KKR plans $6bn push into German real estate market

Private equity major KKR & Co said it is entering the German property market with a business that will focus on the commercial real estate segment.

A Reuters report said the US buyout fund plans to pump €5bn ($5.9bn, £3.9bn) over the next five years into Germany's office and retail property segments.

The new entity - German Estate Group (GEG) - will take over the operating business and 40 staffers from Frankfurt-based property developer Deutsche Immobilien Chancen (DIC), KKR and DIC said in a statement on 13 January.

"With this new platform, we will be able to accelerate our access to investments in Germany across the risk spectrum, offering more solutions to our clients globally," Ralph F. Rosenberg, global head of KKR Real Estate said in the statement.

GEG will invest its own capital and third-party money, the statement added.

DIC is the largest shareholder of listed firm DIC Asset, which focuses on managing existing assets, as opposed to developing new office space and retail buildings.

DIC Asset's stock has gained some 7.54% in Frankfurt trade so far this year.

KKR announced on 8 January that it had floated a non-banking financial company (NBFC) in India that will lend to the realty sector in Asia's third-largest economy.

In Germany the bulk of 2014's realty activity involved offices, commercial space and hotels, where investment volumes rose by almost a third to nearly €40bn, the fifth straight annual increase, property investment manager JLL said last week.

New York-based KKR floated its real estate platform in 2011 and has since injected $1.6bn of equity into 26 transactions in the US, Europe and in Asia.