Good morning, everyone, welcome to our second quarter 2021 earnings call. I'm joined this morning by Scott Nuttall, our Co-President and Co-COO, and by Rob Lewin, our CFO. We would like to remind everyone that we'll refer to non-GAAP measures on the call, which are reconciled to GAAP figures in our press release, which is available on the investor center section at kkr.com. The call will contain forward-looking statements which do not guarantee future events or performance. Please refer to our earnings release as well as our SEC filings for cautionary factors related to these statements. Turning to our results, this quarter really was an exceptional quarter, with record fundraising, deployment, and monetization activity alongside continued strong investment performance. Fee-related earnings per share, as well as after-tax distributable earnings per share, were both record quarterly figures for us, coming in at $0.53 and $1.05 respectively.
Management fees increased over 40% year-over-year to $480 million, helping drive the 68% increase you see in fee-related earnings. Our monetization activities drove the after-tax DE figure, which is 2.5 x the number we reported in the second quarter of last year. Our assets under management are now $429 billion, up over 90% from one year ago and up 17% just since last quarter. This reflects both record fundraising in the quarter as well as strong portfolio appreciation. Our book value per share, which is mark-to-market every quarter, is now $27.03. Net accrued carry on the balance sheet increased 13% since March 31st. Strong growth even after all of Q2's realization activity. Net cash and investments total $17 per share compared to $12 one year ago.
In terms of today's call, I will kick things off with an overview of our fundraising activity before turning things over to Rob to walk through this quarter's results, and Scott will provide a few closing remarks before we head into Q&A. Turning to fundraising, we had an exceptionally strong quarter, with $59 billion of new capital raised on an organic basis. To help put this into perspective, this compares to $44 billion of new capital raised for all of 2020, which itself was a record year for KKR. Differentiated investment performance on behalf of our limited partners, continued scaling across our businesses, and creativity and innovation all contributed to the fundraising results you're seeing, which exceeded our expectations. A few highlights.
First, we held initial closes across the next vintages of our North America private equity, global infrastructure, and core private equity strategies, raising over $40 billion collectively in the quarter. Let me give a few more details here. With a $14.3 billion first close, North America XIII is already larger than its predecessor, and together with our Asia and Europe private equity funds, total committed capital across our three active PE funds on a global basis now exceeds $35 billion. In infra, with just the first close already totaling $14.2 billion, Infrastructure IV is almost twice the size of its predecessor fund. Together with the success we've had in Asia infra and core infra over the last 12 months, total AUM across the infrastructure platform now stands at $38 billion, and that $38 billion compares to $14.5 billion one year ago.
In terms of core private equity, we held the first close on our most recent flagship at $12 billion, including $8 billion of third-party capital. AUM in core private equity is now $28 billion, and that $28 billion compares to $12 billion a year ago. The second fundraising highlight is the continued progress we've seen in perpetual capital with activity in this quarter across infrastructure, real estate, as well as credit. This quarter, we raised an incremental $5 billion in our open-ended core infrastructure strategy, bringing AUM here to $7 billion. We launched KREST, a 40 Act vehicle with REIT taxation that's focused on individual investors. In credit, our two publicly traded BDCs, FSK and FSKR, completed their merger to form one of the two largest BDC platforms with $16 billion of AUM. In July, Global Atlantic announced two reinsurance block transactions.
We expect these two transactions to add approximately $10.5 billion of perpetual AUM in the third quarter, and the pipeline here continues to be strong. Perpetual capital is now 30% of AUM and inclusive of long-dated strategic partnerships, and that includes a new multi-asset class partnership we closed this quarter. That figure is 43%. Remember, we have $21 billion of cash and investments on our balance sheet. The third fundraising highlight is our real estate platform's continued scaling. Focusing first on our opportunistic funds, we held a final close at REPE II, our second European fund in the quarter. At $2.1 billion, REPE II is three times the size of REPE I.
