KKR Waives KREST Incentive Fee Through Mid-2027 as Redemption Pressure Persists
KKR Registered Advisor LLC has agreed to waive the incentive fee payable by KKR Real Estate Select Trust Inc., or KREST, through June 30, 2027, as withdrawal demand at the nontraded real estate investment trust continues to exceed its quarterly liquidity limit.
The waiver begins immediately and applies to all share classes. The agreement bars the adviser from seeking reimbursement for any incentive fees forfeited during the period — the waiver is non-recoupable. KKR did not disclose a reason for the waiver.
KREST’s net asset value per share was $23.22 as of May 19, 2026.
The move follows a string of investor-support measures KKR has deployed at KREST since 2022, when redemption demand first began exceeding the fund’s quarterly 5%-of-net-asset-value repurchase cap. In June 2024, KKR announced the KREST shareholder priority plan, under which KKR Alternative Assets LLC — an affiliate of the adviser — committed to hold approximately 7.7 million KREST shares and, if necessary, contribute them to the fund to support a net asset value per share of up to $27.00 on June 1, 2027. That commitment was valued at roughly $200 million at the time.
Despite the shareholder priority plan and other liquidity management steps, KREST’s withdrawal demand has remained elevated. In its most recently completed tender offer — the Q2 2026 offer that expired April 10 — KREST prorated redemption requests at 74%, meaning investors received 74 cents on the dollar of requested redemptions. The fund repurchased $72.1 million in shares, or 5% of NAV as of Feb. 27, at $23.16 per share. It was the second consecutive quarter in which KREST prorated its tender offer.
KREST received more than 4.2 million share repurchase requests in that offer — well above the 3.1 million shares it had made available for repurchase under the quarterly cap.
The incentive fee waiver reduces the cost of holding KREST shares during the waiver period, though it does not address the underlying liquidity mismatch that has driven the redemption queue. For advisers and broker-dealers distributing KREST, the fee reduction may be relevant context in conversations with clients who have submitted tender requests that remain partially unfulfilled.
KREST is a closed-end, non-diversified management investment company registered under the Investment Company Act of 1940. It invests primarily in income-oriented commercial real estate equity and credit. The fund reported portfolio occupancy of 98% and year-over-year net operating income growth of more than 3% in 2025, according to its most recent tender offer materials. Its balance sheet carries no near-term debt maturities and a revolving credit facility that remains fully undrawn.
The shareholder priority plan remains in place alongside the fee waiver until one month before the incentive fee waiver expires.
Investment banking firm Robert A. Stanger & Company upgraded KREST’s rating to overweight in July 2024, citing the fund’s liquidity management and the shareholder priority plan. At that time, Stanger estimated KREST’s liquidity sleeve at roughly 33% of NAV, more than double its 15% threshold. The fund has not disclosed updated liquidity figures.
KKR & Co. Inc. (NYSE: KKR) is a global investment firm and KREST’s sponsor.
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