Deals

KKR Raises $950 Million for Fund Dedicated to Riskiest CMBS

Covid-19 pandemic has resulted in deeper discounts on B-pieces
Hotel, mall loans have largely been excluded from new bonds

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By Gillian Tan

July 20, 2020 at 5:15 PM UTC

This article is for subscribers only.

KKR & Co. has raised $950 million for a fund dedicated to buying the riskiest slices of new commercial mortgage-backed securities as it expands in a part of the market that has been battered by the Covid-19 pandemic.

The firm closed KKR Real Estate Credit Opportunity Partners II, a successor fund to a $1.1 billion vehicle it raised in 2017 to buy so-called “B-pieces” of CMBS. Such slices are the first to take losses when mortgages underpinning the securities sour.