Global investment firm KKR has acquired a portfolio of 18 multifamily assets from a closed-ended fund sponsored by Quarterra Multifamily for approximately $2.1 billion.
The Class A portfolio consists of over 5,200 units concentrated in growing coastal and Sun Belt markets, including California, Colorado, Florida, Georgia, New Jersey, North Carolina, Texas, and Washington. The portfolio includes a mix of mid-rise and high-rise buildings with access to urban and metropolitan areas and modern amenities.
“We are pleased to acquire this exceptional, well-located multifamily portfolio from one of the world’s premier developers and owners of residential real estate,” says Justin Pattner, partner at KKR and head of real estate equity in the Americas. “We believe this is a great moment to invest in real estate, as transaction activity starts to pick up on the heels of two years of dislocation in commercial real estate markets. Across our platform we are finding opportunities where our scale, strong relationships, multiple pools of capital and local knowledge give us advantages as a buyer of large pools of high-quality, irreplaceable assets.”
Quarterra Multifamily is the multifamily arm for public home builder Lennar. Lennar first launched its apartment development business in 2011 and rebranded the subsidiary as Quarterra Multifamily in 2022. At the time of the rebrand, it was announced Quarterra was to separate from Lennar and launch as an NYSE-listed, alternative asset manager. However, factors, including overall market conditions and financial market complications, contributed to the spinoff of Quarterra being delayed.
Lennar has reported losses in its multifamily segment in its recent quarterly reports. For fiscal year 2023, the national home builder’s multifamily segment recorded losses above $50 million. Lennar reported multifamily segment losses of $16 million and $20 million in the first and second quarters of 2024, respectively.
In December 2023, media outlets began reporting Lennar had hired JLL to sell a portfolio of 11,000 luxury apartments under the Quarterra platform for an estimated $4.5 billion.
“Quarterra is known for their high-quality assets, and we are thrilled to be working with them on this transaction,” Daniel Rudin, managing director at KKR, said. “We like the fundamentals in this sector. This portfolio serves high-growth metropolitan areas across the country, where new supply will slow down significantly looking out beyond the next couple years.”
KKR said it will work with leading multifamily operators including Carter-Haston, MG Properties, and Dalan Real Estate to operate the assets. Quarterra was advised on the transaction by Troutman Pepper Hamilton Sanders and JLL.
In April, KKR acquired a portfolio of 19 purpose-built student housing properties from Blackstone Real Estate Income Trust for approximately $1.64 billion.
