Reel coming soonWhat does it cost to structure and raise a REIT?short video · 9:16IntermediateBrazilian REITs · Lesson I1.2 · Module I1
What does it cost to structure and raise a REIT?
Module I1: How a FII is born and grows
In this lesson
- The cost lines of an offering
- Who pays: you or the fund
- The math of subscribing 100 shares
Brazilian REITs · Lesson I1.2
How much is lost along the way?
A real prospectus, line by line: who charges and who pays.
Real prospectus, 2022
The cost, as % of the offering
Total: 3.24% of an offering of about R$ 250 million — around R$ 8.1 million.
5th offering of FII BTG Pactual Crédito Imobiliário (old rules, ICVM 400), prospectus on B3.
Who pays
Commissions come from the subscriber
You, when subscribing
R$ 2.97
- per share, on top of the R$ 95.86 price
- commissions and their taxes
The fund
R$ 0.13
- per share, paid from the fund's cash
- CVM, B3 and lawyers
In this prospectus, the "unit distribution cost" took the share to R$ 98.83.
Do the math
Subscribing 100 shares
The misconception
Red tape is not the expensive part
of the cost per share was commission and its taxes: R$ 2.97 of R$ 3.10
CVM, B3 and lawyers added up to 0.14% of the offering.
Remember this
Three ideas from this lesson
- About 3% stays on the wayIn the example, 3.24% of the offering became cost.
- Commission is the bulkDistribution and structuring weigh more than CVM and B3.
- Read the prospectusThe unit cost is there, added to the share price.
Quick quiz · 1 of 2
In the example prospectus, what was the largest cost line?
See answer
Distribution: 2.10%. The CVM fee was 0.04% and lawyers another 0.04%.
Quick quiz · 2 of 2
R$ 95.86 share and R$ 2.97 unit cost. What do 10 shares cost you?
See answer
10 × (R$ 95.86 + R$ 2.97) = R$ 988.30. The R$ 29.70 pays for distribution and does not become fund equity.
Lesson complete
Next lesson
I1.3Intermediate · Lesson I1.3Public offerings: IPOs and follow-onsThe first raise and the ones after — and why issuing is not a sign of health.Continue1 / 10
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Image credits
- Autor anônimo (Unsplash) · Wikimedia Commons · CC0 — Wikimedia Commons
- Wilfredor · Wikimedia Commons · CC BY-SA 4.0 — Wikimedia Commons
Educational content, written for learners. Not investment advice.