Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (February 2019)
28 slides from Kkr Real Estate Finance Trust's investor presentation, February 2019
Slide 1: KKR Real Estate Finance Trust Inc. Investor Presentation
KKR Real Estate Finance Trust Inc. Investor Presentation February 2019
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: Overview of KKR Real Estate Finance Trust Inc. (KREF)
Overview of KKR Real Estate Finance Trust Inc. (KREF) Focused on larger, senior floating-rate loans Direct origination platform Fully integrated within KKR Real Estate KREF is a publicly traded externally managed REIT that ~4.5-year operating history; IPO in May 2017 focuses on originating s
Slide 4: Successfully Executing on Business Strategy
Successfully Executing on Business Strategy Portfolio Financing Activity $2.7BN 2018 Originations $4.1BN Financing Capacity (1) $4.1BN Funded Portfolio $1.0BN Managed Collateralized Loan Obligation 100% Senior Floating-Rate Loan Originations 60% Non-Mark-to-Market Financing (2) 100% Pe
Slide 5: KKR Platform
KKR Platform • KREF is externally managed by KKR Real Estate Finance Manager LLC, a subsidiary of KKR (NYSE: KKR, Market Capitalization: $19.5BN(1)), a leading global investment firm with an over 40-year history and a diverse mix of investments across multiple asset classes, including private equity
Slide 6: Integration with KKR Differentiates KREF in the Marketplace
Integration with KKR Differentiates KREF in the Marketplace • KREF further 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 Best-in-class fin
Slide 7: KKR Real Estate Credit Investment Committee
KKR Real Estate Credit Investment Committee • Diversity of Manager’s Investment Committee creates a thorough vetting process that enables KREF to evaluate potential transactions through multiple lenses Manager Investment Committee Chris Lee Matt Salem Patrick Mattson Ralph Rosenberg Co-CEO & Co-Pres
Slide 8: Targeted KREF Strike Zone
Targeted KREF Strike Zone • KREF focuses on floating-rate senior loans collateralized by high-quality commercial real estate: Representative Terms on Newly-Originated Key Attributes of KREF’s Investments Senior Loans Loan Size $50 - $400 million Collateral Primarily Transitional CRE Properties Prima
Slide 9: Key Investment Decision-Making Factors
Key Investment Decision-Making Factors Disciplined Evaluation of Potential Investments Market Dynamics Attractive Basis • High barrier-to-entry markets • Discount to replacement cost • Infill locations • Borrower basis at a discount to competitive • Favorable market dynamics owners in the market
Slide 10: Rigorous Investment Screening and Selection Process
Rigorous Investment Screening and Selection Process • For LTM December 31, 2018, KREF has screened $41.6 billion of financing opportunities and originated $2.7 billion (6%) of senior loans Large opportunity set funneled through rigorous screening and approval process Rigorous Screening The “KKR Edge
Slide 11: 2018 Loan Originations
2018 Loan Originations • 2018 Originations of $2.7 billion of floating-rate senior loans • Subsequent to quarter-end, originated one floating-rate senior loan totaling $76.0 million Summary of 2018 Originations Annual Loan Originations ($ in Millions) $2,729 19 • New loans originated +406% $1,483 $2
Slide 12: KREF Portfolio by the Numbers
KREF Portfolio by the Numbers • Outstanding total portfolio of $4.1 billion as of December 31, 2018 • 98% increase in portfolio size since December 31, 2017 Total Portfolio Growth Property Type(1) ($ in Millions) ($ in Millions) $1,794 • Office YoY increase of 127% $1,719 • Multifamily YoY increase
Slide 13: KREF Portfolio by the Numbers
KREF Portfolio by the Numbers • $4.1 billion portfolio comprised of 43 investments • Portfolio weighted average LTV of 68%(1) Geography(2) Investment Type(3) Mezz CMBS 1% 1% Senior Loans 98% Interest Rate Type Fixed 2% Floating 98% Note: Map does not include Midwest Mezzanine portfolio ($5.5 million
Slide 14: Portfolio Credit Quality Remains Strong
Portfolio Credit Quality Remains Strong • KREF’s loan portfolio is 100% performing, with no defaulted or impaired loans Loan-to-Value(1,2) Risk Rating Distribution(2,4) (% of total portfolio) (% of portfolio) Weighted Average Weighted Average LTV(3): 68% 87% Risk Rating(3): 2.9 3Q’18 3Q’18 28% 26% 2
