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

KKR Alternative Assets LLC and related entities acquired 50,100.064 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 50,100.064 shares of KKR Real Estate Select Trust Inc. common stock.
• The shares were issued as payment for management and incentive fees under the investment advisory agreement.
• The transaction occurred on November 29, 2024, at a price of $25.18 per share.
• Following the transaction, KKR Alternative Assets LLC indirectly holds 10,106,886.794 shares of the common stock.
• The shares are indirectly held through a complex structure of partnerships and corporations ultimately controlled by KKR & Co. Inc. and its founding partners.

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 acquisition of shares as payment for fees indicates a continued relationship between KKR and the Real Estate Select Trust.
• The transaction provides transparency into the compensation structure for KKR's management services.

Risks

• The complex ownership structure could make it difficult to track the ultimate beneficial ownership of the shares.
• The reliance on share-based compensation may dilute existing shareholders if not managed carefully.

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 type of transaction is common in the asset management industry, where management fees are often paid in the form of equity in the managed entity. This aligns the interests of the manager with the performance of the managed assets.

Comparison to Industry Standards

• Many asset managers, such as Blackstone and Apollo, also receive management fees in the form of equity or performance-based incentives.
• The specific structure of the KKR transaction, involving multiple layers of partnerships and corporations, is not uncommon for large private equity firms.
• The fee structure is typical for investment advisory agreements, where a portion of the compensation is tied to the performance of the managed assets.

Related Party Transactions

• The transaction involves related parties, including KKR Alternative Assets LLC and other KKR affiliated entities.

Stakeholder Impact

• The transaction may have a minor dilutive effect on existing shareholders due to the issuance of new shares.
• The transaction aligns the interests of KKR with the performance of the Real Estate Select Trust.

Key Dates

Keywords

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