Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Q3 2020 Earnings Presentation
24 slides from Kkr Real Estate Finance Trust's earnings presentation, Oct 28, 2020
Slide 1: 3rd Quarter 2020 Supplemental Information
KKR Real Estate Finance Trust Inc. 3rd Quarter 2020 Supplemental Information October 26, 2020
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 & Diverse Fully Integrated with KKR Portfolio Balance Sheet $5.0 Billion $6.4 Billion 36% Investment Portfolio Financing Capacity KKR Ownership in KREF 99.5% 83% 78% $207 Billion $19 Billion Senior Loans Multifamily & Office Full
Slide 4: 3Q'20 Key Highlights
3Q'20 Key Highlights • Net income(1) of $0.56 per diluted share, Core Earnings(2) of $0.58 per diluted share • Book value(3) of $18.73 per share, compared to $18.57 per share in 2Q’20 Financials • Earnings benefited from low LIBOR given in-place rate floors; approximately 98% of the loan portfolio i
Slide 5: 3Q'20 Financial Summary
3Q'20 Financial Summary Income Statement Balance Sheet ($ in Millions) 3Q20 ($ in Millions) 3Q20 Net Interest Income $38.9 Total Portfolio $5,034.5 Other Income 1.1 Term Credit Facilities 910.8 Operating Expenses and Other (8.7) Term Lending Agreement 900.0 CECL Provision for Credit Loss, Net 0.1 As
Slide 6: Recent Operating Performance
Recent Operating Performance Net Income(1) and Core Earnings(2) Dividends and Book Value Per Share 3Q'19 2Q'20 3Q'20 ($ in Millions) 3Q'19 2Q'20 3Q'20 Net income: Dividend per share: $23.6 $28.6 $31.4 $0.43 $0.43 $0.43 Core earnings: Dividend yield on book value per share: $25.0 $25.0 $32.5 8.8% 9.3
Slide 7: Conservative Portfolio Construction
Conservative Portfolio Construction Investment Portfolio Evolution Property Type Evolution <3% <1% 100% 100% 86% 83% 27% 80% 80% 6% 62% Multifamily Securities 60% 60% and Office Mezz Loan 97% 99% Hospitality and 40% Senior Loan 40% Retail 31% 67% 20% 20% 7% 8% 0% 0% At IPO 4Q'18 3Q'20 At IPO 4Q'18 3
Slide 8: Last Twelve Months Loan Activity
Last Twelve Months Loan Activity Portfolio Funding Activity – Outstanding Principal(1) ($ in Millions) Future Funding Obligations(2) $5,777 $5,826 $5,769 $5,696 $5,497 $556 $619 $765 $593 $78 $54 $512 $52 $274 $621 $180 $338 $462 $5,221 $5,075 $5,233 $5,257 $5,257 $5,035 3Q'19 4Q'19 4Q'19 4Q'19 1Q'2
Slide 9: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio Growth Investment Type(4) Interest Rate Type ($ in Millions) Current Portfolio: Mezz Fixed 0.5% 0.1% $5.2 billion(2) $5,221 $5,035 Including net funding and repayment activity subsequent to quarter-end $3,383 Senior Floating Loans 99.9% $1,812 99.5%
Slide 10: October Loan Originations – Case Studies
October Loan Originations – Case Studies Investment Denver Multifamily Arlington Multifamily Oakland Office Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Loan Size $40.0 million(1) $70.9 million(2) $159.7 million(3) Location Denver, CO Arlington, VA Oakland,
Slide 11: Portfolio Credit Quality Remains Strong
Portfolio Credit Quality Remains Strong • Loan portfolio is 99.9% performing Loan-to-Value(1,2) Risk Rating Distribution(2) (% of total portfolio) (% of portfolio) Weighted Average 76% Weighted Average 2Q'20 LTV(3): 66% 2Q'20 Risk Rating(3): 3.1 28% 27% 20% 17% 16% 3% 5% 0.1% 8% 1 2 3 4 5 2 2 27 7 1
Slide 12: Case Studies: Watch List Loans (Risk Rating 4 & 5)
Case Studies: Watch List Loans(1) (Risk Rating 4 & 5) Investment Portland Retail New York Condo Ft. Lauderdale Hotel New York Condo San Diego, Multifamily Brooklyn Hotel Queens Industrial Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loa
