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KKR plans real estate investment drive after key hire

The private equity giant behind the world's largest buyout has appointed former Goldman Sachs veteran Ralph Rosenberg to lead its real estate investing programme.

Kohlberg, Kravis & Roberts, one of the world's largest private equity firms with $61 billion of assets under management, is set to embark on a global real estate investment drive.

PERE can reveal that the New York-based firm, led by Henry Kravis and George Roberts, has hired former Goldman Sachs Whitehall Funds co-chief operating officer Ralph Rosenberg from Eton Park Capital Management to lead its efforts in the asset class and to build a team. He becomes the first dedicated real estate professional at the firm since its inception.

Rosenberg started today as managing director and head of real estate investing, and his appointment is expected to be formally announced tomorrow. He is based at KKR's New York headquarters.

The move by KKR to ramp up its real estate investing presence is something of a milestone for the prviate equity real estate sector, which has been dominated of late by the world's largest investment banks. But in the aftermath of the global financial crisis, the sector has become more of a hunting ground for traditional private equity players. Apollo Global Management and TPG Capital have become increasingly active, particularly as a result of the widespread distress seen in many of the world's mature markets and the demise of numerous rival businesses.

According to PERE sources KKR is believed to be keen to augment its existing private equity activities with real estate expertise as many of its investments have significant real estate components, such as those in the hotel, retail, healthcare and financial services sectors. Within these sectors and in more mainstream real estate, Rosenberg's main responsibility will be to locate attractive investments for KKR's multiple funds. When asked by PERE the firm would not comment on future capital raising plans, but it is understood to have no immediate plans for a dedicated real estate fund.

“Ralph brings with him 25 years of experience investing in the real estate industry. He has demonstrated not only the investment skills but also the entrepreneurial vision to build new businesses and manage global teams,” Kravis and Roberts said in a joint statement on the hire.

Rosenberg's previous role was as a partner of Eton Park, where he was part of its operating and commitment committee. He joined Eton Park from R6 Capital Management, a business he formed to invest in real estate, asset-based and corporate credit opportunities. He spent 17 years at Goldman Sachs, during which time he held a variety of roles, including co-chief operating officer of its Whitehall Street Real Estate opportunity fund series – a position he held up until 2003. He also co-headed the bank's Special Situations Group.

Rosenberg said of his appointment: “I am looking forward to joining KKR with its long and successful history as a forward thinking investment firm. KKR's global franchise is uniquely positioned to be a partner of choice for those seeking flexible debt and equity solutions to assist existing real estate companies and properties and to provide growth capital for new opportunities.”

PERE sources said KKR, which has 14 offices worlwide, had been actively seeking a real estate head for the better part of two years before hiring Rosenberg, however the firm has made several investments in the sector beforehand. In addition to a number of investments in real estate-related businesses, KKR has invested in more than a dozen real estate platforms and properties.

Alongside the likes of The Blackstone Group and TPG Capital, KKR has grown into one of the world's largest buyout businesses, breaking a number of records since its inception in 1976. Established by former Bear Stearns executives Jerome Kohlberg Jr, Henry Kravis and George Roberts, the firm is behind both the world's biggest buyout, the $48.4 billion buyout of Energy Future Holdings in 2007 and the world's first $1 billion buyout of Wometco Enterprises in 1984.