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IntermediateBrazilian REITs · Lesson I2.2 · Module I2

The 95% rule: cash, not accounting

Module I2: What the fund can (and can't) do

11 slides~5 minquiz at the end

In this lesson

  • The 95% rule each half-year
  • Accounting vs cash profit
  • Where special payouts come from
See the slides
Three stacks of coins of growing height

Brazilian REITs · Lesson I2.2

Which profit must the fund pay out?

The 95% rule looks at cash that came in, not at the balance sheet.

KMR Photography · Wikimedia Commons · CC BY 2.0

The legal rule

At least 95% of cash profit

95%

measured each half-year, on 30/06 and 31/12, on a cash basis

Law 8,668/1993, art. 10, sole paragraph. In force in 09/2026: MP 1,303/2025, which changed it, lapsed on 08/10/2025.

Two profits

Accounting counts paper. Cash counts money.

Accounting profitCash profit
Rent receivedcountscounts
Property revaluationcountsdoes not count
Rent receivablecountsonly when paid
Cash sale with a gaincountscounts

An illustrative half-year

R$ 32M of profit, R$ 11.4M owed

  1. R$ 32Maccounting
  2. R$ 20Mrevaluation
  3. R$ 12Mcash
  4. R$ 11.4Mminimum payout

The R$ 20M revaluation is paper: nobody received that money.

Do the math

What counts toward the payout

R$ 12Mrents − expenses paid×95%=R$ 11.4Mat least
R$ 20Mrevaluation×0%=R$ 0not cash

Where the "special dividend" comes from

The fund sold a property at a gain

R$ 5Mgain received in cash×95%=R$ 4.75Mextra for holders

A sale gain that reached the bank account is cash profit. That is why a special payout shows up.

The misconception

Is the fund hiding money?

R$ 32M profit and only R$ 11.4M paid is not hiding: R$ 20M was revaluation, not money.

Remember this

Three ideas from this lesson

  1. 95% of cashThe law checks each half-year, on the cash that came in.
  2. Revaluation is paperIt raises accounting profit, not the payout duty.
  3. Sales create extrasA gain received in cash counts toward the 95%.

Quick quiz · 1 of 2

The appraisal raised the properties by R$ 20M. Must the fund pay out 95% of it?

See answer

No. The rule is on a cash basis. Revaluation changes the balance sheet, but no money came in.

Quick quiz · 2 of 2

A R$ 5M gain on a sale, paid in cash. How much must go to holders, at least?

See answer

R$ 5M × 95% = R$ 4.75M. The gain became cash, so it falls under the rule.

Lesson complete

Next lesson

I2.3Intermediate · Lesson I2.3Reserves, reinvestment and capital returnsGains become income; principal may come back to you — and that is not income.Continue
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Educational content, written for learners. Not investment advice.