{"id":141314,"date":"2026-05-01T10:06:52","date_gmt":"2026-05-01T10:06:52","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=141314"},"modified":"2026-05-01T10:06:52","modified_gmt":"2026-05-01T10:06:52","slug":"brazil-real-estate-funds","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/brazil-real-estate-funds\/","title":{"rendered":"Brazil: Real Estate Funds"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-141314","comparative_guide","type-comparative_guide","status-publish","hentry","guides-real-estate-funds","jurisdictions-brazil"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Pinheiro Neto Advogados<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/12\/Logo-Pinheiro-Neto.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Pinheiro Neto Advogados<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/12\/Logo-Pinheiro-Neto.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Real Estate Funds laws and regulations applicable in Brazil<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the principal legal structures used for investment in real estate (e.g., limited partnerships and other fund vehicles, real estate investment companies, real estate investment trusts\/ unit trusts)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Brazil, special purpose entities (SPEs) are commonly used to channel investments in real estate. These are typically incorporated as limited liability companies (Ltda.) or corporations (S.A.), and serve as intermediate vehicles to hold direct title to underlying properties, ring-fencing project-level risk and facilitating financing and collateral arrangements.<\/p>\n<p>In addition to SPEs, one of the primary vehicles for investment in real estate assets is the Real Estate Investment Fund (Fundo de Investimento Imobili\u00e1rio \u2014 FII), governed by Law No. 8,668\/1993 and CVM Resolution No. 175\/2022 (RCVM 175), particularly its Normative Annex III. The FII is organised as a special-purpose condominium (condom\u00ednio de natureza especial), without legal personality, whose assets are segregated from the assets of both its service providers and investors. It is designed for investment in real estate undertakings (rural or urban properties, whether built or under construction), in rem rights over real property, securities issued by entities whose core activities pertain to the real estate sector, and other assets as defined in its bylaws.<\/p>\n<p>Furthermore, Brazilian laws and regulations provide for additional vehicles through which investors may obtain exposure to real estate assets and businesses. Private Equity Funds (Fundos de Investimento em Participa\u00e7\u00f5es \u2014 FIPs), regulated under Normative Annex IV of RCVM 175, may invest in equity interests in real estate companies, project companies and asset-holding entities. Receivables Funds (Fundos de Investimento em Direitos Credit\u00f3rios \u2014 FIDCs), regulated under Normative Annex II of RCVM 175, may invest in real estate-related receivables and other credit rights connected to the sector. Agribusiness Funds (Fundos de Investimento nas Cadeias Produtivas Agroindustriais \u2014 FIAGROs), regulated under Law No. 14,130\/2021 and Normative Annex VI of RCVM 175, may be used for investment in rural properties, agribusiness real estate and related assets. In addition, real estate certificates (Certificados de Receb\u00edveis Imobili\u00e1rios \u2014 CRIs), real estate credit letters (Letras de Cr\u00e9dito Imobili\u00e1rio \u2014 LCIs) and guaranteed real estate letters (Letras Imobili\u00e1rias Garantidas \u2014 LIGs) remain important instruments in Brazil\u2019s real estate finance market, widely used to channel funding to real estate activities and to provide indirect exposure to real estate-backed credit.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do all these structures provide limited liability to the investors? If so, how is this achieved?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As a general rule for any type of Brazilian investment fund, investors\u2019 liability is limited to the subscribed amount, following the framework under RCVM 175. However, the fund\u2019s bylaws may expressly provide for unlimited liability in the case of certain categories of investment funds, in which case investors may be required to cover any negative net equity of the share class.<\/p>\n<p>In the case of FIIs, Law No. 8,668\/1993 establishes that quotaholders are never personally liable for any obligation related to the real estate assets of the fund or the manager, other than the obligation to pay the value of the subscribed quotas. Therefore, specifically for FIIs, investor liability is limited by law.<\/p>\n<p>In SPEs incorporated as limited liability companies (Ltda.), partners\u2019 liability is limited to the value of their quotas, pursuant to Articles 1,052 et seq. of the Brazilian Civil Code. For SPEs structured as corporations (S.A.), shareholder liability is limited to the issue price of the subscribed or acquired shares (Law No. 6,404\/1976, Article 1). In the case of CRIs, LCIs and LIGs, their holders are economically exposed only up to the amount paid upon subscription or acquisition of the securities and are not required to contribute any additional amounts beyond their original investment.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does structure depend on sector (residential, industrial\/logistics, office, living, retail) or investment strategy (core, value-add, opportunistic)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Legal structure depends primarily on the investment strategy, development stage and investor profile, rather than on the specific real estate sector. Residential, logistics, office, retail and living assets may all be held through the same basic structures, most commonly SPEs and FIIs, provided the applicable investment policy and regulatory requirements are observed.