Adam Simon On the Early Days of KKR Real Estate Credit in Dallas

To truly cover a market, you need to have a dedicated pair of boots on the ground. In KKR Real Estate Credit’s early days of planting flags in Dallas, the person wearing those boots was Adam Simon. Simon had worked with Matt Salem, now KKR’s head of real estate credit, at Rialto Capital before joining Salem’s team at KKR in 2015 to build out the firm’s credit business. 

“It was a small team, and the entire country was up for grabs in terms of geographic coverage,” Simon said. “I basically raised my hand and said I would love to cover markets outside of New York. They were always interesting to me, and I was particularly excited about Dallas, Austin and Denver. I was happy to get on an airplane anytime and go anywhere. New York-centric people were clamoring to cover New York, and I said, ‘I’ll cover everything else.’ ” 

He took the road (or sky) less traveled for a couple of reasons back then. 

At the time, the country was still recovering from the Global Financial Crisis, but the economy was steadily stabilizing. Meanwhile, cities were creating new dynamic environments with homes and offices, companies were relocating to new locations, and restaurants and other play activities were flourishing around them. 

“I really liked the idea of getting in relatively early and becoming an expert in markets like Dallas, Denver, Seattle and Portland — markets outside of New York that demonstrated a lot of that growth trajectory, and not in a ‘hyper boom and bust’ cycle, but in a very measured growth model,” Simon said.  

Secondly, KKR has a mantra of “Do business with people you like and trust,” and he felt that in his very first visits to those markets, especially in Dallas. 

“The way that people handle their business there is very community-oriented in the sense that people are generally in similar social circles and see each other frequently, and so you treat people in a certain way and you do the right thing,” Simon said. “Coming out of the GFC, you wanted to do more business with people you liked and you trusted in an environment you enjoyed. I found that in spades in Dallas, which made me want to start spending a lot of time there.” 

Building out a client roster with a new platform is something Simon describes as a “healthy challenge,” but “it was the challenge that I wanted for myself. I wanted to do it in a way that was authentic to me, and I really enjoyed building those relationships.” 

The firm also gave him plenty of space to work his magic. 

“It wasn’t a case of, ‘We’ve got a budget, this is your first year, you have to hit it,’” Simon said. “It was very much, ‘This is a relationship-driven balance sheet lending model that we’re building out within KKR, and you’ll build that out over time, but do right by the client, do right by the real estate, and  build it the right way.’ ” 

Simon’s team in New York focused on their deeper relationships to help the credit business get off the ground, while some of those early seedlings were being planted in Dallas and elsewhere.

Ten years later, those seedlings are fully fledged. New York-based Simon is in Dallas six to 10 times a year, and KKR actively lends in just about every asset class in Dallas. 

While the competition is fierce, KKR’s lending track record, together with its servicing and asset management arm, K-Star, puts it on advantageous footing. 

“When we’re all competing on price and proceeds,” Simon said. “We’re able to show not only what we’ve done in the market today and good referrals and whatnot. We’re able to say, ‘Our team that’s underwriting this loan lives in this market, they know this market, they know your analysts and your associates and the asset managers who are in this market, and the post-closing asset management team is based here, so when you want an amendment, or something is going less well and you want to have a conversation with someone, it’s our team and they’re in your market already. They’ve also probably shopped at your center, or stayed at your hotel.’ It’s important.” 

Cathy Cunningham can be reached at ccunningham@commercialobserver.com.