KKR Moves Into Australia While Apollo Global Shares Move 'Down Under'

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Bigger Picture: Shares Of Apollo Global Management Continue Slide On Downgrade

Blackstone Group LP (NYSE: BX) is the largest alternative asset management firm, by AUM, and currently has more than $80 billion of real estate assets under management worldwide.

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On August 15, 2014, Wells Fargo downgraded Apollo Global Management (NYSE: APO) from Outperform to Market Perform with a price target of $21-$25 (from $27-$30). KKR & Co. (NYSE: KKR) was downgraded from Outperform to Market Perform with a price target of $22-$25 (from $27-$30). Analyst Christopher Harris said he sees risk as we approach the latter stages of the credit cycle.

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Private equity firms have had a great run since 2012, but the timing of when these firms choose to realize profits on long-term investments can be lumpy on a quarter over quarter basis.

KKR Takes A Stake In World Trade Center - Melbourne

A Reuters news service report broke the news that global private equity firm KKR & Co. L.P. has entered into a joint venture with $1.3 billion Abacus Property Group (ASX: ABP) to purchase a 70 percent interest in Towers 2, 3 and 4 of World Trade Centre, Melbourne.

According to an Abacus press release, KKR will be funding 75 percent with Abacus providing the remainder of the funding. The total investment is ~$112 million USD, which Abacus believes will represent an initial yield of 9.3 percent.

The seller, Asset 1 WTC, a privately-owned real estate group, will retain a 30 percent interest in the property, which is part of a mixed-use development adjacent to Melbourne's central business district. Towers 2, 3 and 4 are interconnected and were originally built in 1983. They are 90 percent leased with more than half of the ~468,000 square feet of office space leased to the State Government of Victoria. The complex also contains ~50,000 SF of retail space, and a large childcare facility.

While this KKR real estate JV represents its initial foray into the Australian market, KKR has experience investing in the Asia/Pacific region with assets located in China, India and South Korea.

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