Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (May 2020)
33 slides from Kkr Real Estate Finance Trust's investor presentation, May 2020
Slide 1: KKR Real Estate Investment Trust Inc. Investor Presentation
KKR Real Estate Investment Trust Inc. Investor Presentation | May 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: Overview of KKR Real Estate Finance Trust Inc. (KREF)
Overview of KKR Real Estate Finance Trust Inc. (KREF) $5.2BN portfolio, 100% performing Focused on defensive, Conservative Liability larger, senior floating- Management; 73% rate loans to Non-Mark-to-Market experienced sponsors Direct Strong origination alignment of platform interests with KKR’s 36%
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 S
Slide 5: Conservative Portfolio Construction and Liability Management
Conservative Portfolio Construction and Liability Management Investment Portfolio Evolution Property Type Evolution <3% <1% 100% 100% 86% 85% 27% 80% 80% 6% 62% Multifamily 60% Other Securities 60% and Office 97% 99% Mezz Loan Hospitality 40% 40% 31% and Retail Senior Loan 67% 20% 20% 7% 8% 0% 0% At
Slide 6: KKR Platform
KKR Platform KKR Platform KKR Attributes KKR Real Estate Attributes KREF is externally managed by KKR Real ~$10 billion of AUM spanning KKR $207 billion in AUM and a 44-year Real Estate credit and equity Estate Finance Manager LLC, a subsidiary investment track record strategies of KKR (NYSE: KKR, M
Slide 7: KREF Integration with KKR
KREF Integration with KKR KREF 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 KKR Private Equity Deep network of ~$79BN of AUM, ~200 KKR Cred
Slide 8: KKR Real Estate Credit Investment Committee
KKR Real Estate Credit Investment Committee KREF Management Team KREF Directors Diversity of Manager’s Investment Committee creates a thorough MATT SALEM PATRICK MATTSON RALPH ROSENBERG CHRIS LEE vetting process CEO KREF President & COO KREF Chairman of KREF Vice Chairman KREF Partner & Head of Mana
Slide 9: Targeted KREF Strike Zone
Targeted KREF Strike Zone Representative Terms on Newly-Originated Senior Loans Loan Size $50-$400 million Collateral Primarily Transitional CRE Properties Sponsorship Well-Established, Capitalized & Experienced Geographies Top 30 U.S. Markets Property Types Office, Multifamily, Retail, Industrial,
Slide 10: Key Investment Decision-Making Factors
Key Investment Decision-Making Factors Market Dynamics Attractive Basis • Discount to replacement cost • High barrier-to-entry markets • Borrower basis at a discount to • Infill locations competitive owners in the market • Favorable market dynamics • Attractive stabilized debt yield relative • Liqui
Slide 11: Rigorous Investment Screening and Selection Process
Rigorous Investment Screening and Selection Process • Over the last twelve months, KREF screened $53.8 billion of financing opportunities and originated $3.2 billion (6%) of senior loans Large opportunity set funneled through rigorous screening and approval process Rigorous Screening The “KKR Edge”
Slide 12: Loan Activity
Loan Activity Summary of 1Q'20 Originations $353mm 94% 100% Committed to 3 New Loans Senior Loans Floating-Rate Loans 66% L+3.2% 11.3% Weighted Average LTV Weighted Average Coupon Weighted Average Underwritten IRR (1) Portfolio Funding Activity(2) ($ in Millions) Future Funding $5,777 $5,826 $5,696
Slide 13: KREF Portfolio by the Numbers
KREF Portfolio by the Numbers Total Portfolio Growth $5,221 $5,233 $4,952 $5,075 Current Portfolio(1): $4,134 $3,745 $3,383 $5.2 billion $2,960 $2,474 Including net funding and repayment $2,083 activity subsequent to quarter end $1,812 $1,265 2Q'17 3Q'17 4Q'17 1Q'18 2Q'18 3Q'18 4Q'18 1Q'19 2Q'19 3Q'
Slide 14: KREF Loan Portfolio
KREF Loan Portfolio Geography(1) Investment Type(2) Interest Rate Type Mezz Fixed 0.4% 0.1% 7% Senior Floating 22% Loans 99.9% 99.6% 7% 9% 12% 7% 7% Property Type Condo Industrial (Residential) 3% Student 5% Hospitality 3% Housing 4% 1% 5% Retail Other <5%, 19% 4% Office 28% Multifamily 57% $5.2 bil
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) (% of total portfolio) (% of portfolio) Weighted Average Weighted Average LTV(3): 66% 89% Risk Rating(3): 2.9 4Q'19 4Q'19 29% 25% 20%
Slide 16: Financing Overview: 73% Non-Mark-To-Market
Financing Overview: 73% Non-Mark-To-Market • Diversified financing sources totaling $6.1 billion with $1.7 billion of undrawn capacity Summary of Outstanding Financing Leverage Ratios ($ in Millions) Weighted Maximum Outstanding Average 4.0x Capacity Face Amount Coupon 0.3x Term Credit $2,000 $1,096
Slide 17: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Total / Weighted Counterparty Average Drawn $469 $405 $222 $1,096 Capacity $1,000 $600 $400 $2,000 Collateral: Loans / 5 Loans / $653 3 Loans / $545 3 Loans / $311 11 Loans / $1,509 Principal Balance Final Stated Maturity November 2023 Decem
