KKR REIT makes moves to prop up its NAV
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.
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.
Nontraded REITs are notoriously volatile investments.
“What KKR is doing is a bold move that favors the investor,” said one senior industry executive who spoke confidentially about the matter to InvestmentNews. “This 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.”
Common industry wisdom also says that it’s 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
“Nontraded REIT managers don’t want to be in a negative spotlight, and they have been making changes to prevent a drop in their REIT’s NAVs,” said Brian King, CEO of Lodas Markets.
A KKR spokesperson did not respond to a message Wednesday morning seeking comment.
KKR Real Estate Select Trust, also known as KREST, is relatively small, with $1.2 billion in total assets, according to the company’s website. But larger competitors Blackstone Real
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