KKR REIT Latest to Limit Redemptions

KKR Real Estate Select Trust, a non-traded REIT sponsored by global investment firm KKR, limited redemptions late last week after investor withdrawal requests surpassed the company’s quarterly redemption limit of 5%.

As The DI Wire previously reported, Blackstone Real Estate Income Trust (ticker: BX), the largest nontraded REIT with $69 billion of net assets, limited redemptions in December after investor repurchase requests breached quarterly limits. Starwood REIT, the second-largest non-traded REIT with $15 billion of net assets, followed suit soon thereafter.

In a letter to investors last week, KKR Real Estate Select Trust reported that it received repurchase requests of $128 million, or 8.1%, of the fund’s aggregate net asset value as of Dec. 1, 2022.

KREST has historically conducted quarterly tender offers to repurchase up to 5% of NAV of the fund’s outstanding common stock, with such tender offers being made at the sole discretion of KREST’s board of directors.

The REIT repurchased common stock equal to 5% of its NAV, or $79.3 million. Accordingly, redemption requests were fulfilled at an amount equal to 62% of each shareholder’s first quarter 2023 tender request.

“Within KREST, we are balancing providing access to private real estate, which is an illiquid asset class, with the recognition and understanding that … regular liquidity is an important feature for KREST shareholders,” Billy Butcher, the investment fund’s CEO, wrote in the filing. “We believe that KREST has a strong liquidity position.”

The trust reported liquid holdings of 36% of net asset value as of the fourth quarter 2022. It produced a net total return of more than 8% for the year and received roughly $947 million in subscriptions.

KKR’s private equity, credit and real estate investments are accessible for individual investors through a number of KKR-sponsored and third-party continuously offered registered funds.

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