KKR & Co.’s global real estate arm is sponsoring a $695 million securitization of a loan financing its purchase of a portfolio of logistics properties, according to ratings agency presale reports.
KKR Industrial Portfolio Trust 2021-KDIP is collateralized by a first-lien mortgage for 96 industrial properties in 18 cities with major gateway transportation hubs for warehouse/distribution centers.
The properties, located in nine states, currently have 187 tenant leases for 177 tenants occupying most of the 10.85 million square feet in the portfolio. The properties are mostly distribution centers (97.2% of the net rentable area), along with light manufacturing and research & development/flex space.
The properties secure a two-year, interest-only loan with three one-year options, which large meshes with the weighted average remaining lease terms for portfolio tenants for approximately 4.7 years.
The sponsor, KKR Real Estate Partners Americas II LP, is using the proceeds to help finance the $835 million purchase of 92 of the properties, as well as recapitalize four properties it previously acquired for $154.5 million. KKR paid over $300 million upfront in cash for the purchase, as well as funding a $63.3 million reserve account.
The largest tenant in terms of base rent (3.3% of the portfolio) is D&H Distributing Co., an electronics products and parts distribution center.
KKR is marketing the 144A transaction through a real estate mortgage investment conduit structure, with a $324.4 million Class A tranche of notes with preliminary triple-A ratings from Moody’s Investors Service and DBRS Morningstar.
KKR Real Estate has approximately $14 billion in assets under management.
