KKR Raises $739 Million for First European Real Estate Fund

Updated on
  • Fund plans to focus on investments in western Europe
  • Global real estate platform has already committed $2.7 billion

KKR & Co., the private equity firm co-founded by Henry Kravis and George Roberts, has raised $739 million for its first European real estate fund. 

“There has been a real appetite for European real estate from investors because the region is in the infancy of a recovery and pricing is still attractive relative to other areas,” said Guillaume Cassou, head of European real estate at KKR, in an interview, “There’s still a lot of deleveraging to be done, and it’s all about selection and being creative.”

KKR Real Estate Partners Europe LP -- which was raised in 15 months from investors including public pension funds, family wealth managers and individual investors -- will focus on Germany, the U.K., France, Spain and Italy, Cassou said. KKR started a global real estate platform in 2011 after property funds at Wall Street banks suffered during the financial crisis. The company has committed more than $2.7 billion in equity and debt across 70 transactions in the U.S., Europe and Asia.

The company is interested in “all types of property” in Germany and is potentially interested in residential development with local partners in Madrid and Barcelona, Cassou said. Italian retail and office space may be a good investment since the country is cheap relative to the rest of Europe, he said.

While Paris is expensive, there are opportunities in the French regions where there are higher yielding assets, Cassou said.

Still, KKR is bracing for the impact of a potential Brexit, as the U.K. prepares to vote on whether to leave the European Union this week.

“We are worried about the U.K. leaving the EU, but we are prepared for either eventuality, he said. “If the U.K. does leave, the bar may be higher for U.K. investments because there will be more uncertainty and investors will look for better risk rewards.”

(Updates with comments from KKR’s Cassou in final paragraph.)
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