Look Who’s Investing In CRE’s Capital Markets

Matt Salem is co-head of KKR’s Real estate Credit unit

NEW YORK CITY–Two companies in separate transactions have signalled their intent to expand and diversify their holdings in the commercial real estate capital market. In one transaction Five Oaks Investment Corp. has acquired all of the equity interests of Hunt CMT Equity LLC from Hunt Mortgage Group for $68 million with the intent of increasing its investments in the CRE mortgage space. In the other transaction, Morgan Properties, which typically invests in multifamily properties, has acquired a B-Piece from Freddie Mac through its K-Series program. It too plans to increase its exposure to this asset class. Meanwhile KKR Real Estate Finance Trust recently sold its CMBS B-Piece portfolio for net proceeds of $112.7 million — a significant chunk of its B-Piece portfolio.

Five Oaks Investment Corp.

The assets Five Oaks Investment acquired include junior retained notes and preferred shares of a commercial real estate collateralized loan obligation, a licensed commercial mortgage lender and eight (8) loan participations.

The CLO assets include performing transitional floating rate commercial mortgage loans with a portfolio balance of $346.3 million, collateralized by multifamily, retail, office, mixed-use, industrial and student housing properties. The securitization pool is financed by $290.7 million of investment-grade notes. As of March 31, 2018, the CLO had $2.9 million of cash available for reinvestment.