KKR raising capital for new RE strategy

The New York-based private equity firm already has received backing from Townsend for a new platform that it has created on the heels of its investment in Drawbridge Realty.

Kohlberg Kravis Roberts has formed a new platform focused on single-tenant commercial real estate, in conjunction with an investment it made last year in Drawbridge Realty, a San Francisco-based real estate investment manager that specializes in this strategy.

Last December, KKR bought out Almanac Realty Investors’ stake in Drawbridge as part of a recapitalization of the company. Terms of the transaction were not disclosed. Almanac acquired its interest in Drawbridge in 2012 and is said to have invested $150 million over a three-year period, during which time Drawbridge tripled the size of its portfolio, which currently includes approximately three million square feet of real estate in the San Francisco Bay Area, San Diego, Salt Lake City, Austin and Raleigh-Durham’s Research Triangle Park. 

However, Drawbridge, which acquires, developers and manages core-plus and value-add commercial properties in US high-growth markets, was seeking a greater capital infusion in its desire to expand nationally, which led to bringing in KKR as its new backer. Since the close of the recapitalization deal, Drawbridge has acquired five new properties in San Jose, San Diego and Raleigh-Durham. 

KKR now has formed a new platform to help grow Drawbridge’s business, and has received backing from The Townsend Group, which will be investing on behalf of its clients. Townsend, a Cleveland, Ohio-based investment advisory firm focusing on real estate, infrastructure, timber and agriculture, is not providing any consulting services to Drawbridge.  

“With Drawbridge’s industry leading, vertically integrated real estate capabilities supplemented by access to KKR’s corporate network, we think Drawbridge will be the preferred solutions provider to corporate owners and users of real estate,” said Billy Butcher, KKR’s co-head of real estate acquisitions in the Americas, in a statement. Butcher will be joining Drawbridge’s board of directors.   

Drawbridge typically buys short- and long-term leased single tenant buildings, including corporate sale-leasebacks and build-to-suits, as well as vacant buildings that can be repositioned and leased to single tenants. The company was co-founded in 1999 by Mark Whiting and Mark Pearson.