Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (December 2018)
26 slides from Kkr Real Estate Finance Trust's investor presentation, December 2018
Slide 1: KKR Real Estate Finance Trust Inc. Investor Presentation
KKR Real Estate Finance Trust Inc. Investor Presentation December 2018
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-year operating history; IPO in May 2017 focuses on originating sen
Slide 4: Successfully Executing on Business Strategy
Successfully Executing on Business Strategy Solidify Market Execute on Incubate Business Presence Strategy KREF Progress May 2017 Since IPO(1) $2.5BN • Completed IPO for net proceeds of $226MM LTM Originations January 2015 • Hired team of nine 100% Floating-Rate Senior Loan Originations professi
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: $17.4BN(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 September 30, 2018, KREF has screened $41.8 billion of financing opportunities and originated $2.2 billion (5%) of senior loans Large opportunity set funneled through rigorous screening and approval process Rigorous Screening The “KKR Edg
Slide 11: YTD Loan Originations
YTD Loan Originations • YTD September 30, 2018, originations of $1.8 billion of floating-rate senior loans • Subsequent to quarter-end, originated six floating-rate senior loans totaling $674 million, bringing YTD originations to $2.5 billion • Current total portfolio of $4.0 billion(1), up $1.9 bil
Slide 12: KREF Portfolio by the Numbers
KREF Portfolio by the Numbers • Outstanding total portfolio of $3.4 billion as of September 30, 2018 • 62% increase in portfolio size since December 31, 2017 and 168% since June 30, 2017 (first quarter-end post IPO) • Office and multifamily loans comprise 87% of the portfolio Total Portfolio Growth
Slide 13: 3Q'18 KREF Portfolio by the Numbers
3Q’18 KREF Portfolio by the Numbers • $3.4 billion portfolio comprised of 37 investments • Portfolio weighted average LTV of 68%(1) Geography(2) Investment Type(3) CMBS Mezz 1% 1% Senior Loans 98% Interest Rate Type Fixed 2% Floating 98% Note: Map does not include Midwest Mezzanine portfolio ($5.5 m
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 • The securities portfolio is performing as expected Loan-to-Value(1,2) Risk Rating Distribution(2,4) (% of total portfolio) (% of portfolio) Weighted Average Weighted Average LTV(
Slide 15: Recent Operating Performance
Recent Operating Performance • 3Q 2018 Net Income attributable to common stockholders of $20.8 million or $0.37 per share • Net Core Earnings(1) of $21.4 million or $0.38 per share, up 18% QoQ when compared to 2Q Net Core Earnings excluding gain on sale of CMBS B-Piece investments • Book value of $1
Slide 16: Financing Overview
Financing Overview • Total financing capacity of $2.9 billion(1) with $0.7 billion of undrawn capacity • Entered into $200.0 million asset specific financing facility providing matched-term financing on a non-mark to market basis • Upsized Wells Fargo Repurchase Facility from $750.0 million to $1.0
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 $3.8 million or $0.07 per share over the next 12 months(1)(2) Net Interest Income S
Slide 18: Case Studies
Case Studies Manhattan Multifamily San Diego Multifamily Ft. Lauderdale Hotel Investment Acquisition of luxury multifamily Refinance of substantially renovated, Refinance of high-quality hotel with property in high demand submarket institutional quality multifamily long-dated management contract Loa
Slide 19: Case Studies
Case Studies West Palm Beach Multifamily Philadelphia Multifamily Queens Multifamily Investment Refinance of well-located multifamily Refinance of a newly-built multifamily Refinance of newly renovated property with 87% occupancy multifamily with 93% occupancy in growing neighborhood Loan Type Float
Slide 20: Key Investment Highlights
Key Investment Highlights Established and growing business with strong operating and execution track record Differentiated platform and origination capabilities Large and compelling market opportunity Focused investment strategy with proven scale and access to capital Disciplined underwrit
Slide 21: Appendix
Appendix 21
Slide 22: Portfolio Details
Portfolio Details Committed Current Future Max Remaining # Investment Location Property Type Investment Date Net Equity(2) Coupon(4)(5) LTV(4)(7) ($ in millions) Principal Amount Principal Amount Funding(3) Term (Yrs)(4)(6) (1) Senior Loans 1 Senior Loan Queens, NY Office 5/9/2018 $350.0 $232.8 $128
Slide 23: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) September 30, 2018 December 31, 2017 Assets Cash and cash equivalents $ 192,771 $ 103,120 Restricted cash - 400 Commercial mortgage loans, held-for-investment, net 3,261,878 1,888,510 Equity method investments, at fair valu
Slide 24: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) For the Three Months Ended For the Nine Months Ended September 30, June 30, September 30, September 30, September 30, 2018 2018 2017 2018 2017 Net Interest Income Interest income $ 51,895 $ 40,363 $ 24,408 $ 123,952 $
Slide 25: Reconciliation of GAAP Net Income to Core Earnings and Net Core Earnings
Reconciliation of GAAP Net Income to Core Earnings and Net Core Earnings 3Q18 2Q18 1Q18 4Q17 ($ in thousands, except share and per share data) Net Income Attributable to Common Stockholders $20,821 $23,483 $23,280 $17,034 Adjustments Non-cash equity compensation expense 295 273 1,018 25 Incentive co
Slide 26: 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 (December 2018) on 6ix