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KKR’s Larson: ‘We are now a clear top-five’ opportunistic manager

The New York-based firm nearly tripled its real estate AUM in one year after securing commitments to Europe and Americas funds.

KKR’s real estate assets under management have reached $32 billion, significantly up from $11 billion 12 months ago, on the back of several fundraising feats.

According to the firm’s second-quarter earnings call this week, it raised fresh capital across its regional vehicles. KKR’s Real Estate Partners Europe II fund, a 2019-vintage opportunistic fund, was closed on $2.1 billion. The fund is three times the size of the 2015-vintage REPE I that raised $715 million in 2019.

In addition, the firm’s latest US-focused fund – Real Estate Partners Americas III, which started fundraising in December – has raised $2.95 billion so far, already 50 percent bigger than its predecessor vehicle REPA II, which closed at $1.9 billion.

Craig Larson, head for investor relations at KKR, said during the call that the raises put the firm in rarefied air. “With these closes, we are now a clear top-five opportunistic real estate manager when you aggregate our three regional funds,” he said.

The top five fundraisers in this PERE 100 ranking were Blackstone, Brookfield Asset Management, Starwood Capital Group, AEW and BentallGreenOak. KKR ranked 11, with $9.7 billion raised over the trailing five years.

In total, KKR has 10 strategies focused on real estate equity and credit spanning the globe. These include a variety of different fund structures that target both institutional and retail capital, Larson said.

KKR’s strong fundraising quarter extended to strategies beyond real estate closed-end vehicles. The firm highlighted its perpetual capital fundraising across real estate, infrastructure and credit sectors. For example, it raised an incremental $5 billion for its open-ended core infrastructure strategy. It also launched KKR Real Estate Select Trust in May, an innovatively structured non-traded REIT vehicle within a 1940 Act wrapper to increase its appeal to retail investors.

In response to a question on the contributions and distribution status for KREST, which is understood to be approaching a $700 million AUM, Larson said, “We’re at the very beginning of KREST evolution, which is exciting for us. We began raising capital on two platforms only in June and over time we do expect to see an expansion across many platforms globally.”

KKR’s overall assets under management touched $429 billion in the second quarter, a 17 percent increase from the previous quarter. There was $59 billion of new capital raised during this period, compared with $44 billion for the full-year 2020. In terms of investments, 31 percent of the firm’s total holdings are in private equity, 9 percent in real estate, 4 percent in infrastructure and 6 percent in leverage credit, amongst others.