NEW YORK CITY—KKR on Monday it had closed on a private placement to capitalize the non-traded mortgage REIT it manages, KKR Real Estate Finance Trust Inc. KREF, which invests in performing commercial real estate debt, now has approximately $838 million of equity capital available, along with $1 billion of existing borrowing capacity across its lending facilities.
Several institutional investors participated in the KREF equity placement, along with KKR and some of the firm's employees. Plans are to use the proceeds to continue funding KREF's active pipeline of newly-originated financing opportunities.
KREF represents the first investment vehicle of KKR's Real Estate Credit business, which was launched in 2015 and is co-headed by Chris Lee and Matt Salem. The asset management giant believes that an evolving regulatory environment that's constraining traditional lenders will provide more opportunities for non-regulated providers of capital.
“Given the secular changes altering the real estate debt capital markets, we see attractive opportunities to invest in US real estate credit,” Salem says. “In addition to the evolving regulatory landscape, our existing relationship with borrowers, intermediaries and financing providers allows us to compete effectively for transactions and deliver attractive risk-adjusted returns to KKR and our investors.”
The mortgage REIT is a balance sheet lender with a focus on transitional senior loans, subordinate debt and preferred equity collateralized by commercial real estate assets. In addition, KREF has invested in non-investment grade CMBS and has the ability to invest in other real estate-related securities. At present it has a portfolio of 22 investments.
In late October, KKR reported its third-quarter results, which managing director Craig Larson described as “strong.” After-tax economic net income for the quarter reached $598.2 million, compared to a quarterly loss of $314.8 million in the year-ago period. Assets under management have also been on the rise, and CRE credit was cited as one of the leading contributors.
Several institutional investors participated in the KREF equity placement, along with KKR and some of the firm's employees. Plans are to use the proceeds to continue funding KREF's active pipeline of newly-originated financing opportunities.
KREF represents the first investment vehicle of KKR's Real Estate Credit business, which was launched in 2015 and is co-headed by Chris Lee and Matt Salem. The asset management giant believes that an evolving regulatory environment that's constraining traditional lenders will provide more opportunities for non-regulated providers of capital.
“Given the secular changes altering the real estate debt capital markets, we see attractive opportunities to invest in US real estate credit,” Salem says. “In addition to the evolving regulatory landscape, our existing relationship with borrowers, intermediaries and financing providers allows us to compete effectively for transactions and deliver attractive risk-adjusted returns to KKR and our investors.”
The mortgage REIT is a balance sheet lender with a focus on transitional senior loans, subordinate debt and preferred equity collateralized by commercial real estate assets. In addition, KREF has invested in non-investment grade CMBS and has the ability to invest in other real estate-related securities. At present it has a portfolio of 22 investments.
In late October, KKR reported its third-quarter results, which managing director Craig Larson described as “strong.” After-tax economic net income for the quarter reached $598.2 million, compared to a quarterly loss of $314.8 million in the year-ago period. Assets under management have also been on the rise, and CRE credit was cited as one of the leading contributors.
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