KKR Real Estate Select Trust Completes 4 Debt Investments, While KKR Expands Logistics Venture
Posted on 05/10/2022
KKR Real Estate Select Trust Inc. (KREST) completed four real estate debt investments with a combined value of US$ 234 million. The transactions grow the Fund’s portfolio allocation to income-focused real estate debt investments to approximately 28% as of March 31, 2022. The new debt investments are estimated to have a weighted average yield in the first year of ownership of approximately 8.6 percent. The debt investments are primarily floating rate and backed by commercial real estate. Underlying exposures include: The Old Post Office, a newly redeveloped landmark commercial office building in Chicago; the American Copper Buildings, a pair of luxury multifamily towers in New York City; and two large select service U.S. hotel portfolios with high quality sponsorship. The Old Post Office is a an office property designated as a Chicago historical landmark that completed a major redevelopment in 2021. American Copper Buildings are Class A multifamily towers connected by a three-story sky bridge and private outdoor space, which finished construction in 2018. Real estate debt is one of KREST’s three primary investment strategies, alongside equity investments in stabilized real estate and prime single tenant properties. KREST targets private debt opportunities including real estate loans, preferred equity and commercial mortgage backed securities (CMBS) with a focus on attractive yield supported by underlying properties with consistent and defensive cash flow. KKR’s real estate credit business manages strategies across senior loans, mezzanine debt and CMBS. KKR’s global real estate franchise owns or lends on over $172 billion of real estate assets as of March 31, 2022.
Earlier, KKR announced the expansion of KKR’s industrial real estate investment strategy in the U.S. to include ground-up development of Class A industrial logistics properties. KKR’s wholly owned U.S. industrial real estate platform, Alpha Industrial Properties (AIP), has begun development at four sites and has another four sites in pre-development. The eight projects are expected to deliver 1.8 million square feet (SF) of industrial space serving the Atlanta, Dallas, Denver and Orlando markets. Funding for the projects is being provided by KKR Real Estate Partners Americas III, KKR’s Americas opportunistic equity real estate fund. Square Mile Capital and BMO Harris Bank have provided KKR with a $200 million construction facility to finance its investments in industrial developments nationwide.