Slide 15: Recent Operating Performance
Recent Operating Performance • 4Q 2018 Net Income attributable to common stockholders of $19.7 million or $0.34 per share; 2018 Net Income attributable to common stockholders of $87.3 million or $1.58 per share • 4Q Net Core Earnings(1) of $22.2 million or $0.38 per share; 2018 Net Core Earnings(1)
Slide 16: Financing Overview
Financing Overview • Total financing capacity of $4.1 billion(1) with $1.3 billion of undrawn capacity • Issued a $1.0 billion managed collateralized loan obligation, providing $810.0 million of non-mark-to-market financing • Increased Term Loan Facility from $600.0 million to $1.0 billion • Added a
Slide 17: Interest Rate Sensitivity
Interest Rate Sensitivity • KREF benefits in a rising rate environment • 98% of the portfolio is indexed to one-month USD LIBOR • A 50 basis point increase in one-month USD LIBOR would increase net interest income by $4.4 million or $0.08 per share over the next 12 months(1)(2) Net Interest Income S
Slide 18: Case Studies
Case Studies Brooklyn Hotel Manhattan Multifamily Manhattan Multifamily Investment Refinance of full service hotel with Acquisition of luxury multifamily Acquisition of multifamily property in national hospitality operator rental building in strong location high demand submarket Loan Type Floating-R
Slide 19: Case Studies
Case Studies San Diego Multifamily Ft. Lauderdale Hotel West Palm Beach Multifamily Investment Refinance of substantially renovated, Refinance of high-quality hotel with Refinance of well-located multifamily institutional quality multifamily long-dated management contract property with 87% occupancy
Slide 20: Case Studies
Case Studies Philadelphia Multifamily Queens Multifamily Investment Refinance of a newly-built multifamily Refinance of newly renovated multifamily with 93% occupancy in growing neighborhood Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Loan Size $77 million $45 million Location Phil
Slide 21: Key Investment Highlights
Key Investment Highlights Established and growing business with strong operating and execution track record Differentiated platform and origination capabilities Large and compelling market opportunity Focused investment strategy with proven scale and access to capital Disciplined underwrit
Slide 22: Appendix
Appendix 22
Slide 23: Portfolio Details
Portfolio Details ($ in millions) Investment Committed Current Future Max Remaining # Investment Location Property Type Net Equity(2) Coupon(4)(5) LTV(4)(7) Date Principal Amount Principal Amount Funding(3) Term (Yrs)(4)(6) Senior Loans(1) 1 Senior Loan Queens, NY Office 5/9/2018 $350.0 $255.2 $151.
Slide 24: 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. (2) Net equity reflects
Slide 25: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) December 31, 2018 December 31, 2017 Assets Cash and cash equivalents $ 86,531 $ 103,120 Restricted cash - 400 Commercial mortgage loans, held-for-investment, net 4,001,820 1,888,510 Equity method investments, at fair value
Slide 26: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended Year Ended December 31, December 31, December 31, December 31, December 31, 2018 2017 2018 2017 2016 Net Interest Income Interest income $ 59,623 $ 28,385 $ 183,575 $ 83,145 $ 32,659 Interest expens
Slide 27: Reconciliation of GAAP Net Income to Core Earnings and Net Core Earnings
Reconciliation of GAAP Net Income to Core Earnings and Net Core Earnings 2018 4Q18 3Q18 2Q18 1Q18 ($ in thousands, except share and per share data) Net Income Attributable to Common Stockholders $87,293 $19,709 $20,821 $23,483 $23,280 Adjustments Non-cash equity compensation expense 1,973 387 295 27
Slide 28: Key Definitions
Key Definitions • "Core Earnings" and “Net Core Earnings”: Used by the Company to evaluate the Company's performance excluding the effects of certain transactions and GAAP adjustments the Company believes are not necessarily indicative of the current loan activity and operations. The Company also us
KKR Real Estate Finance Trust — Investor Presentation (February 2019) on 6ix