Best FIIs to buy in October; KNCR11 takes second place and HGRU11 joins the list

The real estate investment trust (FII) market continued its positive bias in September, but the intensity was lower compared to August – which remains the segment’s best period of the year so far. Last month, the B3 index for the sector (Ifix) showed a slight growth of 0.5%, closing at 2991 points. The performance boosted the accumulated gain in 2022 to 6.6%, compared to 5% for the Ibovespa.

As in the previous survey, the majority of brokers monitored by The InfoMoney made occasional adjustments to recommended FII portfolios for October. The only exception was Genial Investimentos, which excluded four portfolios and added two to its referral base.

In the overall election balance, the leadership remains Bresco Logística (BRCO11), for the 14th time in a row, with the same eight applications.

There were changes, however, in other emphases. The deputy lead is now occupied by Kinea Rendimentos Imobiliários (KNCR11), which won one nomination and rose to six – in contrast to CSHG Recebíveis Imobiliários (HGCR11), which dropped one of the portfolios and jumped to third place, with five recommendations.

The number of citations achieved by CSHG Renda Urbana (HGRU11), the novelty of the month, which recorded its debut in that period, is five. The portfolio took the place of BTG Pactual Logística (BTLG11), which was replaced by the broker and finished off the list of the most memorable.

The tie ends, once again, with Capitânia Securities II (CPTS11), which remained with four nominations and was ahead of funds in the same condition, according to the tie criterion.

Regarding the macroeconomic scenario, BTG Pactual recalls that the Central Bank’s Monetary Policy Committee (Copom) announced last month that the basic interest rate (Selić) would be maintained at 13.75 percent per year, after 12 consecutive increases.

For the bank, signs of easing problems in global supply chains and falling commodities suggest the worst of commodity inflationary pressure may be behind us. “However, signs of recovery in economic activity may reverse this effect,” he believes.

Every month, InfoMoney brings the five most prominent real estate funds in portfolios prepared by ten brokerage houses. In the event of a tie, those with the highest average trading volume over the last 12 months are selected, based on data from the financial information platform Economatica.

See below the desired products for October, the number of appointments and the profitability of each sheet in September, in the year and in the last 12 months:

ticker Background Segment recommendations Return in September (%) Return in 2022 (%) Return for 12 months (%)
BRCO11 Bresco Logística Logistics 8 0.18 11.42 19.10
CPTS11 Main securities II claims 4 3.45 5.89 6.98
HGCR11 CSHG Receivables from real estate claims 5 1.83 9.26 10.76
HGRU11 CSHG Urban Income Hybrid 5 1.80 16.71 24.54
KNCR11 Kinea income from real estate claims 6 0.69 9.78 17.17
to repair 0.5 6.6 10.5

Sources: Economatica and brokers (Ativa Investimentos, BB Investimentos, BTG Pactual, Genial, Guide, Itaú BBA, Mirae Asset, Órama, Santander and Rico). Note: Profitability takes into account dividend reinvestment and quotation as of 09/30/2022.

Bresco Logística (BRCO11)

Present in eight out of ten tested portfolios, experts recommend it the most.

BB Investimentos recalls in the report that the logistics segment was one of the beneficiaries of the new social dynamics imposed by Covid-19, which eventually encouraged e-commerce.

“There is a great effort by retail companies to deliver goods in the shortest possible time to consumers, and for this the logistics properties of the last mile (the last mile) are gaining more and more importance,” says the brokerage, noting that 73% of BRCO11 assets are properties with this characteristic.

In October, the fund maintained the level of dividend distribution to shareholders at around R$11.4 million, which is equivalent to R$0.70 per share, the institution says. The amount is equivalent to the rate of return (dividend yield) annual rate of about 8.4%, based on the market price, calculated by BB.

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Kinea income from real estate (KNCR11)

The fund was included by Genial Investimentos in the list of recommendations for the month and as a result took second place in the general ranking, with six choices.

“The recommendation of this FII is based on the fact that it is one of the few receivables funds indexed with CDI and, in this time of high interest rates, the fund tends to be more defensive and hold its dividends,” says Genial.

According to the institution, the portfolio also has a dispersed loan portfolio with “good borrowers”, a list that includes names such as Brookfield, JHSF and Iguatemi.

The broker also notes that, currently, KNCR11 has 109.9% of its capital (PL) allocated to certificates of real estate receivables (CRI), an exposure that is possible through the use of leveraged debt instruments. The volume of funds is equivalent to 3.5% of PL.

CSHG urban income (HGRU11)

Another fund that Genial included in October, HGRU11, achieved five recommendations and appears as a newcomer to the highlights list for the period.

The brokerage company justifies its choice by the product’s exposure to the retail segment and by the management’s move to sell real estate, as a way of realizing capital gains for distribution to shareholders. It also states the decision on the formation of reserves to maintain the dividend distribution at the current level.

Another aspect highlighted by the institution is the expectation that the properties of CSHG Renda Urbana could have a positive revaluation close to the inflation of the period.

The fund’s assets consist of food, clothing and education retail focused assets, located mainly in the southern and southeastern regions of the country, with a smaller exposure to the northeast

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CSHG real estate claims (HGCR11)

The fund was replaced in Genial’s audits, but remains in five other portfolios listed in the month, one of which is BTG.

The bank states that the objective of FIIs is to invest in CRIs with different risk profiles, seeking better than market performance. The list of debtors includes companies such as JSL, Ford, Iguatemi, São Carlos and Hilton Jardim.

“In terms of guarantees, most of the loan portfolio is located in the Southeast and South regions, with São Paulo being the state with the highest concentration.”

Currently, BTG says, CSHG Receivables has an LTV index (loan to value) below 50%, which in practice means that the invested assets have guarantees greater than twice the value of the debt, which reduces the risk of default.

“In terms of allocation, the fund’s portfolio represents a mix of CDI- and inflation-indexed papers, which allows management greater flexibility of allocation in different operations,” comments the institution.

Flagship Securities II (CPTS11)

Capitânia continues with four analyst notes and rounds out the list of October highlights.

According to BTG, the fund’s recommendation is based on the following points: dispersed credit portfolio; active management, with a high ability to generate additional profits through capital gains; robust guarantees; debtors with good credit risk; and exposure to other FIIs – which reduces the risk of a fall in earnings distribution in the face of falling interest rates and inflation.

The bank reminds that Capitânia is a receivables fund with a large part of exposure to high-quality papers, and it also invests in shares of real estate funds, mainly in CRI funds.

What to watch out for in October

The break of Selić’s high cycle, which happened about two weeks ago, was eagerly awaited by several sectors, including real estate.

Another piece of good news is September’s IPCA-15, which was negative by 0.37%, representing the second consecutive deflation, as it fell by 0.73% in August. In 2022, IPCA-15 accumulates an increase of 4.63%. The closed IPCA for the period will be released on October 11.

IGP-M, known as “rent inflation”, also fell last month: 0.95%, after a negative variation of 0.70% in the immediate previous period. As a result, the highest amount accumulated during the year was slightly lower, at 6.61%.

Another important measure is the National Index of Construction Costs – M (INCC-M), which remained practically stable in September, with a residual increase of 0.10%, lower than the 0.33% increase recorded in August. The variation in nine months is positive and amounts to 8.91%.

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