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Spain-focused Kronos hits €200m hard-cap – Exclusive

The real estate manager and developer has deployed 65 percent of the capital from its second fund and will hit the road for Fund III by the end of the year.

Kronos Investment Group, a real estate manager and developer headquartered in Madrid, with offices in London, Luxembourg and Malaga, has hit its €200 million hard-cap for its second opportunistic vehicle.

The firm, founded in 2014 by former Fortress Investment Group Director Saïd Hejal and Bertrand Perrodo, chairman of the family office BNF Capital, beat the €150 million target for the fund, garnering 75 percent of the capital from family offices, and the remainder from US and European institutional investors.

Kronos is targeting a net internal rate of return of 20 percent-plus. The fund will buy well-located residential land in Spain. The firm will then either develop the land, or build landbanks to sell to future developers.

Kronos has already deployed 65 percent of the fund’s capital in cities including Madrid, Barcelona, Valencia and Costa del Sol as well as Spain’s secondary cities such as Cordoba where they see a clear lack of new supply that is mismatched by higher demand for new product.

The firm’s typical bitesize is as low as €15 million and as high as €40 million per investment. The senior team are ex Grupo Lar with strong connectivity across Spain. Kronos purchased land from the balance sheets of Spanish banks, including Spanish 'bad bank' SAREB, REO and NPLs from of distressed developers.

“In Madrid and Barcelona there is a lack of ready-to-build land. Therefore in those markets we are focusing on more complex situations where we are able to extract value by buying an NPL or land with infrastructure to complete,” Hejal told PERE.

Kronos expects to have fully deployed the capital from Fund II by the end of the year and is already preparing to hit the fundraising trail again with Fund III, having hired CBRE Capital Advisors as a placement agent.

“Fund III will follow the same strategy as the prior funds, although we are landbanking more over each fund,” said Hejal. “In Fund II we will develop 60-70 percent, whereas in Fund III we will be looking at 50 percent development and 50 percent sell as landbanks.”

The firm's debut fund was launched in 2014 and closed on €100 million. It has been fully invested and with one investment fully exited, Fund I is expected to achieve an internal rate of return of more than 30 percent and 2.5x.