Real Estate Select Trust Inc. Fund (KRSTX) · NASDAQ:KRSTX
Real Estate Select Trust Inc. Fund (KRSTX) — KKR Real Estate Select Trust — Investor Presentation (December 2023)
60 slides from Real Estate Select Trust Inc. Fund (KRSTX)'s investor presentation, December 2023
Slide 1: KKR Real Estate Select Trust Inc. (KREST)
KKR Real Estate Select Trust Inc. (KREST) DECEMBER 2023 This presentation should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or to adopt any investment strategy, and must be read in conjunction with the prospectus in order to understa
Slide 2: Important Information
Important Information KKR Real Estate Select Trust Inc. (“KREST”) is a non-diversified, closed-end management investment company that intends, under normal market conditions, to invest at least 80% of its net assets (plus the amount of its borrowings for investment purposes) in a portfolio of real e
Slide 3: Important Information: Other Important Disclosures
Important Information Other Important Disclosures The information in this presentation is only as current as the date indicated and may be superseded by subsequent market events or for other reasons. Nothing contained herein constitutes investment, legal, tax or other advice nor is it to be relied o
Slide 4: Important Information: Index Definitions
Important Information Index Definitions Any indices referred to in this presentation are used for purposes of comparison to the performance of certain capital markets. The return figures for each index do not reflect the deduction of any taxes, expenses, transaction costs or advisory fees. Broad-bas
Slide 5: Table of Contents
Table of Contents Page 01 Introduction to KREST 6 02 KKR and KKR Real Estate Overview 10 03 The KREST Investment Strategy 14 04 Why Private Real Estate 19 05 KREST Performance 32 06 Summary of KREST Terms and Structure 34 07 KREST Portfolio Detail 37 5 of 60
Slide 6: Introduction to KREST
Introduction to KREST
Slide 7: KKR Real Estate Select Trust Inc. (KREST)
KKR Real Estate Select Trust Inc. (“KREST”) KREST provides access to the potential benefits of private real estate equity and credit in a single, diversified fund 01 Seeks to deliver tax-efficient yield with appreciation potential to income- oriented investors through diversified real estate investm
Slide 8: KREST Overview
KREST Overview Strategy • Balanced portfolio diversified across three KREST’s Investor Experience: investment pillars: – Stabilized Real Estate – Prime Single Tenant • Daily NAV – Real Estate Credit • Exposure to high-growth markets across the U.S. • Daily Subscriptions via a Ticker and developed Eu
Slide 9: KREST Portfolio Snapshot
KREST Portfolio Snapshot KREST has built a well-diversified and scaled portfolio that has delivered attractive income and total returns to shareholders ITD NET RETURN NET DISTRIBUTION TOTAL NET ASSET VALUE FUND-LEVEL RATE ASSETS (GAAP) GROSS LEVERAGE Fund Statistics 8.90% 5.78% as of December 31, 20
Slide 10: KKR and KKR Real Estate Overview
KKR and KKR Real Estate Overview
Slide 11: KKR Overview
KKR Overview KKR is a global investment firm with a culture deeply rooted in the pursuit of excellence and shared success with our clients, our companies, and our communities. Over 47 Years ~$528B in ~2,500 Multi-asset Offices in 25 ~$28.1B client AUM employees expertise cities invested of investmen
Slide 12: KKR Real Estate Platform Overview
KKR Real Estate Platform Overview KKR Real Estate: A Leading Global Platform Competitive Advantages • Fully-Integrated Platform: Global real estate platform across real Invested in Real Estate Assets estate equity and credit $232B & Loans1 • Differentiated Sourcing Capabilities: One-Firm approach to
Slide 13: KKR Real Estate Global Investment Experience
KKR Real Estate Global Investment Experience Fully-integrated, collaborative platform across global real estate equity and credit that has invested and managed $232 billion in real estate assets and loans1 Real Estate Equity2 Real Estate Credit ~$37.2 billion loans originated ~$9.6billion invested a
Slide 14: The KREST Investment Strategy
The KREST Investment Strategy
Slide 15: KREST's Flexible Investment Strategy
KREST’s Flexible Investment Strategy Three complementary strategy pillars seek to create a well-balanced portfolio that aims to combine the potential for growth while aiming to generate less-correlated and tax-efficient current income Stabilized Real Estate Prime Single Tenant Real Estate Credit See
Slide 16: Investment Strategy: Stabilized Real Estate
KREST Investment Strategy: Stabilized Real Estate Investment Strategy Case Studies Seek to invest in stabilized, income-producing Industrial - MB Parts Korea DC, Anseong, Korea assets, targeting: • 353k SF, purpose-built asset that has • Favorable supply/demand dynamics served as Mercedes-Benz' sole