With continued fundraising at our third Americas fund, REPA III is now at $3 billion, more than 50% larger than REPA II, and we have yet to hold a final close. With these closes, we are now a clear top five opportunistic real estate manager when you aggregate our three regional funds. Looking at the real estate platform more broadly, we now have 10 strategies focused across equity and credit on a global basis in a variety of different fund structures, targeting both institutional and retail clients. Real estate AUM in total is now $32 billion, and that $32 billion compares to $11 billion 12 months ago, with tremendous room for continued growth.
Finally, as you think about your models and future management fees, we now have $42 billion of committed capital with a weighted average management fee rate of just over 100 basis points that becomes payable when the capital is invested or enters its investment period. Last quarter, that amount was a little over $20 billion. All in all, we had an excellent quarter. Importantly, as we look forward over the next 12 months, we continue to have a robust fundraising pipeline across strategies as well as across geographies. With that, let me turn it over to Rob.
Thanks a lot, Craig. I'll start off with our segment financial results for the quarter. Management fees came in at $480 million. That's up 9% from Q1 and up over 40% from this time last year. The investment periods for Americas XIII and Infra IV both commenced in the quarter. You saw a partial quarter's impact from these funds. Health Care Growth II and European real estate were also additive to management fees in the quarter. Our capital markets business had an excellent quarter with $219 million in fees. Transaction activity here was really diversified. We actually only had one fee event that was larger than $20 million, and 50% of our revenues came from activity outside of the U.S. It was also a strong quarter for our third-party capital markets business with $61 million of revenues. We continue to get really good traction in this part of our business.
Fee-related compensation came in at $170 million, a 22.5% compensation ratio. Our other operating expenses were $115 million, modestly elevated with almost $20 million of placement fees recognized this quarter, given all of our fundraising activities. All of this brings us to record fee-related earnings of $470 million or $0.53 per share for the quarter. That is up 68% year-over-year. Also represents a 62% margin. Turning to realizations. Carried interest came in at just over $600 million, while realized investment income was approximately $370 million, bringing total realization activity to just under $1 billion for the quarter. Realizations span multiple funds, products, and geographies. The diversification of our model really contributes to this broad-based performance. In terms of our expenses, realized performance comp was $413 million, and realized investment comp was $55 million.
On a year-to-date basis, our total compensation margin within our asset management segment, including equity-based comp, is currently 36%. Moving on to our insurance segment. This quarter was the first full quarter of operating earnings from Global Atlantic, which totaled $128 million, largely driven by strong core operating performance, as well as the sale of a strategic equity investment that helped bolster net investment income by $47 million. ROE for the quarter was 17%, or 14%, excluding this variable investment income. Putting it all together, our after-tax distributable earnings came in at $926 million or $1.05 per share. On a year-to-date basis, our after-tax DE is $1.80 per share. These results are up 143% and 98% from the same time last year, really highlighting the momentum that we are seeing across the firm today. Our book value per share came in at $27.03 this quarter.
The embedded gains in our balance sheet are currently $6.6 billion as of June 30th, which is up approximately $1 billion from Q1 and up over $5 billion from the same point last year, despite our high levels of realization activity over the corresponding periods. Our net cash and investments per share increased 12% from March 31st to $17 per share. Turning to our investment performance, which continues to be a real differentiator for us. We saw strong results again this quarter. Our PE portfolio appreciated 9%, while our mature flagships appreciated 13%. Real estate continued to show strength, increasing by 10% for the quarter. Our infrastructure business was relatively flat for the quarter, but continues to perform well overall, up 21% over the last 12 months. Our credit funds are similarly performing well. Leveraged credit and alternative credit were up 2% and 6% in the quarter, respectively.
Shifting to deployment. We had an extremely active quarter with total capital invested of approximately $19 billion. In private markets, deployment was diversified with $7 billion invested quite equally across private equity, infrastructure, and real estate, with the remaining billion in growth and core strategies. In public markets, we deployed over $10 billion across our private credit, dislocation, and direct lending strategies. Despite this record level of deployment, dry powder now stands at $112 billion, which is up 63% from last quarter. Before I hand it off to Scott, I wanted to spend just a minute on our fundraising in Q2. While Craig mentioned that this was a record quarter for us, I think just as important is the quality of the capital that we raised. To give you a few stats, 98% of the capital we raised in Q2 has a contractual life of over eight years.
