Kohlberg Kravis Roberts is planning to increase its exposure to German real estate by creating a new company in partnership with a local investment firm, Deutsche Immobilien Chancen-Group (DIC).
German Estate Group (GEG) will be based in Frankfurt and will be active in both core and opportunistic-style investments. To aid its effort, it will have access to DIC’s 40 professionals. GEG will invest its own capital and third-party money, it added in a statement.
The transfer of DIC’s operational business to GEG is the latest chapter in KKR’s long term history with investments in Germany where it has been investing since 1999 in private equity deals. However, it is also a notable development for the firm’s real estate platform, which was launched in 2011, and has so far made $1.6 billion of investments in 26 deals in the US, Europe and Asia.
Explaining the GEG set-up, KKR will exclusively use the company for office and retail investments, it said. Ulrich Höller is to become the company’s chief executive officer, it added.
Ralph Rosenberg, global head of KKR Real Estate, said in a statement: “This is an exciting step forward in our real estate strategy in Europe. With this new platform, we will be able to accelerate our access to investments in Germany across the risk spectrum, offering more solutions to our clients globally.”
This is also not the first time DIC has entered into an agreement with a large US financial institution. In 2004, it teamed up with Morgan Stanley Real Estate Investing, which took a 25 percent stake in the company. That year, DIC and Morgan Stanley bought a portfolio of 45 properties. They made further investments together in 2006.
Following its tie-up with KKR, however, DIC has two platforms through which it makes real estate investments – GEG and a listed entity called DIC Asset AG, in which it owns a 33 percent position.
DIC was originally set up in 1998.