Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Q2 2020 Earnings Presentation
26 slides from Kkr Real Estate Finance Trust's earnings presentation, Aug 4, 2020
Slide 1: 2nd Quarter 2020 Supplemental Information
KKR Real Estate Finance Trust Inc. 2nd Quarter 2020 Supplemental Information August 3, 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 Investment Portfolio Balance Sheet $5.3 Billion $6.1 Billion 36% Investment Portfolio Financing Capacity KKR Ownership in KREF 99.5% 81% 73% $207 Billion $19 Billion Senior Loans Multifamily &
Slide 4: 2Q'20 Key Highlights
2Q'20 Key Highlights • Net income(1) of $0.52 per diluted share, Core Earnings(2) of $0.45 per diluted share and book value(3) of $18.57 per share • Portfolio benefits from low LIBOR given in-place floors; approximately 98% of the portfolio is subject to LIBOR floor of at least 0.95% Financials • Bo
Slide 5: 2Q'20 Financial Summary
2Q'20 Financial Summary Income Statement Balance Sheet ($ in Millions) 2Q20 ($ in Millions) 2Q20 Net Interest Income $36.7 Total Portfolio $5,256.8 Other Income 0.4 Term Credit Facilities 1,087.8 Operating Expenses and Other (9.9) Term Lending Agreement 900.0 CECL Provision for Credit Loss, Net 1.4
Slide 6: Recent Operating Performance
Recent Operating Performance Net Income(2) and Core Earnings(1) Dividends and Book Value Per Share 2Q'19 1Q'20 2Q'20 ($ in Millions) 2Q'19 1Q'20 2Q'20 Net income: Dividend per share: $17.4 ($35.2) $28.6 $0.43 $0.43 $0.43 Core earnings: Dividend yield on book value per share: $20.5 $25.3 $25.0 8.8% 9
Slide 7: Conservative Portfolio Construction
Conservative Portfolio Construction Investment Portfolio Evolution Property Type Evolution <3% <1% 100% 100% 86% 27% 81% 80% 80% 6% 62% Multifamily Securities 60% 60% and Office Mezz Loan 97% 99% Hospitality and 40% Senior Loan 40% Retail 31% 67% 20% 20% 7% 8% 0% 0% At IPO 4Q'18 2Q'20 At IPO 4Q'18 2
Slide 8: Last Twelve Months Loan Activity
Last Twelve Months Loan Activity Portfolio Funding Activity – Outstanding Principal(2) ($ in Millions) Future Funding Obligations(3) $5,777 $5,696 $5,826 $5,769 $5,489 $556 $619 $765 $593 $78 $54 $512 $204 $621 $180 $537 $473 $338 $5,221 $5,075 $5,233 $5,233 $5,257 $4,952 2Q'19 3Q'19 3Q'19 3Q'19 4Q'
Slide 9: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio Growth Investment Type(4) Interest Rate Type ($ in Millions) Current Portfolio: Mezz 0.5% Fixed 0.1% $5.3 billion(2) $4,952 $5,257 Including net funding and repayment activity subsequent to quarter-end $2,960 Senior Floating Loans 99.9% $1,265 99.5%
Slide 10: Multifamily and Office Loan Overview
Multifamily and Office Loan Overview Multifamily Office 53% of Loan Portfolio 28% of Loan Portfolio $146 mm 67% <1% $147 mm 64% <1% Average Loan Size W.A. LTV Construction Average Loan Size W.A. LTV Co-Working Exposure 53% 74% 2014 72% 78% 6.3 years W.A. Occupancy W.A. Occupancy W.A. Year Built W.A.
