Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Q2 2022 Earnings Presentation
24 slides from Kkr Real Estate Finance Trust's earnings presentation, Jul 26, 2022
Slide 1: Second Quarter 2022 Supplemental Information
SECOND QUARTER 2022 SUPPLEMENTAL INFORMATION JULY 25, 2022
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 Best In Class Conservative KREF’s Manager Fully Portfolio Balance Sheet Integrated with KKR $7.9 B $8.5 B 14% Investment Portfolio Financing Capacity KKR Ownership in KREF 99% 58% 77% $479 B $25 B Senior Loans Multifamily & Fully Non-Mark-to-Market(2) Glob
Slide 4: Second Quarter 2022 Highlights
Second Quarter 2022 Highlights • 2Q Net income(1) of $0.28 per diluted share and Distributable Earnings(2) of $0.48 per diluted share Financials • Book Value per Common Share (“BVPS”) of $19.36 per share, compared to $19.46 per share as of 1Q'22 • Book Value inclusive of a $34 million, or ($0.49) pe
Slide 5: 2Q'22 Financial Summary
2Q'22 Financial Summary Income Statement Balance Sheet ($ in Millions) 2Q'22 ($ in Millions) 2Q'22 Net Interest Income $45.9 Total Portfolio(2) $7,887.8 Other Income 4.1 Term Credit Facilities 1,387.2 Operating Expenses (13.2) Term Lending Agreements 1,358.8 Provision for Credit Losses (11.8) Asset
Slide 6: Recent Operating Performance
Recent Operating Performance Net Income and Distributable Earnings Dividends and Book Value Per Share ($ in Millions) 2Q'21 1Q'22 2Q'22 2Q'21 1Q'22 2Q'22 Net income(1): Dividend per share: $29.3 $29.8 $19.4 $0.43 $0.43 $0.43 Distributable earnings(2): Dividend yield on book value per share: $30.4 $2
Slide 7: Last Twelve Months Loan Activity
Last Twelve Months Loan Activity Portfolio Funding Activity – Outstanding Principal(1) ($ in Millions) Future Funding Obligations(2) $9,300 $8,703 $8,160 $1,412 $1,449 $444 $1,078 $7,051 $1,368 $282 $680 $33 $744 $6,466 $1,679 $935 $1,225 $848 $1,143 $7,888 $7,888 $7,254 $7,254 $7,254 $6,825 $6,792
Slide 8: 2Q'22 Loan Originations – Select Case Studies
2Q'22 Loan Originations – Select Case Studies Investment Western U.S. Industrial National Industrial San Antonio Multifamily Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Loan Size $252.3 million(1) $187.8 million(2) $86.3 million(3) Location Western U.S. Na
Slide 9: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio Growth Investment Type(2) Interest Rate Type Non-Senior 100% Floating ($ in Millions) 1% $7,888 SOFR 26% $5,257 $5,618 $4,952 LIBOR Senior 74% Loans 99% Property Type 2Q'19 2Q'20 2Q'21 2Q'22 Condo (Residential) Student Housing 3% 2% Single Family Re
Slide 10: Portfolio Credit Quality Remains Strong
Portfolio Credit Quality Remains Strong Collected 100% of interest payments due on loan portfolio Loan-to-Value(1,2) Risk Rating Distribution (% of total loan portfolio) (% of loan portfolio) Weighted Average Weighted Average 1Q'22 LTV(3): 67% 1Q'22 Risk Rating(3): 2.9 86% 29% 30% 16% 18% 3% 6% 5% 0
Slide 11: Case Studies: Watch List Loans (Risk Rating 4 or 5)
Case Studies: Watch List Loans (Risk Rating 4 or 5) Investment Philadelphia Office Philadelphia Office Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date April 2019 June 2018 Collateral 4-Building, 711k RSF Office Portfolio 2-Building, 978k RSF Office Portfolio Loan Purpos
Slide 12: Financing Overview: 77% Non-Mark-To-Market
Financing Overview: 77% Non-Mark-To-Market Diversified financing sources totaling $8.5 billion with $2.5 billion of undrawn capacity Summary of Outstanding Financing Leverage Ratios Maximum Outstanding Weighted Advance Non- ($ in Millions) Capacity Face Amount Avg. Coupon(1) Rate MTM (2) Term Credit