Slide 17: Investment Strategy: Prime Single Tenant
KREST Investment Strategy: Prime Single Tenant Investment Strategy Case Study Designed to combine the benefits of trophy real estate Prime ST – 300 Pine, Seattle, WA with long, escalating triple-net (“NNN”) leases to creditworthy tenants • High-quality, investment grade or creditworthy tenants • Pri
Slide 18: Investment Strategy: Real Estate Credit
KREST Investment Strategy: Real Estate Credit Investment Strategy Case Study Real estate credit may create yield and diversify the Real Estate Credit– NEMA, Chicago, IL portfolio: • Invest primarily in floating rate loans secured by high-quality real estate assets • Attractive and contractual yields
Slide 19: Why Private Real Estate
Why Private Real Estate
Slide 20: Broad Opportunity Set in Private Real Estate
Broad Opportunity Set in Private Real Estate Commercial Real Estate is the 3rd Largest Asset Class in the U.S. Publicly Traded U.S. Equities U.S. Government Debt SIZE OF ASSET CLASSES ($ trillions) U.S. Commercial $51T Real Estate $24T U.S. Mortgage- U.S. Backed Securities $21T Corporate Debt $12T N
Slide 21: Private Real Estate Has Provided More Stable Returns than Public REITs
Historically, Private Real Estate has Provided More Stable Returns than Public REITs U.S. Private RE Annual Total Returns vs. U.S. Public REITs Annual Total Returns 40% Dot-Com Global COVID-19 30% Bubble Financial Crisis Pandemic 20% 10% 0.7% 0% -2.4% -3.5% -10% -8.3% -14.9% -20% -23.9% -30% -40% -3
Slide 22: Private RE Income Has Generally Outpaced Inflation Since the Mid-1990s
Private RE Income Has Generally Outpaced Inflation Since The Mid-1990s… U.S. Real Estate Net Operating Income (NOI) vs. CPI Inflation 200 Real Estate Net Operating 190 Income 180 CPI Inflation 170 160 150 140 130 120 110 100 1995 2000 2005 2010 2015 2020 (1995 = 100) There can be no assurance that t
Slide 23: Real Estate Returns During Inflationary Periods
…And has Historically Contributed to High Real Estate Total Returns During Inflationary Periods High Growth / High Inflation Low Growth / High Inflation 20.0% 20.0% 16.1% 14.8% 15.0% 15.0% Average Annual Total Returns Average Annual Total Returns 11.9% 10.0% 10.0% 8.8% 6.2% 4.4% 4.2% 5.0% 5.0% 2.1%
Slide 24: Private Real Estate Returns in Rising Rate Environments
Private Real Estate Has Historically Delivered Solid Returns in Rising Rate Environments 20% 19% 700 18% 588 Private Real Estate Total Returns (Annualized) 17% 600 16% Change in 10-year UST Yield (bps) 16% 554 15% 14% 500 12% 12% 11% 400 10% 318 8% 263 300 8% 7% 213 6% 178 165 244 5% 200 137 4% 100
Slide 25: Thematic Private Real Estate May Offer Diversification Benefits
A Thematic Private Real Estate Strategy May Offer Portfolio Diversification Benefits Relative To Traditional Asset Classes Global Custom Global Private Real Global Global High Yield Investment Correlation Thematic Real Global REITs Global Equities Government Estate Debt Commodities Corporates Grade
Slide 26: Thematic Private Real Estate in a Multi-Asset Portfolio
Incorporating Thematic Private Real Estate Assets Into A Multi-Asset Portfolio May Improve Returns While Lowering Volatility 15.0% 0.47 0.50 12.7% 0.43 12.5% 11.7% 11.5% 0.38 0.40 10.0% 0.30 7.5% 5.4% 0.20 4.8% 5.0% 5.0% 0.10 2.5% 0.0% 0.00 Excess Return Volatility Sharpe Ratio (over risk-free rate
Slide 27: Macro Case: For-Rent Residential Real Estate
Macro Case: For-Rent Residential Real Estate Favorable Demographics and Tight Housing Supply Driving Increased Demand Housing Supply has Not Kept Up with Demand… …Resulting in Very Low Vacancy Rates CUMULATIVE GAP BETWEEN U.S. HOUSEHOLD U.S. RENTAL VACANCY RATE FORMATION AND HOUSING STARTS (%) 12% S
Slide 28: Macro Case: Industrial Real Estate
Macro Case: Industrial Real Estate Increased E-Commerce Penetration is a Strong Positive for the Sector The Pandemic Accelerated E-Commerce Penetration, Amid High Demand, Industrial Real Estate which has Plenty of Room to Deepen Vacancy Rates Continue to Decline U.S. E-COMMERCE SALES1 U.S. INDUSTRIA
Slide 29: Macro Case: Medical Office Facilities
Macro Case: Medical Office Facilities Population Aging and Higher Spending on Outpatient Services Fueling Demand Medical Office Tenants (i.e., Physician Practices, Outpatient The 65+ Population is Projected to Account for a Growing Clinical & Ambulatory Surgery Centers, etc.) Tend to be Sticky, Shar
Slide 30: Macro Case: Prime Single Tenant Assets
Macro Case: Prime Single Tenant Assets1 May provide a high, growing and tax-efficient yield at a premium to investment-grade (IG) corporate bonds, combined with the long-term appreciation of trophy real estate Net Occupancy Absorption Through COVID New, Trophy Properties with “Main and • +94.8M 01 T
