

The growth of shopping mall REITs aligns with the strong performance of the sector. Data from GROCS, SiiLA's shopping data and analytics platform, show that sales volume per square meter has been increasing in shopping malls of all classes (A, B, and C) since 2021.

This growth is not just monetary but also physical. An additional 650,000 m² of shopping mall GLA is expected to be delivered in Brazil in the coming years, according to SiiLA's GORCS.

"Shopping malls in Brazil have proven to be a very healthy environment. We can adapt very quickly. At the end of the day, the great value of the shopping mall industry in Brazil is the location of the properties. They are in the middle of cities, unlike in other countries where they are in more remote areas. Because of this, we are heavily investing in service, leisure, and entertainment operations, which are environments where you manage your life. It's not just a place for buying products," says Teatini.

Resilience of Shopping Mall FIIs in Crises

Not only shopping malls, but the fund market in general, was concerned after discussions about investment fund taxation. According to Teatini, this is not the first time, nor will it be the last time this issue is debated.

The executive believes that even if there is taxation or a crisis, shopping mall investment funds will survive.

"Each of our malls has 200 to 300 tenants, and we have 24 malls in our portfolio," he says. The dispersion, according to the executive, helps the fund remain resilient in the face of a regional or city-wide crisis or even if a major store faces financial difficulties.

"In general, this has little impact because one does not weigh much when you have this dispersion of tenants and assets," the executive adds.

Regarding taxation, Teatini believes that, at some point, the issue will resurface. "It may not be this year or the next, but perhaps in 2026, it will be discussed again. I think we will always have a differential marked by these two pillars: the physical pillar, which is the dispersion of risk, and the psychological pillar, which is the tangibility of the investment," he concludes.

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