Drawbridge Realty Recapitalizes $1.7B Innovation-Focused Office Portfolio and Expands KKR Partnership with Long-term Funding from Global Atlantic

Rhea-AI Summary

KKR has announced a recapitalization of a $1.7 billion portfolio of Class A office properties through its partner Global Atlantic Financial Group, aimed at enhancing Drawbridge Realty's investment capabilities. The partnership will allow Drawbridge to seek new high-quality investment opportunities, targeting a portfolio size increase over the next 2-3 years. Drawbridge's portfolio includes 5.4 million square feet of office space, over 95% leased to top corporate tenants. KKR retains its stake in Drawbridge, which has thrived since their initial collaboration in 2014.

Positive

• Recapitalization of $1.7 billion portfolio enhances investment capacity.
• Drawbridge aims to double its portfolio size in 2-3 years, indicating strong growth potential.
• Strategically positioned in high-quality, innovation-focused markets.
• KKR retains ownership stake, ensuring alignment of interests.

Negative

• None.

NEW YORK & SAN FRANCISCO--(BUSINESS WIRE)-- KKR, a leading global investment firm, today announced that Global Atlantic Financial Group (“Global Atlantic”), on behalf of its affiliated insurance companies, has recapitalized an approximately $1.7 billion portfolio of 95% leased, Class A office properties held by investment vehicles managed by Drawbridge Realty (“Drawbridge”). In connection with the transaction, KKR and Drawbridge have established a new venture that will enable Drawbridge’s investment platform to source a pipeline of attractive investment opportunities for Global Atlantic. With committed long-term insurance capital from Global Atlantic, Drawbridge is positioned to accelerate its investments in high-quality, innovation-focused, net-leased office properties in growth markets nationwide with a goal to more than double the size of its portfolio over the next two to three years.

Drawbridge is a real estate investment manager focused on acquiring, developing and managing strategically important properties leased to large corporate users, emphasizing well-located, predominately single tenant office, R&D, life science and industrial buildings in technology and innovation markets with secular growth. The company has a more than 20-year history of executing on its investment strategy and assisting major public and private corporations, as well as institutional owners of commercial property, with their real estate needs while creating value for investors. As a result of the new venture, Drawbridge expects to significantly expand its pace of acquisitions in its existing markets while also entering several new markets.

KKR’s insurance business Global Atlantic is recapitalizing the entirety of Drawbridge’s portfolio which comprises approximately 5.4 million square feet of Class A office assets in innovation-driven growth markets, currently concentrated across the West Coast and Sunbelt regions. The properties are over 95% leased to high-quality corporate tenants, predominantly under triple net leases. Under the terms of the agreement, Drawbridge will continue to oversee and manage the portfolio following the recapitalization.

“This transaction delivers a great outcome for our fund investors. My partners and I are excited to enter the next chapter of our strategic alliance with KKR,” said Mark Whiting, Drawbridge’s Co-Founder and CEO. “Since 2014, with KKR’s support, we have scaled our differentiated operating model and portfolio of high-quality corporate real estate. The stability of capital provided by Global Atlantic’s insurance company balance sheet will enable us to deliver enhanced solutions for our corporate clients and positions Drawbridge for accelerated growth.”

“Drawbridge’s high-quality portfolio is a great fit for our rapidly expanding sources of real estate capital. We are pleased to deepen our relationship with Drawbridge and its experienced team,” said Billy Butcher, Chief Operating Officer of KKR’s global real estate business. “Our new partnership will help to expand Drawbridge’s market presence further and provide KKR and Global Atlantic with access to a growing, diversified portfolio of well-leased, strategically important corporate properties.”

KKR and Drawbridge initially partnered in 2014 to recapitalize a portfolio alongside strategic institutional investors. Since then, the portfolio has tripled in total value while delivering attractive returns to investors. KKR will maintain its ownership stake in the investment manager alongside Drawbridge’s management team following the transaction.

About Drawbridge Realty

Drawbridge Realty is a San Francisco-based real estate investment company focused on acquiring, developing and managing commercial property investments in high growth technology and innovation driven markets across the U.S. Its portfolio primarily consists of strategically important office and research properties leased long-term to large corporations. Drawbridge has a successful history of creating value for corporate clients and investors and has completed transactions with many major companies including Apple, Bayer, Broadcom, Collectors Universe, IBM, Google, Johnson & Johnson, L3Harris Technologies, Lockheed Martin, Medtronic, NI, Northrop Grumman and Take-Two Interactive. https://www.drawbridgerealty.com

About KKR

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com and on Twitter @KKR_Co.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220217005813/en/

Media:

For Drawbridge Realty:

Andrew Neilly and Nancy Amaral

925-930-9848

andrew@gallen.com / nancy@gallen.com

For KKR:

Julia Kosygina and Miles Radcliffe-Trenner

212-750-8300

media@kkr.com

Source: KKR

FAQ

What is the significance of KKR's recapitalization of the $1.7 billion portfolio?

The recapitalization allows Drawbridge to expand its investment capabilities significantly, targeting a larger portfolio and enhancing its operational capacity.

How does the partnership between KKR and Drawbridge affect KKR's investors?

The partnership is expected to provide KKR's investors with access to a growing portfolio of high-quality corporate properties, potentially improving returns.

What types of properties are included in the Drawbridge portfolio?

The Drawbridge portfolio consists primarily of Class A office properties, over 95% leased to high-quality corporate tenants.

What are Drawbridge's growth plans following the recapitalization?

Following the recapitalization, Drawbridge aims to double its portfolio size within the next two to three years.

How has KKR's relationship with Drawbridge evolved since 2014?

KKR and Drawbridge have strengthened their relationship since 2014, with the portfolio tripling in value and delivering attractive returns to investors.