<\/p>\n<p>Core and income-producing strategies are often implemented through listed or widely held FIIs, particularly where liquidity, recurring distributions and access to the capital markets are relevant. Value-add, development and opportunistic strategies are more frequently structured through dedicated FIIs for qualified or professional investors, often combined with underlying SPEs to isolate project-level risk, or through FIPs where the investment thesis is based on equity participation in developers or operating companies.<\/p>\n<p>Sector becomes more relevant only where the nature of the asset itself enables a specific regime. For example, rural and agribusiness-related assets make it possible to use a FIAGRO structure, while real estate-backed credit strategies are typically implemented through FIDCs, CRIs, LCIs, LIGs or other receivables-based instruments, rather than through direct property-holding structures. Infrastructure-related assets may be accessed by investors through FIPs holding SPEs that own these assets, among other possibilities.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the regulatory framework distinguish between different types of real estate funds (e.g., REITs vs. private real estate funds, development funds vs. income-generating property funds, open-ended vs closed-ended) and, if so, how?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Brazilian laws and regulations establish some distinction between real estate investment vehicles, although not exactly by real estate sector or investment strategy. Under RCVM 175, investment funds are primarily divided by fund category \u2013 such as FIIs, FIDCs, FIPs and FIAGROs \u2013 each subject to its own Normative Annex. In that sense, the regulatory framework is organised by the legal nature of the vehicle and its relevant risk factors, rather than by whether the underlying assets are residential, office, logistics or retail, or whether the strategy is core, value-add or opportunistic.<\/p>\n<p>A further distinction is drawn by investor profile, separating structures available to the general public from those restricted to qualified or professional investors, with the latter categories benefiting from greater regulatory flexibility in terms of investment limits, disclosure requirements and permitted asset classes. The framework also distinguishes between open-ended and closed-ended funds or classes: FIIs and FIPs must be constituted on a closed-ended basis, whereas other categories, such as FIDCs and FIAGROs, may be structured as open-ended or closed-ended, depending on the applicable rules.<\/p>\n<p>From a market-practice perspective, FIIs are also commonly divided into \u201cbrick\u201d funds (holding physical real estate assets) and \u201cpaper\u201d funds (holding real estate-related securities or credits), although this is not a formal distinction under CVM regulation. By contrast, SPEs are divided according to their corporate form \u2013 typically limited liability companies or corporations, whether privately held or listed \u2013 and securitisation SPEs or securitisation companies are subject to specific regulation when issuing instruments such as CRIs.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How does the regulatory calculation of leverage apply to alternative investment funds that acquire real estate assets indirectly through non-listed companies? Are there any leverage limits that apply?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As a rule, a Brazilian investment fund itself is not ordinarily permitted to incur indebtedness directly. Accordingly, leverage is typically introduced at the level of the underlying SPE through which the real estate asset is held. In structures of this kind, Brazilian regulation does not apply a standardised leverage calculation methodology, nor does it impose a single general and uniform regulatory leverage cap. The SPEs must observe the applicable accounting and corporate standards, as per their respective legal regimes.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there specific reporting requirements for property-level performance metrics (net operating income, cap rates, occupancy rates)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In general, Brazilian regulation does not require asset-by-asset reporting of property-specific performance metrics such as net operating income, capitalisation rates or occupancy rates. For FIIs and other investment funds, disclosure is instead centred on standardised periodic reports and audited financial statements, which may contain information from which property-level indicators \u2013 particularly regarding income, asset composition and liabilities \u2013 can be derived.<\/p>\n<p>For SPEs, the same logic broadly applies: reporting is generally driven by the applicable corporate and contractual framework and by the financial statements, rather than by a standalone requirement to disclose a comprehensive set of property-level operating metrics for each asset.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are any disclosures required when properties are marked to market versus held at cost?