Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (May 2019)
29 slides from Kkr Real Estate Finance Trust's investor presentation, May 2019
Slide 1: KKR Real Estate Finance Trust Inc. Investor Presentation
KKR Real Estate Finance Trust Inc. Investor Presentation May 2019
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: Overview of KKR Real Estate Finance Trust Inc. (KREF)
Overview of KKR Real Estate Finance Trust Inc. (KREF) Focused on larger, senior floating-rate loans Direct origination platform Fully integrated within KKR Real Estate KREF is a publicly traded externally managed REIT that ~4.5-year operating history; IPO in May 2017 focuses on originating s
Slide 4: Differentiated, Conservative, Investment Strategy
Differentiated, Conservative, Investment Strategy Lending on institutional quality real estate owned by high-quality sponsors in the most liquid markets Institutional Quality Most Liquid Markets, with Strong High-Quality, Experienced & Commercial Real Estate Underlying Fundamentals Well-Capitalized
Slide 5: Successfully Executing on Business Strategy
Successfully Executing on Business Strategy Portfolio Financing Activity $2.5BN LTM Originations $4.2BN Financing Capacity $3.7BN Funded Portfolio $1.0BN Managed Collateralized Loan Obligation 100% Senior Floating-Rate Loan Originations 63% Non-Mark-to-Market Financing (1) 100% Perform
Slide 6: KKR Platform
KKR Platform • KREF is externally managed by KKR Real Estate Finance Manager LLC, a subsidiary of KKR (NYSE: KKR, Market Capitalization: $20.5BN(1)), a leading global investment firm with a 43-year history and a diverse mix of investments across multiple asset classes, including private equity, real
Slide 7: Integration with KKR Differentiates KREF in the Marketplace
Integration with KKR Differentiates KREF in the Marketplace • KREF further differentiates itself by seeking opportunities where it has sourcing, underwriting and execution advantages through KKR’s brand, industry knowledge, relationships and deep bench of investment professionals Best-in-class fin
Slide 8: KKR Real Estate Credit Investment Committee
KKR Real Estate Credit Investment Committee • Diversity of Manager’s Investment Committee creates a thorough vetting process that enables KREF to evaluate potential transactions through multiple lenses Manager Investment Committee Chris Lee Matt Salem Patrick Mattson Ralph Rosenberg Co-CEO & Co-Pres
Slide 9: Targeted KREF Strike Zone
Targeted KREF Strike Zone • KREF focuses on floating-rate senior loans collateralized by high-quality commercial real estate: Representative Terms on Newly-Originated Key Attributes of KREF’s Investments Senior Loans Loan Size $50 - $400 million Collateral Primarily Transitional CRE Properties Prima
Slide 10: Key Investment Decision-Making Factors
Key Investment Decision-Making Factors Disciplined Evaluation of Potential Investments Market Dynamics Attractive Basis • High barrier-to-entry markets • Discount to replacement cost • Infill locations • Borrower basis at a discount to competitive • Favorable market dynamics owners in the market
Slide 11: Rigorous Investment Screening and Selection Process
Rigorous Investment Screening and Selection Process • For LTM March 31, 2019, KREF has screened $38.4 billion of financing opportunities and originated $2.5 billion (7%) of senior loans Large opportunity set funneled through rigorous screening and approval process Rigorous Screening The “KKR Edge” M
Slide 12: 1Q'19 Loan Activity
1Q’19 Loan Activity • March 31, 2019 total portfolio of $3.7 billion, up $1.3 billion or 51% since March 31, 2018 and down $388.1 million or 9% since December 31, 2018 • Higher level of repayments as portfolio seasons and our borrowers execute their business plans • Subsequent to quarter-end, origin
Slide 13: KREF Portfolio by the Numbers
KREF Portfolio by the Numbers • Outstanding total portfolio of $3.7 billion as of March 31, 2019 • Increased 196% since June 30, 2017 (first quarter-end post IPO) Total Portfolio Growth Property Type(1) ($ in Millions) ($ in Millions) • Office YoY increase of 61% • Multifamily YoY increase of 93% •
Slide 14: 1Q'19 KREF Portfolio
1Q’19 KREF Portfolio • $3.7 billion portfolio comprised of 36 investments • Portfolio weighted average LTV of 68%(1) Geography(2) Investment Type(3) CMBS Mezz 1% <1% Senior Loans 99% Interest Rate Type Fixed 1% Floating 99% Property Type(2) Other (<5%) 16% Industrial Retail Condo 4% 4% NY 32% (Resid
Slide 15: Portfolio Credit Quality Remains Strong
