Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (November 2019)
31 slides from Kkr Real Estate Finance Trust's investor presentation, November 2019
Slide 1: KKR Real Estate Finance Trust Inc. Investor Presentation
KKR Real Estate Finance Trust Inc. Investor Presentation November 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 ~5-year operating history; IPO in May 2017 focuses on originating sen
Slide 4: 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
Slide 5: Successfully Executing on Business Strategy
Successfully Executing on Business Strategy Portfolio Financing Activity $3.3BN LTM Originations $5.7BN Financing Capacity $5.2BN Funded Portfolio $1.0BN Managed Collateralized Loan Obligation 100% Senior Floating-Rate Loan Originations 74% Non-Mark-to-Market Financing (1) 100% Perform
Slide 6: KKR Platform
KKR Platform • KREF is externally managed by KKR Real Estate Finance Manager LLC, a subsidiary of KKR (NYSE: KKR, Market Capitalization: $24.4BN(1)), a leading global investment firm with a 43-year history and a diverse mix of investments across multiple asset classes, including private equity, real
Slide 7: 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 8: 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 9: 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 10: 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 11: Rigorous Investment Screening and Selection Process
Rigorous Investment Screening and Selection Process • For LTM September 30, 2019, KREF has screened $44.4 billion of financing opportunities and originated $3.3 billion (7%) of senior loans Large opportunity set funneled through rigorous screening and approval process Rigorous Screening The “KKR Edg
Slide 12: 3Q'19 Loan Activity
3Q’19 Loan Activity • September 30, 2019 total portfolio of $5.2 billion, up $1.8 billion or 54% since September 30, 2018 and $0.3 million or 5% since June 30, 2019 • Subsequent to quarter-end, originated one floating-rate senior loan totaling $93.4 million Summary of 3Q’19 Originations $484mm 100%
Slide 13: KREF Portfolio by the Numbers
KREF Portfolio by the Numbers • Outstanding total portfolio of $5.2 billion as of September 30, 2019 • 54% increase in portfolio size YoY. Increased 313% since June 30, 2017 (first quarter-end post IPO). • Multifamily and office loans comprise 88% of the portfolio Total Portfolio Growth Property Typ
Slide 14: 3Q'19 KREF Portfolio
3Q’19 KREF Portfolio • $5.2 billion portfolio comprised of 38 investments • Portfolio weighted average LTV of 67%(1) Geography(2) Investment Type(3) CMBS Mezz <1% <1% Senior Loans 99% Interest Rate Type Fixed <1% Floating 99% Other (<5%) Property Type(2) 17% NY Industrial 25% Retail Condo 3% 3% MN (
Slide 15: 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): 66% 90% Risk Rating(3): 2.8 2Q’19 2Q’19 27% 24% 2
Slide 16: Recent Operating Performance
Recent Operating Performance • 3Q'19 Net Income attributable to common stockholders of $23.6 million or $0.41 per share • 3Q'19 Net Core Earnings(1) of $25.0 million or $0.43 per share • Book value of $1,122.0 million or $19.54 per share in 3Q'19(3) compared to $1,122.0 million or $19.54 per share i
Slide 17: Financing Overview: 74% Non-Mark-To-Market
Financing Overview: 74% Non-Mark-To-Market • Diversified financing sources totaling $5.7 billion with $1.5 billion of undrawn capacity Summary of Outstanding Financing Leverage Ratios ($ in Millions) 3.6x Weighted 3.4x Maximum Outstanding Average Capacity Face Amount 2.6x Coupon 2.3x 1.9x 2.0x Term
Slide 18: Interest Rate Sensitivity
Interest Rate Sensitivity • 99% of the portfolio is indexed to one-month USD LIBOR • KREF benefits both in a rising rate environment and in a declining rate environment • Approximately 50% of the loan portfolio is subject to a LIBOR floor of at least 2.00% Net Interest Income Sensitivity to LIBOR Mo
Slide 19: Case Studies
Case Studies Student Housing Portfolio Austin Multifamily Investment Acquisition of a five building student housing portfolio Refinance of newly-constructed, Class A, multifamily property in high-growth location with proximity to demand drivers Loan Type Floating-Rate Senior Loan Floating-Rate Senio
Slide 20: Case Studies
Case Studies Denver Multifamily Atlanta Multifamily Investment Refinance of newly-constructed, mixed-use asset in high Refinance of renovated multifamily property in liquid growth Denver MSA submarket with strong underlying fundamentals Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan L
Slide 21: Case Studies
Case Studies Chicago Office Chicago Multifamily Arlington Multifamily Investment Refinance of a, Class A, office building Refinance of newly-constructed, ultra- Refinance and acquisition of luxury, multifamily asset multifamily portfolio Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan
Slide 22: Case Studies
Case Studies Chicago Multifamily Various Multifamily Brooklyn Multifamily Investment Refinance of newly-constructed, Class Refinance of Class A, multifamily Refinance of newly-constructed, luxury A, multifamily asset portfolio in diversified markets multifamily asset Loan Type Floating-Rate Senior L
Slide 23: 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 24: Appendix
Appendix 24
Slide 25: Portfolio Details
Portfolio Details ($ in millions) Investment Committed Current Net Future Max Remaining # Investment Location Property Type Coupon(4)(5) LTV(4)(7) Date Principal Amount Principal Amount Equity(2) Funding(3) Term (Yrs)(4)(6) Senior Loans(1) 1 Senior Loan Brooklyn, NY Multifamily 5/22/2019 $386.0 $342
Slide 26: Portfolio Details
Portfolio Details (1) Senior loans include senior mortgages and similar credit quality investments, including junior participations in our originated senior loans for which we have syndicated the senior participations and retained the junior participations for our portfolio and excludes pari passu l
Slide 27: Fully Extended Loan Maturities
Fully Extended Loan Maturities • Fully extended weighted average loan maturity of 4.1 years(1) Fully Extended Loan Maturities(1) ($ in Millions) $2,500 $2,000 $1,950.8 $1,851.8 $1,500 $1,000 $623.0 $500 $314.6 $314.3 $125.0 $0.0 $5.5 $0 2019 2020 2021 2022 2023 2024 2025 2026 Fully extended maturity
Slide 28: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) September 30, 2019 December 31, 2018 Assets Cash and cash equivalents $ 74,517 $ 86,531 Commercial mortgage loans, held-for-investment, net 5,077,038 4,001,820 Equity method investments, at fair value 37,230 30,734 Accrued
Slide 29: 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, 2019 2019 2018 2019 2018 Net Interest Income Interest income $ 74,223 $ 62,944 $ 51,895 $ 201,918 $ 123,952 Interes
Slide 30: Reconciliation of GAAP Net Income to Core Earnings and Net Core Earnings
Reconciliation of GAAP Net Income to Core Earnings and Net Core Earnings 3Q19 2Q19 3Q18 ($ in thousands, except share and per share data) Net Income Attributable to Common Stockholders $23,617 $17,381 $20,821 Adjustments Non-cash equity compensation expense 1,040 1,043 295 Incentive compensation to
Slide 31: 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
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