(Bloomberg) --

KKR & Co. has bought a stake in London developer Great Portland Estates Plc, betting against the demise of the downtown office.

The private equity company has acquired a 5.35% stake in the landlord, according to a filing, becoming the latest of several money managers to build stakes in U.K. real estate companies during the Covid-19 pandemic. Great Portland, which owns and develops mainly office buildings in central London, has fallen almost 36% this year as restrictions to contain the virus triggered a severe recession and raised questions about the long-term outlook for urban workspace.

Spokesmen for KKR and Great Portland declined to comment.

Real estate stocks have been among those hit hardest hit by the virus fallout as tenants struggle to pay rent, retail spending shifts online and office workers do their jobs from home. That’s lured buyout firms attracted by deep discounts between the value of landlords’ assets and their market capitalizations. Brookfield Asset Management bought a stake in rival landlord British Land Co. in June and upped its holding earlier this month.

KKR’s stake, acquired for about 74.3 million pounds ($94.7 million) based on Wednesday’s closing price, makes it the sixth-largest holder of Great Portland, according to data compiled by Bloomberg. The London-based company is now valued at about 1.4 billion pounds.

While private equity firms have raised vast real estate funds targeting distressed deals, the impact of the coronavrius has yet to translate into widespread defaults and forced sellers. That’s further encouraging the managers to deploy capital on shares and bonds in companies that have strong track records but which have been badly affected by negative sentiment due to the virus.

Great Portland has sold off completed buildings at high prices in the past five years and reduced its debt to about 15% of the value of its properties, a level that’s among the lowest in the business. The company has cash and undrawn loans of about 390 million pounds.

According to a July 10 trading update, it had collected 69% of the rent due in June and 82% of what was owed in March, with stores and restaurants that occupy the ground floors of its mainly West End office buildings particularly hard hit.

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