KKR prices $1 billion commercial real estate CLO; GSO/Blackstone CLO offering on tap

By Cristal Cody

Tupelo, Miss., Nov. 8 – In new issuance, KKR Real Estate Finance Trust Inc. priced a $1 billion commercial real estate CLO on Wednesday.

The deal is the largest managed CRE CLO issued to date by a publicly traded mortgage REIT sponsor, according to a news release.

Kroll Bond Rating Agency said in a ratings report that the transaction is “one of only three CRE CLOs issued post crises with a collateral balance of $1 billion or more.”

The others in that category are the $1 billion BXMT 2017-FL1, Ltd. deal issued in December 2017 and the $1.1 billion LNCR 2018-CRE1 Issuer, Ltd. transaction issued in June.

Elsewhere in the broadly syndicated CLO space, GSO/Blackstone Debt Funds Management LLC intends to price a new $716.25 million offering.

KKR Real Estate prints

KKR Real Estate Finance Trust priced the $1 billion KREF 2018-FL1 Ltd. transaction on Wednesday, according to a market source and a news release.

The CLO sold $810 million of securities rated AAA through BBB- with a weighted average running cost of capital of Libor plus 136 basis points before amortized costs.

Wells Fargo Securities LLC, KKR Capital Markets LLC, Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC were the placement agents.

KKR Real Estate Finance Manager LLC will manage the CRE CLO.

The securities are due June 17, 2036.

The offering is collateralized by commercial mortgage assets.

KKR Real Estate Finance Trust is a New York-based real estate finance company that focuses on originating and acquiring senior loans secured by commercial real estate properties. The company is externally managed by an affiliate of KKR & Co. Inc.

Harbor Park CLO on deck

GSO/Blackstone Debt Funds Management intends to price $716.25 million of notes due Jan. 20, 2031 in a new broadly syndicated CLO offering, according to a market source.

The Harbor Park CLO Ltd./Harbor Park CLO LLC deal includes $1.75 million of class X floating-rate notes (//AAA); $412,125,000 of class A-1 floating-rate notes (//AAA); $42,875,000 of class A-2 floating-rate notes (//AAA); $42 million of class B-1 floating-rate notes; $30.8 million of class B-2 floating-rate notes; $39.2 million of class C floating-rate notes; $43.75 million of class D floating-rate notes; $24.5 million of class E floating-rate notes and $79.25 million of subordinated notes.

Morgan Stanley is the placement agent.

The issue is backed primarily by broadly syndicated first-lien senior secured corporate loans.

The Rule 144A and Regulation S deal is expected to close on Dec. 19.

GSO/Blackstone is a New York City-based subsidiary of alternative asset manager GSO Capital Partners LP.

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