FII Cap Rate Calculator

FII Cap Rate (capitalization rate)

Cap Rate is how the market sizes up a property's return against what the property is worth. The formula is Cap Rate = NOI (annual) / market value. NOI (Net Operating Income) is the rent after you subtract operating costs like condominium, IPTU, maintenance and vacancy, but you take it before debt service and taxes. Say you have NOI of R$ 12 million on a portfolio appraised at R$ 150 million; that lands you at an 8.0% cap rate. Brazilian tijolo FIIs usually sit somewhere in the 6% to 9% band, and the sector matters: logistics 7%–9%, mature corporate 6%–8%, premium malls 7%–8.5%, hospitals and education 8%–10%.

Your reference point is Selic plus a risk premium. When Selic sits at 10.5%, a property yielding an 8% cap rate is actually trading below the risk-free rate. That only makes sense if you expect the asset to appreciate or rents to climb soon. Let Selic drift down to 7% and that same 8% looks good again. Don't confuse Cap Rate with DY (Dividend Yield). DY runs off the FII's market price; Cap Rate runs off the appraised value of the physical assets behind it. Watch the gap between the two, because it tells you whether the fund trades at a premium or a discount to net asset value (P/VP).

Practical applications

Use it to compare buying an FII against owning a property outright, or to cross-check the P/VP multiple, since a discounted FII can hand you an effective cap rate above the appraised one. It also helps when you're deciding how to split money between fixed income and real estate, or weighing one sector against another (logistics vs corporate vs malls). And you can run it backwards: pick a target cap rate and ask what the portfolio is worth at that level.

FAQ

Cap Rate or Dividend Yield, which one to use? Use both, because they answer different questions. Cap Rate tells you the asset's operating return. DY tells you the cash return a shareholder gets at the current market price. The gap between them shows whether the FII trades above or below its net asset value.

What about debt and IR in the calculation? The classic Cap Rate leaves out debt service, which keeps the measure neutral to leverage, and it leaves out corporate income tax, which doesn't apply anyway since FIIs are exempt. If you want to compare levered deals, reach for Cash-on-Cash Return instead.

Higher cap rate = better deal? Not always. In Brazil a cap rate north of 10% is often a warning sign of high risk, whether that's a remote location, a single tenant, a short lease or a structural problem. The lower ones, around 5%–6% on prime triple-A assets, reflect expected appreciation and the comfort of a secure tenant.

Does the cap rate change over time? It does. Rents get renegotiated, occupancy shifts, the asset gets reappraised, and the number moves with all of that. Quarterly management reports usually spell out the implicit cap rate of recent deals and of the portfolio as a whole.