Global investment firm KKR has closed KKR Real Estate Credit Opportunity Partners II (RECOP II) 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 B-Pieces).
“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,” said Matt Salem, partner and head of KKR’s Real Estate Credit business. “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.
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.