KKR Real Estate Establishes First Credit Opportunity Fund
10.12.17
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Simpson Thacher represented KKR & Co. L.P. in the establishment of its first real estate credit opportunity fund, KKR Real Estate Credit Opportunity Partners (“RECOP”), which raised $1.1 billion in capital commitments. RECOP focuses on generating attractive risk-adjusted returns for investors through the purchase of junior tranches of commercial mortgage-backed securities (CMBS) (“CMBS B-Pieces”). RECOP will focus primarily on investing in newly issued CMBS B-Pieces as an eligible third-party purchaser subject to the new risk retention regulations which took effect in December 2016. Earlier this year, KKR negotiated and purchased the first CMBS transaction subject to risk retention. RECOP has since closed on six additional transactions representing a face amount of $517 million and approximately $225 million of invested equity, in aggregate. RECOP’s seven closed investments through August 2017 make it the most active CMBS B-Piece buyer of third-party risk retention structures.
The Simpson Thacher team included Jason Herman, Beate Krieger, Jordan Cross, Jane Park and Christian Witzke (Corporate); Marcy Geller and Joseph Tootle (Tax); Jeanne Annarumma (ERISA); and Mary Touchstone and Amy Ward (Credit).