The New York-based private equity giant Kohlberg Kravis Roberts & Co (KKR) has formed a joint venture with Houston-based Hines and Pinto Realty Partners to develop a 971-acre master-planned business park in Houston.
Under the terms of the deal, KKR and Hines will develop Pinto Business Park, located at the corner of Beltway 8 and Interstate 45 in Houston's north/northwest submarkets. The business park is owned by real estate investment and development platform Pinto Realty, a subsidiary of Cockrell Interests.
Pinto Business Park is the largest development-ready business park in Houston. With the roads and infrastructure already designed, the site is described as ‘shovel- ready’, with tracts available for immediate construction and delivery. The partnership will primarily look to pursue an industrial build-to-suit strategy for credit tenants and individual land sales to corporate end-users.
Palmer Letzerich, managing director at Hines, said: “When fully built out, the park represents an opportunity of nine million square feet and a potential investment of more than $900 million.” This includes equity and debt.
Neither partner has specified when development is scheduled to be completed. A spokeswoman for KKR said it depends on how long the process of finding tenants and then building to suit them takes.
“We are looking forward to leveraging the partnership’s development capabilities and access to capital on a site that we have owned for over 20 years,” said Ernie Cockrell, managing director of Pinto Realty Partners. He added that, “with entitlements and development capital in place”, the time has come to build on the site.
The New York-based brokerage firm Studley has been hired to market the business park to potential tenants.
Separately, news of this development deal immediately follows the announcement earlier this month that KKR took part in a joint investment in the management company of Mclean, Virginia-based senior living company business Sunrise Senior Living.
The deal, which also includes three other investors, gives KKR both a stake in Sunrise’s existing management contracts covering 282 senior living communities as well as leasehold interests in 15 communities and 12 developments.
KKR managed $61.5 billion of assets as of 30 June. The firm started a dedicated real estate division in March 2011 with the hire of Ralph Rosenberg as global head of real estate, although has previously invested in companies with significant real estate components via its other divisions.