Slide 31: Macro Case: Private Real Estate Credit
Macro Case: Private Real Estate Credit Defensive, contractual income with attractive collateral and structural seniority where floating rate pricing that may hedge against rising rates SASB CMBS (Single Asset Single Borrower) has experienced In the Past Decade, Non-Bank Lenders Have Increased Their
Slide 32: KREST Performance
KREST Performance
Slide 33: KREST Performance Summary – December 31, 2023
KREST Performance Summary – December 31, 2023 1-MONTH NET RETURN 3-MONTH NET RETURN YTD NET RETURN ITD NET RETURN(1) NAV / SHARE Class I (1.87%) (3.97%) (6.25%) 8.90% $27.00 Class U (No Sales Load) (1.94%) (4.19%) (7.04%) 4.94% $27.00 Class U (With Sales Load)(2) (4.90%) (7.05%) (9.83%) 3.67% $27.00
Slide 34: Summary of KREST Terms and Structure
Summary of KREST Terms and Structure
Slide 35: Term Sheet
Term Sheet Fund Name • KKR Real Estate Select Trust Inc. (“KREST”) Fund Structure • Non-listed, U.S. registered closed end fund with REIT taxation (’40 Act REIT) Investment Advisor • KKR Registered Advisor LLC, a subsidiary of KKR Investor Eligibility1 • None Subscriptions/NAV2 • Daily2 Management F
Slide 36: KREST's 1940-Act REIT Structure
KREST’s 1940-Act REIT Structure 01 Provides access to tax-advantaged income backed by high quality real estate 02 Low minimum investment, no investor lock-up1, no investor accreditation requirement and not subject to Direct Participation Program concentration limits 03 Innovative ’40-Act REIT struct
Slide 37: KREST Portfolio Detail
KREST Portfolio Detail
Slide 38: KREST Portfolio – December 31, 2023
KREST Portfolio – December 31, 2023 Investment Name Strategy Property Type Acquisition Date Location # of Properties Size (SF/Units) Industrial - AIP-PMR 3-Pack Stabilized Real Estate Industrial Q3 '20 Various, US 3 1,528,580 SF Industrial - Lambert Farms Stabilized Real Estate Industrial Q3 '21 Atl
Slide 39: Glossary of Terms and Important Information
Glossary of Terms and Important Information
Slide 40: Glossary of Terms
Glossary of Terms Assets Under Management or AUM: represent the assets as to which KKR Registered Advisor LLC (the “Adviser”) or its affiliates (collectively “KKR”) is entitled to receive a fee or carried interest. KKR’s calculation of AUM may differ from the calculations of other asset managers and
Slide 41: Important Information
Important Information The Fund is a non-diversified, closed-end management investment company designed primarily as a long-term investment and not as a trading vehicle. An investment in the Fund is not intended to be a complete investment program and, due to the uncertainty inherent in all investmen
Slide 42: Important Information
Important Information Reliance on the Adviser and Investment Professionals The success of the Fund depends on the ability of the Adviser and its respective affiliates to identify and consummate suitable investments and to dispose of investments of the Fund at a profit. The Adviser and its affiliates
Slide 43: Important Information: Illiquid Investment Risk
Important Information Illiquid Investment Risk Many of the Fund’s investments will be illiquid, including the Fund’s private commercial real estate investments. A variety of factors could make it difficult for the Fund to dispose of any of its illiquid assets on acceptable terms even if a dispositio
Slide 44: Important Information: Epidemics and Pandemics Risk
Important Information Epidemics and Pandemics Risk Many countries have experienced outbreaks of infectious illnesses in recent decades, including swine flu, avian influenza, SARS and COVID-19. The ongoing COVID-19 pandemic has had, and will continue to have, a material adverse impact on local econom
Slide 45: Important Information: Emerging Markets Risk
Important Information Emerging Markets Risk The Fund may invest in emerging markets. These markets tend to be very inefficient and illiquid as well as subject to political and other factors to a heightened degree relative to non-emerging markets. Many emerging markets are developing both economicall
Slide 46: Important Information: Joint Venture Risk
Important Information Joint Venture Risk The Fund may in the future enter into joint ventures with third parties to make investments. The Fund may also make investments in partnerships or other co-ownership arrangements or participations. Such investments may involve risks not otherwise present with
Slide 47: Important Information: Valuation Risk
Important Information Valuation Risk The price the Fund pays for its private commercial real estate investments will be based on the Adviser’s projections of market demand, occupancy levels, rental income, the costs of any development, redevelopment or renovation of a property, borrower expertise an
