Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (July 2023)
42 slides from Kkr Real Estate Finance Trust's investor presentation, July 2023
Slide 1: Investor Presentation
Investor Presentation J U LY 2 0 2 3
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% 56% 76% $510 B $25 B Senior Loans Multifamily & Fully Non-Mark-to-Market(2) Glo
Slide 4: Investment Highlights
Investment Highlights 4 3 5 Differentiated Best in Class Investment Conservative Investment Portfolio 2 Liability Cycle Tested, Strategy Management Experienced Leadership Team 6 1 KKR Portfolio Sponsorship Positioned for Rate Environment KKR Real Estate Finance Trust (“KREF”) benefits from its integ
Slide 5: KKR Sponsorship
KKR Sponsorship
Slide 6: KKR Platform – A Leading Global Asset Manager
KKR Platform – A Leading Global Asset Manager Founded 1976 $510 B $25 B 782 23 / 17 Assets Under Management Internal Balance Sheet Investment Professionals Cities / Countries KKR Real Estate Attributes KKR operates with a single culture that rewards investment discipline, creativity, $65+ billion in
Slide 7: Integrated Global Real Estate Platform
Integrated Global Real Estate Platform Founded in 2011 and fully integrated across both Real Estate Debt and Equity, as well as the Americas, Europe, and Asia Real Estate Loans $45B of Collateral Value(1) Integrated Real Estate Platform Own or lend on Real Estate $219B RE assets Real Estate Equity C
Slide 8: KREF Integration with KKR
KREF Integration with KKR KREF 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 KKR Private Equity $94B of AUM, 206 KKR Credit Integration Driv
Slide 9: Experienced Leadership Team
Experienced Leadership Team
Slide 10: KKR Real Estate Credit Investment Committee
KKR Real Estate Credit Investment Committee Diversity of Manager’s Investment Committee creates a thorough vetting process US Investment Committee Matt Salem Patrick Mattson Ralph Rosenberg Chris Lee Joel Traut CEO KREF President & COO KREF Chairman of KREF Board Vice Chairman of KREF Board Partner
Slide 11: KKR Real Estate Finance Trust Team
KKR Real Estate Finance Trust Team Leadership Team Ralph Rosenberg Chris Lee Matt Salem Patrick Mattson Kendra Decious Chairman of the Board Vice Chairman of the Board Chief Executive Officer President Chief Financial Officer Member of the Board Chief Operating Officer Treasurer Senior Investment Te
Slide 12: Differentiated Investment Strategy
Differentiated Investment Strategy
Slide 13: Differentiated, Conservative Investment Strategy
Differentiated, Conservative Investment Strategy Lending on institutional quality real estate owned by high-quality sponsors in top markets Institutional Quality Top Markets with High-Quality, Experienced & Commercial Real Estate Strong Underlying Fundamentals Well-Capitalized Sponsors 80% Select Ex
Slide 14: Targeted Strike Zone
Targeted Strike Zone Representative Terms on Newly-Originated Senior Loans Loan Size $50-$500+ million Collateral Primarily Transitional CRE Properties Sponsorship Well-Established, Capitalized & Experienced Geographies Top 30 U.S. Markets Property Types Multifamily, Office, Life Science, Industrial
Slide 15: Rigorous Investment Screening and Selection Process
Rigorous Investment Screening and Selection Process Over the last twelve months, KREF screened $130.8 billion of financing opportunities Large opportunity set funneled through rigorous screening and approval process Rigorous Screening The “KKR Edge” Multidisciplinary Review Deals Screened: $130.8B(1
Slide 16: Best In Class Investment Portfolio
Best In Class Investment Portfolio
Slide 17: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio Growth Investment Type(2) Interest Rate Type ($ in Millions) Property Type (4) Geography(1) (3) 5% 11% 5% 6% Washington, D.C. Office(5) Multifamily 7% 18% 15% 86% 10% Other <5%: 23% Note: The charts above are based on total assets. Total assets refl
Slide 18: Multifamily and Office Loan Overview
Multifamily and Office Loan Overview Multifamily: 42% of Loan Portfolio Office: 26% of Loan Portfolio $102 M 69% 0% $167 M 60% 2.4% Average Loan Size(1) W.A. LTV(2) Construction Loans Average Loan Size(1) W.A. LTV(2) Co-Working Exposure 80% 90% 2015 67% 75% 9.4 years W.A. Occupancy W.A. Occupancy Me
Slide 19: KREF Office Loan Portfolio Overview
KREF Office Loan Portfolio Overview Just under half of the outstanding principal balance of KREF’s Office segment is Risk-Rated 3 KREF Office Loan Portfolio Office Portfolio Breakdown Current Current Investment Loan Commitment Principal Loan Max Term Location Date Purpose ($ Millions) ($ Millions) p
Slide 20: Case Studies: Largest Three Multifamily Loans
Case Studies: Largest Three Multifamily Loans Investment Arlington Multifamily Los Angeles Multifamily Sunbelt Multifamily Portfolio Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date September 2021 February 2021 May 2019 912-unit Class-B+ and 198
Slide 21: Case Studies: Largest Three Office Loans
Case Studies: Largest Three Office Loans Investment Bellevue Office Mountain View Office Minneapolis Office Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan(5) Investment Date September 2021 July 2021 November 2017 Class-A Office Five Class-A Office Buildings T