Once turned on, the fee-paying capital has a blended fee rate of just under 100 basis points. Finally, 88% of the capital is either carry or an incentive fee eligible. What we have accomplished over the last few months is going to have a very meaningful impact on our financial results for several years to come. With that, let me hand it off to Scott.
Thank you, Rob. Thank you everyone for joining our call. As Rob and Craig just explained, we had an exceptional quarter. Investment performance and capital raising are at record levels and broad-based across strategies and geographies. Capital markets had its second-best quarter ever, with significant activity across KKR and third-party business. On the insurance front, the Global Atlantic integration is proceeding well, and we continue to win new blocks alongside organic growth. On top of all of this, we continue to launch new efforts and expand our product offerings, including in the retail market, providing even greater growth opportunities down the road. This quarter shows in outcomes what we discussed at our April Investor Day. We are at an inflection point in a number of our businesses and see multiple ways for the firm to continue to grow AUM, revenues, and profits.
Let me highlight two examples from this quarter. First, we raised $8 billion of third-party capital for core PE, bringing AUM in that strategy to $28 billion. As a reminder, this business was created less than five years ago. Second, we've raised $7 billion for core infrastructure, a strategy that was launched less than a year ago. We are off to a great start here and on our way to being a market leader in this large and growing space. These are just two examples of how we are innovating and creating adjacent strategies to further scale our businesses in a highly efficient fashion. There's a lot of good to talk about this quarter. Within all the good, we are particularly proud of our investment performance. Our flagship private equity funds are up 86% over the last 12 months.
Real assets are up 21%, and alternative credit is up 30%. The combination of this broad-based and strong investment performance, a growing client base across channels, and multiple maturing businesses, plus the launching of new strategies and raising more permanent capital, and Global Atlantic and Capital Market scaling significantly, is incredibly powerful. You saw this power in our Q2 results. The firm is executing at a high level, and we have a lot of road ahead of us. With that, we're happy to take your questions.
Thank you. Ladies and gentlemen, at this time we will be conducting a question-and-answer session. If you would like to ask a question, you may press star one on your telephone keypad. A confirmation tone will indicate your line is on the queue. You may press star two, if you would like to remove your question from the queue. For participants using a speaker equipment, it may be necessary to please pick up your handset before pressing the star key. We ask that you limit yourself to one to question so we make it to everyone's question. Our first question comes from the line of Alex Blostein with Goldman Sachs. Please proceed with your question.
Great. Good morning. Thanks, everybody, for taking the question. Maybe starting with a bit of an obvious fundraising and a management fee question here. Clearly very impressive start to the fundraising cycle, as you mentioned, with $59 billion in the second quarter, and really, I guess, more than halfway to your 2021, 2022 investor day targets. I was hoping with so much momentum in the business, can you give us an update on how much larger you expect the flagship fundraisers to be relative to the first close figures that you mentioned? How should we ultimately think about the $100+ billion target from here and really maybe trying to break down the plus a little bit more? Thanks.
Great. Good morning, Alex. It's Rob. Thanks for the question. Let me just spend a minute on your question as it relates to how we're thinking about fundraising. Maybe take a step back, and as a reminder, in February of this past year, we had introduced FRE per share guidance. We said at the time that we saw a clear path to comfortably exceeding $2 per share of FRE next year. At our investor day in April, you referenced the $100+ billion figure. We thought it'd be helpful for our investors to understand some of the building blocks behind that FRE growth. We noted that we expected to raise north of $100 billion of capital over the next couple of years.
Part of the reason why we decided to give that statistic was that 2020 in itself was a record fundraising year at $44 billion. What we wanted to ensure people took away is that we didn't think that that was a peak result for us. As it relates to this quarter, the fundraising that we announced exceeded our expectations. What we saw this quarter was more than just the pulling forward, I think, of fundraising expected in future quarters. Across several strategies, we really have exceeded the expectations that we set for ourselves at the beginning of the year.
