On Tuesday, private equity giant KKR, which manages around $28 billion in client assets in global real estate strategies alone, announced the successful close of its second European real estate fund. The new fund, KKR Real Estate Partners Europe (REPE II), closed at $2.2 billion in commitments, and will seek to invest in value-add and opportunistic real estate investments in Western Europe.
The new fund is a successor to KKR‘s first dedicated European real estate fund, REPE I, which closed in June 2016 with $739 million in funds. To date, the fund has committed $700 million of capital, primarily invested in logistics and residential properties on the continent. Since launching its real estate platform in 2011, KKR has committed over $3 billion of balance sheet and employee capital across all of its global real estate strategies.
KKR describes its European real estate platform as deploying “flexibly” across assets and platforms. According to the firm, REPE II will make value-add and opportunistic investments where KKR can drive meaningful growth by leveraging its in-house investment talent, global network of industry and operational experts, and long track record of value creation. REPE II will target sub-sectors with attractive structural dynamics, including logistics, residential, student housing, hospitality and high-quality offices.
“We continue to believe that Europe represents an attractive investing environment for real estate,” KKR Partner and Global Head of Real Estate Ralph Rosenberg said in announcing the fund closing. “Our real estate strategy is closely integrated with the wider KKR platform, our multi-disciplinary investment expertise and is underpinned by our strong global track record. This breadth means we can be a differentiated partner to entrepreneurs, developers and management teams, and we are well-positioned to execute on the opportunities we see in Europe.”
“REPE II’s close is a very exciting milestone for our global strategy and the scaling of our European platform,” added KKR Partner and Head of European Real Estate Guillaume Cassou. “The evolution of the real estate sector is creating a strong pipeline of opportunities that are well-suited to KKR’s flexible investment approach. The Fund is off to a strong start with significant exposure to the logistics and residential sectors, and we are well-positioned to create a diverse portfolio of investments capable of delivering attractive returns to our investors.”
REPE II received strong support from a diverse group of both new and existing investors globally, including public pension plans, sovereign wealth funds, insurance companies, financial institutions, endowments, private banking platforms, family offices and high net worth individual investors.
“We are pleased to have the backing of many investors from around the world who share in our enthusiasm for REPE II, helping us surpass our initial target for the fundraise – a testament to our Real Estate expertise, our global investing platform and the team’s track record,” said Jon Fiorello, Head of KKR’s Real Estate Strategies Team. “We appreciate the confidence that our investors have placed in our strategy and team.”
Last week, KKR signaled a possible area of focus for its European strategies with the opening of its first Nordic office in Stockholm. The office will represent all KKR investment platforms, including Real Estate, as well as Private Equity, Infrastructure, Technology, Health Care, Impact and Credit.
KKR has for some years managed long-term capital on behalf of “a substantial number” of investors in the Nordic region, having successfully invested more than EUR 5 billion (about $5.9 billion) of equity in over 22 transactions to date. In the last two years, KKR has made seven investments in the Nordics including Söderberg & Partners, Sector Alarm, Wolt, Nordic Bioscience, Caruna, Avida and a residential real estate joint venture in Denmark.
