Kinea Prepares for Advancement in Real Estate Ventures. With Brief Experience in Financing Residential Projects, It Provided About R$1.25 Billion in Two Years

Amidst the Reduction in the Volume of Financing Granted by Banks for the Development of Real Estate Projects, Investment Managers Are Showing Their Incorporation Segments with Attention, Even Seeing Opportunities to Fill the Gaps Being Left by Large Institutions. 

One of the firms that is keeping this in mind and working towards it is Kinea, the alternative investment arm of Itaú Unibanco. With its brief experience financing some residential projects, granting about R$ 1.25 billion in credit for over 70 projects in the last two years, this manager is already fully prepared to expand its operations. 

“Banks have always been the largest providers of funding for incorporation, but with the development of the capital markets, part of the financing has migrated from banks to investors, opening opportunities,” commented Flávio Cagno, manager of real estate receivables funds at Kinea, to NeoFeed. “Our intention is to expand throughout Brazil.”

According to Cagno, there are a number of opportunities in mid to high-income projects being developed by the country and by family-run businesses, which are still heavily reliant on banks to proceed with their projects. 

“We have never restricted ourselves to other regions, although there tends to be a greater concentration in areas with higher GDP,” Cagno stated. “Brazil has an enormous diversity of regions, many of which are quite vibrant; it’s not just in the Southeast that there are opportunities.” 

In the case of construction companies, Mello says that CRI is the best and quickest way to raise funds compared to going to banks, which will still require factors such as a high percentage of sold units and having projects under construction. On top of that, there are also lower costs. “Since CRI has tax exemptions, companies can negotiate funds at lower rates,” Mello says. 

In addition to Kinea, other managers are also seeking to meet the demand from some developers for funding. RBR Asset is one of them, for example. Of the more than R$ 3 billion they hold in real estate credits, with a total of R$ 7.5 billion in assets under management, about R$ 900 million is invested in CRI operations for residential projects. 

However, despite the economic slowdown, high-interest rates for companies, and various launches throughout the economic process potentially harming the sector in some way, Cagno believes that the outlook is positive for Kinea’s plans to succeed. 

“People continue to want to live well and have the desire to own their residence. And it is in the most difficult cycles that developers can acquire good land at good prices,” he says. “Despite the greater unpredictability, you see the formation of very good projects, and it is rare to see a very good project that has failed,” he concludes.