Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Q4 2023 Earnings Presentation
28 slides from Kkr Real Estate Finance Trust's earnings presentation, Feb 7, 2024
Slide 1: Fourth Quarter & Full Year 2023 Supplemental Information
Fourth Quarter & Full Year 2023 Supplemental Information FEBRUARY 6, 2024
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 $7.8 B $8.9 B 14% Investment Portfolio Financing Capacity KKR Ownership in KREF 100% 55% 76% $553 B $28 B (2) Senior Loans Multifamily & Fully Non-Mark-to-Market Gl
Slide 4: Fourth Quarter and Full Year 2023 Highlights
Fourth Quarter and Full Year 2023 Highlights • 4Q and full year 2023 Net Income (Loss)(1) of ($0.27) and ($0.78) per diluted share (includes a CECL provision of $50 million and $175 million, or ($0.71) and ($2.53) per diluted share, respectively) • 4Q and full year Distributable Earnings (Loss)(2) o
Slide 5: 4Q'23 Financial Summary
4Q'23 Financial Summary Income Statement Balance Sheet ($ in Millions) 4Q'23 ($ in Millions) 4Q'23 Net Interest Income $46.5 Commercial real estate loans, net $7,133.1 Other Income 4.2 Real estate owned 183.1 Cash 135.9 Operating Expenses (14.1) Other 95.5 Provision for Credit Losses (49.5) Total As
Slide 6: Recent Operating Performance
Recent Operating Performance Net Income and Distributable Earnings Dividends and Book Value Per Share ($ in Millions) 1Q'23 2Q'23 3Q'23 4Q'23 1Q'23 2Q'23 3Q'23 4Q'23 Net income (loss)(1): Dividend per share: ($30.8) ($25.8) $21.4 ($18.7) $0.43 $0.43 $0.43 $0.43 Distributable earnings (loss)(2): Divi
Slide 7: Last Twelve Months Activity
Last Twelve Months Activity Portfolio Funding Activity – Outstanding Principal(1) ($ in Millions) Future Funding Obligations(2) $9,460 $9,381 $9,071 $8,882 $8,573 $1,544 $1,347 $1,199 $1,012 $177 $821 $204 $87 $339 $165 $152 $139 $188 $15 $69 $7,916 $7,916 $8,033 $8,034 $8,034 $7,872 $7,872 $7,872 $
Slide 8: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio(1) Investment Type(2) Interest Rate Type ($ in Millions) $7,916 Fixed $7,752 1% $6,792 Senior $5,075 $4,998 Loans 100% Floating 99% Property Type 4Q'19 4Q'20 4Q'21 4Q'22 4Q'23 (4) Hospitality Other Geography 5% 6% (3) Life Science 10% Industrial Mul
Slide 9: Portfolio Credit Quality Overview
Portfolio Credit Quality Overview Collected 98% of interest payments due on loan portfolio during 2023 Loan-to-Value(1)(2) Risk Rating Distribution Loan 0 2 62 4 3 Count 30% 84% 24% 20% 20% 3Q '23 6% 8% 7% 0% 1% 0 - 60% 60 - 65% 65 - 70% 70 - 75% 75 - 80% 1 2 3 4 5 (3) (3) Weighted Average LTV : 65%
Slide 10: Watch List Migrations Quarter-over-Quarter
Watch List Migrations Quarter-over-Quarter In 4Q'23, KREF had one REO transfer, two risk-rating upgrades and three risk-rating downgrades 3Q’23 Watch List Intra-Quarter Activity 4Q’23 Watch List Total Principal: $551 million Risk Rating: 5 Total Principal: $512 million Mountain View Office Mountain
Slide 11: Case Studies: Watch List Loans (Risk Rating 5)
Case Studies: Watch List Loans (Risk Rating 5) Investment Mountain View Office Minneapolis Office Seattle Life Science Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan(2) Floating-Rate Senior Loan Investment Date July 2021 November 2017 October 2021 Collateral Five Class-A Office Buildi
Slide 12: Case Studies: Watch List Loans (Risk Rating 4)
Case Studies: Watch List Loans (Risk Rating 4) Investment Boston Office West Hollywood Multifamily San Diego Multifamily Raleigh Multifamily Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date February 2021 January 2022 Oc
Slide 13: Overview of Real Estate Owned
Overview of Real Estate Owned Approximately $150 million of equity(1) is held in our current and projected Real Estate Owned (REO) properties REO: Current and Projected Carrying Value Carrying Value Location Property Type ($ in millions) per Square Foot Portland, OR Retail / Redevelopment $82 n.a. P
Slide 14: Financing Overview: 76% Non-Mark-To-Market
