KKR closes $2b fund focused on defensive real estate investments

Global investment firm KKR & Co announced the final closing of a $2-billion fund dedicated to value add and opportunistic real estate investments, which offer higher returns potential, the company said in a press statement.

The new fund, KKR Real Estate Partners Americas II (REPA II), which includes approximately $230 million of capital from KKR’s balance sheet and employee commitments, is looking to aggressively invest in real estate by buying properties, raising rents, leasing vacant spaces or redeveloping existing properties.

REPA II is the successor fund to REPA I, the company’s first dedicated real estate fund, which raised $1.5 billion in capital commitments in December 2013. The fund already returned more than 70%. Investors in REPA II include institutions that invested in the first real-estate fund.

According to a Wall Street Journal report, the fund is focusing partly on senior-living facilities, in anticipation of a surge in demand for these units due to a greying population. It will also invest in apartment buildings that serve the general populace.

Since the inception of KKR’s real estate platform in 2011, the company has leveraged KKR’s sourcing channels, access to underwriting information, and operational expertise to create strong value-driven real estate investments, said Ralph Rosenberg, Member and Global Head of KKR Real Estate.

“Seven years later, we are proud of our progress in scaling both our real estate equity and credit strategies to create differentiated investment opportunities for our investors,” Rosenberg said.

The $2-billion fund received strong backing from a diverse group of new and existing global investors, including public pensions, sovereign wealth funds, insurance companies, financial institutions, foundations, endowments, family offices, and high net worth individual investors.

Suzanne Donohoe, Member and Global Head of KKR’s Client and Partner Group, said the backing of many investors from around the world is “a testament to the strength of the KKR Real Estate team and the KKR franchise”.

KKR first launched a dedicated real estate platform in 2011 and has since then invested or committed over $5 billion in capital across more than 60 real estate deals in the US, Europe, and Asia.

The firm’s global real estate team consists of over 50 dedicated investment professionals, spanning both the equity and credit businesses.

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