Real Estate Select Trust Inc. Fund (KRSTX) · NASDAQ:KRSTX
Real Estate Select Trust Inc. Fund (KRSTX) — KKR Real Estate Select Trust — Investor Presentation (May 2021)
35 slides from Real Estate Select Trust Inc. Fund (KRSTX)'s investor presentation, May 2021
Slide 1: KKR Real Estate Select Trust
KKR Real Estate Select Trust May 2021 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 understand fully all of th
Slide 2: Important Information
Important Information KKR Real Estate Select Trust Inc. (“KREST”) is a newly organized, 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 po
Slide 3: Important Information
Important Information KKR or its affiliates own or have invested in the properties depicted in this sales material. By investing in KREST, investors will not have an interest in all of these properties. Please see “KREST Properties” beginning on page 22 for an overview of the some of the current pro
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 01. Executive Summary 02. The Case for Private Real Estate 03. Investment Strategy 04. Investment Case Studies 05. Tax Advantages of REITs 06. KREST Portfolio
Slide 6: Executive Summary
Executive Summary 66 of of 35 31
Slide 7: An Overview: KKR Real Estate Select Trust
An Overview: KKR Real Estate Select Trust (“KREST” or the “Fund”) 1 Differentiated Income-Oriented Strategy Targets attractive risk-adjusted yield: KREST offers investors an opportunity to potentially diversify their personal portfolios with a real estate based investment focused on providing attrac
Slide 8: KKR: A Leading Asset Management Platform
KKR: A Leading Asset Management Platform KKR Real Estate1,2 $29 bn 113 investment professionals3 AUM Founded 1976 KKR Credit $165 bn 150 investment AUM professionals Over $367bn in Assets Under Management $150 bn Private Equity & Real Assets4 AUM 285 investment professionals $24bn internal balance s
Slide 9: KKR Real Estate Platform
KKR Real Estate Platform Global Real Estate Footprint2 A Differentiated Industrial Multifamily Platform 58.5 Million SF 11,867 Units 426 Properties 345 Properties $108B1 113 in assets scaled investment & asset across Real Estate management equity & debt professionals Office in Student globally4 Inno
Slide 10: The Case for Private Real Estate
The Case for Private Real Estate Portfolio diversification with opportunities for risk-adjusted returns 10 of 31 35
Slide 11: Private Core Real Estate vs. Investment Grade Credit
Private Core Real Estate vs. Investment Grade Credit Real Estate has maintained attractive yields over time compared to corporate bonds and treasury bonds 13% Rolling 10 Year Average Yield Private Core Real Estate has 10% 8% historically generated an 5% attractive and durable cash 3% 0% yield premiu
Slide 12: Consistent, Long Term Results
Consistent, Long Term Results Horizon Returns by Asset Class (Q1 2011 through Q1 2021) 20% 17% 16% 16% 14% 12% Historical performance of 9% 10% 9% 8% 6% Private Core Real Estate has 4% 5% 5% been strong, with long-term 0% 3Y 5Y 10Y investors realizing high Private Core Real Estate US REITS US Equiti
Slide 13: Diversification With the Potential to Improve Risk/Return Profile
Diversification With the Potential to Improve Risk/Return Profile Historical Analysis of Range of Portfolio Allocations Including Private Real Estate (2001 – 2021) 10% Inclusion of private core real 9% estate may enable investors to achieve higher returns per Annual Return (%) 8% unit of volatility
Slide 14: Investment Strategy
Investment Strategy 14 of of 31 35
Slide 15: KREST Investment Strategy: High Quality, Income-Generating Real Estate
KREST Investment Strategy Income-Oriented Commercial Real Estate Exposure Thematically invests in high quality, income-oriented commercial real estate equity and debt primarily in the US, with the optionality to extend exposures globally into developed Asia and Europe Balanced Portfolio Construction
Slide 16: KREST: Three Key Investment Pillars
KREST: Three Key Investment Pillars 1 Stabilized Real Estate Income-generating investments 2 Prime Single Tenant Single Tenant Assets 3 Real Estate Debt Real estate loans, preferred equity, or mezzanine securities Well-leased properties in high Long-term contractual income with growth markets potent
Slide 17: A Resilient Strategy
A Resilient Strategy KREST combines the opportunity for attractive income, low volatility, and defensive nature of traditional fixed income with the potential benefits of real estate – increasing cash flows, growth potential and hard asset backing Macro Themes Key Investment Pillars Durable Prime Si
Slide 18: Real Estate Macro Fundamentals By Asset Type
