Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Q3 2023 Earnings Presentation
24 slides from Kkr Real Estate Finance Trust's earnings presentation, Oct 24, 2023
Slide 1: Third Quarter 2023 Supplemental Information
Third Quarter 2023 Supplemental Information OCTOBER 23, 2023
Slide 2: Legal Disclosures
Legal Disclosures This presentation has been prepared for KKR Real Estate Finance Trust Inc. (NYSE: KREF) for the benefit of its stockholders. This presentation is solely for informational purposes in connection with evaluating the business, operations and financial results of KKR Real Estate Financ
Slide 3: KKR Real Estate Finance Trust Inc. Overview
KKR Real Estate Finance Trust Inc. Overview KREF’s Manager Fully Best In Class Portfolio Conservative Balance Sheet Integrated with KKR $7.9 B $8.9 B 14% Investment Portfolio Financing Capacity KKR Ownership in KREF 100% 55% 76% $519 B $25 B (2) Senior Loans Multifamily & Fully Non-Mark-to-Market Gl
Slide 4: Third Quarter 2023 Highlights
Third Quarter 2023 Highlights • 3Q Net Income(1) of $0.31 per diluted share (includes a CECL provision of $9 million, or ($0.13) per diluted share) • 3Q Distributable Earnings(2) of $0.25 per diluted share Financials (includes a write-off of $15 million, or ($0.22) per diluted share) • Book Value pe
Slide 5: 3Q'23 Financial Summary
3Q'23 Financial Summary Income Statement Balance Sheet ($ in Millions) 3Q'23 ($ in Millions) 3Q'23 (2) Net Interest Income $44.6 Total Portfolio $7,869.9 Other Income 5.4 Term Credit Facilities 1,520.5 Term Lending Agreements 1,406.0 Operating Expenses (14.2) Secured Term Loan 343.9 Provision for Cr
Slide 6: Recent Operating Performance
Recent Operating Performance Net Income and Distributable Earnings Dividends and Book Value Per Share ($ in Millions) 3Q'22 2Q'23 3Q'23 3Q'22 2Q'23 3Q'23 Net income (loss)(1): Dividend per share: ($48.4) ($25.8) $21.4 $0.43 $0.43 $0.43 Distributable earnings(2): Dividend yield on book value per shar
Slide 7: Last Twelve Months Loan Activity
Last Twelve Months Loan Activity Portfolio Funding Activity – Outstanding Principal(1) ($ in Millions) Future Funding Obligations(2) $9,375 $9,460 $9,381 $9,071 $8,882 $1,649 $1,544 $1,347 $1,199 $1,012 $424 $339 $204 $87 $177 $165 $152 $209 $15 $25 $7,726 $7,726 $7,726 $7,726 $7,916 $7,916 $8,034 $
Slide 8: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio Growth Investment Type(2) Interest Rate Type ($ in Millions) $7,870 Fixed $7,726 1% $5,826 $5,221 Senior $5,035 Loans 100% Floating 99% Property Type 3Q'19 3Q'20 3Q'21 3Q'22 3Q'23 (4) Other (1) Hospitality Geography 5% 6% Life Science (3) 9% Industr
Slide 9: Portfolio Credit Quality Overview
Portfolio Credit Quality Overview Collected 96% of interest payments due on loan portfolio Loan-to-Value(1)(2) Risk Rating Distribution Loan 0 1 62 5 3 Count 83% 29% 25% 21% 20% 2Q '23 5% 10% <1% 7% 0% 0 - 60% 60 - 65% 65 - 70% 70 - 75% 75 - 80% 1 2 3 4 5 (3) (3) Weighted Average LTV : 65% Weighted
Slide 10: Case Studies: Watch List Loans (Risk Rating 5)
Case Studies: Watch List Loans (Risk Rating 5) Investment Mountain View Office Minneapolis Office Philadelphia Office Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan(2) Floating-Rate Senior Loan Investment Date July 2021 November 2017 April 2019 Collateral Five Class-A Office Buildings
Slide 11: Case Studies: Watch List Loans (Risk Rating 4)
Case Studies: Watch List Loans (Risk Rating 4) Investment Washington, D.C. Office Boston Office Washington, D.C. Office West Hollywood Multifamily Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date November 2021 February
Slide 12: Financing Overview: 76% Non-Mark-To-Market
