What is the current legal landscape for Real Estate Funds in your jurisdiction?

In Brazil, the predominant legal structure for investment in real estate assets is the Real Estate Investment Fund (Fundo de Investimento Imobiliário – FII), a regulated investment fund governed by Resolution No. 175/2022, issued by the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM), and in particular by Normative Annex III thereto. Under this regulatory framework, the FII is organized as a special-purpose condominium (condomínio de natureza especial) that lacks separate legal personality, but whose assets are segregated from the patrimony of its administrator, portfolio manager and quotaholders. CVM Resolution No. 175/2022 establishes specific rules governing the formation, governance, disclosure obligations, asset valuation, appointment of essential service providers, fiduciary duties and allocation of liability among market participants. FIIs are also subject to the provisions of the Brazilian Civil Code and Law No. 8,668/1993, which address multi-class structures, limited liability of quotaholders and specific features applicable to real estate investment.

The Brazilian legal landscape, however, is not limited to FIIs. Other regulated fund structures may also be used for real estate-related investment, depending on the nature of the underlying assets and the investment strategy. Agribusiness investment funds (Fundos de Investimento nas Cadeias Produtivas do Agronegócio – Fiagros), governed by Normative Annex VI of CVM Resolution No. 175/2022 and by Law No. 14,130/2021, may be used for investing in rural real estate assets and agribusiness-related real estate assets. Private Equity Funds (Fundos de Investimento em Participações – FIPs), regulated under Normative Annex IV, may obtain exposure to the sector through equity interests in project companies or operating companies. Receivables Funds (Fundos de Investimento em Direitos Creditórios – FIDCs), regulated under Normative Annex II, may invest in credit rights and securitized receivables connected to the real estate sector.

Outside the regulated fund and securitization space, real estate investment is also frequently structured through special purpose entities (SPEs), typically incorporated as either limited liability companies (sociedades limitadas) or corporations (sociedades por ações), and therefore subject to corporate, governance, disclosure and, where applicable, capital markets rules corresponding to their legal form and listing status. In addition, funds, securitization structures and corporate vehicles are subject to the Brazilian framework for public offerings, as well as to specific regimes applicable to tax-favored or otherwise incentivized investment structures.

What three essential pieces of advice would you give to clients involved in Real Estate Funds matters?

First, when structuring a real estate investment vehicle, the analysis should not be confined to the acquisition of real estate assets or the initial deployment of capital. Equal attention should be given to exit and liquidity scenarios, including the expected term of the vehicle, the circumstances in which the underlying assets may need to be monetised, and the legal and operational mechanics for amortisation, disposal or liquidation. In the context of FIIs, these matters are typically best addressed at the outset through a coherent combination of by-laws, governance provisions and transaction documents, so that a future wind-down or liquidity event may occur in an orderly and value-preserving manner. A well-structured fund anticipates liquidity events – whether through secondary market listings on B3 S.A. – Brasil, Bolsa, Balcão (the Brazilian stock exchange), redemption events, or asset disposal triggers – because a clear exit path protects all stakeholders and materially increases the fund’s attractiveness to investors.

Second, it is particularly important that the structure contains a governance framework capable of protecting not only the vehicle itself, but also the parties responsible for its origination and implementation. Where sponsors, originators, or affiliates act as service providers, removal and replacement mechanisms should be calibrated with sufficient objectivity and procedural protection to avoid unnecessary disruption. Likewise, where such parties remain connected to the underlying assets as investors, counterparties, or other stakeholders, corresponding safeguards should be implemented to preserve their economic or strategic position and to mitigate cascading effects arising from changes at fund level.

Third, the FII regime is frequently underutilized when viewed solely as a retail product or a tax-driven instrument. Properly structured, FIIs can serve as highly sophisticated vehicles for corporate real estate investment, offering asset segregation, governance discipline, and access to capital markets. In many cases, FIIs may constitute a more efficient alternative to traditional partnership or joint venture arrangements. Exploring this broader structural potential often opens solutions that go well beyond straightforward regulatory compliance.

What are the greatest threats and opportunities in Real Estate Funds law in the next 12 months?

A meaningful opportunity in the next 12 months lies in the continued refinement of Brazil’s fund regulatory framework under CVM Resolution No. 175/2022. Although already fully operative, the framework remains under technical calibration as the CVM continues to implement targeted improvements, often through public consultation. This ongoing refinement follows the profound reorganization that the resolution introduced to the fund industry through its general rules and fund-specific annexes, including those applicable to FIIs, FIPs, FIDCs, and Fiagros.

A particularly significant opportunity lies in the CVM’s proposed reassessment of the respective roles of the fiduciary administrator (administrador fiduciário) and the portfolio manager (gestor) under Normative Annex III. This reassessment may result in broader operational flexibility and greater decisional autonomy for portfolio managers in the day-to-day implementation of FII strategies, while preserving with the fiduciary administrator the ownership of the underlying real estate assets required by Law No. 8,668/1993.

