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KKR & Co. has refinanced a $1.7B office portfolio in what is being viewed as a sign of long-term confidence Americans will return to in-person workplaces.
The properties, largely in the West Coast and Sun Belt and managed by Drawbridge Realty, include 5.4M SF of Class-A offices that are 95% leased. KKR and Drawbridge are launching a venture that will draw let Drawbridge source investment for Global Atlantic Financial Group, receiving long-term insurance capital from Global Atlantic.
The partnership plans to double its portfolio in two to three years, as well as expand into new markets.
“This transaction delivers a great outcome for our fund investors. My partners and I are excited to enter the next chapter of our strategic alliance with KKR,” Drawbridge co-founder and CEO Mark Whiting said in a release.
“Since 2014, with KKR’s support, we have scaled our differentiated operating model and portfolio of high-quality corporate real estate. The stability of capital provided by Global Atlantic’s insurance company balance sheet will enable us to deliver enhanced solutions for our corporate clients and positions Drawbridge for accelerated growth.”
The two companies first partnered in 2014 to recapitalize the portfolio, which has since tripled in value, KKR states.
Billy Butcher, KKR's chief operating officer of global real estate, told Bloomberg the portfolio would zero in on suburban properties in regions enjoying strong population growth and tech employment.
“There’s a recognition that this is a very strong subset of the office universe and the broader office universe has some negative headlines around it,” he told Bloomberg.
KKR has made massive investment deals over the past several years, purchasing millions of dollars in real estate in New York City, Boston and London, among other major cities. In 2019, Drawbridge and KKR announced $240M in equity commitments, which included selling a $55.5M, 160K SF office campus.
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