Brick vs paper: the two Brazilian REIT families and how not to compare them wrong

Almost every real-estate fund fits into one of two families: it owns property, or it owns debt. The confusion starts when someone compares one fund's vacancy with the other's dividend yield — metrics that don't always make sense on both sides.

The two families (and two more)

Brick (tijolo) — owns physical real estate: logistics, malls, corporate office slabs, warehouses. Income is rent.
Paper (papel) — owns CRI (real-estate receivables certificates), i.e. real-estate debt. Income is interest on the receivables.
Hybrid — mixes brick and paper in the same portfolio.
FoF (fund of funds) — a portfolio of other FIIs' shares.

Brick: rent, vacancy and cap rate

In a brick fund the income is rent, so what matters is the property. The key metrics are vacancy (how much sits empty), default (how much the tenant fails to pay), the lease indexation (IGP-M or IPCA), the cap rate (annual income ÷ property value), and the quality and location of the assets. Dados B3 surfaces vacancy per fund from the quarterly report the fund files with the CVM (inf_trimestral), priced at the right time — point-in-time, no look-ahead.

Paper: credit, indexation and duration

In a paper fund the income is the interest on receivables. What drives the result is something else entirely: the credit risk of the debtors, the indexation of the portfolio (CDI or IPCA + spread), and the duration (average term). A paper fund has no vacancy and no cap rate — and that absence is honest, it's the nature of the asset. It's the same principle by which, on this site, a bank has no ROIC: it's not missing data, it's a metric that doesn't apply.

A high yield on a paper fund is rarely a free lunch. A fatter headline dividend yield on a CRI fund usually carries credit or indexation risk along with it — not free yield. Before swapping brick for paper just for the bigger number, ask where the spread comes from and who the debtor is.

How P/BV and DY change meaning

The same multiple reads differently in each family. A paper fund's NAV tracks the interest-rate curve of its bonds, so its P/BV hugs ~1.0 unless there's credit stress. A brick fund's NAV, by contrast, is appraisal-based and can diverge more from the price — hence P/BV of 0.7 or 1.2 being common. More on this in REIT P/BV.

And a FII's dividend yield needs a reading correction: it is cash distributed, not accounting profit. By law, the fund distributes at least 95% of the cash result assessed semiannually, and for individuals in Brazil that income is income-tax exempt. The number you see is money that landed in the account — not a line on the income statement.

The practical takeaway

Match the metric to the family. Don't compare a logistics fund's vacancy with a CRI fund's — the CRI fund has none. And don't read a high paper-fund yield as strictly "better" than a lower brick-fund yield: they're different risks, with different sources of income. The fair comparison is within the same family first.

See the FIIs

Honest limitations

Vacancy and cap rate only describe brick; credit and duration only describe paper.
Vacancy and book data are periodic and backward-looking — they don't predict the future.
Not investment advice. A higher yield is not the same as a better return.