KKR & Co. raised $ 2.2 billion for a new real estate fund that will seek investment opportunities across Europe as isolation measures are eased across the continent.
The private equity firm’s second dedicated real estate fund has already invested more than $ 700 million in residential buildings and warehouses, two areas that have proven to be resilient to the pandemic, according to the statement. It will also seek to buy hospitality properties hit by restrictions and build offices fit for the post-coronavirus workforce.
“We continue to believe that Europe is an attractive environment for real estate investment,” Ralph Rosenberg, partner and global head of KKR Real Estate, said in a statement.
According to the company, about a quarter of the funds raised for direct investment in real estate in the first three months of this year went to Europe. Private equity properties data. Global fundraising for real estate during this period totaled about $ 33 billion, still less than a year earlier as travel restrictions disadvantaged many small managers.
As the economy slowly begins to reopen, pension funds seeking stable income streams amid low interest rates are looking for buildings with a long-lasting arena. At the same time, rapid changes in consumer habits have turned part of the real estate market upside down, creating opportunities for private equity firms that can redirect distressed properties into long-term investments.
The shift to online shopping, accelerated by the pandemic, has increased demand from retailers for warehouse space to serve online orders. This encourages private equity firms, including KKR and competitors. Blackstone Group Inc.… invest even more money in logistics facilities, relying on higher rents and costs. The lack of affordable housing, student residences and retirement opportunities is also prompting investors to bet on European residential assets.
Widespread restrictions have also put pressure on hotel revenues, creating an opportunity for cashed-out private equity groups to buy properties at lower prices. However, government support and fierce competition from investors have so far limited the number of problematic real estate transactions in Europe.
The KKR Real Estate Partners Europe II fund will focus on so-called value-added investments, which usually involve the purchase of buildings that are partially vacant or in need of modernization or redevelopment.
The first dedicated real estate company in Europe, based in New York, raised $ 739 million in 2016. According to applications, the fund’s preliminary net initial return exceeded 10%.