Kayne Anderson Real Estate Tops Fund Target Haul at $1.875B

Kayne Anderson Real Estate—Kayne Anderson Capital Advisors’ CRE investment division—closed a fourth debt fund for its debt platform, KA Real Estate Debt.

The fund was originally targeted to bring in $1.5 billion in investments, but it brought in commitments for $1.875 billion.

The new fund, Kayne Anderson Real Estate Debt IV, “seeks to generate risk-adjusted returns in structured real estate finance, leveraging KA Real Estate’s deep industry relationships and unmatched track record in targeted real estate asset classes,” the company says. The investments will be split between Freddie Mac structured products like bonds and “direct loan originations and purchases across targeted sectors including multifamily and student housing, medical office, seniors housing and self-storage.”

KA Real Estate Debt is the largest debt fund the company has raised to date. Since its inception, the debt platform has raised more than $7 billion in commitments, according to the company, although that could differ from the money actually invested.

“As real estate markets continue to respond to market dislocation, lending standards remain historically conservative, particularly in niche asset classes,” David Selznick, chief investment officer for KA Real Estate, said in prepared remarks. “KARED IV is well positioned to provide liquidity for borrowers while continuing to leverage the firm’s long standing relationship with Freddie Mac to source and acquire stabilized, attractive bond issuances.”

KA Real Estate, which started in 2007, claims more than $24 billion of gross investments across both equity and debt and has seen more than “$11 billion in gross sales to a variety of publicly traded REITs, asset managers, global pension funds, and other large institutional investors/buyers.” The company currently manages $14 billion in real estate assets under management (as of March 31, 2022) “across opportunistic equity, core equity and real estate debt.”

The investment strategy involves a focus on “fragmented sectors experiencing growth but lacking capital efficiencies and sophisticated operational and investment focus.” The company’s team includes expertise in “acquisitions, development, asset management, design and construction management, marketing, legal, accounting, and operations” to improve the effectiveness of the assets. “By targeting investments ranging in size from $25 million to $1 billion+, KA Real Estate also enhances value through asset consolidation and the creation of geographically diverse portfolios.”

KA Real Estate sources deals through relationships in target sectors, including “property managers, operating partners, health and hospital systems, and other large managers.” The company uses joint ventures with operators.