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

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.

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02/17/2022 - 04:15 PM

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.