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under RCVM 175 (Annex III), CVM rules and applicable accounting standards, FII properties must be measured at fair value based on independent appraisal reports reflecting market conditions. Any valuation changes must be reflected in the investment fund\u2019s NAV and disclosed in financial statements, including the methodology, key assumptions and valuer&#8217;s identity. While historical cost may apply to properties under development or recently acquired, the notes to the financial statements must clearly disclose the adopted criteria and any variance between the carrying amount and the estimated fair value. These requirements are adopted as a general rule for other types of investment funds as well.<\/p>\n<p>For SPEs organised as either limited liability companies or corporations, the position is different. They are not subject to the FII-specific accounting and disclosure regime, but rather to the corporate and accounting framework applicable to the company itself. In the case of corporations, financial statements are prepared in accordance with Law No. 6,404\/1976 and, where the SPE is a publicly held company with securities admitted to trading, additional periodic and event-driven disclosure obligations apply under CVM Resolution No. 80\/2022. For limited liability companies and privately held corporations, there is generally no equivalent public disclosure regime requiring recurring disclosure of mark-to-market versus cost measurements. Accordingly, disclosure is typically driven by the applicable accounting standards, the financial statements and any additional requirements arising under the company\u2019s constitutional, financing or contractual documents. To the extent the relevant accounting standards on investment property are applied, the notes to the financial statements should address the adopted measurement basis and the disclosures associated with either the fair value or the cost model.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Who can perform the valuation function for real estate funds?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>For FIIs, the valuation function on a day-to-day basis is ordinarily performed by an external, specialised and independent valuer engaged for that purpose, rather than by the administrator, the manager or the auditor. However, for acquisition purposes, the manager is the entity responsible for the valuation of the real estate assets. Where properties or rights are used for the payment-in-kind of quotas, Annex III to RCVM 175 expressly requires, as a general rule, a valuation report prepared by a specialised firm, and the valuer must declare the absence of conflicts of interest impairing its independence.<\/p>\n<p>For SPEs, there is generally no equivalent fund-specific rule prescribing who must perform the valuation function, so valuations are typically prepared or commissioned under the applicable corporate and accounting framework, reflected in the financial statements and, where applicable, subject to audit and to the disclosure regime depending on whether the company is public or private.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How often must valuations be performed and how does this differ between closed-ended and open-ended real estate funds?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under RCVM 175 (Annex III), all FIIs must be closed-ended, so the open-ended distinction does not apply. Independent appraisals of a FII\u2019s real estate assets must be updated at least annually for financial reporting purposes, and must in any event be updated earlier whenever intervening facts or circumstances indicate that the latest valuation may no longer appropriately reflect current market conditions (for example, regulatory or economic conditions affecting the asset\u2019s value).<\/p>\n<p>For SPEs, by contrast, there is no equivalent FII-specific rule imposing periodic independent appraisals as such; rather, the need for an updated valuation depends on the applicable accounting treatment of the property.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the liquidity management tools you would typically expect a manager to deploy for an open-ended real estate fund?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Although all FII classes of quotas must be constituted in a closed-end regime, and therefore do not have a specific need or requirement related to liquidity, the General Part of RCVM 175 provides a comprehensive set of liquidity-management tools for open-ended funds that may hold real estate-backed financial assets. Managers may deploy redemption gates, with parameters based on the NAV of the classes aimed at retail investors, or freely set for classes restricted to qualified investors &#8211; any implementation or removal requires a material fact disclosure. Additionally, these funds may also adopt longer periods for redemption pricing and payment to manage less liquid assets, adopt exit fees, anti-dilution levies, or swing pricing to protect long-term investors. In exceptional cases, funds\u2019 classes may also be suspended from redemption for up to five business days in specific instances of illiquidity, as provided for in RCVM 175.<\/p>\n<p>In any case, other liquidity management tools may also be used, such as liquidity reserves in cash-like instruments, which are fundamental to meeting redemptions or amortisation payments without forced sales; some classes may also set specific minimum liquid asset percentages. Funds typically maintain reserves for operating expenses and amortisations, as well as put-option contracts or conversion mechanisms to facilitate the exit strategy.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any limits on the manager\u2019s ability to restrict redemptions in open ended real estate funds?