Types of FII and key metrics
Papel (paper / CRI) funds
3 min
Papel means "paper" — these FIIs do not own buildings. Instead they invest in real-estate credit, chiefly CRIs (Certificados de Recebíveis Imobiliários), which are bonds backed by real-estate receivables.
What they really are
A paper fund is closer to a fixed-income portfolio than to a landlord. It lends money — through buying CRIs — to real-estate projects and companies, and earns interest.
Indexation: the key feature
CRIs pay interest tied to an index, and how a paper fund is indexed shapes its behavior:
- Inflation-linked (IPCA + a spread) — income rises with inflation; good for protecting purchasing power.
- Rate-linked (CDI / Selic + a spread) — income rises and falls with Brazil's benchmark interest rate; distributions tend to be high when Selic is high.
Strengths and weaknesses
- Strength — often less tied to the property cycle and to vacancy; income can be very attractive when interest rates are elevated.
- Weakness — exposed to credit risk (a borrower defaulting on a CRI) and to interest-rate moves. A fund's headline yield can look great precisely because it is taking on riskier credit.
When you see an unusually high yield, a paper fund is often the explanation — and that is a prompt to read the report and understand the credit it holds, not just chase the number.
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