Are you worried about your investment in KKR Real Estate Select Trust?
This non-traded real estate fund, sponsored by KKR & Co. Inc., provides investors exposure to commercial real estate across the U.S. While KKR Real Estate Select Trust promotes itself as a vehicle for income and potential long-term growth, many investors may face the same challenges tied to private REITs—limited liquidity, high fees, and valuation concerns.
Understanding KKR Real Estate Select Trust
Launched in 2020, KKR Real Estate Select Trust is a non-diversified, closed-end management investment company with a net asset value of $1.3 billion as of December 31, 2023. Its portfolio spans 82 real estate properties worth approximately $3.4 billion, with a reported 97% occupancy rate.
The fund pursues three investment strategies:
- Stabilized Real Estate – income-generating properties, largely multifamily and industrial.
- Prime Single Tenant Assets – long-term contractual leases with investment-grade tenants.
- Real Estate Debt – loans, preferred equity, and CMBS securities for enhanced yield.
Performance and Distributions
Returns for KKR Real Estate Select Trust vary by share class. For instance, Class I shares reported an 8.90% return since inception, while other share classes have experienced mixed or even negative performance in recent years.
As of year-end 2023, distribution yields ranged from 4.91% (Class U) to 5.78% (Class I). However, certain share classes—like Class S and Class D—recorded negative cumulative returns, raising questions about KKR Real Estate Select Trust’s risk-reward balance.
Liquidity and Redemption Limits
Like other non-traded REITs, KKR Real Estate Select Trust shares cannot be sold on public markets. Liquidity is restricted to a quarterly repurchase program, capped at 5% of outstanding shares and subject to board discretion. This structure can leave investors unable to exit when needed, especially during market downturns.
Key Risks for Investors
- Illiquidity: Limited redemption opportunities can trap investor capital.
- High Costs: Management fees (1.25%), incentive fees (12.5%), and distribution charges erode returns.
- Market Exposure: Concentration in commercial real estate sectors vulnerable to macroeconomic shifts.
- Valuation Uncertainty: NAVs are internally determined and may not reflect market realities.
- Unsuitability Issues: Complex structures may not be appropriate for average retail investors.
Broker Responsibilities
Financial advisors recommending KKR Real Estate Select Trust must ensure suitability based on a client’s net worth, income, investment objectives, and risk tolerance. If brokers failed to disclose risks such as negative performance or illiquidity, they may be liable for investor losses.
Legal Recovery Options
- Class Actions: Typically result in smaller, shared settlements.
- FINRA Arbitration: Allows investors to directly pursue claims against the brokerage firm that recommended KKR Real Estate Select Trust, often leading to faster, higher recoveries.
Free Consultation for Investors
If you have suffered financial losses in KKR Real Estate Select Trust or other non-traded REITs, you may be able to recover your losses through a FINRA arbitration claim.
For a free case evaluation, contact The White Law Group at 1-888-637-5510 or visit www.WhiteSecuritiesLaw.com.
FAQs – KKR Real Estate Select Trust
1. What does KKR Real Estate Select Trust invest in?
KKR Real Estate Select Trust focuses on commercial real estate, including stabilized multifamily and industrial assets, single-tenant leases, and real estate debt instruments.
2. Can I sell my KKR Real Estate Select Trust shares whenever I want?
No. Redemptions are limited to quarterly repurchases (up to 5% of outstanding shares), which may not always be fulfilled.
3. Why are non-traded REITs like KKR Real Estate Select Trust considered risky?
They involve limited liquidity, high fees, internally determined valuations, and exposure to real estate cycles, making them risky for many retail investors.
