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AdvancedBrazilian REITs · Lesson A3.1 · Module A3

How much the manager and administrator earn

Module A3: Can the manager destroy your capital?

11 slides~5 minquiz at the end

In this lesson

  • Why 1% a year weighs on your income
  • Fee bases and the incentive each creates
  • Performance fee and expenses, math included
See the slides
Calculator on a financial report

Brazilian REITs · Lesson A3.1

How much does the manager take from your fund?

The fee looks small on paper. Not in your income — and the fee base changes how the collector behaves.

Dave Dugdale · Wikimedia Commons · CC BY-SA 2.0

Who gets paid first

Fees come out before your income

  1. Revenuerent and interest
  2. Feesadministration and management
  3. Expensesappraisals, custody, upkeep
  4. Youget what is left

“1% doesn't matter”

One percent every year, forever

1/10

of your income, in a fund that pays out 10% a year and charges 1% a year

The fee is charged on assets, not on profit. Good year or bad, it gets paid.

Same fee, different bases

On market price or on net assets?

R$ 850Mmarket value×1%a year=R$ 8.5MR$ 708k/month
R$ 1Bnet assets×1%a year=R$ 10Ma year

Illustrative fund: R$ 1B in net assets, trading at R$ 850M on the exchange.

The base shapes the incentive

The manager earns more when…

  • Market value…the share price rises
  • Net assets…the fund grows, even through a dilutive issue
  • Income paid out…the fund distributes more
  • Total revenue…the fund bills more

Bases allowed for the administration fee (CVM Resolution 175, Annex III, art. 33). A fund in a market index charges on market value unless the unitholders' meeting decides otherwise.

Performance fee

20% of whatever beats the target

R$ 850M×14%return for the year=R$ 119M
R$ 119M−R$ 85M10% target=R$ 34Mexcess
R$ 34M×20%=R$ 6.8Mperformance fee

CVM rule: charged at most every six months, and never while the share is below its base value (Annex I, art. 28).

Beyond the fees

What else leaves the fund's cash

  • Commissionson buying, selling and leasing property
  • Appraisalsthe mandatory valuations
  • Upkeepmaintenance and repairs
  • Custodysafekeeping of assets
  • Representativecosts of whoever oversees for you
  • Changing the feeonly by meeting vote with a qualified quorum

CVM Resolution 175, Annex III, arts. 12, 16 and 42. Checked in 09/2026.

Remember this

Three takeaways

  1. Fees come firstThey come out of the assets every year, before your income.
  2. The base mattersMarket, assets, income or revenue: each one rewards a behavior.
  3. It's not just the feePerformance and expenses also leave the cash. Add them all up.

Quick quiz · 1 of 2

Can the administration fee be a % of income paid out?

See answer

Yes. CVM Resolution 175, Annex III (art. 33) allows net assets, income paid out, total revenue or market value, as the fund's rules set.

Quick quiz · 2 of 2

Market value of R$ 400M and a 1% fee on it. How much per year?

See answer

R$ 400M × 1% = R$ 4M a year, about R$ 333k a month leaving the fund's cash.

Lesson complete

Next lesson

A3.2Advanced · Lesson A3.2The manager's interest is not always yoursThe manager almost always wants what you want. Here are the moments when not.Continue
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Educational content, written for learners. Not investment advice.