KKR Increases Bet on Loan Investor Toorak Capital

Toorak has purchased $1 billion of real estate loans in the U.S. and U.K. since the firm was founded in 2016.

Henry Kravis, co-CEO of KKR (Peter Foley/Bloomberg)

Henry Kravis, co-CEO of KKR

(Peter Foley/Bloomberg)

KKR & Co. has upped its bet on Toorak Capital Partners, a real-estate loans investor formed about two years ago.

The alternative asset manager has increased its investment in the firm to $250 million, after initially investing $75 million in 2016, according to a Toorak statement Monday. The backing is primarily from KKR Private Credit Opportunities II, a $2.24 billion global fund that closed in January.

Since its founding in 2016, Toorak has purchased $1 billion of small mortgages in the U.S. and U.K., including some tied to single-family rentals and commercial and residential properties, according to the statement. The firm has invested in 3,500 loans in 43 states and throughout England and Wales.

“With Toorak, we saw an opportunity to provide stable, long-term capital to a fragmented industry where there is a lack of efficient financing alternatives for lenders,” John Beacham, the firm’s founder and chief executive officer, said in the statement.

[II Deep Dive: Private Debt Fundraising May Have Peaked in 2017]

KKR’s increased investment in Toorak comes amid strong investor interest in credit funds. The firm’s Private Credit Opportunities II is more twice the size of its predecessor fund, the $1 billion KKR Mezzanine Partners I that closed in 2015, according to a KKR statement in January.

Within a short period, Toorak has “substantially” improved financing options in the mortgage market, Dan Pietrzak, a member of KKR Credit, said in Monday’s statement.

Private debt funds had a record year of fundraising in 2017, with each quarter seeing capital totals exceed $20 billion, according to Preqin. While fundraising during the first three months of this year slowed to $14 billion, the alternative-assets data provider said in April that the outlook for the rest of 2018 was “positive.”