Real Estate Macro Fundamentals By Asset Type RecentTrends Recent Trends Industrial Multifamily Long Leased Office • Continued acceleration of • Supply-demand imbalance • Long investment grade leases in growth markets benefiting from in- e-commerce penetration • Household preferences favor renting mi
Slide 19: Real Estate Debt Key Themes
Real Estate Debt Key Themes KREST intends to invest in privately sourced debt and preferred equity interests secured or backed by high quality real estate. Real Estate credit, including in KREST’s portfolio, potentially offers several benefits including: 1 2 3 4 5 Opportunity Lower Portfolio KKR’s C
Slide 20: Acceleration of E-Commerce Growth is Tailwind for Industrial Sector
Acceleration of E-Commerce Growth is Tailwind for Industrial Sector Total E-Commerce Sales ($B) $700 Each 100 bps of share shift from brick and mortar to online Total E-Commerce Sales ($B) $600 translates to ~50mm square E-Commerce Penetration $500 feet of new demand Continues to Drive Demand $400 $
Slide 21: Housing Dynamics Support Strong Demand for Multifamily
Housing Dynamics Support Strong Demand for Multifamily Delta Between Household Formations and Total Housing Starts (‘000s) Difference between household formation and total housing starts Household Formation has Cumulative difference since 2009 1,000 2,400 Outpaced Total Housing 800 600 2,000 Starts
Slide 22: KREST Properties
KREST Properties 22 of 31 35
Slide 23: KREST Prime Single Tenant Strategy: Seattle, WA
Closed Snapshot April 2021 KREST Prime Single Tenant Strategy: Seattle, WA Purchase Price1 c.$600m 93% Leased • Iconic 770k SF mixed-use office • Recently underwent $200mm asset in the heart of Seattle’s renovation to reposition as a Wtd Average Lease Term central business district premier office as
Slide 24: KREST Industrial Strategy: Raleigh-Durham, NC
Closed November Snapshot 2020 KREST Industrial Strategy: Raleigh-Durham, NC Purchase Price c.$50m 100% Leased • 410k square feet, 2020 Duke University vintage last mile distribution center Wtd Average Lease Term • 100% leased to a $1.6tn AA market cap company 7 years 410k Square Feet • 4.8% in-place
Slide 25: KREST Industrial Strategy: C&S, Portland, OR
Closed Snapshot July 2020 KREST Industrial Strategy: C&S, Portland, OR Purchase Price c.$60m 100% Leased • 349k square feet, Class A • ~5.2% in-place cap rate at distribution center 100% leased to acquisition with 2.5% annual Wtd Average Lease Term a third party grocery distributor lease escalators
Slide 26: KREST Industrial Strategy: Kellogg's, Memphis, TN
Closed Snapshot July 2020 KREST Industrial Strategy: Kellogg’s, Memphis, TN Purchase Price c.$55m 100% Leased • 770k square feet, Class A distribution center that is 100% leased to a investment grade rated $23bn market Wtd Average Lease Term cap company and global distributor of cereal, food, and be
Slide 27: Tax Advantages of REITs
Tax Advantages of REITs 27 of 31 35
Slide 28: KREST's Tax Efficient Income
KREST’s Tax Efficient Income KREST’s structure as a Illustrative example of $100,000 investment with a pre-tax yield of 5.0% 1940 Act REIT allows for ($5,000 annualized distribution)5 efficient taxation $4,630 $4,260 • Under the “Tax Cuts & Jobs Act of $3,890 2017,” REIT ordinary dividends paid $3,5
Slide 29: KREST Portfolio
KREST Portfolio As of April 30, 2021 29 of 31 35
Slide 30: KREST Portfolio Snapshot
KREST Portfolio Snapshot Kellogg’s - Memphis, TN C&S - Portland, OR Raleigh-Durham, NC KREST Industrial Strategy KREST Industrial Strategy KREST Industrial Strategy Seattle, WA First Republic - Palo Alto, CA KREST Prime Single Tenant Strategy KREST Prime Single Tenant Strategy Fund Metrics TOTAL ASS
Slide 31: KREST Portfolio Snapshot – April 30, 2021
KREST Portfolio Snapshot – April 30, 2021 Seattle, WA Geographic Portland, OR Location Palo Alto, CA Industrial Raleigh-Durham, NC Prime Single Tenant Memphis, TN Invested Capital by Sector1 Invested Capital by Geography Industrial 36% Prime Single West South Tenant 77% 23% 53% Other* 10% Multifamil
Slide 32: KREST Performance
KREST Performance 32 of 31 35
Slide 33: Performance Summary – May 31, 2021
Performance Summary – May 31, 2021 JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC YTD 2021 0.95% 0.75% 7.81% 0.55% 1.97% 12.43% 2020 - - - - - - - - 2.48% 1.02% 0.77% 0.92% 5.28% Class I Inception Date: July 2, 2020 1-MONTH 3-MONTH YTD ITD NAV / SHARE RETURN RETURN RETURN RETURN(1) Class I 1.97% 10
Slide 34: 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 Adviser KKR Registered Advisor LLC, a subsidiary of KKR Investor Eligibility1 None Subscriptions/NAVs Daily2 Management F
Slide 35: 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 @KKR_Co /company/kkr New York ∙ Houston ∙ Menlo Park ∙ San Francisco ∙ Dubai ∙ Dublin ∙ Frankfurt ∙ London ∙ Luxembourg ∙ Madrid ∙ Paris ∙ Riyadh ∙ Beijing ∙ Hong Kong ∙ Mumbai ∙ Seoul ∙ Shangha
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