KKR blocks REIT withdrawals in latest redemption wave

FILE PHOTO: Trading information for KKR & Co is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., August 23, 2018. REUTERS/Brendan McDermid

NEW YORK (Reuters) - Private equity firm KKR & Co Inc has blocked investors from cashing out of its $1.6 billion non-traded real estate income trust (REIT) after withdrawal requests exceeded pre-set limits, according to a regulatory filing.

KKR is the latest manager of private REITS to limit investor withdrawals following similar curbs at REITs managed by Blackstone Inc and Starwood Capital.

KKR told investors of its KKR Real Estate Select Trust Inc this week that it received redemption requests greater than 5% of its quarterly net asset value as of the end of December.

As a result, KKR allowed investors to redeem just $79.3 million, which is equivalent to approximately 62% of the total investors’ repurchase requests of about $128 million.

A KKR spokesperson declined to comment.

Investors are increasingly looking to cash out of private REITs amid a growing disparity in their returns and those generated by public REITS.

KKR reported that its REIT generated an 8.32% return as of the end of December compared with the publicly traded Dow Jones U.S. Select REIT Total Return Index, which fell 25.96% over the same period.

(This story has been corrected to change size of REIT to $1.6 billion from $1.5 billion in first paragraph)

Reporting by Chibuike Oguh in New York; Editing by Mark Porter