Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (August 2022)
39 slides from Kkr Real Estate Finance Trust's investor presentation, August 2022
Slide 1: Investor Presentation August 2022
INVESTOR PRESENTATION AUGUST 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% $491 B $24 B Senior Loans Multifamily & Fully Non-Mark-to-Market(2) Glob
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 to Benefit in Higher Rate Environment KKR Real Estate Finance Trust (“KREF”) benefi
Slide 5: KKR Sponsorship
KKR Sponsorship KREF
Slide 6: KKR Platform – A Leading Global Asset Manager
KKR Platform – A Leading Global Asset Manager Founded 1976 $491 B $24 B 754 21 / 16 Assets Under Management Internal Balance Sheet Investment Professionals Cities / Countries KKR Real Estate Attributes KKR operates with a single culture that rewards ~$61 billion in AUM in Real Estate strategies glob
Slide 7: Integrated Americas Real Estate Platform
Integrated Americas 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 $35B of Asset Value(1) Equity Integrated Real Real Estate Platform Estate $41B of Collateral Value(2) Loans Own or lend on $172
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 $101B of AUM, 198 KKR Credit Integration Dri
Slide 9: Experienced Leadership Team
Experienced Leadership Team 9
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 12
Slide 13: 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 High-Quality, Experienced & Commercial Real Estate Strong Underlying Fundamentals Well-Capitalized Sp
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 Large opportunity set funneled through rigorous screening and approval process Rigorous Screening The “KKR Edge” Multidisciplinary Review Over the last twelve months, KREF screened Deals Screened: $150.0B(1) $150.0 billion of financing opportunitie
Slide 16: Best In Class Investment Portfolio
Best In Class Investment Portfolio 16
Slide 17: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio Growth Investment Type(2) Interest Rate Type Non-Senior 100% Floating ($ 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 Other (4) Hospitality 5% 5% Geography(1) Life Science (3)
Slide 18: Multifamily and Office Loan Overview
Multifamily and Office Loan Overview Multifamily: 47% of Loan Portfolio Office: 26% of Loan Portfolio $103 M 70% 0% $166 M 66% 2.4% Average Loan Size W.A. LTV Construction Loans Average Loan Size W.A. LTV Co-Working Exposure 78% 91%(1) 2016 71% 72%(1) 7.5 years W.A. Occupancy W.A. Occupancy Current
Slide 19: 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 20: 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 Investment Date September 2021 July 2021 November 2017 Five Class-A Office Buildings Two Class-A Office
Slide 21: 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%
Slide 22: 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 23: Conservative Liability Management
Conservative Liability Management 23
Slide 24: Liability Management: 77% Non-Mark-To-Market
Liability Management: 77% Non-Mark-To-Market Conservative liability management focused on diversified, non-mark-to-market financing capacity Outstanding Secured Financing(1)(2) IPO Q2 2022 Term Credit Facilities Collateralized Loan 23% Obligations 32% Asset Specific Financing Term Credit 1% Faciliti
Slide 25: 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 26: 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 27: 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 $2
Slide 28: Portfolio Positioned for Higher Rate Environment
Portfolio Positioned for Higher Rate Environment Portfolio rotated out of higher rate-floor loans positioning KREF to benefit from a rising rate environment 100% floating-rate loan portfolio; 74% indexed to one-month LIBOR and 26% to Term SOFR Annual Net Interest Income Per Share Sensitivity to Chan
Slide 29: Recent Operating Performance
Recent Operating Performance Net Income and Distributable Earnings Dividends and Book Value Per Share ($ 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 30: Key Highlights
Key Highlights Best in class investment portfolio – 58% Fully integrated with KKR; aligned with Multifamily and Industrial shareholders – 14% ownership; ~$61B of real estate AUM Scaled investment portfolio – Originated 11 Experienced leadership & asset management floating-rate senior loans in Q2 tot
Slide 31: Appendix
Appendix KREF
Slide 32: Portfolio Details
Portfolio Details ($ 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 33: 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 34: 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 35: 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 36: 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 re
Slide 37: 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 38: 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 39: 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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