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As noted above, FIIs must be constituted in closed-end form. However, for open-ended funds authorised to invest in real estate-backed financial instruments, RCVM 175 expressly regulates the limits and conditions for restricting redemptions. The administrator may suspend redemptions where exceptional circumstances of asset illiquidity or market conditions make it impossible to honour redemption requests without prejudicing the remaining quotaholders, for up to five business days. Additionally, the fund\u2019s bylaws may establish redemption gates, provided that, for funds aimed at retail investors, such restrictions must be linked to the proportion of redemption amounts relative to the fund\u2019s NAV.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are potential tools that a manager may use to manage illiquidity risks regarding the real estate assets of its fund (e.g., credit facilities, partial disposals, NAV financing)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As previously noted, FIIs (and investment funds in general) usually cannot rely on fund-level borrowing under the current framework. Accordingly, they typically manage liquidity through the tools already mentioned, asset sales (including partial disposals) and follow-on offerings of new quotas. Fund reorganisations such as mergers, spin-offs or other segregating transactions may also be used, in each case subject to the fund\u2019s investment policy, constitutional documents and the applicable approval requirements.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any other limitations on a manager\u2019s ability to manage its real estate funds (e.g., geographic diversification requirements, property type concentration limits, leverage restrictions)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>&nbsp;<\/p>\n<p>The applicable limits depend on the investment vehicle. For FIIs, RCVM 175 and Annex III require the bylaws to define the fund\u2019s investment policy and the relevant portfolio limits. FIIs targeted to the general public face stricter regulatory concentration limits, in addition to any contractual limits provided for in the bylaws, compared to those targeting qualified or professional investors. In addition, transactions involving conflicts of interest may, in certain cases, require prior approval by the quotaholders\u2019 meeting.<\/p>\n<p>There is no general mandatory geographic diversification requirement, but the bylaws may impose regional or sectoral parameters, and the manager must comply with both the regulatory restrictions and the specific limits set out in the fund documents.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are managers or advisers to real estate funds required to be licensed, authorised or regulated by a regulatory body? And the real estate fund itself?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Investment funds, together with their essential service providers \u2013 most notably the administrator and the portfolio manager \u2013 are subject to the CVM regulatory framework, and must hold the corresponding CVM registration. Under CVM Resolution No. 21\/2021, administrators and portfolio managers must obtain accreditation by demonstrating compliance with professional qualification, technical capacity and organisational structure requirements. The CVM exercises ongoing surveillance over accredited administrators and portfolio managers, including periodic reporting obligations, inspection powers and the authority to impose administrative sanctions for regulatory breaches.<\/p>\n<p>A specialised consultant may also participate in the investment structure, but only if the portfolio manager retains discretionary authority over the fund\u2019s investment decisions. Accordingly, a consultant acting solely in a technical or ancillary capacity would not ordinarily replace, or dispense with, the regulated portfolio-management function and, in turn, would not be subject to CVM registration and supervision. If, however, the consultant performs a regulated securities advisory or analysis activity, the applicable CVM regime must be assessed separately.<\/p>\n<p>By contrast, an SPE holding direct title to the relevant real estate asset will generally be incorporated and registered before the competent corporate registry \u2013 typically the Board of Trade or the Civil Registry of Legal Entities where applicable \u2013 and will remain subject to the ordinary corporate rules governing its legal form. CVM registration would arise at the level of the SPE only if that vehicle itself became an issuer of securities admitted to trading or otherwise engaged in a regulated capital-markets activity.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there different tiers to regulation applicable to local fund vehicles based on the size of the fund and\/ or the size of the manager?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Brazilian laws and regulations do not establish formal regulatory tiers based solely on the size of the fund or the manager. Distinctions are drawn primarily by reference to the investor profile \u2013 separating funds available to the general public from those restricted to qualified or professional investors \u2013 and, indirectly, the number of investors, which affects operational flexibility and governance requirements.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How does the appointment of a property and asset manager typically work for a real estate fund? Are there any regulatory requirements to be aware of?