Slide 13: Financing Overview: 78% Non-Mark-To-Market
Financing Overview: 78% Non-Mark-To-Market • Diversified financing sources totaling $6.4 billion with $2.2 billion of undrawn capacity Summary of Outstanding Financing Leverage Ratios ($ in Millions) Maximum Outstanding Weighted Avg. Advance Non- Capacity Face Amount Coupon Rate MTM 3.8x Term Credit
Slide 14: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Counterparty Total / Weighted Average Drawn $414 $419 $78 $911 Capacity $1,000 $600 $400(1) $2,000 Collateral: Loans / Principal 5 Loans / $654 3 Loans / $568 2 Loans / $161 10 Loans / $1,383 Balance Stated Maturity November 2023 December 20
Slide 15: Liquidity Overview
Liquidity Overview Sources of Available Liquidity ($ in Millions) $800.0 $700.6 $700.0 $42.0 $22.2 $600.0 $500.0 $335.0 $400.0 $300.0 $301.4 $200.0 $100.0 $0.0 (2) Cash Undrawn Approved and Undrawn Loan Repayment Receivable Total Available Liquidity Corporate Revolver Credit Capacity (1) (1) Represe
Slide 16: Rate Floors Provide Earnings Benefit in a Declining Rate Environment
Rate Floors Provide Earnings Benefit in a Declining Rate Environment • 99.9% of the portfolio is indexed to one-month USD LIBOR • Portfolio benefits from current low rate environment given in place LIBOR floors 98% of the portfolio is subject to a LIBOR floor of at least 0.95% 9% of total outsta
Slide 17: Appendix
Appendix 17
Slide 18: Portfolio Details
Portfolio Details Investment Committed Current Net Future (4)(5) Max Remaining Loan Per (4)(7) Risk # Investment Location Property Type (2) (3) Coupon (4)(6) LTV Date Principal Amount Principal Amount Equity Funding Term (Yrs) SF / Unit / Key Rating (1) Senior Loans 1 Senior Loan Brooklyn, NY Multif
Slide 19: Portfolio Details
Portfolio Details (1) Senior loans include senior mortgages and similar credit quality investments, including junior participations in our originated senior loans for which we have syndicated the senior participations and retained the junior participations for our portfolio and excludes vertical loa
Slide 20: Fully Extended Loan Maturities
Fully Extended Loan Maturities • Fully extended weighted average loan maturity of 3.5 years(1) Fully Extended Loan Maturities(1) ($ in Millions) $2,500 $2,282.1 $2,000 $1,500 $1,387.2 $1,000 $525.1 $500 $334.6 $258.6 $109.6 $101.7 $0 2020 2021 2022 2023 2024 2025 2026 (1) Excludes RECOP I CMBS B-Pie
Slide 21: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) September 30, 2020 December 31, 2019 Assets Cash and cash equivalents (1) $ 301,375 $ 67,619 Commercial mortgage loans, held-for-investment 4,895,974 4,931,042 Less: Allowance for credit losses (62,735) - Commercial mortgag
Slide 22: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2020 2020 2019 2020 2019 Net Interest Income Interest income $ 67,689 $ 67,219 $ 74,223 $ 205,987 $ 201,918 Interes
Slide 23: Reconciliation of GAAP Net Income to Core Earnings
Reconciliation of GAAP Net Income to Core Earnings (in thousands - except share and per share data) Three Months Ended September 30, 2020 June 30, 2020 September 30, 2019 Net Income (Loss) Attributable to Common Stockholders $ 31,351 $ 28,590 $ 23,617 Adjustments Non-cash equity compensation expense
Slide 24: Key Definitions
Key Definitions • "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. Core Earnings is a measure that is not prep
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