Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Q3 2022 Earnings Presentation
25 slides from Kkr Real Estate Finance Trust's earnings presentation, Oct 25, 2022
Slide 1: Third Quarter 2022 Supplemental Information
THIRD QUARTER 2022 SUPPLEMENTAL INFORMATION OCTOBER 24, 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 $7.7 B $9.0 B 14% Investment Portfolio Financing Capacity KKR Ownership in KREF 99% 56% 76% $491 B $24 B Senior Loans Multifamily & Fully Non-Mark-to-Market(2) Glob
Slide 4: Third Quarter 2022 Highlights
Third Quarter 2022 Highlights • 3Q Net Loss(1) of ($0.70) per diluted share, which includes an unrealized CECL provision of $81 million, or ($1.16) per diluted share; and 3Q Distributable Earnings(2) of $0.50 per diluted share • Financials The increase in the CECL allowance was primarily due to heig
Slide 5: 3Q'22 Financial Summary
3Q'22 Financial Summary Income Statement Balance Sheet ($ in Millions) 3Q'22 ($ in Millions) 3Q'22 Net Interest Income $47.3 Total Portfolio(2) $7,726.2 Other Income 3.8 Term Credit Facilities 1,423.4 Operating Expenses (13.5) Term Lending Agreements 1,342.6 Provision for Credit Losses (80.6) Asset
Slide 6: Recent Operating Performance
Recent Operating Performance Net Income and Distributable Earnings Dividends and Book Value Per Share ($ in Millions) 3Q'21 2Q'22 3Q'22 3Q'21 2Q'22 3Q'22 Net income (loss)(1): Dividend per share: $32.0 $19.4 ($48.4) $0.43 $0.43 $0.43 Distributable earnings(2): Dividend yield on book value per share:
Slide 7: Last Twelve Months Loan Activity
Last Twelve Months Loan Activity Portfolio Funding Activity – Outstanding Principal(1) ($ in Millions) Future Funding Obligations(2) $9,300 $9,375 $8,703 $8,160 $1,412 $1,649 $1,449 $444 $225 $1,078 $387 $7,051 $1,368 $282 $680 $33 $744 $1,679 $1,225 $7,888 $7,888 $7,888 $7,726 $7,726 $7,254 $7,254
Slide 8: 3Q'22 Loan Originations – Select Case Studies
3Q'22 Loan Originations – Select Case Studies Investment Boston Life Science San Francisco Area Life Science Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Loan Size $313 million $145 million(1) Location Boston, MA Redwood City, CA 424k RSF Class A Four-Building, 656k SF Collateral Li
Slide 9: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio Growth Investment Type(2) Interest Rate Type ($ in Millions) Non-Senior 100% Floating 1% $7,726 SOFR $5,826 36% $5,221 $5,035 LIBOR Senior 64% Loans 99% Property Type 3Q'19 3Q'20 3Q'21 3Q'22 Hospitality Other(4) 5% 6% Geography(1) Life Science (3) 7
Slide 10: Portfolio Credit Quality Overview
Portfolio Credit Quality Overview 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 2Q'22 LTV(3): 67% 2Q'22 Risk Rating(3): 3.0 91% 32% 24% 19% 15% 10% 0% 5% 4% 0%
Slide 11: Case Studies: Watch List Loans (Risk Rating 5)
Case Studies: Watch List Loans (Risk Rating 5) Investment Minneapolis Office Philadelphia Office Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date November 2017 April 2019 Two Class-A Office Buildings Collateral 4-Building, 711k RSF Office Portfolio totaling 1.1mm SF Loan
Slide 12: Case Studies: Watch List Loans (Risk Rating 4)
Case Studies: Watch List Loans (Risk Rating 4) Investment Mountain View Office Washington, D.C. Office Philadelphia Office Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date July 2021 December 2019 June 2018 Five Class-A Office Buildings Collatera
Slide 13: Financing Overview: 76% Non-Mark-To-Market
Financing Overview: 76% Non-Mark-To-Market Diversified financing sources totaling $9.0 billion with $3.0 billion of undrawn capacity Summary of Outstanding Financing Leverage Ratios Maximum Outstanding Weighted Advance Non- ($ in Millions) Capacity Face Amount Avg. Coupon(1) Rate MTM (2) Term Credit
Slide 14: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Total or Counterparty Weighted Average Drawn $716 $584 $124 $1,423 Capacity $1,000 $600 $240 $1,840 Collateral: Loans / 11 Loans / $979 11 Loans / $791 7 Loans / $288 29 Loans / $2,057 Principal Balance Final Stated Maturity(1) September 202
Slide 15: Liquidity Overview
Liquidity Overview In addition to the available liquidity below, KREF had $370 million of unencumbered senior loans that can be pledged to financing facilities subject to lender approval as of September 30, 2022 Sources of Available Liquidity ($ in Millions) $1,000 $916 $900 $123 $800 $700 $600 $500
Slide 16: Portfolio Positioned for Higher Rate Environment
Portfolio Positioned for Higher Rate Environment Portfolio rotated out of higher rate-floor loans positioning KREF to benefit from a rising rate environment 100% floating-rate loan portfolio; 64% indexed to one-month LIBOR and 36% to Term SOFR Annual Net Interest Income Per Share Sensitivity to Chan
Slide 17: Appendix
Appendix KREF
Slide 18: Portfolio Details
Portfolio Details ($ in Millions) Committed Current Investment Total Whole Net Future Max Remaining Loan Per Risk # Investment Location Property Type (2) Principal Principal (3) (5)(6) Coupon LTV (5)(9) Date Loan (2) Equity Funding(4) Term (Yrs) (5)(7) SF / Unit / Key (8) Rating Amount Amount (1) Se
Slide 19: Portfolio Details
Portfolio Details ($ in Millions) Committed Current Investment Total Whole Net Future Max Remaining Loan Per Risk # Investment Location Property Type (2) Principal Principal (3) (4) Coupon (5)(6) (5)(7) (8) LTV (5)(9) Date Loan (2) Equity Funding Term (Yrs) SF / Unit / Key Rating Amount Amount (1) S
Slide 20: 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 21: Fully Extended Loan Maturities
Fully Extended Loan Maturities Fully extended weighted average loan maturity of 3.4 years(1) Fully Extended Loan Maturities(1) ($ in Millions) $3,000 $2,879 $2,519 $2,500 $2,000 $1,500 $972 $1,000 $596 $500 $392 $194 $58 $0 2022 2023 2024 2025 2026 2027 2028 (1) Excludes CMBS B-Pieces held through a
Slide 22: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) September 30, 2022 December 31, 2021 Assets Cash and cash equivalents(1) $ 183,341 $ 271,487 Commercial real estate loans, held-for-investment 7,306,565 6,316,733 Less: Allowance for credit losses (110,798) (22,244) Commerc
Slide 23: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended Nine Months Ended September 30, 2022 June 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Net Interest Income Interest income $ 114,627 $ 90,603 $ 75,320 $ 278,460 $ 207,235 Intere
Slide 24: 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 September 30, 2022 Share(1) June 30, 2022 Share(1) September 30, 2021 Share(1) Net Income (Loss) Attributable to Common Stockholders $ (
Slide 25: 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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