KKR is folding its real estate and infrastructure businesses under the same umbrella, according to Bloomberg, which cited an investor letter. The firm declined to comment.
As part of the reorganization, global head of infrastructure Raj Agrawal is becoming the global head of real assets, supervising both areas of the business. Global head of real estate Ralph Rosenberg, meanwhile, will become chair of real assets, though the infrastructure business will not report to him.
The real assets platform will feature $157 billion under management, including equity and credit. As of the end of the third quarter, the infrastructure business accounted for $77 billion, while the real estate business accounted for $80 billion, up from $15 billion five years ago.
The infrastructure business has been KKR’s better performing segment between the two, however, at least in terms of returns. The infrastructure segment returned 18 percent for the 12 months ending on Sept. 30 — the best performing segment for the entire company — while the real estate segment returned just 3 percent over the same period.
The real estate business suffered under the same weight facing investors across the country since the onset of the pandemic, hindered by elevated interest rates.
But assets in both the real estate and infrastructure worlds are proving to be promising properties for owners. Data centers in particular, which are being driven by the artificial intelligence boom, are becoming more ubiquitous and desirable across the country.
The combined business is set to pursue data centers and logistics properties under the converging strategy, in addition to other areas of “mutual interest,” according to the investor letter.
In October, an affiliate of KKR purchased a 283,000-square-foot distribution warehouse in Northeast Philadelphia from Dov Hertz’s DH Property Holdings for $83.5 million.
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