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under Brazilian fund regulation, the administrator and the manager constitute the fund\u2019s essential service providers pursuant to RCVM 175, except in the limited circumstances in which the fund\u2019s investment policy expressly allows the administrator to perform portfolio management activities directly. Under RCVM 175, the manager is not merely appointed as an ancillary participant, but rather fulfils an essential role in the fund\u2019s operation. Where a separate manager is designated, it must be duly authorised by the CVM and hold discretionary authority over portfolio management, acting jointly with the administrator in the fund\u2019s regulatory structuring and registration process. Asset selection lies with the manager, subject to the fund documents and the applicable investment policy.<\/p>\n<p>A property manager engaged to carry out leasing activities and the day\u2011to\u2011day operation of the underlying real estate assets qualifies as a third\u2011party operational service provider and does not form part of the fund\u2019s essential regulatory structure. The performance of ordinary real estate management functions does not, in itself, require CVM registration. The engagement of a property manager constitutes an outsourcing of operational activities by the essential service providers and does not affect the allocation of regulatory duties, which remain fully vested in the administrator and, where applicable, the manager. Nonetheless, the essential service providers remain responsible for overseeing the property manager\u2019s performance and ensuring compliance with the fund\u2019s contractual and regulatory obligations.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What service providers are required by applicable law and regulation for real estate funds (e.g., property valuers, asset managers, property managers, custodians)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Brazilian investment funds must have the following essential and operational service providers, as applicable: (i) administrator, an institution authorised by the CVM and responsible for the fiduciary administration of the fund; (ii) portfolio manager, a service provider registered with the CVM and responsible for managing the fund&#8217;s portfolio, required for all funds except for FIIs where the investment policy does not permit more than 5% of the NAV to be allocated in securities; (iii) custodian\/bookkeeper, engaged by the administrator and authorised by the CVM for the custody of financial assets and securities, required generally for all funds except, as applicable, where financial assets represent up to 5% of the fund\u2019s NAV, provided such assets are admitted to trading or registered with a system authorised by the Brazilian Central Bank or the CVM; (iv) audit firm, registered with the CVM and responsible for auditing the fund&#8217;s financial statements; and (v) for FIIs (as well as other funds), an independent valuation firm acting as property valuer to prepare appraisal reports for the FII\u2019s real estate assets.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there local residence or other local qualification or substance requirements for the real estate investment fund and\/or the fund manager and\/or the property and asset manager to the fund?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Brazilian investment funds must be established and registered in Brazil with the CVM.<\/p>\n<p>For the administrator and manager, both must be Brazilian legal entities registered with the CVM. A foreign manager without CVM registration may not act directly as administrator or manager of a Brazilian investment fund, but foreign asset managers may incorporate Brazilian subsidiaries or affiliates and obtain CVM registration. To obtain and maintain CVM registration, the administrator and manager must satisfy ongoing requirements, including minimum capital adequacy, appropriate corporate governance structures, internal controls and compliance procedures, and technical qualification of key personnel. In any case, both the administrator and the manager must have an officer resident in Brazil who is responsible for the services provided and duly registered with the CVM. This resident officer requirement ensures accountability and facilitates regulatory supervision, as the designated officer may be held personally liable for regulatory breaches and must be available to respond to CVM inquiries and inspections.<\/p>\n<p>Regarding property managers, there is no nationality or CVM registration requirement, meaning that the property manager may be Brazilian or foreign, provided the engagement complies with duty-of-care and conflict-of-interest rules. Nevertheless, substantial activities in Brazil may be characterised as doing business in Brazil and, therefore, may be fully subject to Brazilian law. In such cases, it may be advisable to set up a local structure to render such services.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What rules apply to foreign managers or advisers wishing to manage, advise, or otherwise operate funds domiciled in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Foreign managers wishing to manage Brazilian-domiciled funds must incorporate a Brazilian entity and obtain CVM registration as a securities portfolio manager. Direct activity by a foreign manager without local presence and CVM registration is not permitted.<\/p>\n<p>The foreign manager must therefore comply in full with Brazilian regulatory requirements, including capital adequacy, technical qualification of officers, and appropriate compliance infrastructure and internal controls.