KKR’s real estate investment trust, which completed its initial public offering three months ago, has recently provided two floating-rate senior loans totalling $224 million, the company said on Monday.
The KKR Real Estate Finance Trust issued a $119 million acquisition loan backed by a five-building office complex in Atlanta, Georgia, according to a statement. This loan had a three-year initial term with two one-year extension options, with a coupon of LIBOR plus 3 percent and a loan-to-value ratio of 66 percent.
The other $105 million loan also has a three-year initial term with two one-year extension options, carrying a coupon of LIBOR plus 3.95 percent and a LTV of 66 percent. This loan refinances an existing construction loan on a multifamily property in Honolulu, Hawaii.
The Atlanta and Honolulu investments mark commitments outside of REIT’s largest geographic holdings, which, as of 30 June, were California (23.1 percent), Texas (12.7 percent) and New York (9.2 percent), according to the firm’s second-quarter earnings report filed with the US Securities and Exchange Commission. These mark two of the six loans, totalling $690 million, that the trust has conducted since its entrance into the public markets this May, the statement showed. The weighted average internal rate of return of the two loans is 11.7 percent.
Chris Lee and Matt Salem, co-chief executive officers of KREF, said in prepared remarks that the firm expects to “build on the momentum” as far as the trust’s recent pace of originations throughout the rest of the year. KKR was not immediately available to comment further.
The REIT, traded on the New York Stock Exchange under the “KREF” ticker, focuses primarily on originating and acquiring senior loans secured by commercial real estate assets.
The trust’s portfolio totalled $1.26 billion and comprised 100 percent performing loans and 89 percent floating-rate as of 30 June, second-quarter earnings showed. The portfolio had a weighted average LTV ratio of 67 percent as of that date.
KKR is one of several firms that have taken their debt-focused REITs public recently. The TPG Real Estate Finance Trust conducted an IPO on the NYSE under the ticker symbol “TRTX” this July, offering an initial 11 million shares of its common stock at $20 per share. KKR and TPG joined the ranks of Starwood Capital Group, Blackstone and Apollo Global Management, all of which have taken similar platforms public.