Kohlberg Kravis Roberts & Co, the New York-based buyout group, has completed the first US retail real estate investment via its recently formed dedicated real estate platform.
The firm announced today it has acquired the Yorktown Center in Chicago in a deal valued at $196 million in partnership with three other partners. They are YTC Pacific, a partnership between retail real estate firm Pacific Retail Capital Partners, retail developer Collarmelle Partners and Peter Fair, part of developer Continuum Partners.
The firm has acquired the asset using capital from KKR Financial, its publically traded specialty finance company, and capital from its balance sheet.
The vendor of the shopping centre was not disclosed, KKR stating it had been under private ownership since 1968.
The investment marks something of an early milestone for KKR’s real estate division which was launched at the start of 2011 following the hire of ex-Goldman Sachs Real Estate Principal Investment Area senior executive Ralph Rosenberg.
Since his hire there has been few outlays via the platform as he built up his team and stables of business partners. One previous investment occurred in Asia where KKR formed a development fund with Sino-Ocean Land, one of Beijing’s largest real estate companies, called Sino Prosperity Real Estate Fund. In that fund, KKR injected $75 million and helped in the raising of a further $75 million from third-party investors.
Rosenberg described the Chicago shopping centre investment as an investment in “Yorktown and the Lombard community” adding the firm intended to provide the asset with a “combination of proactive management, a focus on leasing, cosmetic and other improvements” with a view to adding value.
The shopping centre, located 20 miles west of downtown Chicago, has 1.5 million square feet of space and houses more than 150 stores. It produces an annual revenue of more than $280 million from tenants including The Capital Grille Restaurant, Victoria’s Secret, American Eagle Outfitters, Gap, AMC Theatres, Forever 21 and department store chains JC Penney, Carson Pirie Scott, and Von Maur.
YTC Pacific, Collarmelle Partners and Peter Fair will manage the day-to-day operations of the asset.
KKR had $59 billion of assets under management across multiple asset classes, as of December 31, 2011.