With the perception that real estate values are bottoming, one of the biggest private equity players in the industry is planning to ramp up its property acquisitions in the coming months.

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KKR sees larger opportunities to buy commercial real estate in the rest of 2024.

After spending $8B in the second quarter on mostly real estate buys, as of April 1, New York-based KKR & Co. had closed or was under contract to outlay $10B in real estate equity, KKR co-CEO Scott Nuttall said on the firm’s earnings call Wednesday.

“The real estate investment opportunity is highly compelling,” Nuttall said, adding that the firm has a “full pipeline as some owners of real estate seek liquidity and sell their best assets.”

“And in this environment, scale is trading at a discount,” he said. 

KKR generated $668M of net income in the second quarter, and its revenue in the first six months of 2024 doubled year-over-year to $13.8B. It increased its assets under management by 16% to $601B, including $152B in real assets, which includes real estate, according to its earnings report. 

Last month, KKR purchased 18 multifamily properties from Charlotte-based Quarterra for $2.1B. The apartment portfolio encompasses 5,200 units spread across several states, including California, Washington, Florida, Texas and Georgia. KKR is also under contract in a joint venture with Dalan Management to buy a 43-story Brooklyn apartment tower for $240M, The Real Deal reports.

“We believe this is a great moment to invest in real estate, as transaction activity starts to pick up on the heels of two years of dislocation in commercial real estate markets,” KKR partner and Head of Real Estate Equity in the Americas Justin Pattner said in a press release announcing the Quarterra deal.

KKR is joining a growing chorus of investors signaling that they are getting more aggressive about buying properties. Blackstone bought $34B in real estate in the second quarter, including taking both Apartment Income REIT and Tricon Residential private, after which President Jonathan Gray said CRE values are bottoming out, with more buyers hitting the market.

“Volatility and uncertainty are still with us. So far, 2024 feels like it could be a sweet spot year where values are attractive and activity levels are high,” Nuttall said on the earnings call. “This year, we not only have an open market, we have pent-up supply of deals that didn’t get done the last couple of years coming to market, so we are optimistic.”

Investment giant KKR has scooped up more than 5,000 apartments across the country in a deal that represents its biggest-ever bet on the sector. 

The company has purchased 18 properties from Charlotte-based Quarterra for $2.1B, it announced Tuesday.

The 5,200 units are spread across several states, including California, Washington, Florida, Texas, Georgia and North Carolina, Colorado and New Jersey. The Wall Street Journal first reported the deal. 

It comes six months after Quarterra’s parent company, Lennar, announced it was looking to sell more than 11,000 apartment properties that Quarterra operates, which it said could earn $4.5B. 

KKR executives said in Tuesday’s release that the firm likes the fundamentals of the apartment sector, and this portfolio serves high-growth metro areas where new supply will slow down significantly in a few years.

“We believe this is a great moment to invest in real estate, as transaction activity starts to pick up on the heels of two years of dislocation in commercial real estate markets,” KKR partner and Head of Real Estate Equity in the Americas Justin Pattner said. 

The firm plans to work with multifamily operators Carter-Haston, MG Properties and Dalan Real Estate to operate the assets. 

Law firm Gibson Dunn & Crutcher advised KKR on the transaction, while Troutman Pepper Hamilton Sanders and JLL advised Quarterra.

KKR, which had $71B in assets under management as of the end of the first quarter, has completed a few other multifamily acquisitions this year. 

In April, it purchased a 19-property student housing portfolio from Blackstone Real Estate Income Trust over 10 states for $1.64B. In January, it purchased two multifamily properties in London from British-based Quintain, totaling 490 units.

KKR has acquired a two-building Class A logistics property in the Nashville Airport submarket. KKR paid $76.2 million for the industrial campus, or $186 a square foot. The firm financed the purchase with a $42 million loan from Forethought. The seller was a joint venture between LRC Properties and Machine Investment Group.

The two-building logistics property is located adjacent to Nashville International Airport, with direct access to downtown Nashville and immediate proximity to the I-24, I-40, and I-65 major interstate trucking highways. The second of the two multi-tenant industrial buildings was completed in 2023. The property features 30-foot and 32-foot clear heights with cross-dock and rear-loading, excess power, and excellent access and site circulation. The property features Amazon as a tenant. 

“Nashville is continuing to experience outsized growth driven by favorable long-term demographic trends. We are pleased to add this high-quality asset to our portfolio, particularly given its airport adjacent location,” said KKR’s Ben Brudney.

KKR and Blackstone Real Estate Income Trust said Thursday that KKR-managed funds would acquire a portfolio of 19 purpose-built student housing properties from BREIT for approximately $1.64 billion. BREIT acquired the portfolio in 2018 for $1.2 billion in a joint venture with Greystar Real Estate Partners.

Spanning more than 10,000 beds, the properties are anchored to 14 leading four-year public universities across 10 states. The majority are located with easy pedestrian access to campus.

Post-closing, the portfolio will be managed by KKR’s University Partners affiliate. “Student housing is a sector that we have long-term conviction in,” said Justin Pattner, partner at KKR and head of real estate equity in the Americas. “We are pleased to be working with Blackstone to complete this transaction which will add a diverse mix of high-quality properties to our portfolio.

“The operating capabilities we have built with University Partners over the past decade and our ability to transact at scale, position us to create value for our investors and to continue investing in great living experiences across these communities,” he continued. “We are deploying into what we view as a compelling market environment to purchase quality real estate.”

Blackstone remains the largest owner of student housing in the U.S., primarily through its 2022 acquisition of American Campus Communities for $12.8 billion.

Gibson, Dunn & Crutcher LLP served as legal advisor to KKR. TSB Capital Advisors and J.P. Morgan Securities LLC served as BREIT’s financial advisors. Simpson Thacher & Bartlett LLP served as BREIT’s legal advisor.