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Laxman Pai, Opalesque Asia:

The global investment firm KKR has closed its second real estate credit opportunity fund at $950 million. The fund will focus on new issue conduit commercial mortgage-backed securities (CMBS).

The firm that manages multiple alternative asset classes, closed KKR Real Estate Credit Opportunity Partners II (RECOP II), a successor fund to a $1.1 billion vehicle it raised in 2017 to buy so-called "B-pieces" of CMBS.

KKR is among the most active buyers of B-pieces, which banks and other financial institutions often seek to offload at steep discounts.

Matt Salem, Partner, and Head of KKR's Real Estate Credit business said: "We are pleased to have the trust of so many investors in our second fund, which speaks to the strength of our strategy, team, and reputation in the market. Having invested over $1.25 billion into conduit risk retention since 2017, we believe that the market has demonstrated the need for private, long-dated risk retention capital."

According to a press release, RECOP II, like its predecessor, RECOP I, focuses primarily on investing in newly-issued conduit CMBS B-Pieces as an eligible third party purchaser subject to the risk retention regulations which took effect in December 2016. Additionally, it can purchase non-risk retention conduit CMBS and other real estate securities.

RECOP II has closed on nine risk retention transactions and RECOP I and RECOP II have completed a combined 36 closed investments through June 20......................

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