Real Estate Overview

KKR Real Estate Overview Ralph Rosenberg July 18, 2011

CONFIDENTIAL

KKR Real Estate Today In 2011, KKR established a real estate platform with the mandate of leveraging KKR’s relationships, sourcing channels and proprietary access to information to create compelling opportunities to provide flexible capital to solve real estate problems •

KKR has built a team of 9 dedicated real estate professionals supported by a deep bench of investment professionals in private equity (e.g. retail and healthcare) and special situations

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The team has successfully integrated within KKR and is viewed as a complementary business to existing KKR industry verticals and strategies

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Since launching the effort in the spring and summer of 2011, KKR has committed in excess of $200 million of equity to four transactions with an active pipeline of new opportunities

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We are beginning to evaluate options for third party capital and have completed listening tours in Asia and the Middle East to help us refine our strategy

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KKR Real Estate 3-Year Vision Over the next three years, KKR will establish a real estate platform characterized as… •

Solutions provider across the capital structure focused on achieving attractive risk-adjusted returns

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Strategic counterparty and partner to institutions, real estate owners, and real estate intensive companies

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Control investors who intend to influence the outcome of transactions through improving operations, optimizing the capital structure and making accretive capital investments

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Identifier of opportunities with favorable process dynamics where our relationships or inhouse expertise create a KKR advantage

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Complementary business to existing KKR industry verticals and strategies

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Focused yet entrepreneurial culture that enables KKR to react selectively to opportunistic deal flow

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Short-Term Goals

Network

Internal Investments US Europe Asia Capital 4

•Systematic outreach to RE operators and intermediaries to generate differentiated deal flow •Franchise enhancing senior advisor relationships

•Establish house “macro view” on specific asset classes, markets or themes •Refine investment committee process •Start developing RE infrastructure (finance, reporting, valuation, etc.)

•Deploy $300-500 million of capital across 5-7 investments •Develop expertise across certain asset classes and investment themes •Demonstrate differentiation

•Continue building investment track record •Develop capital markets capabilities

•Proactive sourcing of new opportunities •Seamless integration with Special Situations and PE teams

•Continue evaluating opportunities in China through China Growth Fund

•Continue deploying capital from KFN and KKR allocations •Begin introducing platform and strategy to existing LPs and consultants •Evaluate opportunities to develop co-invest or SMA relationships with LPs

3-Year Targeted Real Estate Capabilities Global Investment Platform • Equity and high-return structured investments • Real estate operator / developer platform • Real estate-intensive private equity investments • Non-securitizeable credit and mezzanine

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Capital Markets / Fund Raising • Syndicate equity and debt • Procure best-in-market deal financing • Understand interests of key sources of real estate capital • Captures fees and carry associated with “flow business”

Real Estate Operating Capability •Network of exclusive operating partners •Several owned / partnered operating platforms •In-house Capstone real estate capabilities •Strong network of senior advisors in desired asset classes

Tremendous Debt & Equity Excesses In the U.S. During Bubble • $1.4 trillion in US Commercial Real Estate debt to mature between 2012 to 2015

$bn

Commercial Real Estate Debt Maturities

Source: Trepp (2011).

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And in Europe… • The banking system has become disproportionately large (compared to GDP), with significant CRE exposure Banking System Assets as a Percentage of GDP

Source: Barclays Capital (2012).

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Traditional CRE Players Are Gone or Are a Fraction of Their Prior Size

Fraction of Prior Size

Winding Down / Gone

Equity Funds / Investors

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Real Estate Partners Whitehall Funds

Real Estate Funds

Numerous real estate opportunity funds…

Mezzanine / Special Situations / Senior Lenders

Market Opportunity We believe interesting opportunities exist in the Real Estate space due to:

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Need to recapitalize complex capital structures created during the 2005-2008 timeframe Lack of capital from balance sheet lenders and shadow banking industry Fewer private dedicated providers of equity and mezzanine capital Desire for owners to access stable, strategic capital partners with no legacy portfolios Favorable supply / demand dynamics in private real estate markets

Compelling Opportunities 9

Note:

Unless indicated, the above reflects the current market views, opinions and expectations of KKR based on its historic experience. Historic market trends are not reliable indicators of actual future market behavior or future0 performance of any particular investment or any KKR fund, vehicle or account which, may differ materially, and are not to be relied upon as such. There can be no assurance that investors in any KKR fund, vehicle or account will receive a return of capital.

