KKR & Co. raised more than $850 million for an opportunistic real estate credit fund as investors see a ripening moment for financing property deals.
The vehicle, KKR Opportunistic Real Estate Credit Fund II, will back first mortgages secured by high-quality properties in the US and Europe, according to a statement Friday. It will also purchase certain tranches of commercial-mortgage backed securities.
KKR is closing the fund at a time when the firm believes commercial-property values have bottomed, creating an opportunity to lend against appreciating assets. An increase in transactions and a pullback in bank financing also have stoked landlords’ demand for private credit.
As a result, the firm is seeing the potential for deals that offer an appealing measure of safety, Matt Salem, KKR’s head of real estate credit, said in an interview. That may include lending to owners of multifamily or industrial buildings in markets where an influx of new supply has made it harder to raise rents in the short term.
“Our institutional borrowers own fundamentally solid properties,” Salem said. “They’re trying to get through the next two or three years in order to potentially sell into a better capital-market environment.”
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