I think it is fair to say that we feel a lot better about our outlook for new capital raised over the next couple of years, and that we'll be certainly north of that $100+ billion number that we put out there a couple of months ago. I also think it's fair to say that we feel even better about achieving or exceeding the FRE targets that we put out at the beginning of this year, given all the momentum that we have across our business today.
Our next question comes from the line of Glenn Schorr with Evercore ISI. Please proceed with your question.
Hi. Thanks very much. I'm curious, with all the growth across both core PE and core infra that you just noted, I wonder what you could tell us about the LP base and how much overlap there is with your opportunistic funds. Meaning, are the same clients that buy into the opportunistic funds buying into core PE, or is this an expanding client base?
Hey, Glenn, it's Craig. Why don't I start on that? I think you're right. It is interesting on the topic of core more broadly. When you look at core PE, core infra, core real estate, we now have around $37 billion of AUM across these strategies, we're seeing real interests. Longer dated, lower risk reward profile compared to opportunistic, importantly those that have a yield that's attached. We think the end markets are massive, really are for these core strategies. Huge opportunity for us. Really pleased with the first steps that you've seen. I think in terms of those first steps, we have seen the bigger investors, so I'd say sovereign wealth funds, pension plans, insurance companies, they've been particularly active as the long-dated nature of the investments in these strategies is in line with their long-dated liabilities.
I think importantly, on the last part of your question, they view these strategies as a complement to the regular way opportunistic strategies, not in lieu of these strategies. I think in the long term, or I should not even say the long term, look, you should expect us to explore the best ways for us to package and bring these type of products also to the retail market, as again, the end markets here are massive.
The only thing I'd add, Glenn, its Scott, is if you look at by dollars, to answer your question, there's not that much overlap between core and our opportunistic vehicles. There's some, but we're finding that these strategies are allowing us to expand our investor base.
Our next question comes from the line of William Katz with Citi. Please proceed with your question.
Okay. Thank you very much. I'm going to sort of try to squeeze a two-part question in, I'm sorry to cheat the rules a little bit. First, just sort of tying back to the FRE discussion, you've also sort of laid out that you felt like you could get the $4-$5 of DE somewhere between 2023 and 2024. Obviously, if you annualize this quarter, you're already there. Just sort of questioning how to think about that from here. Secondly, a broader question for you. It seems like there is a very fast land grab going on in the retail channel. You seem to have terrific momentum.
Is there any risk of or opportunity here where scale will win out quicker, such that if I'm a retail distributor, they may only be willing to work with five or 10 players including KKR and some of the branded players? Wondering how the dialogue's going on that score. Thank you.
Hey, William Katz. It's Rob. I'll take the first part of the question around the DE guidance that we put out a couple of months ago. We don't have any updated guidance for this call. Obviously, we'll consider providing updated guidance in the future, but not for today. I would say that I think it's very fair to acknowledge that we are ahead of where we thought we would be. We are well ahead of expectation across most of our fundraising activity. The assets that we manage on behalf of Global Atlantic Financial Group are ahead of expectations. The momentum in our capital markets business is really good right now, maybe as good as it's ever been. We've got a lot of momentum across our performance which has generated a lot of embedded gains that sit across our carried interest in our balance sheet.
We feel really good about the potential to drive meaningful additional revenue growth from here as well as profitability growth. The one other thing I would say, Bill, which is tangential, I suppose, to your question, that we often get is where we are from a monetization perspective in Q3. We already have really good visibility here into meaningful revenue and monetization activity. As of right now, we have line of sight of approximately $650+ million of performance and investment income. As a reminder, this is from deals that are already closed or have been signed up and we expect to close in the third quarter. In terms of the split, which I know is important from a comp ratio perspective, probably around 50% carry right now and 50% weighted towards investment income.
The last thing I'd say here is that I'd underscore that all of these are really approximations at this stage. This is our best view right now from all the identified deal activity we expect to close in the upcoming quarter.
