KKR in A$103m Australian mall co-investment

KKR has acquired a regional shopping mall in Queensland, its second real estate partnership with the Abacus Property Group in six months.  

New York-based private equity firm Kohlberg Kravis Roberts (KKR) has teamed up with the Abacus Property Group to acquire a regional shopping mall in Australia for A$103.5 million (€70.22 million; $80.24 million). This value excludes transaction costs and represents an initial annual yield of 7.9 percent.

Under the partnership, KKR would fund 60 percent of the equity and Abacus the remaining 40 percent. KKR declined to disclose the vehicle from which the investment was made.

Oasis Shopping Centre is a three-level shopping mall located in Broadbeach, a tourist destination in Queensland. It is spread over an area of 232,037 square feet and is said to be over 90 percent occupied.

“Australia is an attractive destination for KKR and holds great investment potential,” Bryan Southergill, director, real estate at KKR said in a statement. “We look forward to broadening our real estate portfolio in the market and to collaborating with Abacus on the management of a second Australian property.”

This is not the first joint investment by the two groups. In August last year, KKR made its first real estate investment in Australia with the acquisition of a majority interest in three towers of the World Trade Centre in Melbourne for A$120.4 million. The investment, made in partnership with Abacus, saw KKR providing 75 percent of the equity and Abacus the rest.

On the latest investment, Dr Frank Wolf, chief executive officer of Abacus Property Group said: “Abacus is pleased to be continuing our relationship with KKR. This transaction also illustrates the continued progress of our third-party capital strategy and also our successes in accessing stand out core-plus assets with value add characteristics.”

KKR has been steadily adding to its real estate portfolio in Asia, with investments in India, Australia, China and South Korea. In the beginning of the year, it partnered with Singapore’s sovereign wealth fund GIC to establish a non-banking financial company in India, to provide structured credit solutions to the country’s real estate sector. This was the firm’s second investment in India, after providing an INR 7.5 billion (€105.61 million; $120.68 million) loan jointly with the Standard Chartered Bank to Wadhwa Group of developers.