Slide 11: Case Studies: Largest Three Multifamily Loans
Case Studies: Largest Three Multifamily Loans Investment Brooklyn Multifamily Chicago Multifamily Arlington Multifamily Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date May 2019 June 2019 June 2019 Collateral 857-Unit Class-A Luxury Multifamily
Slide 12: Case Studies: Largest Three Office Loans
Case Studies: Largest Three Office Loans Investment Boston Office Plano Office Minneapolis Office Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date May 2018 February 2020 November 2017 Class-B+ Office Four Class-A- Office Buildings Two Class-A Of
Slide 13: Portfolio Credit Quality Remains Very Strong
Portfolio Credit Quality Remains Very Strong • Loan portfolio is 99.9% performing Loan-to-Value(1,2) Risk Rating Distribution(2) (% of total portfolio) (% of portfolio) Weighted Average Weighted Average 1Q'20 LTV(3): 66% 1Q'20 Risk Rating(3): 3.0 77% 28% 27% 20% 17% 14% 3% 6% 0% 8% 1 2 3 4 5 2 3 28
Slide 14: Case Studies: Watch List Loans (Risk Rated-4)
Case Studies: Watch List Loans(1) (Risk Rated-4) Investment New York Condo Ft. Lauderdale Hotel New York Condo Portland Retail San Diego, Multifamily Brooklyn Hotel Queens Industrial Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Flo
Slide 15: Financing Overview: 73% Non-Mark-To-Market
Financing Overview: 73% Non-Mark-To-Market • Diversified financing sources totaling $6.1 billion with $1.9 billion of undrawn capacity Summary of Outstanding Financing Leverage Ratios ($ in Millions) Maximum Outstanding Weighted Avg. Advance Non- Capacity Face Amount Coupon Rate MTM 4.0x Term Credit
Slide 16: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Counterparty Total / Weighted Average Drawn $469 $419 $200 $1,088 Capacity $1,000 $600 $400 $2,000 Collateral: Loans / Principal 5 Loans / $658 3 Loans / $558 3 Loans / $306 11 Loans / $1,522 Balance Stated Maturity November 2023 December 20
Slide 17: Liquidity Overview
Liquidity Overview Sources of Available Liquidity ($ in Millions) $500.0 $450.0 $431.1 $18.8 $400.0 $350.0 $300.0 $285.0 $250.0 $200.0 $150.0 $100.0 $127.3 $50.0 $0.0 Cash Undrawn Approved and Undrawn Total Available Liquidity Corporate Revolver Credit Capacity (1) (1) Represents under-levered amoun
Slide 18: Rate Floors Provide Protection in a Declining Rate Environment
Rate Floors Provide Protection in a Declining Rate Environment • 99.9% of the portfolio is indexed to one-month USD LIBOR • Portfolio benefits from decreasing rates given in place LIBOR floors 98% of the portfolio is subject to a LIBOR floor of at least 0.95% 5% of total outstanding financing is
Slide 19: Appendix
Appendix 19
Slide 20: Portfolio Details
Portfolio Details Investment Committed Current Net Future Max Remaining Loan Per Risk # Investment Location Property Type Coupon(4)(5) LTV(4)(7) Date Principal Amount Principal Amount Equity (2) Funding(3) Term (Yrs)(4)(6) SF / Unit / Key Rating Senior Loans (1) 1 Senior Loan Brooklyn, NY Multifamil
Slide 21: Portfolio Details
Portfolio Details (1) Senior loans include senior mortgages and similar credit quality investments, including junior participations in our originated senior loans for which we have syndicated the senior participations and retained the junior participations for our portfolio and excludes vertical loa
Slide 22: Fully Extended Loan Maturities
Fully Extended Loan Maturities • Fully extended weighted average loan maturity of 3.7 years(1) Fully Extended Loan Maturities(1) ($ in Millions) $2,500 $2,255.9 $2,000 $1,452.8 $1,500 $1,000 $516.3 $500 $405.5 $334.6 $125.0 $131.0 $0 2020 2021 2022 2023 2024 2025 2026 (1) Excludes RECOP I CMBS B-Pie
Slide 23: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) June 30, 2020 December 31, 2019 Assets Cash and cash equivalents $ 127,250 $ 67,619 Commercial mortgage loans, held-for-investment 5,113,531 4,931,042 Less: Allowance for credit losses (62,399) - Commercial mortgage loans,
Slide 24: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended Six Months Ended June 30, 2020 March 31, 2020 June 30, 2019 June 30, 2020 June 30, 2019 Net Interest Income Interest income $ 67,219 $ 71,079 $ 62,944 $ 138,298 $ 127,695 Interest expense 30,563 39,
Slide 25: 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 June 30, 2020 March 31, 2020 June 30, 2019 Net Income (Loss) Attributable to Common Stockholders $ 28,590 $ (35,164) $ 17,381 Adjustments Non-cash equity compensation expense 1,374
Slide 26: 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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