Bill, on the second part of your question on the retail channel. Look, we're really encouraged. We've been investing aggressively in that space, and we've doubled the size of the team in the last 12 months, and we're continuing to invest in that build-out.
Part of the reason we're encouraged is even as we're doing that build-out in the U.S., we're also investing to build out Europe and Asia, and we're seeing significant engagement across private wealth and retail. We're already at mid-teens% of our fundraising coming from that channel. As an example, in the second quarter, about 14% of the money we raised was actually from retail, and we don't think we're anywhere near our potential yet. There's a lot of opportunity ahead of us. In terms of the question about land grab, we're finding that we have an engaged set of partners as we continue to build out distribution in this space. We're already on a number of platforms, adding products to those, and then developing new relationships all around the world. We haven't run into any resistance.
If anything, we're finding a significant and growing interest in all things alternatives, and a lot of interest in the registered funds in particular.
Our next question comes from the line of Robert Lee with KBW. Please proceed with your question.
Great. Good morning. Thanks for taking my question. I am just curious, with fundraising going so well ahead of target and fund sizes increasing substantially, maybe even more than you originally anticipated, how is this changing your commitments to the funds? Are you reducing meaningfully how much you are committing in order to maintain capacity for third-party investors? How is this shaping how you think of your own capital commitments?
Yeah. Listen, we're obviously very meaningful investors in our funds. We like that. We like that positioning on our balance sheet. When you look at our balance sheet capital relative to our fund capital, it's a fairly small percentage, and so it really doesn't eat into capacity, and it hasn't impacted in a material way how we've thought about committing capital to our strategies, Rob. It's a good question. We do separate out those two things.
Our next question comes from the line of Patrick Davitt with Autonomous Research. Please proceed with your question.
Hey, guys. Good morning. You mentioned capital markets didn't really have any of the chunky numbers we're used to seeing running at a little over $200 million a quarter. If we assume deal activity remains this high, I think you do have a couple of those chunky ones coming through in the second half that this kind of $200+ million is kind of a pretty good run rate, assuming activity levels stay this high.
Hey, Patrick, it's Rob. The way we think about our capital markets business really isn't quarter- to- quarter. You've heard from us quite a bit, especially more recently, that we see a lot of growth in that business, both secularly, and then ability for us to be able to take market share on a global basis. We really think about that from an annual perspective and over a multi-year period of time. I think as you look at the first half of 2021, roughly $330 million of fees, I think our LTMs about $680 million in our capital markets business. With a healthy amount of deal activity around the world, we think those are the types of numbers that hopefully should be achievable for us.
Off of that base, our expectation over the next number of years is we should really be able to scale that business going forward.
Our next question comes from the line of Chris Kotowski with Oppenheimer. Please proceed with your question.
Yeah, good morning. Thanks for taking my question. You flagged the three funds, North America XIII, Global Infra IV, and Health Care II, as having been turned on in the quarter. I wonder if you could talk about how much of an impact that had on base management fees. I guess the second part of it is a little I'm surprised that you would have turned the funds on so early in that, like Americas XII and Infra III both still have around $4 billion of uncalled commitments in them. I wonder if you can flesh all those things out a bit.
Yeah. Hey, Chris. It's Rob. A couple of things. When you look at our investment vehicle summary, I guess you're looking at pages 20 and 21 of our earnings release. The uncalled commitments there represent what's uncalled from the fund. What they exclude is the amount of committed capital that we have to different strategies there that has not been called yet, as well as reserves in those funds. As an example, our KKR Americas XII fund on an adjusted basis would be closer to $1.3 billion. I think that would be much more in line with how you would think about when to turn on that fund. As it relates to the first part of your question on management fees, you're right. Those funds turned on, I think, about 2/3 of the way, the big ones, through the quarter.
We'd expect a little bit of an additional ramp-up in Q3 as those funds get going, and we turn to post-investment period on the predecessor funds as they run off. I think a management fee number there that could be in the range of $40+ million for the third quarter, more of on a run-rate basis, I think is something that would be an approximation that I think would be a reasonable one at this stage.
