KKR Closes $1.1 Billion Real Estate Credit Opportunity Partners Fund
October 10 2017 - 4:45PM
Business Wire
Seeks to Purchase Junior Tranches of New Issue
CMBS In Compliance with Risk Retention Rules
KKR, a leading global investment firm, today announced the final
closing of KKR Real Estate Credit Opportunity Partners (“RECOP” or
“the Fund”), a $1.1 billion fund focused on generating attractive
risk-adjusted returns for investors through the purchase of junior
tranches of commercial mortgage-backed securities (CMBS) (the “CMBS
B-Piece”).
RECOP focuses primarily on investing in newly-issued CMBS
B-Pieces as an eligible third party purchaser subject to the new
risk retention regulations which took effect in December 2016.
Earlier this year, KKR negotiated and purchased the first CMBS
transaction subject to risk retention. The Fund has since closed on
six additional transactions representing a face amount of $517
million and approximately $225 million of invested equity, in
aggregate. The Fund’s seven closed investments through August 2017
make it the most active CMBS B-Piece buyer of third party risk
retention structures.
KKR’s Real Estate Credit business, co-headed by Chris Lee and
Matt Salem, was established in 2015 to invest across the commercial
real estate debt spectrum and offer financing solutions to
commercial property owners. The 15-person team of investment
professionals has long-standing relationships with issuers and
borrowers, expansive underwriting capabilities, and expertise
across property types and markets nationwide.
RECOP exceeded its target capital raise and received strong
backing from a diverse group of global investors, including public
pensions, insurance companies, and family offices.
Matt Salem, co-Head of KKR’s Real Estate Credit business, said:
“With more than $50 billion annual conduit CMBS issuance, and a
limited universe of B-piece buyers, there is a growing need for
capital to satisfy the new regulatory framework. We believe our
long-dated capital offers a compelling risk retention solution
while also generating attractive returns for our investors. In
addition, the Fund will benefit from KKR’s extensive relationships
with major CMBS issuers and our integrated ‘one-firm’ approach to
underwriting.”
Ralph Rosenberg, Global Head of Real Estate for KKR, said: “This
demonstrates the power of our integrated real estate platform. We
are pleased to have received the backing of so many investors as
the CMBS market has transitioned over the past year.”
Since launching a dedicated real estate platform in 2011, KKR
has invested or committed over $4.5 billion in capital across more
than 60 real estate transactions in the U.S., Europe and Asia as of
June 30, 2017. The global real estate team consists of over 50
dedicated investment professionals.
About KKR
KKR is a leading global investment firm that manages multiple
alternative asset classes, including private equity, energy,
infrastructure, real estate, credit and, through its strategic
partners, hedge funds. KKR aims to generate attractive investment
returns by following a patient and disciplined investment approach,
employing world-class people, and driving growth and value creation
with KKR portfolio companies. KKR invests its own capital alongside
its partners' capital and provides financing solutions and
investment opportunities through its capital markets business.
References to KKR’s investments may include the activities of its
sponsored funds. For additional information about KKR & Co.
L.P. (NYSE: KKR), please visit KKR's website at www.kkr.com and on
Twitter @KKR_Co.
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KKRKristi Huller or Cara Kleiman, 212-750-8300media@kkr.com
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