KKR & Co. joins rivals, including Blackstone, in restricting withdrawals from real estate investment trusts after investors tried to withdraw more money.
KKR Real Estate Select Trust repurchased 8.1% of its net asset value during the first quarter tender offer period, receiving requests to exceed its quarterly cap of 5%, according to Wednesday’s filing. This trust met 62% of each shareholder’s request. KKR shares fell 5.7% to $49.98 at 12:12 pm in New York on Thursday.
KKR and Blackstone-overseen real estate investment vehicles have come under pressure in recent months as investors demanded refunds over limits set by the fund.Blackstone Real Estate Income Trust and Starwood Real Estate Income Trust said they would limit redemptions, prompting questions by the U.S. Securities and Exchange Commission.
“Within KREST, we are striking a balance between providing access to private real estate, a less liquid asset class, with the recognition and understanding that regular liquidity level selectivity is an important function for KREST shareholders. We’re doing it,” said CEO Billy Butcher. A representative of KKR Real Estate Select Trust said: “We believe KREST has a strong liquidity position.”
KKR is one of several private equity firms to expand its offering to retail investors in pursuit of growth as institutional investors face limits on what they can allocate to alternative assets. Last year, New York-based KKR filed for regulatory approval to launch its high-net-worth infrastructure strategy.
However, the recent struggles of these real estate trusts have highlighted the challenge of attracting a broader audience to fairly illiquid investments. Blackstone recently entrusted real estate trusts to traditional institutional investors, University of California.