Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (May 2021)
42 slides from Kkr Real Estate Finance Trust's investor presentation, May 2021
Slide 1: Investor Presentation | May 2021
Investor Presentation | May 2021
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 Fully Integrated with KKR Portfolio Balance Sheet $5.3 Billion $6.1 Billion 27% Investment Portfolio Financing Capacity KKR Ownership in KREF 98.8% 85% 76% $367 Billion $23 Billion Senior Loans Multifamily & Office Fully Non-Mark
Slide 4: Investment Highlights
Investment Highlights 3 4 Differentiated Best in Class Investment Investment Portfolio 2 Strategy 5 Cycle Tested, Conservative Experienced Liability Leadership Team Management 6 1 Earnings KKR Power from Sponsorship LIBOR Floors KKR Real Estate Finance Trust (“KREF”) is a differentiated company full
Slide 5: KKR Sponsorship
KKR Sponsorship 5
Slide 6: KKR Platform - A Leading Global Asset Manager
KKR Platform - A Leading Global Asset Manager Founded 1976 $367bn $23bn ~632 20 / 15 Assets Under Management Internal Balance Sheet Investment Professionals Cities / Countries KKR Attributes KKR Real Estate Attributes ~$29 billion in AUM in Real Estate strategies globally(1) KKR operates with a sing
Slide 7: Integrated Americas Real Estate Platform
Integrated Americas Real Estate Platform RE Equity • REPA I / II / III: opportunistic ~$15bn of asset value(1) • KPPA: core plus Integrated Real Estate Platform • KREF: primarily senior loans on • Differentiated access to RE Senior Loans transitional properties in the top 15 MSAs information and enh
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 $86BN of AUM, ~184 Integration Drives profes
Slide 9: Experienced Leadership Team
Experienced Leadership Team 9
Slide 10: KKR Real Estate Credit Investment Committee
KKR Real Estate Credit Investment Committee KREF Management Team KREF Directors MATT SALEM PATRICK MATTSON RALPH ROSENBERG CHRIS LEE CEO KREF President & COO KREF Chairman of KREF Board Vice Chairman of KREF Board Partner & Head of Managing Director & COO of Partner & Global Head Partner & Head of R
Slide 11: KKR Real Estate Finance Trust Team
KKR Real Estate Finance Trust Team Leadership Team RALPH ROSENBERG CHRIS LEE MATT SALEM PATRICK MATTSON MOSTAFA NAGATY Chairman of the Board Vice Chairman of the Board Chief Executive Officer President & Chief Operating Officer Chief Financial Officer & Treasurer Senior Investment Team JOEL TRAUT JU
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 Strong High-Quality, Experienced & Commercial Real Estate Underlying Fundamentals Well-Capitalized S
Slide 14: Conservative Portfolio Construction
Conservative Portfolio Construction Investment Portfolio Evolution Property Type Evolution <1% <2% 100% 100% 85% 85% 27% 80% 80% 6% Senior Loan 62% Multifamily 60% 60% and Office Non-Senior/ 99% 98% Other Loan Hospitality and 40% 40% 31% Retail Securities 67% 20% 20% 8% 6% 0% 0% At IPO 1Q'20 1Q'21 A
Slide 15: Targeted Strike Zone
Targeted Strike Zone Representative Terms on Newly-Originated Senior Loans Loan Size $50-$400 million Collateral Primarily Light Transitional CRE Properties Sponsorship Well-Established, Capitalized & Experienced Geographies Top 30 U.S. Markets Property Types Multifamily, Office, Industrial, Hospita
Slide 16: 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 $62.3 billion of Deals Screened: $62.3bn(1) financing opportunities
Slide 17: Best In Class Investment Portfolio
Best In Class Investment Portfolio 17
Slide 18: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio Growth Investment Type(3) Interest Rate Type ($ in Millions) Mezz/Other Current Portfolio: 1.2% Fixed 0.1% $5.4 billion(1) $5,330 Including net funding and repayment $5,233 activity subsequent to quarter-end $3,745 $2,474 Senior Floating Loans 99.9%
Slide 19: 1Q'21 Loan Originations – Case Studies
1Q’21 Loan Originations – Case Studies Investment Dallas Office Boston Office Los Angeles Multifamily Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Loan Size $87.0 million $187.5 million(1) $260.0 million Location Dallas, TX Boston, MA Los Angeles, CA Collat
Slide 20: Multifamily and Office Loan Overview
Multifamily and Office Loan Overview Multifamily: 50% of Loan Portfolio Office: 35% of Loan Portfolio $120 mm 70% <1% $143 mm 63% <1% Average Loan Size W.A. LTV Construction Average Loan Size W.A. LTV Co-Working Exposure 56% 73%(1) 2006 73% 72%(1) 6.5 years W.A. Occupancy W.A. Occupancy W.A. Year Bu
Slide 21: Case Studies: Largest Three Multifamily Loans
Case Studies: Largest Three Multifamily Loans Investment Chicago Multifamily Arlington Multifamily Los Angeles Multifamily Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date June 2019 June 2019 February 2021 Collateral 800-Unit Class-A Luxury Mult
Slide 22: Case Studies: Largest Three Office Loans
Case Studies: Largest Three Office Loans Investment Boston Office Minneapolis Office Boston Office Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date May 2018 November 2017 February 2021 Class-B+ Office Two Class-A Office Buildings Three Class-A O
Slide 23: Portfolio Credit Quality Remains Strong
Portfolio Credit Quality Remains Strong • Collected 97.1% of interest payments due on loan portfolio Loan-to-Value(1,2) Risk Rating Distribution (% of total portfolio) (% of portfolio) Weighted Average Weighted Average 4Q'20 LTV(3): 67% 4Q'20 Risk Rating(3): 3.1 77% 31% 30% 14% 14% 13% 12% 7% 0% 2%
