KKR RE debt fund raises $838m

The vehicle, launched last year, targets invests in US commercial real estate. It has an additional $1bn of borrowing capacity across its lending facilities available.

KKR has closed a real estate debt fund targeting investments in the performing commercial property space in the US after raising $838 million in equity capital.

Titled KKR Real Estate Finance Trust (KREF), the fund has so far invested 55 percent of its capital, a spokeswoman for KKR confirmed to PDI.

Asked about the performance of the fund so far, KKR declined to comment.

In addition to the equity capital available, the firm has $1 billion of borrowing capacity across its lending facilities.

Established in 2015, KREF targets senior and subordinated loans, as well as preferred equity instruments backed by US real estate. The vehicle also has the mandate to invest in commercial mortgage-backed securities and is open to other securitised products.

Matt Salem, co-head of KKR’s real estate credit business, said: “Given the secular changes altering the real estate debt capital market, we see attractive opportunities to invest in US real estate credit.

“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 risk-adjusted returns to KKR and our investors,” he said.

KKR reported an overall positive quarter in the last quarter with the firm’s alternative credits attracting decent returns. Its special situations, mezzanine and direct lending strategies achieved gross returns of 4,5 and 3 percent respectively. Alternative credit now makes up 11 percent of the firm’s strategy. Approximately $1.5 billion was deployed across its credit strategies in third quarter.