KKR Raises $1.1B For New CMBS-B Credit Fund

Oct 10 2017 | 7:37pm ET

Global alternative investment giant KKR has raised $1.1 billion in capital commitments for a new credit fund aimed at investing in junior tranches of commercial mortgage-backed securities.

The new fund, named KKR Real Estate Credit Opportunity Partners, exceeded its target capital raise and received strong backing from a diverse group of global investors, including public pensions, insurance companies, and family offices, KKR said in a statement. It will focus primarily on newly-issued CMBS B pieces as an eligible third party purchaser subject to new risk retention regulations effective last December. 

Earlier this year, KKR negotiated and purchased the first CMBS transaction subject to risk retention, and the new fund has since closed on six additional transactions representing a face amount of $517 million and approximately $225 million of invested equity in aggregate. The new fund’s seven closed investments through August 2017 make it the most active CMBS B-Piece buyer of third party risk retention structures, KKR added.

KKR’s 15-person real estate credit business was established in 2015 and is co-headed by Chris Lee and Matt Salem. Since launching a dedicated real estate platform in 2011, KKR has invested or committed over $4.5 billion in capital across more than 60 global real estate transactions.

Founded in 1976, KKR as a whole manages around $130 billion across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds. 

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