As a reminder, it is star one to ask a question. Our next question comes from the line of Arnaud Giblat with Exane BNP. Please proceed with your question.
Yeah, good morning. Thanks for taking my question. I was wondering if you could give us an update on how you view opportunities to deploy capital, specifically, what target returns are being discussed with investors? Are these the same targeted returns that you used to have, or have they been scaled back given current market levels?
Sure. Arnaud, it's Craig. Why don't I start? I'll let Scott give an update in terms of overall target returns. I'm glad you asked about deployment because honestly, given all we've had to go through today, we probably haven't talked about deployment in as much detail as we should. I think the main takeaway is we're continuing to deploy actively. In terms of private markets first, we've continued to invest meaningfully. First half deployment was a little over $12 billion. LTM deployment's a little over $24 billion. Again, that pace has been very healthy. What you're really seeing there is diversification. Rob mentioned this in our prepared remarks. Deployment in Q2 was between $2.3 billion and $2.5 billion individually across all of private equity, infrastructure, and real estate. We've had a really nice balance with the growth strategies in core making up that incremental piece.
I think in terms of themes, you're seeing investments in really good companies with strong growth prospects. I think overall at the moment, there's probably more dislocation in Asia that's leading to better opportunities for us in that region. In public markets, what you're really seeing is the growth in the overall footprint of the firm. AUM in our credit business has increased from a little over $70 billion a year ago to $170 as of June 30. You're seeing a meaningful increase in deployment in public markets, just recognizing the dramatic increase in the footprint of the firm. In terms of the $10 billion this quarter, again, that was actively deployed across a number of strategies, direct lending, opportunistic credit, asset-based finance, et cetera.
Yeah. Arnaud, on your question around targeted returns, the short answer is that there hasn't really been any change in how we think about it. We talked about this a bit on prior calls. One of the things we've been very focused on the last several years is having the firm get behind some themes that we think will benefit over the next several years. Frankly, some of those themes have been accelerated by virtue of what we all just are going through with COVID. In private equity, if you look at where our deployment has been as an example, a lot of deployment in digital and technology, areas like health and wellness, cybersecurity, nesting, and series of themes like those. Infrastructure, again, fiber and telecom would be a couple of themes we've been investing behind in renewables. In real estate, industrial properties, multifamily.
In credit, asset-based finance as the banks have pulled back, and housing. Then Global Atlantic is obviously a very big investment behind the thematic of savings, tax deferral, the aging population, and people looking to manage their own retirement wealth. So what we're finding is if you get behind these big themes, there's a big opportunity to generate outsized returns, and there's a lot of dispersion in the market. There's going to be some of these areas and themes that we think will be big winners. We're getting behind those. I think part of the reason you've seen our returns be so strong is we've, in effect, been overweight a lot of those sectors that are benefiting and those themes that are working, and underweight others.
We think by continuing to pursue that effort, we've got an opportunity to continue to generate outsized returns, and our targets haven't really changed.
Our next question comes from the line of Michael Cyprys with Morgan Stanley. Please proceed with your question.
Hey, good morning. Thanks for taking the question. Wanted to circle back to core PE and core infrastructure. Appreciate those are longer-dated strategies with lower return targets. I was just hoping you can elaborate a bit on the platform that you've built out there, the investment strategy more broadly. What sort of deals can make sense? Maybe you can remind us how the economics work for KKR, and what's your sense on the timeframe for putting all that capital to work?
Mike, it's Craig. Why don't I start there? Infrastructure is an interesting place to begin. At our investor day, we walked through infrastructure really as a case study in terms of how we look to build an investment platform. That begins with strong performance of flagship strategies. There's a focus on scaling those flagships and innovating. That innovation can happen geographically. You've seen that with Asia Infra, can also come through adjacent strategies, and you've seen that through core. That's really where we are today. We have a built-out infra franchise with three distinct market segments. Our global infra funds series, Asia infra funds series, and diversified core. In terms of core and the focus on those investments, core infra is really targeting more mature cash generative assets with a focus on long-term predictable cash flows.
