Kayne Anderson closes latest debt fund iteration at nearly $1.9bn

CEO Al Rabil says a heavier tilt toward direct origination will be a priority during its deployment.

Kayne Anderson Real Estate closed on the latest iteration of its flagship debt fund on May 11 with nearly $1.9 billion in capital commitments, marking the largest debt fundraise in company history.

Al Rabil, CEO of Kayne Anderson Capital Advisors and co-founder and CEO of Kayne Anderson Real Estate, told Real Estate Capital USA exclusively that the Kayne Anderson Real Estate Debt IV fund will feature a heavier tilt toward direct origination compared to prior iterations of the strategy.

“[Freddie Mac originations and acquisitions] will still be a big part of what we do and is a very attractive risk-adjusted return, but we are seeing higher returns on the direct origination side,” Rabil said.

The $14 billion Boca Raton, Florida-based real estate investment arm beat its original fundraising target of $1.5 billion because of a longer development timeline partially influenced by the pandemic. KARED IV totaled $1.875 billion in capital commitments as of its May 11 close.

The fund will focus on proprietary investment opportunities in Freddie Mac structured products and direct loan originations with sights set on multifamily, student housing, medical office, senior housing and self-storage.

“We have always structured [funds] thoughtfully and carefully, we have never used incremental leverage. We do not use warehouse lines of credit,” Rabil said. “So we have not taken duration or mark-to-market liquidity risk, which was very apparent in 2020 when we were able to play offense rather than defense on the last fund that we actually raised prior to this fund.”

The student housing target in particular extends on Kayne Anderson’s dive into the European student housing market at the end of 2021 through a joint venture with Kinetic Capital, a UK-based specialist lender in the sector. 

The close of KARED IV brings Kayne Anderson’s real estate debt platform to over $7 billion in capital commitments after the $1.3 billion close of the Kayne Anderson Real Estate Opportunistic Debt fund in April 2020 and $1.3 billion close of KARED III in December 2018.