KKR Closes $4.3B U.S. Real Estate-Focused Fund

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A decade after forming its real estate strategy, KKR has closed its third opportunistic fund focused on investment opportunities across the U.S., the company announced yesterday.

The $4.3 billion KKR Real Estate Partners Americas III (REPA III) is the successor of another $2 billion fund, for which fundraising was completed in January 2018. As of September 2021, KKR had committed $1 billion of capital for investments from the fund.

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“We take a thematic approach to real estate investing because real estate is a cyclical asset class, so there are moments in time when you want to invest in certain markets and asset classes and other moments in time when you want to invest in different markets and asset classes,” Justin Pattner, KKR’s head of real estate equity in the Americas, told Commercial Observer. “What enables us to pick, or focus, where we want to concentrate is the fact that we have access to differentiated information because we sit inside of KKR — a large global asset manager — where we are culturally and economically incentivized to work with our colleagues who are investing in non-real estate businesses.”

Pattner said REPA III will focus on all commercial real estate asset classes, particularly industrial, multifamily and self-storage. He said the fund will also be geared toward targeted aspects of the office market such as life sciences and Class A properties in the Sun Belt or western regions as well as leisure travel-oriented hotels.

The new fund was launched 10 years after KKR’s initial establishment of a dedicated real estate team in 2011, which has since grown to roughly 130 investment professionals in equity and credit businesses across 12 offices. The team is situated across nine countries and oversees $33 billion of assets under management in real estate strategies globally, as of June 30, 2021.

“As we mark this important milestone in our business 10 years after we first launched a dedicated real estate strategy, our real estate platform has evolved to include multiple pools of capital with the ability to transact in scale across the equity and credit risk spectrum,” Ralph Rosenberg, global head of KKR’s real estate platform, said in a statement. “We believe that our platform gives us tangible advantages that translate into differentiated outcomes for our collective investors across our multiple products.”

Andrew Coen can be reached at acoen@commercialobserver.com.