Slide 48: Important Information: Mezzanine Loan Risk
Important Information Mezzanine Loan Risk The Fund may invest in mezzanine loans that take the form of subordinated loans secured by a pledge of the ownership interests of either the entity owning the real property or the entity that owns the interest in the entity owning the real property. These ty
Slide 49: Important Information: High Yield Securities Risk
Important Information Below Investment Grade (High Yield or Junk) Securities Risk The Fund’s investments in traded real estate-related securities (including both direct and indirect investments) may consist of below investment grade securities. Lower grade securities may be particularly susceptible
Slide 50: Important Information: Derivatives Risk
Important Information Derivatives Risk The Fund may invest in derivative instruments, such as options contracts, futures contracts, options on futures contracts, indexed securities, credit linked notes, credit default swaps and other swap agreements for investment, hedging and risk management purpos
Slide 51: Important Information: Conflicts of Interest Risk
Important Information Potential Conflicts of Interest Risk The Adviser will experience conflicts of interest in connection with the management of the Fund, relating to the allocation of the Adviser’s time and resources between the Fund and other investment activities; the allocation of investment op
Slide 52: Important Information: Non-U.S. Investment Risks
Important Information Non-U.S. Investment Risks We may invest in real estate located outside of the United States and real estate debt issued in, and/or backed by real estate in, countries outside the United States, including Asia and Europe. Non-U.S. real estate and real estate-related investments
Slide 53: Risks Related to the Fund's REIT Status
Important Information Risks Related to the Fund’s REIT Status (continued) Our charter does not permit any person or group to own more than 9.8% in value or number of shares, whichever is more restrictive, of our outstanding Common Stock or of our outstanding capital stock of all classes or series, a
Slide 54: Tax Risks of Investing in the Fund
Important Information Tax Risks of Investing in the Fund (continued) You may have current tax liability on distributions you elect to reinvest in our Common Stock. If you participate in our distribution reinvestment plan, you will be deemed to have received, and for U.S. federal income tax purposes
Slide 55: Important Information for Non-US Residents
Important Information This document contains important information regarding KKR Real Estate Select Trust Inc. and should be read in connection with your Prospectus. Please read carefully both the notice to non-U.S. residents and the jurisdiction-specific notices provided below. IMPORTANT INFORMATIO
Slide 56: Important Information: Caribbean and Cayman Islands
Important Information IMPORTANT INFORMATION FOR RESIDENTS OF THE CARIBBEAN The presentation and any other document or material issued in connection with the offer or sale of Shares of the Fund does not constitute or form part of any investment advice or an offer or solicitation of an offer to buy an
Slide 57: Important Information: EEA Residents
Important Information IMPORTANT INFORMATION FOR ALL EEA RESIDENTS The Fund is an alternative investment fund for the purpose of the European Union Alternative Investment Fund Managers Directive (Directive 2011/61/EU) (“AIFMD”). The Adviser is the alternative investment fund manager (“AIFM”) of the F
Slide 58: Important Information: Japan, Jersey, Korea
Important Information IMPORTANT INFORMATION FOR RESIDENTS OF JAPAN This presentation is not, and under no circumstances is to be considered as, a public offering of securities in Japan. No registration pursuant to Article 4 paragraph 1 of Japan’s Financial Instruments and Exchange Act has been or wi
Slide 59: Important Information: Peru
Important Information IMPORTANT INFORMATION FOR RESIDENTS OF PERU Shares will not be subject to a public offering in Peru. The Shares described herein have not been and will not be approved by or registered with the Peruvian Superintendency of Capital Markets (Superintendencia del Mercado de Valores
Slide 60: Kohlberg Kravis Roberts & Co. L.P.
Kohlberg Kravis Roberts & Co. L.P. 30 Hudson Yards New York, New York 10001 +1 (212) 750.8300 www.kkr.com | www.krest.reit @KKR_Co /company/kkr New York ∙ Houston ∙ Menlo Park ∙ Miami ∙ San Francisco ∙ Copenhagen ∙ Dubai ∙ Dublin ∙ Frankfurt ∙ London ∙ Luxembourg ∙ Madrid ∙ Paris ∙ Riyadh ∙ Stockhol
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