Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (February 2022)
40 slides from Kkr Real Estate Finance Trust's investor presentation, February 2022
Slide 1: Investor Presentation | February 2022
Investor Presentation | February 2022
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 $6.8 Billion $6.7 Billion 23% Investment Portfolio Financing Capacity KKR Ownership in KREF 99% 74% 71% $471 Billion $25 Billion Senior Loans Multifamily & Office F
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 Portfolio KKR Repositioning Sponsorship to Benefit in Higher Rate Environment KKR Real Estate Finance Trust (“KREF”) ben
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 $471bn $25bn 767 21 / 16 Assets Under Management Internal Balance Sheet Investment Professionals Cities / Countries KKR Attributes KKR Real Estate Attributes ~$41 billion in AUM in Real Estate strategies globally(1) KKR operates with a singl
Slide 7: Integrated Americas Real Estate Platform
Integrated Americas Real Estate Platform • REPA I / II / III: opportunistic RE Equity ~$21bn 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 $110BN of AUM, ~203 Integration Drives KKR C
Slide 9: Experienced Leadership Team
Experienced Leadership Team 9
Slide 10: KKR Real Estate Credit Investment Committee
KKR Real Estate Credit Investment Committee Investment Committee MATT SALEM PATRICK MATTSON RALPH ROSENBERG CHRIS LEE CEO KREF President & COO KREF Chairman of KREF Board Vice Chairman of KREF Board Member of KREF Board Managing Director & COO of Partner & Global Head Partner & Head of Partner & Hea
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 KENDRA DECIOUS Chairman of the Board Vice Chairman of the Board Chief Executive Officer President & Chief Operating Chief Financial Officer & Treasurer Member of the Board Officer M
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: 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 15: 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 $145.9 billion of Deals Screened: $145.9bn(1) financing opportuniti
Slide 16: Best In Class Investment Portfolio
Best In Class Investment Portfolio 16
Slide 17: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio Growth Investment Type(3) Interest Rate Type ($ in Millions) Non-Senior Current Portfolio: 0.6% $7.1 billion(1) Including net funding and repayment $6,792 activity subsequent to quarter-end $5,075 $4,998 Floating $4,134 100.0% Senior Loans $2,083 99
Slide 18: Multifamily and Office Loan Overview
Multifamily and Office Loan Overview Multifamily: 46% of Loan Portfolio Office: 28% of Loan Portfolio $114 mm 71% 0% $171 mm 65% 3% Average Loan Size W.A. LTV Construction Loans Average Loan Size W.A. LTV Co-Working Exposure 73% 91%(1) 2018 70% 72%(1) 6.7 years W.A. Occupancy W.A. Occupancy Median Y
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 Five Class-A Office Buildings Two Class-A Office
Slide 21: Portfolio Credit Quality Remains Strong
Portfolio Credit Quality Remains Strong • Collected 97.3% 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 3Q'21 LTV(3): 67% 3Q'21 82% Risk Ra
Slide 22: Case Studies: Watch List Loans (Risk Rating 4 & 5)
Case Studies: Watch List Loans (Risk Rating 4 & 5) Investment New York Condo Queens Industrial New York Condo Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date December 2018 July 2017 August 2017 Collateral 126-Unit Class-A Residential Condominiu
Slide 23: Conservative Liability Management
Conservative Liability Management 23
Slide 24: Liability Management: 71% Non-Mark-To-Market
Liability Management: 71% Non-Mark-To-Market Conservative liability management focused on Diversified, non-mark-to-market financing capacity Outstanding Secured Financing(1)(2) IPO Q4 2021 Term Lending Agreements 21% Term Term Credit Facilities Credit 29% Facilities 100% Collateralized Loan Obligati
Slide 25: Financing Overview: 71% Non-Mark-To-Market
Financing Overview: 71% Non-Mark-To-Market • 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) Term Credit Facilities $1,840 $1,555 L+1.6% 69.7%
