Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (February 2024)
41 slides from Kkr Real Estate Finance Trust's investor presentation, February 2024
Slide 1: Investor Presentation
Investor Presentation FEBRUARY 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 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 Strong Levels of Sponsorship Liquidity KKR Real Estate Finance Trust (“KREF”) benefits from its integration within K
Slide 5: KKR Sponsorship
KKR Sponsorship
Slide 6: KKR Platform – A Leading Global Asset Manager
KKR Platform – A Leading Global Asset Manager Founded 1976 $553 B $28 B 755 26 / 18 Assets Under Management Internal Balance Sheet Investment Professionals Cities / Countries KKR Real Estate Attributes KKR operates with a single culture that $69 billion in AUM in Real Estate strategies globally(1) r
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 $48B of Collateral Value(1) Integrated Real Estate Platform Own or lend on Real Estate $245B 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 $98B of AUM, 199 KKR Credit Integration Driv
Slide 9: Experienced Leadership Team
Experienced Leadership Team
Slide 10: KKR Real Estate Credit Investment Committee
KKR Real Estate Credit Investment Committee Diversity of Manager’s Investment Committee creates a thorough vetting process US Investment Committee Matt Salem Patrick Mattson Ralph Rosenberg Chris Lee Joel Traut CEO KREF President & COO KREF Chairman of KREF Board Vice Chairman of KREF Board Partner
Slide 11: KKR Real Estate Finance Trust Team
KKR Real Estate Finance Trust Team Leadership Team Ralph Rosenberg Chris Lee Matt Salem Patrick Mattson Kendra Decious Chairman of the Board Vice Chairman of the Board Chief Executive Officer President Chief Financial Officer Member of the Board Chief Operating Officer Treasurer Senior Investment Te
Slide 12: Differentiated Investment Strategy
Differentiated Investment Strategy
Slide 13: Differentiated, Conservative Investment Strategy
Differentiated, Conservative Investment Strategy Lending on institutional quality real estate owned by high-quality sponsors in top markets Institutional Quality Top Markets with High-Quality, Experienced & Commercial Real Estate Strong Underlying Fundamentals Well-Capitalized Sponsors 79% Select Ex
Slide 14: Best In Class Investment Portfolio
Best In Class Investment Portfolio
Slide 15: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio(1) Investment Type(2) Interest Rate Type ($ in Millions) Property Type (4) Geography (3) 6% 12% 6% Washington, D.C. Office(5) Multifamily 8% 18% 15% 92% 9% Other <5%: 26% (1) Includes real estate owned and CMBS B-Pieces held through an equity method
Slide 16: Multifamily and Office Loan Overview
Multifamily and Office Loan Overview Multifamily: 41% of Loan Portfolio Office: 24% of Loan Portfolio $100 M 70% 0% $155 M 62% 2.0% Average Loan Size(1) W.A. LTV(2) Construction Loans Average Loan Size(1) W.A. LTV(2) Co-Working Exposure 81% 92% 2015 65% 76% 9.9 years W.A. Occupancy W.A. Occupancy Me
Slide 17: KREF Office Loan Portfolio Overview
KREF Office Loan Portfolio Overview Two-thirds of the outstanding principal balance of KREF’s Office segment is Risk-Rated 3 or better KREF Office Loan Portfolio Office Portfolio Breakdown Current Current Investment Loan Commitment Principal Loan Max Term 5-Rated Location Date Purpose ($ Millions) (
Slide 18: KREF Life Science Loan Portfolio Overview
KREF Life Science Loan Portfolio Overview 100% of KREF’s Risk-Rated 3 exposure is located in the top two Life Science markets and approximately 40% of future funding supports “good news” leasing KREF Life Science Loan Portfolio Life Science Portfolio Breakdown Current Current Investment Loan Commitm
Slide 19: 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 3Q '23 Weighted Average LTV(3): 65% Weighted Average Risk Rating(3): 3.2 Loan Count 0 2 60 4 3 4Q '23 Weighted Average LTV(3): 66%
Slide 20: 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 21: 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 22: 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 23: Overview of Real Estate Owned
Overview of Real Estate Owned Approximately $150 million of equity(1) is held in our current and projected Real Estate Owned (REO) properties REO: Current and Projected Location Property Type Carrying Value Carrying Value ($ in millions) per Square Foot Portland, OR Retail / Redevelopment $82 n.a. P
Slide 24: Conservative Liability Management
Conservative Liability Management
Slide 25: 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) Capacity Principal Coupon(1) Rate MTM Amount (2) Term C
Slide 26: 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) (1) Based on outstanding principal balance of financing (2) Represents the earlier of (i) the maximum maturity of the underlying loans ple
Slide 27: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Counterparty Total or 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 28: 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) (1) (1) Represents under-levered amount
Slide 29: 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 Change in SOFR Note: Based on portfolio as of December 31, 2023
Slide 30: 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 31: Key Highlights
Key Highlights Best in class investment portfolio – 55% Fully integrated with KKR; aligned with Multifamily and Industrial shareholders – 14% ownership; $69B of real estate AUM Scaled investment portfolio – $7.8 billion Experienced leadership & asset management predominantly senior loan portfolio te
Slide 32: Appendix
Appendix
Slide 33: Portfolio Details
Portfolio Details ($ in Millions) Committed Current Investment Total Whole Principal Net Max Remaining Loan Per Risk # Investment(1) Location Property Type Date Principal Coupon(4)(5) LTV(4)(8) Rating Loan(2) Amount Equity(3) Term (Yrs)(4)(6) SF / Unit / Key(7) Amount(2) Senior Loans(9) 1 Senior Loa
Slide 34: Portfolio Details
Portfolio Details ($ in Millions) Committed Current Investment Total Whole Principal Net Max Remaining Loan Per Risk # Investment(1) Location Property Type Date Principal Coupon(4)(5) LTV(4)(8) Rating Loan(2) Amount Equity(3) Term (Yrs)(4)(6) SF / Unit / Key(7) Amount(2) Senior Loans(9) 51 Senior Lo
Slide 35: 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 $5.5 million that w
Slide 36: Fully Extended Loan Maturities
Fully Extended Loan Maturities Fully extended weighted average loan maturity of 2.7 years Fully Extended Loan Maturities(1)(2) ($ in Millions) (1) Excludes real estate owned and CMBS B-Pieces held through an equity method investment (2) Based on current principal amount 36
Slide 37: 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 38: 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 39: 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 40: 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 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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