We're looking for simplicity and low execution risk, all in that open-ended perpetual vehicle. Our focus here is we want to buy simplicity and hold simplicity. That's really the focus. In terms of core private equity, that's really an example of innovation where we can't find a home for great investment opportunities. This, again, is a long-duration strategy where we expect to hold investments in compound value for 10-15 years. As you noted, again, the risk reward is different than our opportunistic PE funds. We're looking for a mid-teens IRR, businesses with less disruption risk, very good cash flows, often consolidation opportunities in fragmented sectors. Again, we've been at this business longer at this point. We have what we think is a really incredible portfolio of companies.
The gross IRR year to date since inception is 27%. I think there's a final point as it relates to core in the business model, because given the participation on our balance sheet, core PE has really contributed to the compounding of our book value. When you look at the core line on page 14 of our press release, you see $4.2 billion of fair value as part of the $17.5 billion of investments. That $4.2 billion has just under $2 billion of costs associated with it. We have over $2 billion of embedded gains on our balance sheet. As shareholders, we're participating in the economics from the third-party capital management fees and carry with performance over time. In addition, that compounding aspect is an additional powerful way that we also can participate in the success here.
Hey, Michael, it's Scott. Just a couple of things I'd add. One, it's important to understand this is deal flow we were already seeing. To Craig's point, think lower risk, longer duration opportunities that we really like the risk-reward, but did not fit into opportunistic vehicles, but were investments we like nonetheless. We now have homes for those investments. We did not before. Because of the fact that this was deal flow we were already seeing, it was being sourced by our existing teams. We have not had to build new teams to actually prosecute these strategies. The existing teams are actually just sourcing these investments. If they don't fit in the opportunistic fund, then they can be considered for core. It's been a highly profitable, incremental source of AUM and fees for us.
It's something that we're really monetizing deal flow that was already here. In terms of the deployment period, we have been very actively deploying that. I think our expectation is for core PE, that'll probably get deployed over a three to five-year period. For core infrastructure, with this first pool of capital, we're operating at a current run rate that would be faster than that, and we'll continue to add capital to that strategy as well over time. Rob, why don't you pick up on economics?
Yes, Mike, the management fees on both these products get paid when the capital is invested. This capital is largely in AUM right now, and over time, it'll gravitate towards fee-paying AUM. The capital across both these strategies are carry and incentive-fee eligible, and so we think will be a contributor to performance revenue over the long term.
Mike, it's Craig. One final point is kind of an interesting statistic, and this actually ties into Glenn's question earlier. It's interesting when you look at core infra. Of the $7 billion of capital that's been raised, over 40% of the commitments have come from LPs that are new to KKR. In terms of how these strategies are helping us really broaden the LP base, again, it's an interesting statistic.
Our next question comes from the line of Robert Lee with KBW. Please proceed with your question.
Thanks for taking my follow-up. I guess, just on Global Atlantic, is it possible just to get, number one, a sense of what their kind of regular flow is? If we think about it outside of reinsurance transactions, what you're seeing as kind of their quarter-to-quarter regular flow if they don't do a transaction? Maybe just update us on the amount of capital that they've got available once they get through the $10 billion of deals closing this quarter.
Great, Rob. I'll take that. It's Scott. Look, in terms of the way to think about it, organic away from a block activity. A couple things I'd point to. One, remember, they have a significant distribution presence, and they're raising money in the individual sector. So if you want to think about that as $8 billion-$10 billion of annual flow, give or take, that's kind of a good starting number to work with. On the institutional side, I know the block activity is the stuff that gets the press release and gets more focus and attention. There's also a number of other things that we do there. We have flow reinsurance arrangements with a number of different counterparties. There's pension risk transfer activity, which is incredibly active and is getting more active, especially this year. We're also active in the funding agreement market.
