KDC Closes $800M Fund With New Partners

Parkside Uptown, Dallas. Image courtesy of KDC

KDC, a national real estate company known for its development of office buildings, corporate build-to-suit facilities and mixed-use projects, is evolving. It now has two new partners—Cadillac Fairview, the global real estate division of the Ontario Teachers’ Pension Plan, and Compatriot Capital, a wholly owned subsidiary of longtime KDC partner Sammons Enterprises Inc.—which acquired a 50 percent interest in the company.

Concurrent with the establishment of the joint venture, the new partners closed on their inaugural $800 million commercial real estate fund, which focuses on office and mixed-use assets in the U.S.

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Over the last three decades, KDC has solidified a reputation as a leading corporate build-to-suit development and investment firm, having created a premier portfolio of customized headquarters and regional facilities valued at more than $9 billion and totaling approximately 36 million square feet across the U.S.

KDC’s current portfolio is bursting at the seams with six commercial projects accounting for an aggregate 2.1 million square feet. Valued at a total of more than $1.1 billion, the projects include such mixed-use developments as the $1.5 billion Hub RTP in Raleigh, N.C., which got underway last fall, and Parkside Uptown, an approximately 493,000-square-foot Dallas office tower featuring 8,000 square feet of ground-level retail space and a corner plaza.

Per terms of the joint venture agreement, Cadillac Fairview and Compatriot will work with KDC on the ongoing development of corporate office properties as well as the acquisition of high-quality, mixed-use assets. Additionally, with the launch of the fund, KDC will enter new territory, as the internally capitalized investment vehicle will act as a long-term instrument for enhancing the partners’ combined portfolio of Class A office and mixed-use properties in key U.S. markets.

Investors acting as anticipated

Many real estate industry experts had anticipated that 2021 would be a busy year for the formation of joint ventures in the investment community worldwide.

“Joint venture strategies are rising in popularity among real estate investors as an attractive route into new markets and sectors, as well as a way for existing owners to diversify risk and create new relationships,” according to a February 2021 report by JLL.

Pointing to a survey by INREV, that same JLL report noted that, globally, 27 percent of investors indicated that they planned to increase their allocations to joint ventures in 2021.

Notable partnerships that have materialized over the month include Invesco Real Estate and Jera Asset Management’s formation of Mercury Trust, a strategic joint venture that will have the capacity to purchase up to $3 billion in industrial assets over the next three to five years.

Just last week, Greystar Real Estate Partners LLC joined forces with Toronto-based Canada Pension Plan Investment Board on a new $1.2 billion partnership to capitalize on the thriving life sciences sector.

Earlier this week, Madison International Realty and Warsaw-based Griffin Real Estate announced a new joint venture to enter the German logistics market, where the firms will commence activities by partnering with logistics developer Panattoni on two build-to-suit facilities, valued at more than $94 million, for Amazon.