Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Q1 2024 Earnings Presentation
27 slides from Kkr Real Estate Finance Trust's earnings presentation, Apr 24, 2024
Slide 1: First Quarter 2024 Supplemental Information
First Quarter 2024 Supplemental Information APRIL 23, 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 $7.5 B $8.7 B 14% Investment Portfolio Financing Capacity KKR Ownership in KREF 100% 58% 78% $553 B $28 B (2) Senior Loans Multifamily & Fully Non-Mark-to-Market Gl
Slide 4: First Quarter 2024 Highlights
First Quarter 2024 Highlights • 1Q 2024 Net Loss(1) of ($0.13) per diluted share (includes a CECL provision of $33 million, or ($0.48) per diluted share) • 1Q 2024 Distributable Earnings(2) of $0.39 per diluted share; 1.54x dividend coverage Financials • Book Value per Share (“BVPS”) of $15.18 per s
Slide 5: 1Q'24 Financial Summary
1Q'24 Financial Summary Income Statement Balance Sheet ($ in Millions) 1Q'24 ($ in Millions) 1Q'24 Net interest income $39.1 Commercial real estate loans, net $6,869.6 Other income 7.6 Real estate owned 182.6 Cash 106.5 Provision for credit losses (33.3) Other 97.9 Operating expenses (16.9) Total As
Slide 6: Recent Operating Performance
Recent Operating Performance Net Income and Distributable Earnings Dividends and Book Value Per Share ($ in Millions) 1Q'23 4Q'23 1Q'24 1Q'23 4Q'23 1Q'24 Net income (loss)(1): Dividend per share: ($30.8) ($18.7) ($8.7) $0.43 $0.43 $0.25 Distributable earnings (loss)(2): Dividend yield on book value
Slide 7: Last Twelve Months Activity
Last Twelve Months Activity Portfolio Funding Activity – Outstanding Principal(1) ($ in Millions) Future Funding Obligations(2) $9,381 $9,071 $8,882 $8,573 $1,347 $8,252 $1,199 $1,012 $177 $339 $821 $165 $152 $139 $188 $106 $729 $15 $336 $69 $8,034 $8,034 $7,872 $7,872 $7,872 $7,885 $7,870 $7,870 $7
Slide 8: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio(1) Investment Type(2) Interest Rate Type ($ in Millions) $7,916 Fixed $7,752 $7,522 1% $6,792 Senior $4,998 Loans 100% Floating 99% Property Type 4Q'20 4Q'21 4Q'22 4Q'23 1Q'24 Other Hospitality (4) Geography 5% 5% Life Science (3) 10% 4% Industrial
Slide 9: Portfolio Credit Quality Overview
Portfolio Credit Quality Overview Collected 97% of interest payments due on the loan portfolio Loan-to-Value(1) Risk Rating Distribution Loan 0 2 60 4 3 Count 86% 26% 25% 24% 21% 4Q '23 3% 6% 7% 0% 1% 0 - 60% 60 - 65% 65 - 70% 70 - 75% 75 - 80% 1 2 3 4 5 (2) (2) Weighted Average LTV : 65% Weighted A
Slide 10: Watch List Migrations Quarter-over-Quarter
Watch List Migrations Quarter-over-Quarter In 1Q'24, KREF had two risk-rating downgrades 4Q’23 Watch List Intra-Quarter Activity 1Q’24 Watch List Total Principal: $512 million Risk Rating: 5 Total Principal: $700 million(1) Mountain View Office Mountain View Office Minneapolis Office Minneapolis Off
Slide 11: Case Studies: Watch List Loans (Risk Rating 5)
Case Studies: Watch List Loans (Risk Rating 5) Investment Mountain View Office Minneapolis Office Boston Office Seattle Life Science Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan(2) Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date July 2021 November 2017 February 2
Slide 12: Case Studies: Watch List Loans (Risk Rating 4)
Case Studies: Watch List Loans (Risk Rating 4) Investment San Carlos Life Science San Diego Multifamily West Hollywood Multifamily Raleigh Multifamily Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date February 2022 Octob
Slide 13: Overview of Real Estate Owned
Overview of Real Estate Owned As of March 31, 2024, approximately $165 million of equity(1) was held in our current and projected Real Estate Owned (REO) properties REO: Current and Projected Carrying Value(2) Carrying Value Location Property Type ($ in millions) per Square Foot Current REO Portland
