Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (May 2023)
41 slides from Kkr Real Estate Finance Trust's investor presentation, May 2023
Slide 1: Investor Presentation
Investor Presentation M AY 2 0 2 3
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 $8.0 B $9.0 B 14% Investment Portfolio Financing Capacity KKR Ownership in KREF 100% 57% 76% $504 B $24 B Senior Loans Multifamily & Fully Non-Mark-to-Market(2) Glo
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 for Rate Environment KKR Real Estate Finance Trust (“KREF”) benefits from its integ
Slide 5: KKR Sponsorship
KKR Sponsorship
Slide 6: KKR Platform – A Leading Global Asset Manager
KKR Platform – A Leading Global Asset Manager Founded 1976 $504 B $24 B 813 23 / 17 Assets Under Management Internal Balance Sheet Investment Professionals Cities / Countries KKR Real Estate Attributes KKR operates with a single culture that rewards investment discipline, creativity, ~$64 billion in
Slide 7: Integrated Global Real Estate Platform
Integrated Global 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 Loans $44B of Collateral Value(1) Integrated Real Estate Platform Own or lend on Real Estate $207B RE assets Real Estate Equity C
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 $94B of AUM, 209 KKR Credit Integration Driv
Slide 9: Experienced Leadership Team
Experienced Leadership Team
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
Slide 13: Differentiated, Conservative Investment Strategy
Differentiated, Conservative Investment Strategy Lending on institutional quality real estate owned by high-quality sponsors in top markets Institutional Quality Top Markets with High-Quality, Experienced & Commercial Real Estate Strong Underlying Fundamentals Well-Capitalized Sponsors 80% Select Ex
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 Over the last twelve months, KREF screened $105.6 billion of financing opportunities and originated $1.9 billion, 1.8% of senior loans screened Large opportunity set funneled through rigorous screening and approval process Rigorous Screening The “K
Slide 16: Best In Class Investment Portfolio
Best In Class Investment Portfolio
Slide 17: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio Growth Investment Type(2) Interest Rate Type ($ in Millions) 100% Floating Property Type (4) Geography(1) (3) 5% 10% 5% Office(5) Multifamily 6% Washington, D.C. 8% 18% 85% 16% 11% Other <5%: 21% Note: The charts above are based on total assets. Tot
Slide 18: Multifamily and Office Loan Overview
Multifamily and Office Loan Overview Multifamily: 44% of Loan Portfolio Office: 25% of Loan Portfolio $102 M 69% 0% $167 M 62% 2.4% Average Loan Size(1) W.A. LTV(2) Construction Loans Average Loan Size(1) W.A. LTV(2) Co-Working Exposure 78% 89% 2016 68% 75% 9.5 years W.A. Occupancy W.A. Occupancy Me
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 Class-A Office Five Class-A Office Buildings Two
Slide 21: Case Studies: Largest Three Industrial Loans
Case Studies: Largest Three Industrial Loans Investment Western U.S. Industrial Portfolio Bronx Industrial U.S. Industrial Portfolio Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date April 2022 August 2021 June 2022 14 Class A/B Industrial Proper
Slide 22: Portfolio Credit Quality Overview
Portfolio Credit Quality Overview Collected 100% of interest payments due on loan portfolio Loan-to-Value(1)(2) Risk Rating Distribution (% of loan portfolio) (% of loan portfolio) Weighted Average Weighted Average 4Q'22 LTV(3): 66% 4Q'22 Risk Rating(3): 3.2 0 0 70 3 3 Loan Count Weighted Average We
Slide 23: Case Studies: Watch List Loans (Risk Rating 5)
Case Studies: Watch List Loans (Risk Rating 5) Investment Minneapolis Office Philadelphia Office Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date November 2017 April 2019 Collateral Two Class-A Office Buildings 4-Building, 711k RSF Office Portfolio totaling 1.1mm SF Loan
Slide 24: Case Studies: Watch List Loans (Risk Rating 4)
Case Studies: Watch List Loans (Risk Rating 4) West Hollywood Investment Mountain View Office Washington, D.C. Office Washington, D.C. Office Chicago Office Multifamily Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Sen
Slide 25: Conservative Liability Management
