Gabriel Poggi

Gabriel Poggi asked for KKR's broader perspective on global demand for commercial real estate credit and equity, seeking insights into the KKR machine's view on market sentiment and value creation probability for a longer-term outlook.

Answer

CEO Matt Salem, speaking from KKR's perspective, indicated increased allocation to both real estate credit and equity, with sentiment shifting due to real estate's relative stagnation over the past five years. He noted that most equity allocation is in opportunistic and value-add sectors, with early signs of core-plus money returning. Salem observed increasing velocity in the market, with more acquisitions and capital recycling. For real estate credit, he highlighted increased allocations, driven by a tangible relative value discussion and diversification away from corporate credit, expecting continued growth in private funds for this space.

Gabriel Poggi from Raymond James Financial, Inc. asked about the broader KKR perspective on global demand for domestic commercial real estate, both on the credit and equity sides, to understand potential value creation probabilities over a longer term.

Answer

President and COO Patrick Mattson, speaking from the KKR perspective, reported increased allocation to both real estate credit and equity, noting a shift in sentiment. He observed equity demand primarily in opportunistic and value-add sectors, with increasing market velocity and acquisitions. For real estate credit, he highlighted sustained growth in allocations, driven by relative value discussions and diversification away from corporate credit, with significant capital raising by private funds expected to continue.