KKR Investment Strategy - Approach •

We believe improving operating fundamentals, a current lack of new supply, and an improving real estate capital markets landscape should lead to future improvement in real estate values

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The combination of i) overleveraged capital structures and ii) a scarcity of equity capital necessary to recapitalize these capital structures should create compelling value-driven investment opportunities where KKR seeks to trade situational complexity for a more attractive basis and excess risk-adjusted returns

Opportunities to buy into complicated legacy capital structures providing KKR with an attractive entry point into the capital structure. We seek positions with substantial control rights through the debt security where we can influence the outcome or ultimately convert to a control equity position and own the asset outright (e.g. European Corporate: Confidential)

In certain recapitalizations/repositionings, we believe the best risk-adjusted returns are in the form of a preferred equity/mezzanine security where we can earn an attractive current yield and an equity-like all-in return

Note:

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Distressed for Control

Structured Credit Investing

Recaps / Reposition -ings

Many overleveraged assets and portfolios have suffered operationally from a lack of capital investment or active management. We believe there will be attractive opportunities to invest in assets that require capital to “re-institutionalize” them (e.g. Yorktown)

Corporate We will seek to leverage KKR’s corporate PE experience to i) execute take private, corporate carve-out, and PIPE transactions and ii) execute platform / build-up opportunities within targeted sectors

Unless indicated, the above reflects the current market views, opinions and expectations of KKR based on its historic experience. Historic market trends are not reliable indicators of actual future market behavior or future performance of any particular investment or any KKR fund, vehicle or account which, may differ materially, and are not to be relied upon as such. There can be no assurance that investors in any KKR fund, vehicle or account will receive a return of capital. The specific companies shown represent all of KKR’s real estate investment since March 2011. The specific investments identified are not representative of all of the investments purchased, sold or recommended for KKR clients, and it should not be assumed that the investments identified was or will be profitable.

What Is KKR’s “Edge” in Real Estate Investing? • KKR believes its Real Estate Team has a differentiated competitive advantage and benefits from KKR’s global footprint as one of the largest alternative investment firms in the world Sourcing Differentiated Sourcing

• Over 400 executives in 14 offices globally • Oftentimes, use exclusive relationships to seek new investments

Brand

• Ability to attract top management talent • Trusted and respected partner and counterparty

Execution

Senior Advisor / Platform Capabilities

• Access to senior advisors (operational and investment professionals) within real estate and related sectors • Underwriting and sourcing resource

Culture

• The KKR “OneFirm” approach • Collaborative effort and attention across all business lines in executing investments

Industry Verticals

• Ability to tap KKR industry teams as another avenue to source and evaluate deal opportunities

Financial Structuring

• Access to KKR Capital Markets • Financing expertise • Special Situations execution expertise(1)

(1) Participation of KKR Private Equity, KKR Capital Markets, and KKR Capstone personnel in the public markets investment process is subject to applicable law and inside information barrier policies and procedures, which may limit the involvement of such personnel in certain circumstances and KAM’s ability to leverage such integration with KKR. Discussions with Senior Advisors and employees of the Firm’s managed portfolio companies are also subject to the inside information barrier policies and procedures, which may restrict or limit discussions and/or collaborations with Public Markets/KAM.

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Operating Capabilities

• Access to the KKR value creation tools: KKR Capstone, Public Affairs, Stakeholder Management • Rigorous and regular portfolio management

i. Case Studies – Recent Transactions

Note:

The specific companies shown represent all of KKR’s real estate investment since March 2011. The specific investments identified are not representative of all of the investments purchased, sold or recommended for KKR clients, and it should not be assumed that the investments identified was or will be profitable. Past performance is no guarantee of future results.

Yorktown Center: KKR’s Edge

Macro Views

Yorktown Center

Senior Advisor / Platform Capabilities

Industry Verticals

Culture

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• Retailer relationships (senior advisors and PE retail team) enabled extensive tenant outreach and diligence efforts to prove out lease-up value-add opportunity (meaningful information advantage in projecting upside potential of asset)

European Corporate (Confidential): KKR’s Edge

Operating Capabilities

Macro Views European Corporate (Confidential)

Senior Advisor / Platform Capabilities

Industry Verticals

Culture

Differentiated Sourcing

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• KKR macro and local portfolio company insights created conviction in long-term value and provided insight into near-term market trends • Process dynamic and relationship created value “on the buy”: Selling partner needed reliable / fast execution with partner with shared vision (joint control). Willing to trade price for certainty and speed. Long historical relationship between KKR/partner and KKR/management • Complex capital structure creates optionality for patient and well-capitalized buyer