<\/p>\n<p>Foreign advisers may, however, be engaged as specialised consultants. Such consultants are not subject to CVM regulation (provided they do not advise on the purchase and sale of securities) and, therefore, are not required to be registered with the CVM. Their activities are limited to the provision of advisory services and must comply with the general CVM rules applicable to investment funds, as well as with the guidelines, instructions and contractual obligations established by the fund\u2019s manager, who acts as the legal representative of the contracting party, namely the fund. Nevertheless, as mentioned above, substantial activities in Brazil may require the setting up of a local structure to perform the corresponding activities.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the typical level of management fee paid for real estate funds? Does it vary by sector or investment strategy (core, value-add, opportunistic)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Management fees for Brazilian real estate funds are typically calculated as a percentage of the fund\u2019s NAV, usually ranging from 0.5% to 2% per annum depending on the fund\u2019s size and complexity. The bylaws may also establish a minimum fixed amount in local currency to ensure coverage of essential service expenses. Fee levels do not typically vary by real estate sector, but may differ based on investment strategy: core and income-focused funds generally command lower fees, while value-add and opportunistic strategies may justify higher management fees given the more active management involved. Performance fees are also common, and any variable performance fee must adhere to the criteria set out in RCVM 175, provided they do not conflict with the specific rules for FIIs, as applicable. As a general rule, performance fees are charged only in funds where the manager actively selects and trades assets (i.e., value-add and opportunistic strategies).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is a typical carried interest type in real estate funds? Is there a common approach to hurdle\/preferred return, catch-up provision, or other condition based on property-specific benchmarks? If so, please explain.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Unlike the classic foreign private equity structure, real estate funds in Brazil do not commonly adopt a typical carried-interest mechanism. The functional equivalent is a performance fee, calculated on the fund&#8217;s excess return above a predefined benchmark\/hurdle \u2013 most often the Broad National Consumer Price Index (IPCA) plus a spread (e.g., IPCA + 6% p.a.), the Interbank Deposit Certificate Rate (CDI), the General Market Price Index (IGPM) or a sector index. Funds may set specific benchmarks and segregate quotas into subclasses with distinct economic and political rights, each with its own benchmark, in accordance with RCVM 175. For funds in which development is a key part of the strategy, performance fees are quite common, with the establishment of market hurdles and structures similar to those adopted offshore (catch-up, clawbacks, etc.).<\/p>\n<p>Carry structures in Brazil, however, may be created through different types of subclasses within the same fund, establishing either different benchmarks for such subclasses or subordination to create preferred returns. The flexibility of those structures depends heavily on the target investor base of the fund (whether sophisticated or not) and the category of the fund, since specific rules differ by fund type and are detailed in the relevant Normative Annexes.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are typical management fees for real estate funds paid during and after the investment period, and how do these vary (if at all) in terms of the basis of the fee?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>For Brazilian FIIs, the distinction between \u201cduring\u201d and \u201cafter\u201d the investment period is less relevant than in traditional foreign private equity vehicles, as most FIIs available to the general public have an indefinite term and no formally defined investment period, and typically invest in already developed assets.<\/p>\n<p>In dedicated or exclusive FIIs structured similarly to private equity funds (notably development FIIs), the fee structure may provide for: (i) during the investment period, a management fee calculated on committed capital, typically between 1.50% and 2.00% per annum; and (ii) after the investment period, a reduced management fee, shifting to invested capital or the fund&#8217;s net asset value as the calculation base, frequently between 1.00% and 1.50% per annum.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any particular requests investors in real estate funds are likely to ask for in their side letters?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Side letters are not common practice across the FII market generally, but they appear more frequently in sophisticated, non-listed or dedicated vehicles aimed at qualified or professional investors. Under CVM Resolution 175, the principle of equitable treatment generally prohibits side letters that grant competitive advantages. Economic rights and voting rights cannot be differentiated in private agreements, and any such variations must be formally established through distinct subclasses in the fund&#8217;s bylaws. Side letters are strictly limited to regulating investor-specific administrative or regulatory requirements that do not impact the fund&#8217;s financial or governance balance \u2013 for example, reporting formats, tax documentation or compliance certifications required by a particular investor\u2019s internal policies or home jurisdiction. This framework ensures that any legitimate differentiated treatment is transparent and maintains equal treatment among investors within the fund\u2019s collective structure.