KKR To Acquire 1.8M SF Property In One Of Houston's Largest Industrial Trades
KKR plans to put down $234M for a 1.8M SF industrial park developed by Artis Real Estate Investment Trust in what is reported to be the market's second-largest warehouse deal ever.
KKR is set acquire the 127-acre complex known as Park 8Ninety, which Artis REIT developed in five phases from 2017 to 2022, Green Street reported. The complex has 13 single and multitenant buildings at 9021 S. Sam Houston Parkway in Missouri City, according to its website.
The park is fully leased, and tenants include Comcast, Rexel, Texas AirSystems and VWR International, Green Street reported.
BMO was the advisor to the seller, according to a source close to the deal. Artis is offloading assets to strengthen its balance sheet, according to Green Street. The sale will work out to about $128 per SF.
Artis’ board initiated a strategic review in August to review options, including the sale of the REIT, CEO Samir Manji said in its latest earnings call March 1. While he didn't believe a buyer was prepared to acquire the REIT at a reasonable value at that time, “there remains healthy interest from potential buyers of high-quality retail and industrial assets and certain office assets,” Manji said on the call.
KKR’s acquisition gives the firm a high-quality, multitenant park with a diverse rent roll, KKR Managing Director Ben Brudney said in a statement to Bisnow.
The company chose Houston to expand its industrial portfolio because it is a market that “continues to benefit from strong demand fundamentals and comparatively low supply,” Brudney said.
Houston saw a record amount of industrial square footage delivered in 2023, about 32.4M SF worth, according to Avison Young. All that new supply pushed Houston’s industrial vacancy to just below 8%. But construction has dwindled in recent months, and industrial experts expect strong absorption to lower vacancy soon.
“Starts have fallen off a cliff,” Bradley Kluever, market leader and regional director for First Industrial Realty Trust, said at a Bisnow event last month.
Sales of Houston industrial properties worth $25M or more fell 35% last year, coming in at $1B, according to Green Street’s sales comps database. That trumps the 29% national dip, but it followed two years of record industrial trading in Houston and still represented Houston’s third-largest annual trading volume, Green Street reported.
The pending KKR acquisition is a historic one, according to Green Street. Only the sale of a 66% stake in the 3M SF Greens Port Industrial Park for $261.6M, or $132 per SF, 14 years ago was larger.
KKR’s purchase comes after it sold 50 industrial properties across the Atlanta, Dallas-Fort Worth, Chicago, Lehigh Valley and Central Pennsylvania regions for $560M in October. But the firm also picked up 2M SF of industrial properties in May, purchasing an industrial park in Phoenix and a warehouse in Atlanta for a combined $250M.
UPDATE, APRIL 10, 12:07 CT: This story has been updated with new information about the firm advising on the deal.