Slide 14: Financing Overview: 78% Non-Mark-To-Market
Financing Overview: 78% Non-Mark-To-Market Diversified financing sources totaling $8.7 billion with $2.9 billion of undrawn capacity Summary of Outstanding Financing Leverage Ratios Outstanding Maximum Weighted Avg. Advance Non- ($ 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 $617 $387 $330 $1,335 Capacity $1,000 $600 $400 $2,000 Collateral: Loans / Principal 8 Loans / $958 9 Loans / $551 7 Loans / $508 24 Loans / $2,017 Balance Final Stated Maturity(1) September 2026
Slide 16: Liquidity Overview
Liquidity Overview In addition to the available liquidity below, KREF had $108 million of unencumbered senior loans that can be pledged to financing facilities subject to lender approval as of March 31, 2024 Sources of Available Liquidity (4) ($ in Millions) $700 $600 $64 $500 $400 $450 $300 $620 $5
Slide 17: Earnings Sensitivity to Change in SOFR
Earnings Sensitivity to Change in SOFR 99% floating-rate loan portfolio indexed to Term SOFR Quarterly Net Interest Income Per Share Sensitivity to Change in Market Rates(1) Term SOFR = 5.33% ($ Impact Per Share) As of March 31, 2024 $0.05 $0.04 $0.03 $0.03 $0.02 $0.02 $0.01 $0.00 $0.00 ($0.01) ($0.
Slide 18: Appendix
Appendix KREF
Slide 19: Portfolio Details
Portfolio Details ($ in Millions) Outstanding Committed Investment Total Whole Principal / Net Max Remaining Loan Per Origination Risk # Investment(1) Location Property Type Principal Coupon(4)(5) Date Loan(2) Investment Equity(3) Term (Yrs)(4)(6) SF / Unit / Key(7) LTV(4)(8) Rating Amount(2) Amount
Slide 20: Portfolio Details
Portfolio Details ($ in Millions) Outstanding Committed Investment Total Whole Principal / Net Max Remaining Loan Per Origination Risk # Investment(1) Location Property Type Principal Coupon(4)(5) Date Loan(2) Investment Equity(3) Term (Yrs)(4)(6) SF / Unit / Key(7) LTV(4)(8) Rating Amount(2) Amount
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 loans that were fully written off. For Senior Loan 9, the total whole
Slide 22: Fully Extended Loan Maturities
Fully Extended Loan Maturities Fully extended weighted average loan maturity of 2.5 years Fully Extended Loan Maturities ($ in Millions) $4,000 $3,317 $3,000 $2,715 $2,000 $1,000 $664 $318 $313 $0 2024 2025 2026 2027 2028 Note: Based on current principal amount. Excludes real estate owned and CMBS B
Slide 23: KREF Debt Maturities
KREF Debt Maturities No corporate debt or final facility maturities due until 2026 Upcoming Debt Maturities by Year ($ in Millions) $2,000 $1,738 $1,500 $1,347 $1,000 $500 $150 $176 $121 $0 2024 2025 2026 2027 2028 Note: Based on outstanding principal balance of secured financing agreements (does no
Slide 24: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) March 31, 2024 December 31, 2023 Assets Cash and cash equivalents $ 106,517 $ 135,898 Commercial real estate loans, held-for-investment 7,113,256 7,343,548 Less: Allowance for credit losses (243,634) (210,470) Commercial re
Slide 25: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended March 31, 2024 December 31, 2023 March 31, 2023 Net Interest Income Interest income $ 151,620 $ 165,024 $ 152,530 Interest expense 112,476 118,532 105,976 Total net ineterest income 39,144 46,492 46
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) Three Month Ended Per Diluted December 31, Per Diluted Per Diluted March 31, 2024 Share(1) 2023 Share(1) March 31, 2023 Share(1) Net Income (Loss) Attributable to Common Stockho
Slide 27: Key Definitions
Key Definitions “Distributable Earnings": The Company defines Distributable Earnings as net income (loss) attributable to common stockholders or, without duplication, owners of the Company's subsidiaries, computed in accordance with GAAP, including realized losses not otherwise included in GAAP net
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