There's a lot of ways to grow on the institutional side as well that is significant, and those are also billion-dollar-plus opportunities individually. We see that as another way to grow. In terms of the answer to the question, you could think $8-$10 + several billion on top of that from more of the kind of flow-related institutional business away from blocks. In terms of the capital available question, as a reminder, when we actually closed the transaction earlier this year, we raised an incremental $250 million of primary capital. There is runoff in this business as well. We're generating new capital by virtue of our earnings. We're freeing up capital with some of the runoff, and we're replacing that with all the aforementioned, plus all the block activity. If the company needs more capital, we're highly confident we'll be able to access it.
Our next question comes from the line of Alex Blostein with Goldman Sachs. Please proceed with your question.
Hey, guys. Thanks for taking the follow-up question here. I had another sort of question around retail and specifically related to KREST. Looks like AUM there is approaching about $700 million. Not huge in the context, obviously, of KKR as a whole, but it's an important driver potentially as you think about the sort of the affluent and the mass affluent part of the retail market. Can you maybe walk us through your sort of distributions for KREST, specifically how many platforms and sort of the type of platforms that are contributing to flows here, just thinking through kind of wirehouse, independent broker-dealers, et cetera. Really try to understand any distinct advantages of having something like this in a 40 Act wrapper that sort of really resonates with distribution partners.
I guess lastly here, I think, Craig, you mentioned that there might be other opportunities to bring additional retail product to market, maybe in core. Curious if we get some early kind of thoughts on that. Thanks.
Alex, why don't I begin? Just for those of you less familiar, KREST is an acronym for KKR Real Estate Select Trust. It's a continuously offered, registered closed-end fund with REIT taxation that was created for individual investors, and it features daily pricing and subscriptions via a ticker. We're at the very beginning of KREST's evolution, which is exciting for us. We began raising capital on two platforms only in June, and over time, we do expect to see an expansion across many platforms globally. Alex, we don't have a whole ton of details. I think the main takeaways for you are really three-fold. One, the size of the end markets here are massive. Two, it's a big opportunity for us.
Three, we're really pleased with our first steps, and we'll keep you abreast as we move forward from here, both as it relates to this, in addition to as other products and strategies are launched, again, through those products tailored towards the retail market.
Our next question comes from the line of William Katz with Citi. Please proceed with your question.
Okay. Thanks also for taking the extra questions. A two-parter again. Maybe one for Rob. As you think about the FRE margin, 62% this quarter, and it was weighed down a little bit by placement fees and obviously turning on some of the bigger funds. Where do we go from here? Maybe stepping back, given what seems to be a step function of earnings power, any thoughts on dividend policy? Thank you.
Yeah, sure. Bill, thanks for the question. We've signaled in the past that we expect to continue to make some near-term investments here across distribution and technology. Even with those investments, we do see a medium opportunity to drive scale efficiencies in our operating expenses. We think that's going to yield margin expansion over time. We've been operating generally in the low -60s. We do see a pathway over time to take that up to the mid-60s. We're going to work through some of that additional investment over the near term that we flagged that we think is going to pay dividends for us in the long term. Your question as it relates to dividend policy. Nothing's changed as it relates to how we think about returning capital to shareholders.
Our policy and how we think about that has been consistent for a number of years now, and we would expect it to continue to be consistent. Just to say we'll evaluate it annually. We'll do that at the beginning of the year like we have done in past years. Our expectation, as we have done in past years, is that we're going to look to modestly increase our dividend on an annual basis. That should be the expectation going forward.
Our next question comes from the line of Michael Cyprys with Morgan Stanley. Please proceed with your question.
Thanks for taking the follow-up here. More of a follow-up question, I guess, for Rob. If you could just maybe help us out with the deployment and realizations off the balance sheet in the quarter, please. Thanks.
Sure. The deployment was $800 million off the balance sheet in the quarter. The realizations were just above that at $900 million. On an LTM basis, those numbers, Michael, are 3.1 of deployment and 2.6 of realization.
This concludes our question and answer session. I'd like to hand it back to Mr. Larson for closing remarks.
Thank you everybody for your time this morning. We look forward to chatting with you again after next quarter's results. Anything in the interim, please, of course, feel free to reach out directly. Thank you once again.