(Broadcast) Amount totals R$39 billion from January to August 2024, double the same period in 2023
By Circe Bonatelli
Issuance of real estate receivables certificates (CRIs) has soared this year despite the more restrictive rules imposed by the National Monetary Council (CMN) in February. The scenario helped developers gain liquidity, with an alternative to bank financing.
CRI issuances totaled R$39 billion from January to August 2024, double the same period in 2023 and the highest figure ever recorded in the period, according to data from the Brazilian Association of Financial and Capital Market Entities (Anbima).
CRI is a very popular security in the construction sector, accounting for around 10% of all resources used to purchase and build properties in Brazil. The main advantage is the exemption from income tax for individuals, which helps attract investors.
Through this instrument, companies obtain financing that functions as an advance on resources for their activities. The title is backed by the amounts to be received from sales of off-plan properties, rentals of residential or commercial properties, installments of financing granted to customers, among others.
In February, the CMN vetoed the issuance of CRIs backed by operations of companies not related to the real estate sector, cutting off the wings of many companies – from education to retail – that had been taking advantage of the tax-exempt instrument to raise funds. In the regulator's view, this represented a distortion of the market, which aimed to provide incentives specifically for the real estate market.
In this more restricted scenario, the big winners were companies that work with residential, commercial, subdivision and hotel projects, as they no longer compete with other productive sectors in attracting investors.
“After the CMN resolution, the market focused on where it should. The subsidy is for those who deserve it, which is the construction sector, a major job generator and the target of public policy,” said Daniel Wainstein, managing partner at Seneca Evercore, a financial advisory firm that opened a fixed-income area this year. This new business arm grew even with the new CMN rules.
According to Luis Miraglia, a partner at Seneca Evercore, regulatory restrictions have even helped reduce the rates for developers to issue bonds. “Before, there was a lot of competition, and companies had to offer a higher rate to attract investors. The supply dried up that a bit, and caused a small downward adjustment in the rate,” he said.
Cyrela’s CFO, Miguel Mickelberg, commented at a recent event at the Housing Union (Secovi-SP) that CRIs already represent half of the company’s total debt, R$3.4 billion (not counting the fintech CashMe, a subsidiary). The other half comes from traditional bank financing for production. “The capital market is very important to us,” he said at the time.
New destinations
Receivables certificates are not only available to top-tier companies like Cyrela. Lucas Drummond, head of institutional relations at Opea Securitizadora, noted that reduced competition has helped put companies that previously did not attract much interest in issuing CRIs on investors' radar, such as small and medium-sized construction companies and those outside the Southeast region.
“It is safe to say that, today, CRI is a financing alternative for developers, including for less obvious operations, in areas that were not so well-received by the market, such as projects in the South or the Midwest,” said Drummond, referring mainly to subdivisions.
A survey by Opea showed that the average value of CRI issuances this year is R$87.8 million, 22.5% lower than last year, when it was R$113.4 million. “The average transaction ticket is decreasing. This is the result of the change in the CMN resolution, which ended up concentrating transactions on specific real estate activities, which have a lower value than issuances for corporate purposes, as had been the case.”
Lawyer Carlos Ferrari, partner at NFA, added that real estate funds have also turned their attention to purchasing CRIs from developers following restrictions on the issuance of these securities by other sectors. Ferrari noted that, at the same time, the issuance of Real Estate Credit Letters (LCIs) – issued by banks – has fallen in recent months because the CMN resolution increased the minimum maturity term of these securities, driving away investors seeking immediate liquidity.
“The reduction in the participation of banks in this funding composition seems evident. The CMN resolutions this year helped developers by increasing their participation in issuances,” said Ferrari.
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