KKR, Drawbridge Recap $1.7B Portfolio

4 and 5 Polaris Way in Aliso Viejo, Calif. Image courtesy of Drawbridge Realty

Global Atlantic Financial Group, KKR’s insurance business, has recapitalized Drawbridge Realty’s $1.7 billion portfolio, comprising innovation-focused office properties. The assets add up to 5.4 million square feet of Class A space, situated on the West Coast and the Sun Belt region.

The portfolio, comprising high-quality assets in growth markets, was more than 95 percent leased at the time of closing. In connection to the deal, KKR and Drawbridge have set up a new venture, enabling the San Francisco-based real estate company to speed up its investments in similar office assets. In the coming two to three years, the partners plan on doubling the size of Drawbridge’s portfolio.

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The duo first teamed up back in 2014, to recapitalize another portfolio alongside strategic investors. Following the current transaction, KKR will maintain its ownership interest in the investment management firm.

Focus on office assets

Roughly one year ago, global investment firm KKR closed on the acquisition of Global Atlantic, one of the largest fixed rate and fixed annuity providers in the U.S. The insurance company became a subsidiary of KKR, which now holds a controlling 60 percent interest in Global Atlantic. The transaction was valued at roughly $4.7 billion.

One of KKR’s latest office investments included the purchase of HQ @ First, a three-building, Class A campus in San Jose, Calif., marking one of the largest Bay Area office transactions of 2021. The company paid $535 million to Mori Trust Co. for the fully leased asset.

In January 2021, Drawbridge completed the $149 million refinancing of four office properties—three in Southern California and one in Austin, Texas. California Bank & Trust, along with Bank of the West and TCF National Bank provided the five-year permanent loan.