Non-bank lenders are expected to be a bigger force in the US CMBS lending market in the coming year, particularly as deep-pocketed firms like KKR & Co LP elbow their way into the sector.
The buyout firm has hired industry veteran Matt Salem and several members of his team from Rialto Capital Management, a person familiar with the matter said on Thursday.
It marks KKR’s first foray into real estate debt since it created its property-focused group in 2011.
Rialto has been a consistent presence in CMBS deals as a lender as well as a B-piece buyer over the past three years, and it was one of only a handful of specialty debt shops to ramp up in both areas in the wake of the financial crisis.
At KKR, the team will focus on investments in preferred equity, mezzanine debt and junior credit like B-pieces, in addition to CMBS lending, the person said.
The news was the talk of the second day of the annual Commercial Real Estate Finance Council conference in Miami.
“Non-bank lenders are each saying they are going to increase loan production by 50% this year,” a portfolio manager who buys CMBS told IFR on the sidelines of the conference.
“We want to know how long they will be around after the loan is made.”
Though KKR’s move is not expected to dethrone the dominant players in the CMBS market, it does represent an important shift.
Bond deals flowing from bank-sponsored shelves are likely to look more complicated as the list of lenders spinning loans into bonds expands, the portfolio manager said.
Another non-bank ramping up its CMBS lending effort is Benefit Street Partners (BSB), the credit strategy arm of Providence Equity Partners, a global private equity firm with US$40bn in capital under management.
Scott Wayneburn, a former Deutsche Bank staffer, heads BSB’s 11 member commercial real estate team.
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