KKR's Latest Industrial Purchase Is For $835M

Global investment firm KKR has aggressively expanded its industrial holdings with a number of significant industrial acquisitions this year. In the most recent purchase, KKR has acquired a 9.7 million-square-foot industrial portfolio for $835 million. The purchase grew the firm’s holdings by nearly one-third, giving KKR a total of 30 million square feet in industrial assets.

KKR acquired the 9.7 million-square-foot portfolio through its Real Estate Partners Americas Fund II from High Street Logistics Properties. The properties are located near infill submarkets in Atlanta, Baltimore, Chicago, Central Florida, Dallas, Central Pennsylvania and South Florida.

KKR has been on an industrial buying spree this year, acquiring several industrial portfolios in the last few months alone. Earlier in December, KKR acquired two industrial distribution properties in Texas totaling approximately 1.8 million square feet for $171 million.

In November, KKR acquired four Greater Atlanta industrial distribution properties totaling 1.6 million square feet for $136 million. The properties were acquired from four different sellers and consist of three shallow-bay last-mile distribution properties with an average vintage of 2006. The fourth property is a fulfillment center completed in 2020 that is leased to an investment-grade tenant on a long-term basis.

In August, KKR acquired Wisconsin’s Kenosha Enterprise Park, a 1.5 million-square-foot distribution center occupied by Amazon, for $176 million. It was the largest industrial deal for an Amazon-occupied property.

KKR has managed to grow its portfolio significantly this year. Last November, the firm’s industrial portfolio totaled only 10 million square feet. At the time, KKR said it was strategically focused on infill, multi-tenant assets in major MSAs due to the continued strength of industrial supply-demand fundamentals. This year, the pandemic has only fueled more activity in the industrial sector. This year, the firm has said that this recent string of acquisitions is all part of that original strategy.

Several investors have entered or increased exposure to the industrial market this year in response to record growth. However, despite this activity, overall industrial investment is still down 25% this year with a total of $59 billion in investment sales volume, according to data from Colliers International. Warehouse and distribution deals accounted for 75% of the investment activity. Major markets, many of which are target areas for KKR, have seen the majority of industrial absorption investment activity. Those markets are Inland Empire, Dallas, Atlanta, Chicago, Houston and Columbus.