Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (May 2018)
25 slides from Kkr Real Estate Finance Trust's investor presentation, May 2018
Slide 1: KKR Real Estate Finance Trust Inc. Investor Presentation
KKR Real Estate Finance Trust Inc. Investor Presentation May 2018
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 3.5-year operating history; IPO in May 2017 focuses on originating se
Slide 4: Successfully Executing on Business Strategy
Successfully Executing on Business Strategy Solidify Market Execute on Incubate Business Presence Strategy KREF Progress May 2017 • Completed IPO for net Since IPO proceeds of $226MM $1.9BN January 2015 Originations Since 1Q17(1) • Hired team of nine 100% professionals including Matt Salem and P
Slide 5: KKR Platform
KKR Platform • KREF is externally managed by KKR Real Estate Finance Manager LLC, a subsidiary of KKR (NYSE: KKR, Market Capitalization: $19.5B(1)), a leading global investment firm with an over 40-year history and a diverse mix of investments across multiple asset classes, including private equity,
Slide 6: 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 7: 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 8: 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 9: 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 10: Rigorous Investment Screening and Selection Process
Rigorous Investment Screening and Selection Process • For LTM March 31, 2018, KREF has screened $31.5 billion of financing opportunities and originated $1.6 billion (5%) of senior loans Large opportunity set funneled through rigorous screening and approval process Rigorous Screening The “KKR Edge” M
Slide 11: LTM Loan Originations
LTM Loan Originations • LTM March 31, 2018, originations of $1.6 billion of floating-rate senior loans • Outstanding total portfolio of $2.5 billion as of March 31, 2018 • Subsequent to quarter end, originated a $350.0 million floating-rate senior loan, bringing total portfolio size to $2.7 billion
Slide 12: KREF Portfolio by the Numbers
KREF Portfolio by the Numbers • $2.5 billion portfolio comprised of 37 investments • Portfolio weighted average LTV of 67%(1) Geography(2) Investment Type(3) CMBS Mezz 5% 2% Senior Loans 93% Interest Rate Type Fixed 6% Floating 94% Note: Map does not include Midwest Mezzanine portfolio ($5.5 million
Slide 13: 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 14: Recent Operating Performance
Recent Operating Performance • 1Q 2018 Net Income attributable to common stockholders increased to $23.3 million, up 37% QoQ; Net Core Earnings(1) increased to $18.9 million, up 10% QoQ • Book value per share increased to $19.79 in 1Q • Subsequent to quarter end, declared 2Q dividend of $0.43 per sh
Slide 15: Financing Overview
Financing Overview • Total financing capacity of $1.8 billion with $0.5 billion of undrawn capacity as of March 31, 2018 • Subsequent to quarter end, closed a $400 million term loan financing facility providing matched-term financing on a non- mark to market and non-recourse basis Summary of Outstan
Slide 16: Interest Rate Sensitivity
Interest Rate Sensitivity • KREF benefits in a rising rate environment • 94% 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 $3.0 million or $0.06 per share over the next 12 months(1)(2) Net Interest Income S
Slide 17: Case Studies
Case Studies New York Office New York Multifamily Orlando Multifamily Investment Refinance of office property with Newly-constructed institutional quality Refinance of high quality, renovated strong in-place cash flow multifamily in infill location multifamily property Loan Type Floating-Rate Senior
Slide 18: Case Studies
Case Studies Seattle Office New York Multifamily St. Paul Office Investment Refinance of office building in a strong Refinance of a newly-constructed, Recapitalization of a stabilized class-A and diverse economic market highly amenitized rental property office property Loan Type Floating-Rate Senior
Slide 19: Key Investment Highlights
Key Investment Highlights Established and growing business with strong operating and execution track record Differentiated platform and origination capabilities Large and compelling market opportunity Focused investment strategy with proven scale and access to capital Disciplined underwrit
Slide 20: Appendix
Appendix 20
Slide 21: Portfolio Details
Portfolio Details Investment Committed Current Principal Future Max Remaining # Investment ($ in millions) Location Property Type Net Equity(2) Coupon(4)(5) LTV(4)(7) Date Principal Amount Amount Funding(3) Term (Yrs)(4)(6) (1) Senior Loans 1 Senior Loan New York, NY Condo (Resi) 8/4/2017 $239.2 $20
Slide 22: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) March 31, 2018 December 31, 2017 Assets Cash and cash equivalents $ 23,124 $ 103,120 Restricted cash - 400 Commercial mortgage loans, held-for-investment, net 2,273,190 1,888,510 Equity method investments, at fair value 18,
Slide 23: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) For the Three Months Ended March 31, 2018 December 31, 2017 March 31, 2017 Net Interest Income Interest income $ 31,694 $ 28,385 $ 12,906 Interest expense 10,690 8,632 3,953 Total net interest income 21,004 19,753 8,9
Slide 24: Reconciliation of GAAP Net Income to Core Earnings and Net Core Earnings
Reconciliation of GAAP Net Income to Core Earnings and Net Core Earnings 1Q18 4Q17 3Q17 2Q17 ($ in thousands, except share and per share data) Net Income Attributable to Common Stockholders $23,280 $17,034 $17,339 $14,081 Adjustments Non-cash equity compensation expense 1,018 25 25 15 Incentive comp
Slide 25: 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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