KKR raising new European real estate fund for long-term bets

KKR & Co has begun raising capital for a new fund that will target long-term real estate deals in Europe, people familiar with the process said.

The new vehicle will have an unlimited lifespan and target so-called core-plus properties, the people said, asking not to be identified because the process is private. Core-plus funds typically invest in medium-risk real estate deals that sit between the risker bets made by opportunistic private equity funds and the stable property investments favoured by most pension and sovereign investors.

A spokesman for KKR declined to comment.

The fund raise follows the appointment of Ian Williamson, who joined KKR last year from BlackRock as a managing director and head of core-plus real estate in Europe. Private equity firms including Blackstone and KKR have been diversifying beyond their traditional opportunistic funds in pursuit of new and steady fee streams.

KKR has already completed two deals on behalf of the new fund through its Mirastar platform, which focuses on warehouses, the people said. The fund will also invest in rental and student housing, and is evaluating opportunities to buy offices with good environmental credentials that cater to more flexible ways of working, they said.

The strategy echoes that of KKR’s latest opportunistic European real estate fund, which raised US$2.2 billion of capital last year. The open-ended nature of the new fund will allow it to hold investments in those sectors for the long-term.

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The private equity firm already operates a US real estate fund that has so far amassed about US$2.9 billion of capital.