Financing Overview: 76% Non-Mark-To-Market Diversified financing sources totaling $8.9 billion with $2.8 billion of undrawn capacity Summary of Outstanding Financing Leverage Ratios Outstanding Maximum Weighted Avg. Advance Non- ($ in Millions) Principal Capacity Coupon(1) Rate MTM Amount (2) Term C
Slide 15: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Total or Counterparty Weighted Average Drawn $647 $483 $347 $1,477 Capacity $1,000 $600 $400 $2,000 Collateral: Loans / Principal 8 Loans / $982 11 Loans / $730 8 Loans / $520 27 Loans / $2,232 Balance Final Stated Maturity(1) September 2026
Slide 16: Liquidity Overview
Liquidity Overview In addition to the available liquidity below, KREF had $43 million of unencumbered senior loans that can be pledged to financing facilities subject to lender approval as of December 31, 2023 Sources of Available Liquidity (4) ($ in Millions) $700 $600 $44 $500 $400 $450 $630 $300
Slide 17: Earnings Sensitivity to Change in SOFR
Earnings Sensitivity to Change in SOFR 99% floating-rate loan portfolio indexed to Term SOFR Quarterly Net Interest Income Per Share Sensitivity to Change in Market Rates(1) Term SOFR = 5.35% ($ Impact Per Share) As of December 31, 2023 $0.05 $0.04 $0.03 $0.03 $0.02 $0.02 $0.01 $0.00 $0.00 ($0.01) (
Slide 18: Appendix
Appendix KREF
Slide 19: Portfolio Details
Portfolio Details ($ in Millions) Investment Total Whole Committed Current 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 (9) Senior Loans 1 Senior Lo
Slide 20: Portfolio Details
Portfolio Details ($ in Millions) Investment Total Whole Committed Current 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 (9) Senior Loans 51 Senior L
Slide 21: 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 REO investments. Excludes one mezzanine loan with an outstanding principal of $5.5 million that
Slide 22: Fully Extended Loan Maturities
Fully Extended Loan Maturities Fully extended weighted average loan maturity of 2.7 years Fully Extended Loan Maturities(1)(2) ($ in Millions) $4,000 $3,268 $3,000 $2,700 $2,000 $1,000 $837 $469 $284 $0 2024 2025 2026 2027 2028 (1) Excludes real estate owned and CMBS B-Pieces held through an equity
Slide 23: KREF Debt Maturities
KREF Debt Maturities No corporate debt or final facility maturities due until the first quarter of 2026 Upcoming Debt Maturities by Year(1)(2)(3) ($ in Millions) $2,000 $1,798 $1,500 $1,345 $1,000 $500 $305 $245 $100 $0 2024 2025 2026 2027 2028 (1) Based on outstanding principal balance of financing
Slide 24: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) December 31, 2023 December 31, 2022 Assets Cash and cash equivalents(1) $ 135,898 $ 239,791 Commercial real estate loans, held-for-investment 7,343,548 7,494,138 Less: Allowance for credit losses (210,470) (106,974) Commerc
Slide 25: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended Year Ended December 31, 2023 September 30, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2021 Net Interest Income Interest income $ 165,024 $ 163,229 $ 143,508 $ 640,412 $
Slide 26: Reconciliation of GAAP Net Income (Loss) to Distributable Earnings (Loss)
Reconciliation of GAAP Net Income (Loss) to Distributable Earnings (Loss) (in thousands - except share and per share data) Year Ended Three Months Ended December 31, Per Diluted December 31, September 30, 2023 Share(1) 2023 2023 June 30, 2023 March 31, 2023 Net Income (Loss) Attributable to Common S
Slide 27: Reconciliation of GAAP Net Income (Loss) to Distributable Earnings (Loss)
Reconciliation of GAAP Net Income (Loss) to Distributable Earnings (Loss) (in thousands - except share and per share data) Year Ended December 31, Per Diluted December 31, Per Diluted December 31, Per Diluted 2023 Share(1) 2022 Share(1) 2021 Share(1) Net Income (Loss) Attributable to Common Stockhol
Slide 28: 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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