Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (November 2021)
40 slides from Kkr Real Estate Finance Trust's investor presentation, November 2021
Slide 1: Investor Presentation | November 2021
Investor Presentation | November 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 KREF’s Manager Fully Portfolio Balance Sheet Integrated with KKR $5.8 Billion $6.7 Billion 23% Investment Portfolio Financing Capacity KKR Ownership in KREF(4) 98% 71% 81% $459 Billion $25 Billion Senior Loans Multifamily & Offic
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”) benefits from its integration wi
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 $459bn $25bn ~757 21 / 15 Assets Under Management Internal Balance Sheet Investment Professionals Cities / Countries KKR Attributes KKR Real Estate Attributes ~$38 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 • REPA I / II / III: opportunistic RE Equity ~$16bn of asset • KPPA: core+ value(1) Integrated • KREST: core+ Real Estate Platform • KREF: primarily senior loans on • Differentiated access to RE Senior Loans transitional properties in the top 15 MSAs informat
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 $105BN of AUM, ~199 Integration Drives profe
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 Property Type <1% <2% 100% 100% 83% 27% 80% 80% 71% 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% 8% 0% 0% At IPO 3Q'20 3Q'21 At IPO 3Q'20 3Q'21 Av
Slide 15: Targeted Strike Zone
Targeted Strike Zone Representative Terms on Newly-Originated Senior Loans Loan Size $50-$400 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 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 $121.0 billion of Deals Screened: $121.0bn(1) financing opportuniti
Slide 17: Best In Class Investment Portfolio
Best In Class Investment Portfolio 17
Slide 18: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio Growth Investment Type(3) Interest Rate Type ($ in Millions) Mezz/Other Current Portfolio: 0.9% Fixed 0.1% $6.0 billion(1) $5,826 Including net funding and repayment $5,221 $5,035 activity subsequent to quarter-end $3,383 Senior Floating Loans 99.9%
Slide 19: Multifamily and Office Loan Overview
Multifamily and Office Loan Overview Multifamily: 44% of Loan Portfolio Office: 27% of Loan Portfolio $125 mm 69% 1% $172 mm 66% 2% Average Loan Size W.A. LTV Construction Loans Average Loan Size W.A. LTV Co-Working Exposure 63% 89%(1) 2018 68% 70%(1) 6.3 years W.A. Occupancy W.A. Occupancy Median Y
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 Investment Date September 2021 July 2021 November 2017 Five Class-A Office Buildings Two Class-A Office
Slide 22: Portfolio Credit Quality Remains Strong
Portfolio Credit Quality Remains Strong • Collected 97.4% of interest payments due on loan portfolio and 100% on loans rated 4 or better Loan-to-Value(1,2) Risk Rating Distribution (% of total loan portfolio) (% of loan portfolio) Weighted Average Weighted Average 2Q'21 LTV(3): 67% 2Q'21 87% Risk Ra
Slide 23: Case Studies: Watch List Loans (Risk Rating 4 & 5)
Case Studies: Watch List Loans(1) (Risk Rating 4 & 5) Investment Portland Retail(2) New York Condo Brooklyn Hotel Queens Industrial New York Condo Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Da
Slide 24: Conservative Liability Management
Conservative Liability Management 24
Slide 25: Liability Management: 81% Non-Mark-To-Market
Liability Management: 81% Non-Mark-To-Market Conservative liability management focused on growing diversified non-mark-to-market financing capacity Outstanding Secured Financing(1) IPO 3Q’20 3Q’21 Term Credit Term Credit Facilities Term Loan Asset Specific Facilities Collateralized Asset Specific 22
Slide 26: Diversified Financing Sources Totaling $6.7 Billion
