P/B — Price-to-Book Ratio

P/B (Preço sobre Valor Patrimonial, or price-to-book) is a valuation multiple used mainly to analyze Brazilian Real Estate Investment Funds (Fundos de Investimento Imobiliário, or FIIs). It’s calculated by dividing the market price of a share (quoted on the B3 exchange) by the book value per share, which represents the fund’s net assets divided by the number of shares issued.

• P/B = 1: the market is pricing the share exactly at the value of the fund’s recorded assets — no discount, no premium.
• P/B below 1: the share trades at a discount to book value. This can signal an opportunity (the investor pays less than what the assets are worth on the books) or a sign the market doubts the quality of the assets or the manager.
• P/B above 1: the share trades at a premium. The market recognizes value beyond book assets — superior management quality, a differentiated portfolio, a prime location, or growth prospects.
• Limitations: the book value reflects the most recent appraisal of the properties, which may be outdated if there hasn’t been a recent reappraisal. Funds that haven’t recently reappraised their assets may show a book value per share out of step with the properties’ real market value. For this reason, P/B should be analyzed alongside current yield, asset quality, lease terms, and the fund’s liquidity.
• Brick-and-mortar funds vs. paper funds: for brick-and-mortar funds (which hold physical properties), P/B reflects the discount or premium on the value of those properties. For paper funds (holding CRIs and other receivables), P/B carries less analytical weight, since financial assets are marked to market more dynamically.

For a Florianópolis-based investor seeking real estate exposure through FIIs — as an alternative to physical local properties with lower liquidity — P/B is one of the most commonly used entry multiples for comparing funds within the same segment and spotting attractive buy points.