Slide 18: Liquidity Overview: March 31, 2020
Liquidity Overview: March 31, 2020 ($ in Millions) Sources of Available Liquidity $500.0 $450.0 Capacity $450.0 $80.1 $400.0 Cash and Cash $369.9 Equivalents $350.0 $369.9 Term Credit 6.9 Facilities $300.0 Term Lending 1.6 Agreement $250.0 Warehouse 2.9 Facility $200.0 Asset Specific 2.6 $150.0 Fina
Slide 19: Rate Floors Provide Protection in a Declining Rate Environment
Rate Floors Provide Protection in a Declining Rate Environment ($ Impact Per Share / Q) Portfolio benefits from decreasing $0.25 Net Interest Income Per Share rates given in place LIBOR floors: Sensitivity to LIBOR Movements(1) $0.21 • 98% of the portfolio is subject to a LIBOR floor of at least 0.9
Slide 20: 1Q'20 Financial Summary
1Q'20 Financial Summary Income Statement Balance Sheet ($ in Millions, except per share data) 1Q20 ($ in Millions, except per share data) 1Q20 Net Interest Income $32.0 Total Portfolio $5,232.5 Other Income (1.5) Term Credit Facilities 1,095.5 Operating Expenses and Other (10.4) Term Lending Agreeme
Slide 21: Recent Operating Performance
Recent Operating Performance • 1Q'20 Net loss attributable to common stockholders of ($35.2) million or ($0.61) per diluted share, net of ($55.3) million or ($0.96) per diluted share, provision for credit losses in connection with CECL adoption • 1Q'20 Core Earnings(1) of $25.3 million or $0.44 per
Slide 22: Case Studies
Case Studies Plano Office San Diego Multifamily New York Multifamily Investment Refinance of a fully renovated Class-A- Acquisition of a 14-story property Construction of 237-unit, luxury Class-A four office complex in location recently converted into a 231-unit multifamily property with proof of be
Slide 23: Case Studies
Case Studies Herndon Multifamily Washington, DC Office Retail Portfolio Investment Acquisition of newly-built property Refinance of Class-A office building in Acquisition of grocery-anchored adjacent to Amazon Web Services’ premier location properties backed by an investment East Coast HQ grade rate
Slide 24: Case Studies
Case Studies Los Angeles Multifamily Irvine Office State College Student Housing Investment Refinance of a newly-constructed Refinance of a five property complex Acquisition of a five building student Class-A multifamily asset within the airport submarket of Irvine housing portfolio Loan Type Floati
Slide 25: Key Investment Highlights
Key Investment Highlights High quality investment portfolio - 85% Fully integrated with KKR; aligned with multifamily and office; only 8% hospitality shareholders – 36% ownership; ~$10b of and retail real estate AUM Conservative liability management – Experienced asset management 73% non-mark-to-mar
Slide 26: Appendix
Appendix 26
Slide 27: Portfolio Details
Portfolio Details Loan Per Investment Committed Current Net Future Max Remaining # Investment Location Property Type Coupon(4)(5) SQFT / Unit / LTV(4)(7) Date Principal Amount Principal Amount Equity (2) Funding(3) Term (Yrs)(4)(6) Key Senior Loans (1) 1 Senior Loan Brooklyn, NY Multifamily 5/22/201
Slide 28: Portfolio Details
Portfolio Details (1) Senior loans include senior mortgages and similar credit quality investments, including junior participations in our originated senior loans for which we have syndicated the senior participations and retained the junior participations for our portfolio and excludes vertical loa
Slide 29: Fully Extended Loan Maturities
Fully Extended Loan Maturities Fully extended weighted average loan maturity of 3.9 years(1) Fully Extended Loan Maturities(1) ($ in Millions) $2,500 $2,216.3 $2,000 $1,489.9 $1,500 $1,000 $497.9 $500 $404.0 $320.3 $125.0 $143.4 $0 2020 2021 2022 2023 2024 2025 2026 (1) Excludes RECOP I CMBS B-Piece
Slide 30: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) March 31, 2020 December 31, 2019 Assets Cash and cash equivalents $ 369,867 $ 67,619 Commercial mortgage loans, held-for-investment 5,089,968 4,931,042 Less: Allowance for credit losses (65,979) - Commercial mortgage loans,
Slide 31: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended March 31, 2020 December 31, 2019 March 31, 2019 Net Interest Income Interest income $ 71,079 $ 72,417 $ 64,751 Interest expense 39,082 41,333 34,842 Total net interest income 31,997 31,084 29,909 Ot
Slide 32: Reconciliation of GAAP Net Income to Core Earnings
Reconciliation of GAAP Net Income to Core Earnings 1Q20 4Q19 1Q19 ($ in thousands, except share and per share data) Net Income (Loss) Attributable to Common Stockholders $ (35,164) $ 24,789 $ 24,705 Adjustments Non-cash equity compensation expense 1,607 1,017 991 Unrealized (gains) or losses (1) 3,4
Slide 33: 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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