Diversified Financing Sources Totaling $6.7 Billion Summary of Outstanding Financing Leverage Ratios ($ in Millions) Maximum Outstanding Weighted Avg. Advance Non- Capacity Face Amount Coupon Rate MTM (1) 3.4x Term Credit Facilities $1,840 $847 L+1.7% 66.7% 0.2x Term Lending Agreements $1,213 $1,008
Slide 27: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Counterparty Total / Weighted Average Drawn $495 $260 $92 $847 Capacity $1,000 $600 $240 $1,840 Collateral: Loans / Principal 7 Loans / $753 5 Loans / $360 5 Loans / $157 17 Loans / $1,270 Balance Final Stated Maturity(1) September 2026 Dece
Slide 28: Liquidity Overview
Liquidity Overview • In addition to the available liquidity below, KREF had $373.7 million of unencumbered senior loans that can be pledged to financing facilities subject to lender approval, as of September 30, 2021. Sources of Available Liquidity ($ in Millions) $600.0 $5.4 $516.2 $500.0 $18.1 $40
Slide 29: Earnings Power from LIBOR Floors
Earnings Power from LIBOR Floors 29
Slide 30: Portfolio Benefits from Attractive in the Money LIBOR Floors
Portfolio Benefits from Attractive in the Money LIBOR Floors • 99.9% of the loan portfolio is indexed to one-month USD LIBOR • Portfolio benefits from current low rate environment given in-place LIBOR floors 50% of the portfolio is subject to a LIBOR floor of at least 0.75% Portfolio weighted av
Slide 31: Recent Operating Performance
Recent Operating Performance Net Income(1) and Distributable Earnings(2) Dividends and Book Value Per Share 3Q'20 2Q'21 3Q'21 ($ in Millions) 3Q'20 2Q'21 3Q'21 Net income: Dividend per share: $31.4 $29.3 $32.0 $0.43 $0.43 $0.43 Distributable earnings: Dividend yield on book value per share: $32.5 $3
Slide 32: Key Highlights
Key Highlights Best in class investment portfolio - 71% Fully integrated with KKR; aligned with multifamily and office; only 2% retail shareholders – 23% ownership(1); ~$38bn of real estate AUM Conservative liability management – 81% Experienced leadership & asset management diversified non-mark-to-
Slide 33: Appendix
Appendix 33
Slide 34: Portfolio Details
Portfolio Details Investment Total Whole Committed Current Net Future (5)(6) Max Remaining Loan Per (5)(8) Risk # Investment Location Property Type Coupon LTV Date Loan(2) Principal Amount(2) Principal Amount Equity(3) Funding(4) Term (Yrs)(5)(7) SF / Unit / Key Rating Senior Loans(1) 1 Senior Loan
Slide 35: Portfolio Details
Portfolio Details (1) Senior loans include senior mortgages and similar credit quality investments, including junior participations in our originated senior loans for which we have syndicated the senior participations and retained the junior participations for our portfolio and excludes vertical loa
Slide 36: Fully Extended Loan Maturities
Fully Extended Loan Maturities • Fully extended weighted average loan maturity of 3.3 years(1) Fully Extended Loan Maturities(1) ($ in Millions) $2,500 $2,108.9 $2,000 $1,772.0 $1,500 $1,000 $835.4 $613.5 $500 $261.5 $152.0 $47.3 $0 2021 2022 2023 2024 2025 2026 2027 (1) Excludes RECOP I CMBS B-Piec
Slide 37: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) September 30, 2021 December 31, 2020 Assets Cash and cash equivalents $ 307,731 $ 110,832 Commercial real estate loans, held-for-investment 5,442,734 4,844,534 Less: Allowance for credit losses (58,807) (59,801) Commercial
Slide 38: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended Nine Months Ended September 30, 2021 June 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020 Net Interest Income Interest income $ 75,320 $ 67,149 $ 67,689 $ 207,235 $ 205,987 Interes
Slide 39: 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 September 30, 2021 June 30, 2021 September 30, 2020 Net Income (Loss) Attributable to Common Stockholders $ 31,989 $ 29,264 $ 31,351 Adjustments Non-cash equity compensatio
Slide 40: 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
KKR Real Estate Finance Trust — Investor Presentation (November 2021) on 6ix