{"id":380599,"date":"2024-06-06T10:41:22","date_gmt":"2024-06-06T14:41:22","guid":{"rendered":"https:\/\/qa.bluevaultpartners.com\/?p=380599"},"modified":"2024-06-11T11:14:40","modified_gmt":"2024-06-11T15:14:40","slug":"kkr-reit-makes-moves-to-prop-up-its-nav","status":"publish","type":"post","link":"https:\/\/qa.bluevaultpartners.com\/kkr-reit-makes-moves-to-prop-up-its-nav\/","title":{"rendered":"KKR REIT makes moves to prop up its NAV"},"content":{"rendered":"

Bruce Kelly<\/a> | Investment News<\/a><\/em><\/p>\n

In an unprecedented move by a nontraded real estate investment trust, the KKR Real Estate Select Trust Inc. on Tuesday disclosed its management was going to devote as much as $250 million over the next few years to support the net asset value, or NAV, of the company.<\/p>\n

Industry executives said it was an effort to prevent current KREST investors cashing in their shares as well as give financial advisors a positive picture of the company in a topsy turvy commercial real estate market.<\/p>\n

Nontraded REITs\u00a0are notoriously volatile<\/a>\u00a0investments.<\/p>\n

\u201cWhat KKR is doing is a bold move that favors the investor,\u201d said one senior industry executive who spoke confidentially about the matter to\u00a0InvestmentNews<\/em>. \u201cThis supports the thesis that retail class alternative investments like real estate have been institutionalized, or risen to the level of the institutional investor. This would not have happened a decade ago.\u201d<\/p>\n

Common industry wisdom also says that it\u2019s tough for financial advisors to sell another series of nontraded REITs to his or her best clients after a manager has already had problems or been in the headlines. Older investors typically buy nontraded REITs for promised, steady yields, with advisors usually recommending a small percentage of less than 10% into any one REIT manager or sponsor<\/p>\n

\u201cNontraded REIT managers don\u2019t want to be in a negative spotlight, and they have been making changes to prevent a drop in their REIT\u2019s NAVs,\u201d said Brian King, CEO of Lodas Markets.<\/p>\n

A KKR spokesperson did not respond to a message Wednesday morning seeking comment.<\/p>\n

KKR Real Estate Select Trust, also known as KREST, is relatively small, with $1.2 billion in total assets,\u00a0according to the company\u2019s website<\/a>. But larger competitors Blackstone Real Estate Income Trust Inc. and Starwood Real Estate Income Trust Inc. have seen clients steadily withdraw cash since 2022, fearing rising interest rates and a commercial real estate market that was in some areas because workers had not fully returned to offices after Covid-19.<\/p>\n

The Starwood REIT\u00a0last month said<\/a> it would limit its quarterly buyback of shares from clients starting in July to 1% of stockholder NAV from its former level of 5%. That drops the gate on some investors who want to sell their REIT shares back to the company; nontraded REITs do not trade on an exchange like the Nasdaq Stock Market.<\/p>\n

KREST is making two moves to support its NAV, according to Robert A. Stanger & Co. Inc.<\/p>\n

First, various affiliates of KKR have pledged that if NAV per share of is below $27 by June 2027, they will cancel up to 7.7 million shares of KREST they own to support a NAV of $27. The company\u2019s current NAV is $25.56 per share.<\/p>\n

In addition, affiliates of KKR will inject $50 million of new capital into KREST.<\/p>\n

\u201cNo nontraded REIT has ever done this,\u201d said Kevin Gannon, CEO of Stanger. \u201cThe industry is buzzing about it, but remember, fundraising for nontraded REITs is on track for only $5 billion this year compared to $30 billion a couple years ago.\u201d<\/p>\n

<\/div>","protected":false},"excerpt":{"rendered":"

KKR Real Estate Select Trust, also known as KREST, is relatively small, with $1.2 billion in total assets,\u00a0according to the company\u2019s website.<\/p>\n","protected":false},"author":3681,"featured_media":380601,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3010,2880,2964],"tags":[],"class_list":["post-380599","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-asset-manager-news","category-kkr","category-nav"],"acf":[],"yoast_head":"\nKKR REIT makes moves to prop up its NAV - Blue Vault<\/title>\n<meta name=\"description\" content=\"KKR Real Estate Select Trust, also known as KREST, is relatively small, with $1.2 billion in total assets,\u00a0according to the company\u2019s website.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/qa.bluevaultpartners.com\/kkr-reit-makes-moves-to-prop-up-its-nav\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"KKR REIT makes moves to prop up its NAV - 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