KKR Moves Up KREST Support Payment, Adds 2% Fee on Shares Held Less Than a Year

KKR Real Estate Select Trust Inc., or KREST, a nontraded real estate investment trust, will impose a new 2% fee on common stock redeemed within a year of purchase starting Oct. 1. The early repurchase deduction, which applies on a first-in, first-out basis across all four share classes – I, D, S, and U – arrives just weeks before KKR Registered Advisor LLC, the fund’s adviser, moves up part of a separate shareholder support payment originally due in mid-2027.

Under the amended shareholder priority plan, KREST’s adviser can now satisfy its support obligation in installments rather than in one lump sum. The adviser intends to contribute one quarter of the Class I shares it committed under the plan on Sept. 16, 2026, a move the fund said would raise net asset value to approximately $23.31 per share based on its Aug. 31 valuation. The actual figure will depend on the Sept. 16 NAV and could come in higher or lower, the company said. Investors who buy in on or after that date won’t get the full benefit of the plan, since part of the committed shares will already be reflected in the stock price. The adviser remains obligated for the full amount it would have owed under the original June 1, 2027, timeline regardless of the early contribution, and any shares it contributes are permanently canceled; they aren’t reinstated even if NAV moves against shareholders later.

The new redemption fee can be waived for repurchases tied to a shareholder’s death, qualifying disability, or divorce, for accounts that fall below the $1,000 minimum balance, for trade or operational errors, and for repurchases made through approved discretionary model-portfolio programs. Waiver requests tied to death, disability, or divorce must be submitted in writing within 12 months of the triggering event and, in the case of death, accompanied by a certified death certificate; the exemption doesn’t extend to non-natural-person holders such as trusts or corporations. Shareholders exchanging one share class for an equivalent amount of another won’t be treated as triggering a repurchase and won’t owe the fee.

KREST also updated its expense disclosures. Total annual operating expenses, after fee waivers, now run 2.7% for Class I shares, 2.95% for Class D, and 3.55% each for Class S and Class U – driven by a 1.25% management fee, an incentive fee of 12.5% of quarterly portfolio operating income (currently waived through June 30, 2027), and servicing and distribution fees that vary by class. The fund continues to target quarterly tender offers for up to 5% of NAV, a program the fund has said was oversubscribed in the past.

KREST reported roughly $1.47 billion in average net assets for the current fiscal year.

The new fee lands just as KREST’s redemption pressure appeared to be easing. The fund prorated tender offers for two straight quarters – fulfilling 81% of Q1 2026 requests, then just 74% in Q2, when investors submitted 4.2 million shares against a 3.1 million-share cap – before fully satisfying all Q3 requests in July, a streak-ending quarter that repurchased 3.16 million shares at $22.82 apiece.

KKR’s shareholder priority plan dates to June 2024, when the sponsor injected $50 million in equity and pledged to forfeit up to 7.7 million shares – worth roughly $200 million at the time – to support a $27.00 per-share NAV target by June 1, 2027. Robert A. Stanger & Co. cited the plan in upgrading KREST to overweight that July, calling it “downside protection” paired with “equity upside potential from levered assets at bottom-of-market pricing.” NAV has continued to run well below that floor since – $23.16 in February, $23.22 in May, and $23.27 as of the fund’s most recent report in June – making the roughly $23.31 lift from this month’s partial contribution a modest step rather than a return to the committed level.

KREST first limited redemptions in January 2023, when it fulfilled only 62% of $128 million in requests and joined Blackstone Real Estate Income Trust and Starwood Real Estate Income Trust among nontraded REITs curbing withdrawals – the plan and this month’s fee are the latest chapters in a redemption story that’s now three years running.

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