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KKR expands US real estate operations – Exclusive

The New York-based private equity firm has relocated three real estate professionals to San Francisco to ramp up its investment activities on the West Coast.

Kohlberg Kravis Roberts (KKR) is taking its US real estate operations to the West Coast. It has moved three members of its real estate team from New York to San Francisco with the aim of ramping up its property investments in the US region.

Earlier this month, the New York-based private equity firm relocated its co-head of real estate acquisitions in the Americas, Justin Pattner, along with two other investment professionals, from its New York headquarters to its downtown San Francisco office, which, to date, has primarily served as the home of its corporate credit business.

“We realized that you when you look west of Texas, we have very few investments in that part of the country,” said Pattner in an interview with PERE. “Given the fact that the Western US accounts for 35 percent to 40 percent of overall transactions in the commercial real estate space, that piqued our interest.”

As an overall firm, KKR already has a relatively large footprint on the West Coast, with approximately 200 employees across its various business units as of December 31. In addition to the downtown San Francisco office, the firm also has a location in Menlo Park, California that is mostly focused on corporate private equity and where co-founder and co-chairman George Roberts is based.

To date, KKR’s West Coast investments have included the December acquisition of a stake in Drawbridge Realty, a San Francisco-based real estate investment manager that specializes in single-tenant commercial real estate; and the purchase of Waikiki Trade Center, a 22-story office building in Honolulu, Hawaii, in a joint venture with Coastwood Capital Group in December 2013.

Pattner added that the firm currently is focused on building relationships with real estate operators, management teams and professionals in the area and developing a pipeline of deals. He expects to collaborate with KKR’s other West Coast teams, particularly the technology, retail and healthcare industry teams within the private equity business, to help source real estate opportunities. Indeed, he noted that the firm already has made several investments in the retail and healthcare real estate space, specifically senior housing, which were the result of collaborations with its retail and healthcare private equity team, respectively.

KKR launched its global real estate business in 2011, with the hire of former Goldman Sachs partner Ralph Rosenberg as head of the platform. The real estate team has now grown to approximately 40 real estate professionals across the US, Europe and Asia. About 25 of those employees are in the US, evenly split between real estate debt and real estate equity.