Joel Traut

Is it better to be a lender or borrower today?

We see significant opportunity to invest globally across both equity and credit within the real estate sector today, leveraging our platform capabilities, expansive capital and deep relationships. 

With that said, it is certainly a particularly attractive time to be investing in real estate credit across both loans and securities. Property values have reset, in many cases to well below replacement cost, fundamentals are improving, and lenders can achieve attractive returns with conservative credit metrics, strong current income and meaningful downside protection. At the same time, the need for financing remains significant, with approximately $655 billion of average annual U.S. maturities expected from 2026 through 2029. 

We’re also constructive on real estate equity, particularly in sectors and markets globally where strong fundamentals and nominal GDP growth, even in a higher-rate environment, create opportunities to compound cash flow over time. 

Broadly, we think this is a compelling time to invest across real estate, but the setup is particularly attractive for credit given the combination of reset values, current income and significant refinancing demand. Our integrated global equity and credit platform gives us a differentiated perspective on market dynamics and the flexibility to identify and pursue attractive opportunities across the capital structure.

What’s your competitive edge in deals today?

Our advantage is the breadth of financing solutions we offer, combined with the scale, relationships and execution capabilities behind them. KKR Real Estate Credit originates approximately $10 billion of loans annually and manages approximately $43 billion in AUM, supported by more than 130 investment and asset management professionals across the U.S. and Europe. 

We manage multiple pools of capital across, bank, insurance, mortgage REIT and fund vehicles, enabling us to provide financing across the risk-return spectrum, property types and structures. Relationships are equally important. In 2025, 70 percent of loans came from repeat sponsors, reflecting our longstanding institutional borrower relationships.

We also leverage KKR’s integrated real estate equity and credit platform for insights, deal flow and capital markets execution. KKR Capital Markets helps us access financing sources and structure customized solutions that enhance capital efficiency. Through K-Star, we also bring integrated underwriting, surveillance, asset management and workout expertise across the portfolio.

What is the most important thing you have done to protect your loan portfolio?

The most important thing we have done to protect the loan portfolio is maintain disciplined underwriting from the outset. That means moderate leverage, high-quality collateral, institutional sponsorship and careful attention to basis. We’re also highly selective about position sizing, evaluating collateral quality, business-plan risk, sponsor strength, liquidity and the mandate of each pool of capital.

Beyond individual loans, portfolio construction matters. We focus on diversification across asset types, markets, sponsors, business plans and pools of capital, while maintaining disciplined deployment pacing to preserve flexibility across market cycles. And our work doesn’t stop at origination. Active asset management means continuously monitoring cash flow, valuations, sponsor support, refinancing proceeds and business-plan execution, particularly in a higher-rate environment.

Structural protections, including cash sweeps, extension tests, reserves, covenants and interest rate caps, also play an important role in preserving lender control and managing downside risk.

Data centers: Are they as attractive a lending opportunity as two years ago?

Data centers remain attractive, but the opportunity set is more specialized and less forgiving than it was two years ago. Strong demand alone isn’t enough. The details of each investment matter. 

We’re particularly focused on power availability, construction execution, tenant quality, lease duration and long-term asset value.

The opportunities we find most attractive involve pre-leased assets with investment-grade tenants, clear power solutions, long-term leases and strong sponsorship. There’s significant capital focused on the sector today, which makes selectivity even more important. Getting the basis, structure, sponsor and exit right matters more now than it did two years ago.

Biggest headwind and tailwind to lending activity in 2027?

The biggest headwind is continued uncertainty around rates, values and refinancing proceeds. Competition for high-quality assets may also remain elevated as banks and other lenders re-enter parts of the market. 

The biggest tailwind is the wall of maturities, which will support continued demand for refinancing, recapitalization and real estate credit solutions. We’re also seeing more attractive entry points for lenders following the reset in property values, while limited new construction should support fundamentals across many existing assets.

If rates stabilize and values continue to reset, we believe deferred refinancing and extension activity could translate into a broader wave of origination opportunities. 

Lightning Round:

Super Bowl or World Cup? Super Bowl — Go Packers.

Orcas or yachts? Yacht to sightsee orcas.

Best vacation you ever took? All family vacations.

Conversions: “Keep `em comin’ ” or “Sooo 2020 (scoff)”? Keep `em comin’. More housing!

Sun Belt multifamily or Boston life sciences? Sun Belt multi.

Book reader or phone scroller/email checker before bed? Email checker, until AI starts handling for me.

Describe your portfolio in one word? Defensive.

Fitness activity of choice? Running.

Holiday wish? Health and happiness.

“Power” song you listen to when mentally preparing for a big event/deal/day? That’s a secret.