KKR says 2024 could be the ‘best time’ to buy real estate

With real estate prices at rock bottom, one of the largest players in the private equity market is planning to increase the number of acquisitions in the coming months.

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KKR sees greater opportunities to acquire commercial real estate in the remainder of 2024.

After spending $8 billion in the second quarter, mostly on real estate acquisitions, New York-based KKR & Co. closed or signed an agreement on April 1 to invest $10 billion in equity capital in the real estate sector, KKR co-chief executive Scott Nuttall said on an earnings conference call Wednesday.

“The real estate investment opportunity is incredibly attractive,” Nuttall said, adding that the business has “full potential as some property owners seek liquidity and sell their best assets.”

“In such an environment, scale trades at a discount,” he said.

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

Last month, KKR bought 18 multifamily properties from Charlotte-based Quarterra for $2.1 billion. The apartment portfolio includes 5,200 units in several states, including California, Washington, Florida, Texas and Georgia. KKR is also in the middle of a joint venture with Dalan Management to buy a 43-story apartment tower in Brooklyn for $240 million, The Real Deal reported.

“We believe this is a great time to invest in real estate as transaction activity begins to recover from two years of turbulence in commercial real estate markets,” KKR partner and Americas real estate equity director Justin Pattner said in a press release announcing the Quarterra deal.

KKR is joining a growing chorus of investors signaling they are becoming more aggressive in buying real estate. Blackstone bought $34 billion of real estate in the second quarter, including taking Apartment Income REIT and Tricon Residential private, after Chief Executive Jonathan Gray said CRE values ​​were bottoming out and more buyers were coming to the market.

“Volatility and uncertainty continue to be with us. So far, 2024 looks like a great year where values ​​are attractive and activity levels are high,” Nuttall said on the earnings conference call. “This year, we have not only an open market, but also a built-up inventory of deals that have not been executed over the last few years that have come to market, so we are optimistic.”