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Three New Public REITs Offer Nonbank Lending To One-Up Conservative Banks


KKR & Co., TPG Capital and Franklin Square are all in the process of launching commercial mortgage-focused REITs to help fill the void left by conservative banks that are tightening their standards and backing away from real estate.

On Wednesday New York investment firm KKR launched an initial public offering for its new finance REIT and San Francisco-based private equity firm TPG filed for an IPO to take its own commercial real estate finance REIT public, CoStar reports. Earlier in the year Franklin Square, an alternative investment firm in Philadelphia, said it plans to launch its own finance REIT.

The three firms are united by their desire to raise money from investors and provide nonbank capital to real estate investors holding loans that are about to mature. This is a trend that even developers are jumping into. Several big players in New York — including Kushner Cos., Moinain Group and Related Cos. — have launched debt funds to help their peers move quickly on mezzanine loans, bridge financing and other debt.

As for commercial mortgage-backed securities, within the next six months $55.8B in CMBS debt alone is set to mature, and experts said it is unclear whether some of these loans, which were issued in the late stages of the commercial real estate bubble, will meet current bank standards for refinancing.