KKR Explores Growth Opportunity amid Supply Chain Issues

Global investment firm KKR & Co. Inc. (NYSE: KKR) recently announced that it has acquired four logistics properties in the UK for £160 million ($208.5 million) from global alternative asset management firm TPG and Stoford.

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The acquisitions were carried out through KKR Real Estate’s industrial and logistics platform in Europe, Mirastar.

Situated in Harlow, Greater London, the Grade A freehold properties span a total area of 370,000 square feet. The location can be used for national distribution as well as within Greater London.

Following the acquisition of four freehold logistics assets totaling 45,000 square meters in the Netherlands in January, the latest acquisition is KKR’s second from its pan-European Core+ Real Estate strategy.

Management Commentary

The Managing Director and Head of Core+ Real Estate in Europe at KKR, Ian Williamson, said, “We’re delighted to announce our first UK acquisition for KKR’s Core+ strategy for Real Estate. High-quality logistics assets are one of the main investment themes for our Core+ strategy in Europe and this marks the second successful transaction in just three months since the platform was launched last year. The combination of protection on the downside and optionality on the upside is compelling.”

Stock Rating

Recently, Deutsche Bank analyst Brian Bedell reiterated a Buy rating on the stock. The analyst, however, lowered the price target from $87 to $83, which implies upside potential of 43.9% from current levels.

According to the analyst, macroeconomic headwinds like the rising interest rate environment can impact the company’s earnings capability.

Consensus among analysts is a Strong Buy based on seven Buys and one Hold. KKR’s average price target of $84.88 implies upside potential of 47.1% from current levels. Shares have gained 10.9% over the past year.

Key Takeaway

The acquisition of these four properties in the sector near London is expected to be beneficial for the company, as the logistics sector in the UK has been witnessing sustained growth over the past few years. Also, given that the global supply chain issues are unlikely to abate soon, KKR’s move to strengthen its logistics portfolio appears to be prudent.

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