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BeginnerBrazilian REITs · Lesson B3.4 · Module B3

Development, Fiagro and niche types

Module B3: The types of FII

11 slides~5 minquiz at the end

In this lesson

  • How a development fund makes money
  • The math of a one-year construction delay
  • What a Fiagro is and what it can hold
See the slides
Building under construction with a crane

Brazilian REITs · Lesson B3.4

Some FIIs build

And there's an agribusiness fund under the same law. Meet the niche types.

Gaf.arq · Wikimedia Commons · CC BY-SA 3.0

Development fund

Money goes out first and comes back at the end

  1. Year 0LandR$ 20 mn leave the fund
  2. Years 1 to 3Constructionanother R$ 60 mn, little or no income
  3. Year 4Deliveryunits are sold or leased
  4. At the endCashR$ 100 mn come back to the fund

Do the math

What the project made

R$ 20 mnland+R$ 60 mnconstruction=R$ 80 mninvested
R$ 100 mnsales−R$ 80 mn=R$ 20 mnprofit (25%)

Simplified: as if all the money went in at the start. Illustrative figures.

Timing risk

Construction delays cost return

Delivered in 4 years

5.7% a year

  • 25% profit in 4 years

One year late

4.6% a year

  • Same profit, stretched over 5 years

Nobody lost money — and the return still shrank.

The myth

During construction, don't expect monthly rent

Finished brickDevelopment
Monthly incomerent every monthlow or irregular
Where the money comes fromleasessale or delivery
Main riskvacancydelays and building costs
Green soybean field with trees in the background

Fiagro

The agribusiness cousin, same law

A fund for agribusiness supply chains, created in 2021 inside the FII law. It also trades on the exchange.

Law 8,668/1993, arts. 20-A to 20-F, added by Law 14,130/2021.

Lucas Friederich · Wikimedia Commons · CC BY-SA 4.0

Inside a Fiagro

What a Fiagro can hold

  • Farmlandland leased to growers
  • CRAagribusiness debt, a cousin of the CRI
  • Sector securitiesissued by those who grow or trade
  • Agribusiness companiesstakes in companies in the chain

Income is tax-exempt for individuals under the same conditions as FIIs (Law 11,033/2004, art. 3, III).

Remember this

Three ideas from this lesson

  1. Development buildsMoney comes on sale or delivery, not from monthly rent.
  2. Time is returnA year's delay shrinks the annual gain, even with no loss.
  3. Fiagro is agribusinessSame law as FIIs, holding farmland, CRAs and companies in the chain.

Quick test · 1 of 2

Which law created the Fiagro?

See answer

Law 8,668/1993. Law 14,130/2021 added articles 20-A to 20-F to it, creating the Fiagro.

Quick test · 2 of 2

A fund whose building is still under construction. What income to expect?

See answer

Low or irregular. No tenant pays during construction: the money comes back when the units are sold or leased.

Lesson complete

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Educational content, written for learners. Not investment advice.