KKR strikes its first San Francisco-area RE deal

The New York-based firm relocated some of its real estate team to San Francisco last year to broaden its footprint in the western US.

KKR has teamed up with a California operator to make its first investment in the greater San Francisco area.

The New York-based alternative investment firm is purchasing 180 Grand, a 15-story office building in Oakland, California, with Harvest Properties for about $120 million, according to data provider Real Capital Analytics. A 371-spot parking garage adjacent to the building was also included in the sale.

Neither partner could be reached for comment as of press time.

The sellers, a joint venture between private real estate firms Ellis Partners and Artemis Real Estate Partners, paid $61 million for the building in 2014, according to RCA.

The building is 96 percent occupied, with tenants including engineering firm Amec Foster Wheeler, insurer Health Net of California and Bank of America. Amenities at the 277,000 square foot building include a fitness center and conference room, according to its website.

It was unclear as of press time where capital for KKR’s purchase originated. The firm is marketing its second domestic opportunistic fund, KKR Real Estate Partners America II. The Maine Public Employees’ Retirement System allocated $50 million to REPA II, according to PERE data.

Last spring, KKR relocated its co-head of real estate acquisitions in the Americas, Justin Pattner, and two other investment professionals to its downtown San Francisco office, with the aim of ramping up its property investments in the US region, PERE previously reported. Before the relocation, the office had primarily served as the home of its corporate credit business.

KKR had a real estate footprint on the West Coast before the move, however. In June 2015, the firm acquired a stake in Drawbridge Realty, a San Francisco-based real estate investment manager that specializes in single-tenant commercial real estate with holdings across the western US. In December 2013, the firm bought Waikiki Trade Center, a 22-story office building in Honolulu, Hawaii, in a joint venture with Coastwood Capital Group. It was unclear if KKR had made any other property investments in the western US since the relocation.