Kinea holds second close on Brazilian fund

Kinea Investimentos has completed fundraising for the second issuance of its Brazilian real estate rental income fund and plans to launch a new development fund, according to the São Paulo-based alternative investment management firm. The latest issuance of the firm's rental income fund, Kinea Renda Imobiliária FII, reached its target of R$202 (€90 million; $130 million) this month. The previous offering of the fund raised R$263 million last October. 

Kinea Renda Imobiliária focuses on acquiring performing commercial and logistics properties in Brazil, primarily in São Paulo and Rio de Janeiro. According to Carlos Martins, founding partner and portfolio manager of real estate at Kinea, this is not a separate vehicle but a new tranche to the original fund, bringing its total equity as of today to R$550 million.

Martins told PERE that Kinea currently is in the process of allocating the capital. Although the firm currently is not raising additional capital for the fund, a new issuance may occur once the resources raised in the second offering have been allocated. 

“We expect a new fundraising to occur in the fourth quarter,” said Martins, adding that the firm could seek up to an additional R$500 million. That could bring the final equity haul for Kinea Renda Imobiliária to more than R$1 billion.

Separately, the investment manager is about to raise another smaller fund. Kinea Real Estate Equity Fund II, the firm's second development vehicle, will launch later this quarter and look to raise R$150 million to R$250 million in equity. 

Martins said the development fund will target residential projects, “mainly directed to middle-class buyers”, in Brazil. A portion of the capital raised will go toward commercial developments as well.

The development fund's predecessor, Kinea Real Estate Equity Fund I, raised R$50 million during its first offering completed in April 2008. During its second issuance in August 2009, the fund garnered an additional R$100 million in capital. 

Kinea Renda Imobiliária is targeting IRRs of 13 to 14 percent. Kinea Real Estate Equity Fund II is targeting IRRs of 17 to 19 percent. Both IRRs factor in inflation.

Kinea was founded in 2007 by Itau-Unibanco, the largest private financial conglomerate in the Southern Hemisphere and the 10th largest bank in the world, and founding partners Martins, Aymar Almeida, Sérgio Gabriele and Marcio Verri. The firm currently has R$700 million in real estate assets under management and R$2.5 billion in total assets.