Form 4: KKR Real Estate Select Trust Inc. Insider Filing: KKR Alternative Assets LLC Acquires Shares as Payment for Management Fees

KKR Alternative Assets LLC acquired 104,406.552 shares of KKR Real Estate Select Trust Inc. common stock at $25.32 per share as payment for management and/or incentive fees.

Summary

• On September 30, 2024, KKR Alternative Assets LLC acquired 104,406.552 shares of KKR Real Estate Select Trust Inc. common stock.
• The shares were acquired at a price of $25.32 per share.
• This acquisition was made as payment for management and/or incentive fees under the investment advisory agreement between KKR Real Estate Select Trust Inc. and KKR Registered Advisor LLC.
• Following the transaction, KKR Alternative Assets LLC beneficially owns 10,005,318.025 shares of the company's common stock indirectly.
• The filing includes multiple reporting persons due to the complex ownership structure within the KKR organization.

Sentiment

Score: 7

Explanation: The sentiment is neutral to slightly positive. The transaction is a routine payment of management fees, indicating ongoing operations and alignment of interests between the manager and the REIT. There are no red flags or negative implications apparent in the filing.

Industry Context

This filing reflects the standard practice of compensating investment advisors with shares of the REIT they manage. It's common for large asset managers like KKR to have complex ownership structures, which necessitates multiple reporting persons in insider filings.

Comparison to Industry Standards

• Similar arrangements are common in the REIT and asset management industries, where management fees are often paid in a combination of cash and equity.
• Blackstone (BX), Apollo Global Management (APO), and Ares Management (ARES) also frequently use equity-based compensation for their executives and affiliated entities.
• The specific amount and structure of the fees are typically detailed in the investment advisory agreement, which is a standard document in these types of arrangements.

Related Party Transactions

• The issuance of shares to KKR Alternative Assets LLC is a related party transaction, as KKR Alternative Assets LLC is an affiliate of KKR Registered Advisor LLC, which has an investment advisory agreement with KKR Real Estate Select Trust Inc.

Stakeholder Impact

• The transaction has a minor dilutive effect on existing shareholders due to the issuance of new shares.
• However, it also ensures continued management and incentive alignment, which can be viewed positively.

Key Dates