KKR Real Estate greenshoe ups 6.125% convertibles to $143.75 million

By Marisa Wong

Morgantown, W.Va., May 18 – The initial purchasers of KKR Real Estate Finance Trust Inc.’s offering of 6.125% convertible senior notes due 2023 exercised their $18.75 million over-allotment option in full, bringing the total size of the issuance to $143.75 million, according to an 8-K filing with the Securities and Exchange Commission.

KKR priced $125 million of the five-year convertible notes prior to the market open on Wednesday at the cheap end of talk with a coupon of 6.125% and an initial conversion premium of 10%, as previously reported.

Price talk had been for a coupon of 5.625% to 6.125% and an initial conversion premium of 10% to 15%, according to a market source.

Morgan Stanley & Co. LLC, Wells Fargo Securities LLC and KKR were bookrunners for the Rule 144A deal.

The notes are non-callable. There is takeover and dividend protection for any dividend paid above 43 cents quarterly.

The notes are contingently convertible prior to Feb. 15, 2023 subject to a 110% threshold.

Conversions will be settled in cash, shares or a combination of both at the company’s option.

Proceeds will be used to acquire target assets consistent with the company’s investment strategy and guidelines.

KKR Real Estate is a New York-based real estate finance company.

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