This proposed reallocation of functions sits alongside other potentially material enhancements, including: (i) the admission of subordinated subclasses for debt-focused FIIs offered to the general public; (ii) adjustments to repurchase of quotas and voluntary tender offers (ofertas públicas de aquisição); (iii) a more workable treatment of dissenting quotaholders’ reimbursement rights (direito de reembolso) in illiquid structures; (iv) refinements to assembly quorums and quotaholder representation; and (v) a more adaptable periodic disclosure regime. Additionally, ESG-oriented products may benefit from the still-evolving framework being shaped by both CVM regulation and ANBIMA (Associação Brasileira das Entidades dos Mercados Financeiro e de Capitais) self-regulation.

The same regulatory momentum that creates opportunity also brings risks. The CVM and the Brazilian Central Bank (Banco Central do Brasil) have intensified supervisory scrutiny across fund structures, not only where the target investor is an individual, but more broadly across investor profiles, signaling a generally protective regulatory posture. The flexibility of these vehicles has also attracted less well-intentioned market participants seeking to build opaque arrangements, which in practice tends to increase scrutiny and regulatory pressure even on compliant participants. Furthermore, Brazil’s ongoing fiscal consolidation debate may affect the tax benefits that underpin the attractiveness of FIIs, Fiagros, and incentivized infrastructure-focused structures, and any amendment to the current exemption regimes could reduce their economic advantages. Lastly, the review of Normative Annex III and CVM Resolution No. 175/2022 may itself generate transitional uncertainty.

How do you ensure high client satisfaction levels are maintained by your practice?

Our ability to maintain high levels of client satisfaction in this area is closely tied to our genuinely multidisciplinary approach to these mandates. Real estate fund structures in Brazil require not only a solid command of fund regulation and capital markets rules, but also a sophisticated understanding of real estate law and the legal treatment of the underlying assets. These are two particularly strong practices within our firm, and their complementarity allows us to design structures that are robust from both the perspective of the investment vehicle and the real estate assets themselves. In practical terms, this means that comprehensive due diligence on assets and stakeholders, the legal architecture of the fund, the governance arrangements, the asset-holding structure, and the underlying real estate documentation are developed as a coherent whole, rather than in isolation.

Real estate fund mandates sit at the intersection of capital markets, real estate, tax, corporate governance, environmental regulation, and, increasingly, ESG advisory. As a full-service firm with strong practices in these fields, we deploy integrated cross-functional teams across all these areas–ensuring clients receive coordinated, commercially grounded advice rather than fragmented opinions.

Equally important, we do not limit ourselves to conventional structures when the client’s objectives call for a more tailored solution. We place considerable value on thinking beyond standard market formats and, in many cases, develop intelligent, non-conventional structures that accurately reflect the client’s commercial objectives while remaining fully consistent with the applicable legal and regulatory framework. Our role is not merely to confirm whether a familiar structure is available, but to identify how the desired result can be implemented with the appropriate level of legal certainty, efficiency, and flexibility. That combination of technical depth, complementary expertise, execution quality, commercial sensitivity, and structuring creativity is what clients value most.

What technological advancements are reshaping Real Estate Funds law and how can clients benefit from them?

Technological developments have so far had less impact on the specific regulatory framework of real estate funds than on the operational environment surrounding the underlying assets and their negotiation dynamics. The main regulatory discussions are currently taking place in the broader sphere of tokenization and tokenized assets, both before the CVM and the Central Bank, which have been progressively clarifying the regulatory treatment of digital assets, tokenized receivables, and virtual-asset service providers. That said, these structures are not yet being deployed in any significant way in the Brazilian real estate fund industry, which remains largely centered on more traditional vehicles and instruments. Clients should monitor these developments closely, as early adoption of tokenization frameworks, once mature, may offer competitive advantages in fundraising and secondary market liquidity.

Another relevant development has been the increasing sophistication of high-frequency and algorithmic trading, with greater use of parametrisation and automation tools aimed at generating more consistent execution and return profiles. B3 has continued to invest in infrastructure for this segment, and the expansion of this trading environment has been visible in the Brazilian market, including through faster order execution and the growing role of high-frequency trading participants in market liquidity. This is an area that continues to be closely observed by market participants and regulators alike.

At the manager level, the most immediate impact has been the broader use of technological tools for screening, evaluating, monitoring, and managing both prospective and current assets, including data-driven analysis, automation, and AI-based support tools. For clients, these advancements translate into more rigorous asset selection, enhanced portfolio monitoring, and, ultimately, better-informed investment decisions throughout the fund’s lifecycle.