Financing Overview: 76% Non-Mark-To-Market Diversified financing sources totaling $8.9 billion with $2.7 billion of undrawn capacity Summary of Outstanding Financing Leverage Ratios Maximum Outstanding Weighted Avg. Advance Non- ($ in Millions) Capacity Face Amount Coupon(1) Rate MTM (2) Term Credit
Slide 13: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Total or Counterparty Weighted Average Drawn $674 $506 $340 $1,521 Capacity $1,000 $600 $400 $2,000 Collateral: Loans / Principal 9 Loans / $989 11 Loans / $758 8 Loans / $609 28 Loans / $2,356 Balance Final Stated Maturity(1) September 2026
Slide 14: Liquidity Overview
Liquidity Overview In addition to the available liquidity below, KREF had $23 million of unencumbered senior loans that can be pledged to financing facilities subject to lender approval as of September 30, 2023 Sources of Available Liquidity (4) ($ in Millions) $800 $700 $30 $78 $600 $500 $400 $500
Slide 15: Portfolio Positioned for Rate Environment
Portfolio Positioned for Rate Environment 99% floating-rate loan portfolio indexed to Term SOFR continues to benefit from a rising rate environment Annual Net Interest Income Per Share Sensitivity to Change in Market Rates(1) Term SOFR = 5.32% ($ Impact Per Share) As of September 30, 2023 $0.15 $0.1
Slide 16: Appendix
Appendix KREF
Slide 17: Portfolio Details
Portfolio Details ($ in Millions) Investment Total Whole Committed Current Net Max Remaining Loan Per Risk # Investment(1) Location Property Type Principal Principal Coupon(4)(5) LTV(4)(8) Date Loan(2) Equity(3) Term (Yrs)(4)(6) SF / Unit / Key(7) Rating Amount(2) Amount (9) Senior Loans 1 Senior Lo
Slide 18: Portfolio Details
Portfolio Details ($ in Millions) Investment Total Whole Committed Current Net Max Remaining Loan Per Risk # Investment(1) Location Property Type Principal Principal Coupon(4)(5) LTV(4)(8) Date Loan(2) Equity(3) Term (Yrs)(4)(6) SF / Unit / Key(7) Rating Amount(2) Amount (9) Senior Loans 51 Senior L
Slide 19: Portfolio Details
Portfolio Details (1) Our total portfolio represents the current principal amount on senior and mezzanine loans, net equity in RECOP I, which holds CMBS B-Piece investments, and net carrying value of our sole REO investment. Excludes one mezzanine loan with an outstanding principal of $5.5 million t
Slide 20: Fully Extended Loan Maturities
Fully Extended Loan Maturities Fully extended weighted average loan maturity of 2.8 years Fully Extended Loan Maturities ($ in Millions) $3,500 $3,145 $3,000 $2,893 $2,500 $2,000 $1,500 $1,000 $832 $500 $347 $286 $250 $0 2023 2024 2025 2026 2027 2028 Note: Excludes CMBS B-Pieces held through an equi
Slide 21: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) September 30, 2023 December 31, 2022 Assets Cash and cash equivalents(1) $ 108,038 $ 239,791 Commercial real estate loans, held-for-investment 7,528,451 7,494,138 Less: Allowance for credit losses (218,992) (106,974) Commer
Slide 22: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended Nine Months Ended September 30, 2023 June 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022 Net Interest Income Interest income $ 163,229 $ 159,629 $ 114,627 $ 475,388 $ 278,460 Inte
Slide 23: Reconciliation of GAAP Net Income (Loss) to Distributable Earnings
Reconciliation of GAAP Net Income (Loss) to Distributable Earnings (in thousands - except share and per share data) Three Months Ended September 30, Per Diluted Per Diluted September 30, Per Diluted 2023 Share(1) June 30, 2023 Share(1) 2022 Share(1) Net Income (Loss) Attributable to Common Stockhold
Slide 24: Key Definitions
Key Definitions “Distributable Earnings": Commencing for all periods ending on or after December 31, 2020, the Company has elected to present Distributable Earnings, a measure that is not prepared in accordance with GAAP, as a supplemental basis to KREF’s net income as determined in accordance with
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