Slide 24: Case Studies: Watch List Loans (Risk Rating 4 & 5)
Case Studies: Watch List Loans(1) (Risk Rating 4 & 5) • Two 4-risk rated watch list loans were upgraded in 1Q to a 3-risk rating based on improved performance. Investment Portland Retail(2) New York Condo New York Condo Brooklyn Hotel Queens Industrial Loan Type Floating-Rate Senior Loan Floating-Ra
Slide 25: Conservative Liability Management
Conservative Liability Management 25
Slide 26: Liability Management: 76% Non-Mark-To-Market
Liability Management: 76% Non-Mark-To-Market Conservative liability management focused on growing diversified non-mark-to-market financing capacity Outstanding Secured Financing(1) IPO 1Q’20 1Q’21 Term Loan Term Loan Term Credit Facility Term Credit Facility Facilities 21% Facilities 23% 24% 27% Ass
Slide 27: Diversified Financing Sources Totaling $6.1 Billion
Diversified Financing Sources Totaling $6.1 Billion Summary of Outstanding Financing Leverage Ratios ($ in Millions) Maximum Outstanding Weighted Avg. Advance Non- Capacity Face Amount Coupon Rate MTM 3.7x Term Credit Facilities $1,840 $1,018 L+1.7% 65.7% - (1) 0.2x Term Lending Agreement $900 $900
Slide 28: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Counterparty Total / Weighted Average Drawn $520 $421 $77 $1,018 Capacity $1,000 $600 $240 $1,840 Collateral: Loans / Principal 5 Loans / $804 8 Loans / $588 2 Loans / $158 15 Loans / $1,549 Balance Final Stated Maturity(1) November 2023 Dec
Slide 29: Liquidity Overview
Liquidity Overview Sources of Available Liquidity ($ in Millions) $600.0 $571.1 $26.8 $500.0 $400.0 $335.0 $300.0 $200.0 $209.3 $100.0 $0.0 Cash Undrawn Approved and Undrawn Total Available Liquidity Corporate Revolver Credit Capacity(1) (1) Represents under-levered amounts under financing facilitie
Slide 30: Earnings Power from LIBOR Floors
Earnings Power from LIBOR Floors 30
Slide 31: Portfolio Benefits from Attractive in the Money LIBOR Floors
Portfolio Benefits from Attractive in the Money LIBOR Floors • 99.9% of the loan portfolio is indexed to one-month USD LIBOR • Portfolio benefits from current low rate environment given in-place LIBOR floors 69% and 50% of the portfolio is subject to a LIBOR floor of at least 1.0% and 1.65%, respe
Slide 32: Recent Operating Performance
Recent Operating Performance Net Income(1) and Distributable Earnings(2) Dividends and Book Value Per Share 1Q'20 4Q'20 1Q'21 ($ in Millions) 1Q'20 4Q'20 1Q'21 Net income: Dividend per share: ($35.2) $28.8 $29.2 $0.43 $0.43 $0.43 Distributable earnings: Dividend yield on book value per share: $25.3
Slide 33: Key Highlights
Key Highlights Best in class investment portfolio - 85% Fully integrated with KKR; aligned with multifamily and office; only 6% hospitality and retail shareholders – 27% ownership; ~$29bn of real estate AUM Conservative liability management – 76% Experienced leadership & asset management diversified
Slide 34: Appendix
Appendix 34
Slide 35: 1Q'21 Financial Summary
1Q'21 Financial Summary Income Statement Balance Sheet ($ in Millions) 1Q21 ($ in Millions) 1Q21 Net Interest Income $37.4 Total Portfolio $5,087.2(2) Other Income 1.2 Term Credit Facilities 1,017.6 Operating Expenses and Other (11.0) Term Lending Agreement 900.0 Benefit From Credit Loss Provision 1
Slide 36: Portfolio Details
Portfolio Details Investment Total Whole Committed Current Net Future (5)(6) Max Remaining Loan Per (5)(8) Risk # Investment Location Property Type Coupon LTV Date Loan(2) Principal Amount(2) Principal Amount Equity(3) Funding(4) Term (Yrs)(5)(7) SF / Unit / Key Rating Senior Loans(1) 1 Senior Loan
Slide 37: Portfolio Details
Portfolio Details (1) Senior loans include senior mortgages and similar credit quality investments, including junior participations in our originated senior loans for which we have syndicated the senior participations and retained the junior participations for our portfolio and excludes vertical loa
Slide 38: Fully Extended Loan Maturities
Fully Extended Loan Maturities • Fully extended weighted average loan maturity of 3.3 years(1) Fully Extended Loan Maturities(1) ($ in Millions) $2,500 $2,199.9 $2,000 $1,500 $1,083.6 $1,000 $888.3 $652.6 $500 $208.7 $261.3 $0 2021 2022 2023 2024 2025 2026 (1) Excludes RECOP I CMBS B-Piece investmen
Slide 39: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) March 31, 2021 December 31, 2020 Assets Cash and cash equivalents $ 209,347 $ 110,832 Commercial mortgage loans, held-for-investment 5,026,920 4,844,534 Less: Allowance for credit losses (58,473) (59,801) Commercial mortgag
Slide 40: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended March 31, 2021 December 31, 2020 March 31, 2020 Net Interest Income Interest income $ 64,766 $ 63,201 $ 71,079 Interest expense 27,383 28,835 39,082 Total net interest income 37,383 34,366 31,997 Ot
Slide 41: 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 March 31, 2021 December 31, 2020 March 31, 2020 Net Income (Loss) Attributable to Common Stockholders $ 29,184 $ 28,776 $ (35,164) Adjustments Non-cash equity compensation
Slide 42: 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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