Benzinga | Aug 2, 2021 07:09AM EDT

KKR Acquires HQ @ First in Silicon Valley

KKR, a leading global investment firm, today announced that KKR Real Estate Select Trust Inc. ("KREST") has acquired HQ @ First, a 603,666 square-foot Silicon Valley office campus, from MORI TRUST CO., LTD., a Japan-based major real estate developer. KREST is a continuously offered, registered closed-end fund open to all investors delivering access to income-oriented private real estate investments.

Located in North San Jose, HQ @ First is a Class A, modern technology campus with three highly amenitized office buildings, including over 60,000 square-feet in lab space, and a parking garage with 1,600+ spaces. The property holds a LEED Gold certification and offers direct access to the Silicon Valley's premier global technology corridor, transportation infrastructure and best-in-class retail. The property is 100% leased on a long-term basis to an investment-grade rated, leading publicly traded global technology company and serves as the center of the company's strategic West Coast footprint.

"HQ @ First is a marquee property with great amenities, including onsite lab facilities, and access to Silicon Valley's immense pool of talent," said Justin Pattner, KKR Partner and Head of Real Estate Equity in the Americas. "We believe well-located, trophy assets that can deliver a dynamic work environment for innovative growth companies will have significant staying power and long-term value. We are excited to add this property to KREST's portfolio as part of our prime single tenant strategy."

The investment is part of KREST's prime single tenant investment strategy, one of the fund's three primary investment strategies, which targets high-quality commercial real estate with long-term leases to single investment grade tenants. The purchase grows the value of underlying properties in KREST's portfolio to more than $1 billion and continues KKR's focus on investing in attractive commercial real estate opportunities on the West Coast.

Inclusive of HQ @ First, KKR has acquired more than $4 billion of properties on the West Coast over the last 24 months alone for its real estate funds. Since launching a dedicated real estate platform in 2011, KKR has grown its real estate assets under management to approximately $28 billion across the U.S., Europe, and Asia Pacific as of March 31, 2021. KKR's global real estate team consists of over 110 dedicated investment professionals, spanning both the equity and credit business, across 11 offices and eight countries.

Drawbridge Realty, a San Francisco-based real estate investment manager (in which KKR has an ownership interest) with a portfolio primarily of office properties leased long-term to large corporations, has been engaged by KREST as the operating partner for HQ @ First. An entity controlled by Drawbridge senior management is a joint venture partner in the investment.

Newmark Knight Frank acted as broker on the sale.