KKR Said to Recruit Rialto Team for Real Estate Debt ExpansionDevin Banerjee
KKR & Co., the private equity firm run by Henry Kravis and George Roberts, is hiring about 12 dealmakers from Rialto Capital Management to invest in real estate debt, according to a person with knowledge of the matter.
The team is led by Matt Salem, Goldman Sachs Group Inc.’s former head of commercial mortgage-backed securities trading, and will be co-run by Chris Lee, a director in KKR’s real estate group, said the person, who asked not to be named because the hires haven’t been finalized. They plan to focus on mezzanine debt, preferred equity and risky slices of loans, the person said.
KKR, which formed a real estate group in 2011 with the hire of former Goldman Sachs partner Ralph Rosenberg, is expanding the unit after committing about $1.8 billion of equity to 29 deals in the U.S., Europe and Asia. The New York-based firm plans to use its balance sheet to fund the credit team’s initial investments, the person said, a similar approach to the way KKR started Rosenberg’s group before raising money from outside investors.
Kristi Huller, a spokeswoman for KKR, declined to comment. The Wall Street Journal reported the team’s hire yesterday.
Investment firms are piling into commercial real estate debt with $295 billion in loans from the boom years coming due over the next three years. Abundant financing is aiding a recovery in U.S. property values, with prices on prime properties in large cities surging to records.
Blackstone Group LP, the largest private equity firm, started its real estate debt group in 2008. The unit oversees $9.3 billion in assets.
Salem, who didn’t respond to a request for comment, left New York-based Goldman Sachs in 2011 after five years. He previously worked at Morgan Stanley.
Rialto, run by founder Jeffrey Krasnoff, focuses on distressed loans in commercial and residential real estate. The Miami-based firm is owned by Lennar Corp., the second-biggest U.S. homebuilder by market value.