KKR Seeks Investments in Real Estate Loans and Securities After Raising $850M
KKR has raised more than $850 million from the close of its Real Estate Credit Fund II, which will target real estate securities and senior loans.
Through the investment strategy, the New York-based firm said in a statement it plans to "pursue attractive risk-adjusted returns," located in not only the U.S. but Western Europe too. Particularly, for loan originations, KKR is eyeing first mortgages on assets in major markets that are operated by institutional sponsors.
Also, KKR thinks the timing of fundraising is ideal coupled with its strategy, as it said that loan demand is continuing to spike.
“We believe it is a great time to invest real estate credit. The asset class offers attractive absolute and relative returns, underpinned by the opportunity to lend on high-quality, well-located assets at conservative leverage levels on re-set property values,” Matt Salem, partner and head of real estate credit at KKR, said.
“We have designed our ROX II strategy with a flexible mandate to participate in what we view as the best risk-adjusted opportunities we see across our platform, with the objective of delivering attractive returns coupled with significant current income and a focus on downside protection.”
KKR's real estate credit strategy since 2015 has poured $14 billion in commercial mortgage-backed securities (CMBS) and originated more than $43.4 billion in loans. For B-Piece CMBSs, KKR claims it is the biggest third-party buyer.
Meanwhile, a recent report from Trepp found that the CMBS delinquency rate rose 17 basis points in December month-over-month to 6.57 percent overall. Retail and office delinquencies saw the highest gains, at 86 and 63 basis points, respectively. The lodging sector was the only one that Trepp tracked that saw a drop, falling by 78 basis points to 6.14 percent.
Source: GlobeSt/ALM