KKR Real Estate Select Trust makes first debt investment

KKR Real Estate Select Trust Inc (KREST) has provided a mezzanine loan to leading urban real estate firm, Crescent Heights, to support the refinancing of NEMA Chicago, an 800-unit luxury residential building located in the heart of Chicago’s South Loop. 

This represents KKR’s first debt investment through KREST, a continuously offered, registered closed-end fund designed to deliver access to income-oriented private real estate investments.

Built in 2019, NEMA Chicago is the tallest multi-family residential apartment tower offering unobstructed views of Grant Park, Lake Michigan and the Chicago skyline, as well as convenient access to Chicago’s downtown employment centres and nearby universities. The 76-storey property features 71,000 square feet of state-of-the-art amenities and finishes, including indoor and outdoor pools, extensive fitness facilities, conference meeting spaces and a diverse mix of units.

“We are thrilled to build on our longstanding relationship with Crescent Heights and participate in the refinancing of this premier property as it enters into the next phase of its business plan,” says Matt Salem, KKR Partner and Head of Real Estate Credit. “NEMA Chicago is delivering a luxury live and work experience that is in high demand and we believe the property is well positioned for continued growth and outperformance.”

“KKR has been a trusted lending partner to NEMA Chicago and multiple phases of its lifecycle. We are appreciative to KKR’s entire team for their capital flexibility,” says Casey Klein, Crescent Heights Managing Director.

Real estate debt is one of KREST’s three primary investment strategies, alongside equity investments in stabilised real estate and prime single tenant properties. KREST targets private debt opportunities including real estate loans, preferred equity or commercial mortgage-backed securities (“CMBS”) with a focus on attractive yield supported by underlying properties with consistent and defensive cash flow.

“KREST’s first investment in a mezzanine loan is representative of the real estate credit component of KREST’s strategy: attractive yield backed by strong sponsorship and a best-in-class asset in a top market,” says Billy Butcher, Chief Executive Officer of KREST and Chief Operating Officer of KKR Global Real Estate. “We are excited to enhance and further diversify our portfolio with NEMA Chicago, which was facilitated by the strong relationship between Crescent Heights and our credit team.”

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