KKR Breaks Own CRE Record for Real Estate Loan

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The investment company has already disbursed $ 8 billion in loans.

The year has ended just over half, but global investment firm KKR has already exceeded the total volume of commercial real loans, Bloomberg reported. reports… So far, KKR has disbursed $ 8 billion in CRE loans in 2021, more than double the previous year’s record. The increase in CRE loans is due to the fact that the reopening after COVID-19 has created a higher demand for funding.

“The market is only reviving in terms of volume,” Matt Salem, head of real estate lending at KKR, told Bloomberg. “The pipelines are very large in all directions.”

Increased construction volumes, debt repayment and low interest rates have led to a demand for new loans. According to the Mortgage Bankers Association, total debt on commercial and multi-family real estate in the United States increased to $ 3.93 trillion as of March 31. This is a 1.1% increase in the first quarter of 2021. Debt growth continued as trillions of dollars in stimulus money entered the economy, and COVID-19 vaccination campaigns helped revitalize trade and the willingness of CRE investors to take risks.

KKR’s Real Estate Finance arm has completed $ 4 billion in CRE loans and has pledged an additional $ 4 billion this year by June 30, Salem told Bloomberg. Obligated loans surpassed KKR’s previous record of $ 3.1 billion, which it reached in 2019. KKR made a $ 1.4 billion loan last year – a decrease as a result of the freezing of real estate markets during the pandemic. As of March 31, the company had $ 28 billion in real estate under management and, according to a recent presentation, it plans to increase that figure to $ 15 billion by next year.

The company’s lending has increased in part because it has more funding opportunities. Earlier this year, he acquired Global Atlantic Financial Group Ltd., an annuity provider whose portfolio invests in long-term real estate loans. He then created the KKR Real Estate Select Trust, which has high yielding debts including mezzanine loans and preferred shares.

The firm provided loans for CRE office projects in Atlanta, Dallas, Miami, but avoided some high-value markets negatively impacted by the COVID-19 exodus.

“In New York and San Francisco, I think you have to wait a bit to see how things work out,” Salem told Bloomberg.

The firm is currently funding hotel deals; he is looking for properties that attract tourists but takes a wait-and-see approach to destinations commonly used for conventions. Salem told Bloomberg that KKR did not find many opportunities to acquire discounted, problem or problem loans.

“We are much more focused on creating new loans,” he said, “rather than acquiring loans with scratches and dents.”

Joe Dayton can be reached at joed@fifthgenmedia.com.



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