NEW YORK CITY—KKR, which has stepped up its game in real estate investing over the past two years, said Tuesday afternoon it had closed on KKR Real Estate Credit Opportunity Partners at $1.1 billion. RECOP exceeded its target capital raise and received strong backing from a diverse group of global investors, including public pensions, insurance companies, and family offices. The fund is geared toward generating attractive risk-adjusted returns for investors through the purchase of junior tranches of CMBS.

RECOP focuses primarily on investing in newly-issued CMBS B-Pieces as an eligible third party purchaser subject to the new risk retention regulations which took effect in December 2016. The risk retention mandate for CMBS calls upon lenders to retain a 5% stake in the securitization for five years.

Earlier this year, KKR negotiated and purchased the first CMBS transaction subject to risk retention. RECOP has since closed on six additional transactions representing a face amount of $517 million and a total of approximately $225 million of invested equity. KKR says the fund's seven closed investments through August 2017 make it the most active CMBS B-Piece buyer of third party risk retention structures.