KKR Forms Platform to Buy Triple Net Lease Real Estate
Posted on 08/28/2021
Some institutional investors are betting on triple-net lease (NNN) real estate as record U.S. inflation could boost cash flows to these types of properties. KKR created Strategic Lease Partners, a new platform to invest in a diversified portfolio of triple-net lease real estate. KKR’s investment, primarily from its credit and real estate funds, will position the platform to acquire over US$ 3 billion in assets. Veteran net lease investors Andrés Dallal and Joseph Mastrocola will join Strategic Lease Partners as partners, working with KKR’s real estate, credit and capital markets teams to acquire NNN properties and deliver sale-leaseback solutions to corporate tenants. Prior to the formation of the KKR platform, Dallal and Mastrocola were Executive Directors at W.P. Carey Inc., where they were responsible for sourcing, evaluating, negotiating and structuring net lease investments in North America. In the second quarter of 2021, the W.P. Carey REIT deployed US$ 780 million into new opportunities at a weighted average cap rate of 5.6%.
In early May 2021, The Carlyle Group Inc., through its Global Credit platform, agreed to provide up to US$ 300 million in growth capital to New York-based Four Springs Capital Trust, a private real estate investment trust (REIT) focused on acquiring, owning, and actively managing a portfolio of single-tenant, income-producing properties throughout the United States, subject to long-term net leases. Four Springs plans to use the funds to scale up its portfolio which currently includes 122 properties across 29 states. At the time, Four Springs’s 122 properties were leased to 56 unique tenants across 31 different tenant types that fall into three major property types: industrial, medical, and retail.
The trust’s top tenants include: Caliber Collision, Amazon.com, Inc, GAF, CVS Caremark, and Horizon Healthcare. Carlyle developed an in-depth and differentiated view on many of Four Springs’s tenants using knowledge provided through direct investment in many of those tenants or past diligence on them and their competitors. Carlyle’s US$ 59 billion Global Credit platform regularly pursues investments in privately negotiated capital solutions for upper middle market borrowers, including both private equity sponsored and family or entrepreneur owned businesses.