KKR Europe adviser: 'We are embarking on an ambitious journey in Europe'

PropertyEU talks to KKR's new senior adviser for Europe Martin Moore and Europe director Guillaume Cassou about the firm's plans for the Continent.

In a phone interview from London, Moore, who previously headed UK property firm M&G Real Estate (formerly Prupim) for 17 years, said KKR is embarking on ‘an ambitious journey in Europe’ after diversifying into real estate two years ago.

While declining to provide details about KKR’s plans, Moore said the New York-listed private equity giant is ‘casting its net widely’ in terms of asset classes and geographies. ‘We are approaching things with an open mind and looking at the market on an opportunity-by-opportunity basis.’

He said KKR would seek to deploy more capital into the UK and Western Europe following its maiden European acquisition of a UK retail park portfolio in June. Although the financial details of that transaction were not disclosed, the investment volume is understood to have been around £112.5 mln (€132 mln), reflecting a yield of 6.5%. The warehouses are located in regional UK cities such as Oxford, Glasgow and Sunderland and were acquired from Resolution Property.

Moore said KKR will be looking at all asset classes and geographies in its efforts to build a European portfolio. ‘We will be looking at the office, retail and logistics sectors as well as alternative classes. In terms of geographic markets, we are not ruling anything out although it would be fair to say that core markets around London are not an obvious starting point as they are fully priced.’ He named France, Germany, Spain and the UK as markets which would be targeted.

KKR has committed over $700 mln (€527 mln) to real estate since taking on Goldman Sachs’ Ralph Rosenberg in 2011 to lead the business globally. This commitment has been made primarily from the firm’s own balance sheet. Besides direct real estate, the New York-based firm is looking selectively at real estate debt, but is not actively chasing the large NPL portfolios.

‘KRR decided to move into real estate two years ago based upon an interesting market opportunity and a way to leverage the firm’s other businesses and expertise,’ added Guillaume Cassou, director of real estate at KKR Europe. ‘We believe KKR has a role and place in the real estate world, and Martin’s appointment is a demonstration that we are serious about our ambitions in this area. We plan to grow over time and become a sizeable player.’

Cassou: 'KKR has the ability to invest in Europe and, given the size of the firm’s first deal there, it is clear there is sufficient appetite to do more similar sized transactions in Europe.'

KKR's senior advisers are current and former senior executives who have leadership skills that complement the work of the firm's investment professionals, including supporting new investing activities and providing counsel to KKR portfolio companies.

Moore retired as chairman of M&G Real Estate at the end of June, a role he had held since July 2012. Prior to that he was managing director of the firm for 17 years. He also served as a director of M&G Ltd and continues as an independent non-executive director of F&C Commercial Property Trust Ltd and as a commissioner of English Heritage.

‘Martin has been through a lot of investment cycles and brings in substantial knowledge and understanding of the real estate business, especially in the UK,’ Cassou said. ‘His appointment highlights KKR’s commitment to the sector following our recent first European property investment in the UK. We are currently assessing a number of other opportunities to expand our portfolio and I look forward to working with Martin on these transactions.’

KKR also recently hired Bryan Southergill to oversee property investments in Asia as part of the firm’s global drive into real estate. Southergill previously worked for a unit of JPMorgan Chase & Co as managing director and head of Asia real estate investment.

KKR, formerly known as Kohlberg Kravis Roberts, ranks alongside other US-based groups Blackstone, Cerberus, Lonestar and TPG as one of the largest private equity investors in the world. At end-June this year, KKR had $83.5 bn in assets under management.