Form 4: KKR Entities Acquire Shares in KKR Real Estate Select Trust Inc. as Management Fee Payment

KKR Alternative Assets LLC and related entities acquired 102,613.161 shares of KKR Real Estate Select Trust Inc. as payment for management and incentive fees.

Summary

• KKR Alternative Assets LLC, along with several related entities, acquired 102,613.161 shares of KKR Real Estate Select Trust Inc. common stock.
• These shares were issued as payment for management and incentive fees, as per the investment advisory agreement between KKR Real Estate Select Trust Inc. and KKR Registered Advisor LLC.
• The shares were acquired at a price of $24.86 per share.
• Following this transaction, KKR Alternative Assets LLC indirectly holds 10,209,499.955 shares of the common stock.
• The reporting entities, including KKR Group Assets Holdings II L.P., KKR Group Assets II GP LLC, KKR Group Partnership L.P., KKR Group Holdings Corp., KKR Group Co. Inc., KKR & Co. Inc., KKR Management LLP, Henry R. Kravis, and George R. Roberts, disclaim beneficial ownership except to the extent of their pecuniary interest.

Sentiment

Score: 7

Explanation: The document reflects a routine transaction related to management fees, which is a normal part of the business. There are no indications of significant positive or negative sentiment.

Positives

• The transaction reflects the ongoing management and advisory relationship between KKR and KKR Real Estate Select Trust Inc.
• The payment of fees in shares aligns the interests of KKR with the performance of the trust.

Risks

• The complex ownership structure involving multiple KKR entities could make it difficult to track the ultimate beneficial ownership of the shares.
• The disclaimer of beneficial ownership by the reporting persons could create uncertainty about their actual control over the shares.

Management Comments

• The shares were issued as payment for management and/or incentive fees pursuant to the investment advisory agreement between KKR Real Estate Select Trust Inc. and KKR Registered Advisor LLC.
• KKR Registered Advisor LLC directed that KKR Alternative Assets LLC, its affiliate, receive these shares on its behalf.

Industry Context

This transaction is typical for investment management firms that receive fees in the form of equity in the funds they manage, aligning their interests with the fund's performance.

Comparison to Industry Standards

• The practice of paying management and incentive fees in shares is common in the investment management industry, particularly for private equity and real estate funds.
• Other firms like Blackstone and Apollo also often receive compensation in the form of equity in the funds they manage.
• The specific terms of the advisory agreement and the valuation of the shares would be comparable to similar arrangements in the industry.

Related Party Transactions

• The transaction involves related parties, including KKR Alternative Assets LLC and other KKR entities, as part of the management fee payment.

Stakeholder Impact

• The transaction increases KKR's stake in KKR Real Estate Select Trust Inc., aligning their interests with shareholders.
• The payment of fees in shares could be seen positively by shareholders as it ties KKR's compensation to the performance of the trust.

Key Dates

Keywords

KKR, Real Estate, Select Trust, Share Acquisition, Management Fees, Incentive Fees, Beneficial Ownership, Investment Advisory Agreement