KKR Expands US Industrial Platform With Ground-Up Developments
The firm’s new initiative will start with projects in four states.
Veterans Point, Bolingbroke, Ill. Image courtesy of CBRE
After acquiring more than 45 million square feet of industrial real estate in the U.S. over the past four years, KKR is developing its own ground-up industrial assets. Four projects are already in development and four more are in pre-development for a total of 1.8 million square feet as the global firm expands its U.S. industrial real estate strategy.
KKR’s wholly owned U.S. industrial real estate platform, Alpha Industrial Properties, is developing the industrial properties at sites in the Atlanta, Dallas, Denver and Orlando, Fla., markets. Square Mile Capital and BMO Harris Bank provided KKR with a $200 million construction facility to finance the first four developments, four planned locations and support additional capacity. Funding for the first projects is being provided by KKR Real Estate Partners Americas III, KKR’s Americas opportunistic equity real estate fund.
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Ben Brudney, a director in the real estate group at KKR, said in a prepared statement the addition of ground-up development capabilities enhances the firm’s ability to assemble diversified portfolios of high-quality industrial real estate and increase its presence in growth markets where the supply and demand fundamentals remain dynamic. He said the global investment firm’s extensive experience in acquiring approximately $7 billion of U.S. logistics assets since 2018 positions them to identify attractive opportunities and meet market demand for new, strategically located new supply.
Construction plans
The first four properties are expected to deliver in the second half of 2022. Construction starts on the four pre-development projects will range but are generally expected in the fourth quarter, with deliveries in the second half of 2023, according to KKR.
All the properties are speculative projects at this time, but KKR has been getting strong preleasing activity and has already executed some leases. KKR is using Seefried Industrial Properties, JLL and CBRE as leasing and marketing teams across the various projects.
Over time, KKR expects to expand the development strategy to other markets across the West Coast and Southeast.
KKR has appointed industry veterans Greg Bradley and Matt Singleton as senior vice presidents at AIP, the in-house real estate platform created in 2018. They will be responsible for managing the platform’s sourcing, pre-development and development activity.
Recent industrial acquisitions
In March, KKR acquired Alliance Northport, a three-building industrial park totaling 911,654 square in Northlake, Texas, from Hillwood, according to Denton County records. Covering 62 acres, Alliance Northport is located in AllianceTexas, a mixed-use, master-planned community built across 27,000 acres by Hillwood in Dallas-Fort Worth’s North Fort Worth submarket.
Several months earlier, a KKR fund acquired industrial properties in the Chicago and Charleston, S.C., markets totaling more than 1.9 million square feet for $264 million in separate deals. KKR Real Estate Select Trust Inc. completed the purchases of a 1 million-square-foot, cross-dock industrial warehouse in Summerville, S.C., and a three-building industrial park in Bolingbrook, Ill., with about 923,000 square feet.
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