Brazilian securitization consultancy Uqbar said in a report that 2010 issuance of CRIs, the main vehicle for real estate securitization in the country, hit R$8.53 billion ($5.1 billion) last year (see chart below). This was more than double the figure for 2009.
Uqbar sounded an optimistic note for 2011 as well. “First indicators point to another robust year, despite the increase in interest rates,” the consultancy said. “Based on their strong finish last year and their auspicious figures in the first weeks of 2011, the [market for real estate investment funds or FIIs] and CRI markets seem to indicate they are about to repeat their outstanding performance of last year.”
Last year saw the introduction of fixed income real estate funds, a new category of FII devoted to CRIs and other real estate credit-linked securities. Players were encouraged by
Law No. 12,024/2009, which extended a tax exemption for retail investors holding CRIs to those holding shares in FIIs that hold CRIs.
Market capitalization for this segment reached R$646.5 million, Uqbar said.
FIIs are closed-ended funds similar to REITs but are not organized as a company or trust. Law No. 12,024 matters to MBS players because the minimal investment required for buying CRIs directly makes it prohibitively expensive for smaller investors. CRI exposure via FIIs is more accessible to retail buyers.
The Uqbar report, which also contains a wealth of data about real estate financing outside of securitization, is attached.