Hines Sells Texas Assets for $171M

Image courtesy of EFAFLEX Schnelllauftore via Pixabay.com

KKR continues the rapid expansion of its holdings in the U.S. industrial sector with the acquisition of two Texas properties totaling 1.8 million square feet. As part of its core plus real estate strategy, the global investment firm purchased the assets, located in Dallas and Houston, from Hines in a transaction valued at $171 million.

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There’s history between KKR and Hines. KKR established its dedicated real estate platform in 2011 and made one of its first investments in the U.S. industrial sector in 2012 when the two companies formed a joint venture with Pinto Realty Partners to develop the 971-acre Pinto Business Park in Houston.

KKR’s newly acquired industrial distribution facilities, neither of which the company has identified specifically, share a handful of traits that any investor would find attractive. The state-of-the-art properties were developed in 2019 or thereabouts and are each 100 percent occupied by a single investment-grade tenant under long-term lease agreements. With the purchase of the two assets from Hines, KKR’s industrial real estate portfolio now totals approximately 7.2 million square feet.

Buy some and buy some more

While many investors have slowed activity amid the pandemic-induced climate of uncertainty, KKR has remained quite acquisitive. “The bar remains very high, but we continue to focus on some of the areas we talked about in the past, growth areas for us like real estate,” Scott Nuttall, co-president & co-COO of KKR, said during the company’s third quarter 2020 earnings call on October 30. “We are seeing real opportunities to invest in real assets with yield. And that’s part of the reason you’re seeing such growth in our infrastructure and real estate businesses in particular.”

KKR has announced a half-dozen industrial acquisitions since COVID-19 took hold in the U.S., increasing and diversifying its footprint across the country through its core plus real estate strategy and Real Estate Partners Americas Fund II. In mid-November, the company pushed its industrial presence in the Phoenix area up to nearly 2 million square feet with the $32 million purchase of a distribution facility in the Southwest Valley submarket. And just days later, KKR revealed it had purchased four metropolitan Atlanta distribution centers totaling 1.6 million square feet in separate transactions for an aggregate $136 million.