KKR Closes $950 Million Real Estate Credit Opportunity Partners Fund II

Press Release

July 20, 2020

NEW YORK–(BUSINESS WIRE)– KKR, a leading global investment firm, today announced the final closing of KKR Real Estate Credit Opportunity Partners II (“RECOP II” or “the Fund”) with $950 million in committed capital. The Fund will continue KKR’s strategy focused on generating attractive risk-adjusted returns, primarily through the purchase of junior tranches of new issue conduit commercial mortgage-backed securities (CMBS) (the “CMBS B-Piece”).

Matt Salem, Partner and Head of KKR’s Real Estate Credit business, said: “We are pleased to have the trust of so many investors in our second fund, which speaks to the strength of our strategy, team, and reputation in the market. Having invested over $1.25 billion into conduit risk retention since 2017, we believe that the market has demonstrated the need for private, long-dated risk retention capital.”

RECOP II, like its predecessor, RECOP I, focuses primarily on investing in newly-issued conduit CMBS B-Pieces as an eligible third party purchaser subject to the risk retention regulations which took effect in December 2016. Additionally, it has the ability to purchase non-risk retention conduit CMBS and other real estate securities.

RECOP II has closed on nine risk retention transactions and RECOP I and RECOP II have completed a combined 36 closed investments through June 2020, making KKR the most active CMBS B-Piece buyer of third party risk retention structures since risk retention regulations took effect.

Chris Lee, Partner and Head of KKR’s Real Estate Americas business, said: “We have continued to grow our platform which enables us to invest across the capital structure and risk return spectrum while delivering differentiated underwriting capabilities. The successful closing reflects the strong progress of our real estate credit business, and we are pleased to provide our clients with a product that delivers attractive cash yield and portfolio diversification.”

Since launching a dedicated real estate platform in 2011, KKR has grown to approximately $11.8 billion in real estate assets under management across the U.S., Europe and Asia as of March 31, 2020. KKR’s global real estate team consists of over 85 dedicated investment professionals, spanning both the equity and credit businesses.

About KKR

KKR is a leading global investment firm that manages multiple alternative asset classes, including private equity, credit, and real assets, with strategic partners that manage hedge funds. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. KKR invests its own capital alongside its partners’ capital and provides financing solutions and investment opportunities through its capital markets business. References to KKR’s investments may include the activities of its sponsored funds. For additional information about KKR & Co. L.P. (NYSE: KKR), please visit KKR’s website at www.kkr.com and on Twitter @KKR_Co.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200720005737/en/

Media Contact
Kristi Huller, Cara Major, or Miles Radcliffe-Trenner
media@kkr.com
(212) 750-8300

Source: KKR

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Miles Radcliffe-Trenner

Julia Kosygina
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Wei Jun Ong
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This presentation contains certain forward-looking statements pertaining to KKR & Co. Inc. and its consolidated subsidiaries (collectively “KKR”), including certain investment funds, vehicles and accounts that are managed by KKR (each, a “fund”). Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements are based on KKR’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or are within its control. If a change occurs, KKR’s business, financial condition, liquidity and results of operations, including but not limited to, assets under management, fee paying assets under management, after-tax distributable earnings, capital invested, syndicated capital, uncalled commitments, cash and short-term investments, fee related earnings, fee and yield segment EBITDA, core interest expense and book value, may vary materially from those expressed in the forward-looking statements. The following factors, among others, could cause actual results to vary from the forward-looking statements: whether KKR realizes all or any of the anticipated benefits from converting to a corporation and the timing of realizing such benefits; whether there are increased or unforeseen costs associated with the conversion, including any adverse change in tax law; the volatility of the capital markets; the general volatility of the capital markets; failure to realize the benefits of or changes in KKR’s business strategies including the ability to realize the anticipated synergies from acquisitions or strategic partnerships or other transactions; availability, terms and deployment of capital; availability of qualified personnel and expense of recruiting and retaining such personnel; changes in the asset management industry, interest rates or the general economy; underperformance of KKR's investments and decreased ability to raise funds; and the degree and nature of KKR’s competition. All forward-looking statements speak only as of the date they are made. KKR does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law. In addition, KKR’s business strategy is focused on the long-term and financial results are subject to significant volatility.

Additional information about factors affecting KKR, including a description of risks that may be important to a decision to purchase or sell any common or preferred stock of KKR & Co. Inc., can be found in KKR & Co. Inc.’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and its other filings with the SEC, which are available at www.sec.gov.

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