KKR Bought Dropbox’s San Francisco Headquarters: What Investors Should Know

Huge private-equity agency KKR has determined to buy a mixed-use constructing in San Francisco, consisting of workplace and life science area within the Mission Bay space. KKR is buying the property for $1.1 billion and simply obtained a $600 million mortgage from Goldman Sachs (NYSE: GS) and JPMorgan Chase (NYSE: JPM) to assist fund the acquisition.

Here is a rundown of the constructing KKR is shopping for, why the corporate is probably going under no circumstances fearful about gathering lease for the foreseeable future, and what it means to real estate investors as a complete.

KKR's newest actual property acquisition

The constructing, referred to as The Change on sixteenth, is most notable as a result of it is the headquarters of file-sharing expertise firm Dropbox (NASDAQ: DBX), which leases greater than 98% of the area within the constructing, totaling 738,000 sq. toes. KKR is investing practically a half-billion {dollars} of its personal core-plus actual property funding capital within the deal. Dropbox introduced it would transition to a "digital first" office mannequin after the pandemic. So at first look, this would possibly sound like a dangerous funding for KKR. Nonetheless, there's little cause to fret in regards to the firm's skill to pay lease.

For starters, Dropbox has paid its lease all through the pandemic. One other factor that KKR probably finds interesting in regards to the deal is that Dropbox's lease has practically 13 years left on it, so the agency can depend on regular, rising lease funds by way of no less than November 2033.

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