Slide 13: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Counterparty Total / Weighted Average Drawn $690 $573 $124 $1,387 Capacity $1,000 $600 $240 $1,840 Collateral: Loans / 11 Loans / $936 11 Loans / $778 7 Loans / $219 29 Loans / $1,932 Principal Balance Final Stated Maturity(1) September 2026
Slide 14: Liquidity Overview
Liquidity Overview In addition to the available liquidity below, KREF had $416 million of unencumbered senior loans that can be pledged to financing facilities subject to lender approval as of June 30, 2022 Sources of Available Liquidity ($ in Millions) $800 $790 $62 $700 $600 $500 $610 $400 $300 $2
Slide 15: Portfolio Positioned for Higher Rate Environment
Portfolio Positioned for Higher Rate Environment Portfolio rotated out of higher rate-floor loans positioning KREF to benefit from a rising rate environment 100% floating-rate loan portfolio; 74% indexed to one-month LIBOR and 26% to Term SOFR Annual Net Interest Income Per Share Sensitivity to Chan
Slide 16: Appendix
Appendix KREF
Slide 17: Portfolio Details
Portfolio Details ($ in Millions) Committed Investment Total Whole Current Net Future Max Remaining Loan Per Risk # Investment Location Property Type Principal Coupon(5)(6) LTV(5)(9) Date Loan(2) Principal Amount Equity(3) Funding(4) Term (Yrs)(5)(7) SF / Unit / Key(8) Rating Amount(2) Senior Loans(
Slide 18: Portfolio Details
Portfolio Details ($ in Millions) Committed Investment Total Whole Current Net Future Max Remaining Loan Per Risk # Investment Location Property Type Principal Coupon(5)(6) LTV(5)(9) Date Loan(2) Principal Amount Equity(3) Funding(4) Term (Yrs)(5)(7) SF / Unit / Key(8) Rating Amount(2) Senior Loans(
Slide 19: Portfolio Details
Portfolio Details (1) Senior loans include senior mortgages and similar credit quality investments, including junior participations in our originated senior loans for which we have syndicated the senior participations and retained the junior participations for our portfolio and excludes vertical loa
Slide 20: Fully Extended Loan Maturities
Fully Extended Loan Maturities Fully extended weighted average loan maturity of 3.6 years(1) Fully Extended Loan Maturities(1) ($ in Millions) $3,500 $3,000 $2,895 $2,500 $2,416 $2,000 $1,500 $1,007 $1,000 $606 $571 $500 $220 $58 $0 2022 2023 2024 2025 2026 2027 2028 (1) Excludes RECOP I CMBS B-Piec
Slide 21: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) June 30, 2022 December 31, 2021 Assets Cash and cash equivalents (1) $ 118,020 $ 271,487 Commercial real estate loans, held-for-investment 7,473,101 6,316,733 Less: Allowance for credit losses (31,529) (22,244) Commercial r
Slide 22: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended Six Months Ended June 30, 2022 March 31, 2022 June 30, 2021 June 30, 2022 June 30, 2021 Net Interest Income Interest income $ 90,603 $ 73,230 $ 67,149 $ 163,833 $ 131,915 Interest expense 44,733 32,
Slide 23: Reconciliation of GAAP Net Income to Distributable Earnings
Reconciliation of GAAP Net Income to Distributable Earnings (in thousands - except share and per share data) Three Months Ended Per Diluted Per Diluted Per Diluted June 30, 2022 Share (3) March 31, 2022 Share (3) June 30, 2021 Share (3) Net Income (Loss) Attributable to Common Stockholders $ 19,394
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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