KKR nears US$800m US warehouse deal with e-commerce booming

[NEW YORK] KKR & Co is nearing a deal for a portfolio of US warehouses, a sector that has received a boost during the pandemic as consumers increasingly turn to e-commerce.

The transaction, which may close as soon as next week, values the roughly 100 properties at more than US$800 million, according to a person with knowledge of the matter.

Barclays is arranging about US$700 million in commercial mortgage-backed securities to finance the deal, which includes assets in markets including Atlanta, Chicago, Dallas and Baltimore, said the person, who requested anonymity because the talks are private.

Representatives for KKR and Barclays declined to comment.

While hotels and retail properties have been battered by the pandemic, investors have flocked to warehouses to capitalise as an e-commerce boom that was flourishing before the pandemic accelerates with shoppers increasingly buying from their couches.

The warehouse portfolio set to be acquired by KKR is part of a broader wager by the company, increasing its exposure to the sector to about 30 million square feet. In recent months, through various funds, it has snapped up properties in metropolitan areas including Atlanta and Phoenix.

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"We believe that the current environment will lead to continued acceleration of e-commerce penetration, which drives demand for large modern distribution centres like the ones we are acquiring," Roger Morales, a KKR partner and head of commercial real estate acquisitions in the Americas, said in a July statement announcing the US$260 million purchase of properties in Chicago and Charlotte.

"Logistics real estate represents a growth opportunity as more and more US consumers migrate to shopping online."

Institutional investors, such as real estate-focused private equity firms and pension funds, have been pouring capital into warehouses. The largest industrial real estate investment trust, Prologis, has seen its shares climb about 10 per cent this year, beating the roughly 10 per cent decline by the Bloomberg US Reits index.

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