Portfolio Credit Quality Remains Strong • KREF’s loan portfolio is 100% performing, with no defaulted or impaired loans • The securities portfolio is performing as expected Loan-to-Value(1,2) Risk Rating Distribution(2,4) (% of total portfolio) (% of portfolio) Weighted Average Weighted Average LTV(
Slide 16: Recent Operating Performance
Recent Operating Performance • 1Q'19 Net Income attributable to common stockholders of $24.7 million or $0.43 per share • 1Q'19 Net Core Earnings(1) of $25.3 million or $0.44 per share • Book value of $1,128.7 million or $19.67 per share in 1Q'19(3) compared to $1,132.3 million or $19.66 per share i
Slide 17: Financing Overview
Financing Overview • Total financing capacity of $4.2 billion with $1.5 billion of undrawn capacity • Increased the borrowing capacity on the Corporate Revolving Credit Facility from $100.0 million to $140.0 million. Subsequent to quarter end, further increased the borrowing capacity in April 2019 t
Slide 18: Interest Rate Sensitivity
Interest Rate Sensitivity • KREF benefits in a rising rate environment • 99% of the portfolio is indexed to one-month USD LIBOR • A 50 basis point increase in one-month USD LIBOR would increase net interest income by $3.9 million or $0.07 per share over the next 12 months(1) • 95% of the portfolio i
Slide 19: Case Studies
Case Studies Philadelphia Mixed-Use Boston Multifamily Brooklyn Hotel Investment Acquisition of 4-building mixed-use Refinance of newly-constructed, Class Refinance of full service hotel with portfolio A, multifamily asset national hospitality operator Loan Type Floating-Rate Senior Loan Floating-Ra
Slide 20: Case Studies
Case Studies Manhattan Multifamily Manhattan Multifamily San Diego Multifamily Investment Acquisition of luxury multifamily Acquisition of multifamily property in Refinance of substantially renovated, rental building in strong location high demand submarket institutional quality multifamily Loan Typ
Slide 21: Key Investment Highlights
Key Investment Highlights Established and growing business with strong operating and execution track record Differentiated platform and origination capabilities Large and compelling market opportunity Focused investment strategy with proven scale and access to capital Disciplined underwrit
Slide 22: Appendix
Appendix 22
Slide 23: Portfolio Details
Portfolio Details ($ in millions) Investment Committed Current Net Future Max Remaining # Investment Location Property Type Coupon(4)(5) LTV(4)(7) Date Principal Amount Principal Amount Equity (2) Funding(3) Term (Yrs)(4)(6) Senior Loans (1) 1 Senior Loan Queens, NY Office 5/9/2018 $350.0 $277.1 $17
Slide 24: Portfolio Details
Portfolio Details (1) Senior loans include senior mortgages and similar credit quality investments, including junior participations in our originated senior loans for which we have syndicated the senior participations and retained the junior participations for our portfolio. (2) Net equity reflects
Slide 25: Fully Extended Loan Maturities
Fully Extended Loan Maturities • Fully extended weighted average loan maturity of 3.8 years(1) Fully Extended Loan Maturities(1) ($ in Millions) $2,500 $2,022.6 $2,000 $1,500 $1,000 $661.1 $500 $392.5 $331.3 $291.0 $0.0 $5.5 $0.0 $0 2019 2020 2021 2022 2023 2024 2025 2026 Fully extended maturity (1)
Slide 26: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) March 31, 2019 December 31, 2018 Assets Cash and cash equivalents (1) $ 228,440 $ 86,531 Commercial mortgage loans, held-for-investment, net 3,684,128 4,001,820 Equity method investments, at fair value 32,711 30,734 Accrued
Slide 27: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended March 31, 2019 December 31, 2018 March 31, 2018 Net Interest Income Interest income $ 64,751 $ 59,623 $ 31,694 Interest expense 34,842 32,192 10,690 Total net interest income 29,909 27,431 21,004 Ot
Slide 28: Reconciliation of GAAP Net Income to Core Earnings and Net Core Earnings
Reconciliation of GAAP Net Income to Core Earnings and Net Core Earnings 1Q19 4Q18 1Q18 ($ in thousands, except share and per share data) Net Income Attributable to Common Stockholders $24,705 $19,709 $23,280 Adjustments Non-cash equity compensation expense 991 387 1,018 Incentive compensation to af
Slide 29: Key Definitions
Key Definitions • "Core Earnings" and “Net Core Earnings”: Used by the Company to evaluate the Company's performance excluding the effects of certain transactions and GAAP adjustments the Company believes are not necessarily indicative of the current loan activity and operations. The Company also us
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