KKR inks first European deal

The New York-based private equity firm has acquired retail warehouses outside London for its debut transaction.

Kohlberg Kravis Roberts & Co (KKR) has inked its very first European real estate deal, kicking off its plans to invest in the region by acquiring a portfolio of retail parks for an undisclosed figure. The transaction is expected to close within weeks.

The New York-based private equity firm has revealed the acquisition of 430,000 square feet of multi-let retail warehouse space in UK cities Oxford, Glasgow and Sunderland. In a statement, KKR explained how the assets had been bought from London-based Resolution Property and that they had a strong income profile, with average occupancy of 90 percent and a weighted average lease length of 10 years. The investment also provides operational upside through asset management, let-up and lease re-gearing, it said. Quadrant Estates has been retained as the asset manager.

Guillaume Cassou, a director of KKR London and head of the KKR Europe real estate team, said: “We are excited to be announcing KKR's first European property acquisition and are delighted that it is in a strong portfolio, which combines excellent locations and attractive opportunities for asset management.”

Cassou added that KKR was “perfectly placed” to develop the portfolio, given its experience in the retail sector with companies such as Alliance Boots and Pets at Home, which the private equity firm bought out in 2007 and 2010, respectively. “We look forward to doing more such deals in the UK and Europe,” he said.

Christopher Daniel, director of London-based Quadrant Estates, noted that his firm has been looking at the retail warehouse sector for a long time. “[KKR’s] three parks present a very interesting opportunity,” he said. “They offer asset management value add and a good diversity of tenant mix. We're pleased to be working with KKR on their first direct property investment in Europe.”

KKR has been building up its team around the world. Cassou was hired from Goldman Sachs in March 2012 and, last month, the firm hired Bryan Southergill from JPMorgan, where he was a managing director and head of Asia real estate investing. The appointment of Southergill came more than two years after KKR hired former Goldman Sachs executive Ralph Rosenberg in New York to build a real estate division from scratch on behalf of the firm.