Saw the recent KKR logistics portfolio sale to Oxford Realty. Was wondering what is the rationale behind KKR assembling the portfolio in over 50 transactions over the past three years. How does portfolio valuation differ from the sum of the individual asset valuation? Why do many Mega funds choose to build out these operating platforms? What kind of synergies/benefits can we achieve through scale?

Operating platforms are used because it’s generally not worth it to do many small transactions every year. The amount of time a small deal takes is the same as a big deal. Generally, you see these operating platforms in areas like manufactured housing or self storage, where the fund can commit a few hundred million and not have to worry about finding the deals. In these areas, and industrial can be included, the average equity check is really small - like less than $5MM small.

Operating Platform vs. Single Asset

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Authored by: Certified Real Estate Professional - Assistant Vice PresidentCertified Real Estate Pro

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Operating Platform vs. Single Asset

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