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can real estate funds be marketed to non-professional (retail) investors in your jurisdiction? If so, is this a particular form of real estate fund and what are the regulatory requirements?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>FIIs can be marketed to retail investors. Marketing an FII to the general public requires a formal public offering registered under CVM Resolution 160\/2022, whereas restricted offerings for qualified or professional investors may benefit from greater flexibility. Retail-oriented FIIs typically trade on B3 S.A. \u2013 Brasil, Bolsa, Balc\u00e3o (the local stock exchange) for liquidity and must follow stricter diversification and concentration limits under Normative Annex III. While no specific FII category is reserved for retail investors, offerings to the general public demand comprehensive disclosure in the prospectus and marketing materials. The prospectus must include detailed information on the fund\u2019s investment policy, target assets and permitted asset classes, the fee structure (including management, performance and other applicable fees), risk factors specific to real estate investments (such as vacancy, tenant default, market fluctuation and liquidity risks), conflicts of interest, the identity and track record of the administrator and manager, and the procedures for subscription, redemption (if applicable) and secondary market trading. Ongoing disclosure obligations include monthly reports detailing the fund\u2019s portfolio composition, NAV, income distributions and material events, as well as audited annual financial statements. The primary distinction remains between funds open to the public and those restricted to qualified or professional investors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there additional restrictions on marketing real estate funds to government entities or similar investors (e.g. sovereign wealth funds) or pension funds or insurance company investors, given their typical allocation targets for real estate?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no CVM-specific restrictions on marketing FIIs to pension funds, insurers or sovereign wealth funds. These investors are, however, subject to their own regulatory frameworks limiting their allocations to real estate funds. For pension funds, CMN Resolution No. 4,994\/2022 sets allocation limits for closed-end supplementary pension entities (Entidades Fechadas de Previd\u00eancia Complementar \u2014 EFPCs), typically capping exposure to real estate funds at a specified portion of the entity&#8217;s total assets. For insurers, CNSP Resolution No. 432\/2021 and SUSEP regulations govern the allocation limits for variable-income assets, including FII quotas. There is no specific Brazilian restriction on the participation of foreign sovereign wealth funds in FIIs, but they must comply with the applicable rules on foreign investment in the Brazilian capital market.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What sustainability due diligence or disclosure requirements and ongoing compliance obligations apply to managers of real estate funds?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>ESG-related requirements apply within both the CVM regulatory framework and ANBIMA (Brazilian Financial and Capital Markets Association) self-regulation, on a principles-based and flexible basis. In particular, funds whose names, policies or marketing materials refer to sustainability, ESG or similar concepts are expected, depending on the circumstances, to adopt additional substantiation measures, including enhanced disclosure and reporting, internal processes at the manager level, and, where applicable, evidence of alignment with stated objectives.<\/p>\n<p>More specifically, under RCVM 175 and ANBIMA self-regulation, fund managers are required to: (i) adopt documented internal policies and procedures for the identification and monitoring of relevant ESG criteria; (ii) ensure effective implementation of such criteria in portfolio management decisions; (iii) maintain consistency between stated objectives and actual investment practices; and (iv) provide proportionate and verifiable disclosure and periodic reporting to investors.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any mandatory energy efficiency reporting or carbon footprint disclosure requirements?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Energy efficiency or carbon footprint disclosures are not currently required under RCVM 175, except for FIIs explicitly marketed as sustainable, such as \u201cgreen\u201d or \u201cESG\u201d funds that have committed to such objectives. Additionally, ANBIMA recognises two sustainable fund categories with specific disclosure expectations \u2013 ESG and IS (Impact and Sustainability). ESG funds are those with sustainable objectives and criteria integrated into their investment process, while IS funds are committed to seeking measurable real-world impact within specific sustainable objectives and are required to report on progress.<\/p>\n<p>Many FIIs voluntarily adopt certifications such as LEED, AQUA-HQE or EDGE and participate in the Brazilian GHG Protocol Programme as competitive differentiators. Looking ahead, the CVM intends to expand ESG requirements in line with ISSB and IOSCO recommendations, suggesting that reporting obligations will become progressively more robust, especially for funds positioned as sustainable.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">5210<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/141314","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=141314"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}