Conservative Liability Management
Slide 26: Financing Overview: 76% Non-Mark-To-Market
Financing Overview: 76% Non-Mark-To-Market Diversified financing sources totaling $9.0 billion with $2.7 billion of undrawn capacity Summary of Outstanding Financing Leverage Ratios Maximum Outstanding Weighted Avg. Advance Non- ($ in Millions) Capacity Face Amount Coupon(1) Rate MTM (2) Term Credit
Slide 27: Focused on Growing Non-MTM Financing Capacity
Focused on Growing Non-MTM Financing Capacity Creating a diversified liability structure built on non-mark-to-market financing has been a top priority Summary of Non-MTM Financing Growth Since June 30, 2021 $ in Millions $125 $4,111 $516 Term Lending $1,350 Agreements $540 540 Bespoke Liabilities As
Slide 28: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Total or Counterparty Weighted Average Drawn $715 $574 $240 $1,529 Capacity $1,000 $600 $240 $1,840 Collateral: Loans / Principal 10 Loans / $974 11 Loans / $822 7 Loans / $422 28 Loans / $2,218 Balance Final Stated Maturity(1) September 202
Slide 29: Liquidity Overview
Liquidity Overview In addition to the available liquidity below, KREF had $100 million of unencumbered senior loans that can be pledged to financing facilities subject to lender approval as of March 31, 2023 Sources of Available Liquidity ($ in Millions) (1) (1) Represents under-levered amounts unde
Slide 30: Portfolio Positioned for Rate Environment
Portfolio Positioned for Rate Environment 100% floating-rate loan portfolio continues to benefit from a rising rate environment 64% indexed to Term SOFR and 36% to one-month LIBOR Annual Net Interest Income Per Share Sensitivity to Change in Market Rates One-month LIBOR = 4.86% ($ Impact Per Share)
Slide 31: Recent Operating Performance
Recent Operating Performance Net Income and Distributable Earnings Dividends and Book Value Per Share ($ in Millions) 1Q'22 4Q'22 1Q'23 1Q'22 4Q'22 1Q'23 Net income (loss)(1): Dividend per share: $29.8 $14.6 ($30.8) $0.43 $0.43 $0.43 Distributable earnings(2): Dividend yield on book value per share:
Slide 32: Key Highlights
Key Highlights Best in class investment portfolio – 57% Fully integrated with KKR; aligned with Multifamily and Industrial; 8% Life Science shareholders – 14% ownership; ~$64B of real estate AUM Scaled investment portfolio – +11% in net funded Experienced leadership & asset management portfolio grow
Slide 33: Appendix
Appendix
Slide 34: Portfolio Details
Portfolio Details ($ in Millions) Committed Current Investment Total Whole 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 Senior Loans(9) 1 Senior Loa
Slide 35: Portfolio Details
Portfolio Details ($ in Millions) Committed Current Investment Total Whole 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 Senior Loans(9) 51 Senior Lo
Slide 36: 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 sole REO investment. Excludes one impaired mezzanine loan with an outstanding principal of $5.5 m
Slide 37: Fully Extended Loan Maturities
Fully Extended Loan Maturities Fully extended weighted average loan maturity of 3.2 years(1) Fully Extended Loan Maturities(1) ($ in Millions) (1) Excludes CMBS B-Pieces held through an equity method investment 37
Slide 38: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) March 31, 2023 December 31, 2022 Assets Cash and cash equivalents(1) $ 254,096 $ 239,791 Commercial real estate loans, held-for-investment 7,612,238 7,494,138 Less: Allowance for credit losses (167,360) (106,974) Commercial
Slide 39: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended March 31, 2023 December 31, 2022 March 31, 2022 Net Interest Income Interest income $ 152,530 $ 143,508 $ 73,230 Interest expense 105,976 91,592 32,459 Total net ineterest income 46,554 51,916 40,77
Slide 40: Reconciliation of GAAP Net Income (Loss) to Distributable Earnings
Reconciliation of GAAP Net Income (Loss) to Distributable Earnings (in thousands - except share and per share data) Three Months Ended Per Diluted December 31, Per Diluted Per Diluted March 31, 2023 Share(1) 2022 Share(1) March 31, 2022 Share(1) Net Income (Loss) Attributable to Common Stockholders
Slide 41: 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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