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Kayne Anderson’s $1.8bn fund close, KKR Real Estate’s $234m debt move, MSCI’s report, Fitch Ratings’ CMBS delinquencies dive

Kayne Anderson’s $1.8 billion debt fund close, KKR Real Estate’s $234 million real estate debt investments, MSCI highlights income stream risks, Fitch Ratings sees CMBS delinquencies dive; and more in today’s Term Sheet – exclusively for our valued subscribers.

They said it

When a borrower comes to us to borrow money in the industrial space, it would be hard for us to say we don’t have a relevant comp in our own portfolio”

Bryan Donohoe, partner and head of real estate debt at Ares Management, on the role proprietary data plays in making investment decisions, in an interview this week.

What’s new

Kayne closure Kayne Anderson Real Estate this week closed its fourth flagship debt fund, Kayne Anderson Real Estate Debt IV, with $1.8 billion in committed capital as of May 9. The real estate investment arm of Kayne Anderson Capital Advisors will aim for investment opportunities in Freddie Mac structured products and direct loan originations and purchases across multifamily, student housing, medical office, senior housing and self-storage assets. KARED IV is the largest debt fund developed to date by Kayne Anderson, outpacing the $1.3 billion in total commitments of predecessor KARED III. The most recent close marks $7 billion in commitments raised across KA Real Estate’s debt platform since inception.

KKR debt deal KKR Real Estate Select Trust this week completed $234 million of real estate debt investments across four transactions, growing the trust’s portfolio allocation to income-focused real estate debt investments to 28 percent. The debt investments have been primarily arranged on floating rates and are backed by diversified, prime, stabilized commercial real estate assets spanning the retail, office, hospitality and multifamily sectors. “We believe that Class A office space, lifestyle-oriented multifamily and room-only lodging catering to domestic travel are attractive and resilient categories positioned to benefit from long-term tailwinds,” said Matt Salem, KKR partner and head of real estate credit.

Trending

Incom-ing woes Commercial real estate lenders are increasingly examining the resilience of income streams in a bid to pinpoint any potential economic exposure behind their returns and the risk of tenant defaults. This is an emerging trend as inflation and increased interest rates continue to impact various components of the real estate debt market. A MSCI report published last week highlighted how going beyond aggregate-portfolio analysis could help investors identify concentrations of risk tied to geographies, tenant industries and individual companies across their holding structures. Read more about this here.

The retail connection
Apollo Global Management is the latest manager to throw its hat into the retail capital management ring. During the New York-based manager’s Q1 2022 earnings call on Thursday, co-president Scott Kleinman told investors how inflows from its global wealth platform accounted for 10 percent, or double the firm’s historic average, across asset classes. Apollo is not done either, he said. The firm is expecting to launch one or two retail products every quarter over the next two years, beginning with its non-traded real estate income vehicle: Apollo Realty Income Solutions, which was registered with the SEC in April. Already slugging it out for this type of capital are private equity real estate peers Blackstone and Starwood.

People

Cottonwood stacks c-suite Cottonwood Group, a $3 billion Los Angeles-based private equity real estate investment firm, this week hired Mark Green as its new chief investment officer and promoted Jeffrey Horowitz to chief operating officer. The managing director duo were brought into their new roles to build on the firm’s current momentum, chief executive officer Alexander Shing said on May 6. Green joined from Chatham Road Capital, a New York-based real estate credit investment firm he co-founded and worked at as managing partner and chief investment officer. Green brings additional experience from Leucadia National, Jefferies and UBS among other real estate practices across his 22-year career. Horowitz was most recently head of investments at Cottonwood.

Data snapshot

Fitch delinquency dropping The US CMBS delinquency rate has carried its downward momentum into the second quarter of this year, according to data from Fitch Ratings published May 6. The credit ratings agency tracked a 6 basis-point fall to 2.32 percent from 2.38 percent in March because of new issuance, increased loan resolution volume and a drop in new delinquencies.

Loan in focus

Square Mile: US warehouse developments (Source: Getty)

Imposing industrialIndustrial assets continue to sit in the hot seat with New York-based manager Square Mile Capital and Chicago-based BMO Harris Bank the latest to make a move in the space. The pair provided a $200 million construction facility to affiliates of KKR to finance the development of industrial properties across the US. Proceeds from the facility are being used to support KKR’s development of four sites, with another four in pre-development and additional capacity available.


Today’s Term Sheet was prepared by Anna-Marie Beal with Samantha RowanWill Johnson, Jonathan Brasse and Randy Plavajka contributing.

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