Slide 26: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Counterparty Total / Weighted Average Drawn $981 $384 $191 $1,555 Capacity $1,000 $600 $240 $1,840 Collateral: Loans / Principal 14 Loans / $1,396 8 Loans / $552 6 Loans / $282 28 Loans / $2,230 Balance Final Stated Maturity(1) September 202
Slide 27: Liquidity Overview
Liquidity Overview • In addition to the available liquidity below, KREF had $235.3 million of unencumbered senior loans that can be pledged to financing facilities subject to lender approval, as of December 31, 2021. Sources of Available Liquidity ($ in Millions) $600.0 $528.9 $500.0 $57.4 $400.0 $2
Slide 28: Portfolio Repositioning for Higher Rate Environment
Portfolio Repositioning for Higher Rate Environment • 100% of the loan portfolio is indexed to one-month USD LIBOR Portfolio Weighted Average LIBOR Floor • 54% of the portfolio is subject to a LIBOR floor of at least 0.25% 1.70% 1.64% and 9% of total outstanding financing, including the Secured Term
Slide 29: Recent Operating Performance
Recent Operating Performance Net Income(1) and Distributable Earnings(2) Dividends and Book Value Per Share 1Q'21 2Q'21 3Q'21 4Q'21 ($ in Millions) 1Q'21 2Q'21 3Q'21 4Q'21 Net income: Dividend per share: $29.2 $29.3 $32.0 $35.2 $0.43 $0.43 $0.43 $0.43 Distributable earnings: Dividend yield on book v
Slide 30: Key Highlights
Key Highlights Best in class investment portfolio - 74% Fully integrated with KKR; aligned with multifamily and office (91% of office portfolio is shareholders – 23% ownership; ~$41bn of real Class-A) estate AUM Scaled investment portfolio – Funded portfolio Experienced leadership & asset management
Slide 31: Appendix
Appendix 31
Slide 32: Portfolio Details
Portfolio Details ($ in Millions) Investment Total Whole Committed Current Net Future (5)(6) Max Remaining Loan Per (5)(8) Risk # Investment Location Property Type (2) (2) (3) (4) Coupon (5)(7) LTV Date Loan Principal Amount Principal Amount Equity Funding Term (Yrs) SF / Unit / Key Rating (1) Senio
Slide 33: Portfolio Details
Portfolio Details ($ in Millions) Investment Total Whole Committed Current Net Future Max Remaining Loan Per Risk # Investment Location Property Type (2) (2) (3) (4) Coupon(5)(6) (5)(7) LTV(5)(8) Date Loan Principal Amount Principal Amount Equity Funding Term (Yrs) SF / Unit / Key Rating (1) Senior
Slide 34: 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 35: Fully Extended Loan Maturities
Fully Extended Loan Maturities • Fully extended weighted average loan maturity of 3.6 years(1) Fully Extended Loan Maturities(1) ($ in Millions) $3,000 $2,803.9 $2,500 $2,000 $1,508.6 $1,500 $1,000 $917.7 $609.7 $535.5 $500 $301.8 $0 2022 2023 2024 2025 2026 2027 (1) Excludes RECOP I CMBS B-Piece in
Slide 36: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) December 31, 2021 December 31, 2020 Assets (1) Cash and cash equivalents $ 271,487 $ 110,832 Commercial real estate loans, held-for-investment 6,316,733 4,844,534 Less: Allowance for credit losses (22,244) (59,801) Commerci
Slide 37: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended Year Ended December 31, 2021 September 30, 2021 December 31, 2020 December 31, 2021 December 31, 2020 December 31, 2019 Net Interest Income Interest income $ 72,715 $ 75,320 $ 63,201 $ 279,950 $ 269
Slide 38: Reconciliation of GAAP Net Income to Distributable Earnings
Reconciliation of GAAP Net Income to Distributable Earnings (in thousands - except share and per share data) Year Ended Three Months Ended December 31, Per Diluted December 31, September 30, June 30, March 31, 2021 Share(4)(5) 2021 2021 2021 2021 Net Income (Loss) Attributable to Common Stockholders
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) Year Ended December 31, Per Diluted December 31, Per Diluted December 31, Per Diluted 2021 Share(4) 2020 Share(4) 2019 Share(4) Net Income (Loss) Attributable to Common Stockholders $ 125,635
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
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