Slide 22: Case Studies: Largest Three Industrial Loans
Case Studies: Largest Three Industrial Loans Investment Western U.S. Industrial Portfolio Bronx Industrial U.S. Industrial Portfolio Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date April 2022 August 2021 June 2022 14 Class A/B Industrial Proper
Slide 23: Portfolio Credit Quality Overview
Portfolio Credit Quality Overview Collected 99% of interest payments due on loan portfolio Loan-to-Value(1)(2) Risk Rating Distribution Loan 0 0 68 5 2 Count 1Q '23 Weighted Average LTV(3): 66% Weighted Average Risk Rating(3): 3.2 Loan Count 0 1 62 5 3 2Q '23 <1% Weighted Average LTV(3): 65% Weighte
Slide 24: 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 25: Case Studies: Watch List Loans (Risk Rating 4)
Case Studies: Watch List Loans (Risk Rating 4) West Hollywood Investment Washington, D.C. Office Boston Office Washington, D.C. Office Chicago Office Multifamily Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loa
Slide 26: Conservative Liability Management
Conservative Liability Management
Slide 27: Financing Overview: 76% Non-Mark-To-Market
Financing Overview: 76% Non-Mark-To-Market Diversified financing sources totaling $8.9 billion with $2.8 billion of undrawn capacity Summary of Outstanding Financing Leverage Ratios Maximum Outstanding Weighted Avg. Advance Non- ($ in Millions) Capacity Face Amount Coupon(1) Rate MTM (2) Term Credit
Slide 28: KREF Upcoming Debt Maturities
KREF Upcoming Debt Maturities No corporate debt or final facility maturities due until the fourth quarter of 2025 Upcoming Debt Maturities by Year(1)(2) ($ in Millions) $2,000 $1,500 $1,051 $1,000 $868 $500 $395 $0 2023 2024 2025 2026 2027 (1) Based on outstanding principal balance of financing (2)
Slide 29: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Total or Counterparty Weighted Average Drawn $682 $506 $362 $1,550 Capacity $1,000 $600 $400 $2,000 Collateral: Loans / Principal 9 Loans / $951 11 Loans / $742 8 Loans / $598 28 Loans / $2,291 Balance Final Stated Maturity(1) September 2026
Slide 30: Liquidity Overview
Liquidity Overview In addition to the available liquidity below, KREF had $18 million of unencumbered senior loans that can be pledged to financing facilities subject to lender approval as of June 30, 2023 Sources of Available Liquidity ($ in Millions) (1) (1) Represents under-levered amounts under
Slide 31: 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 = 5.14% ($ Impact Per Share) As of June 30, 2023 Change in SOFR
Slide 32: Recent Operating Performance
Recent Operating Performance Net Income and Distributable Earnings Dividends and Book Value Per Share ($ in Millions) 2Q'22 1Q'23 2Q'23 2Q'22 1Q'23 2Q'23 Net income (loss)(1): Dividend per share: $19.4 ($30.8) ($25.8) $0.43 $0.43 $0.43 Distributable earnings(2): Dividend yield on book value per shar
Slide 33: Key Highlights
Key Highlights Best in class investment portfolio – 56% Fully integrated with KKR; aligned with Multifamily and Industrial shareholders – 14% ownership; $65B of real estate AUM Scaled investment portfolio – $7.9 billion Experienced leadership & asset management predominantly senior loan portfolio te
Slide 34: Appendix
Appendix
Slide 35: Portfolio Details
Portfolio Details ($ in Millions) Committed Current Investment Total Whole 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 Senior Loans(9) 1 Senior Loa
Slide 36: Portfolio Details
Portfolio Details ($ in Millions) Committed Current Investment Total Whole 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 Senior Loans(9) 51 Senior Lo
Slide 37: 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 impaired mezzanine loan with an outstanding principal of $5.5 m
Slide 38: Fully Extended Loan Maturities
Fully Extended Loan Maturities Fully extended weighted average loan maturity of 3.0 years Fully Extended Loan Maturities ($ in Millions) Note: Excludes CMBS B-Pieces held through an equity method investment 38
Slide 39: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) June 30, 2023 December 31, 2022 Assets Cash and cash equivalents(1) $ 207,698 $ 239,791 Commercial real estate loans, held-for-investment 7,445,958 7,494,138 Less: Allowance for credit losses (223,767) (106,974) Commercial
Slide 40: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended Six Months Ended June 30, 2023 March 31, 2023 June 30, 2022 June 30, 2023 June 30, 2022 Net Interest Income Interest income $ 159,629 $ 152,530 $ 90,603 $ 312,159 $ 163,833 Interest expense 115,677
Slide 41: 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 Per Diluted Per Diluted Per Diluted June 30, 2023 Share(1) March 31, 2023 Share(1) June 30, 2022 Share(1) Net Income (Loss) Attributable to Common Stockholders $ (25
Slide 42: Key Definitions
Key Definitions “Distributable Earnings": Distributable Earnings, a measure that is not prepared in accordance with GAAP, is a key indicator of the Company's ability to generate sufficient income to pay its quarterly dividends and in determining the amount of such dividends, which is the primary foc
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