Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (February 2023)
43 slides from Kkr Real Estate Finance Trust's investor presentation, February 2023
Slide 1: Investor Presentation February 2023
INVESTOR PRESENTATION FEBRUARY 2023
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 KREF’s Manager Fully Portfolio Balance Sheet Integrated with KKR $7.9 B $9.1 B 14% Investment Portfolio Financing Capacity KKR Ownership in KREF 99% 57% 77% $504 B $24 B Senior Loans Multifamily & Fully Non-Mark-to-Market(2) Glob
Slide 4: Investment Highlights
Investment Highlights 4 3 5 Differentiated Best in Class Investment Conservative Investment Portfolio 2 Liability Cycle Tested, Strategy Management Experienced Leadership Team 6 1 KKR Portfolio Sponsorship Benefits from Higher Rate Environment KKR Real Estate Finance Trust (“KREF”) benefits from its
Slide 5: KKR Sponsorship
KKR Sponsorship KREF
Slide 6: KKR Platform – A Leading Global Asset Manager
KKR Platform – A Leading Global Asset Manager Founded 1976 $504 B $24 B 813 23 / 17 Assets Under Management Internal Balance Sheet Investment Professionals Cities / Countries KKR Real Estate Attributes KKR operates with a single culture that rewards ~$64 billion in AUM in Real Estate strategies glob
Slide 7: Integrated Global Real Estate Platform
Integrated Global Real Estate Platform Founded in 2011 and fully integrated across both Real Estate Debt and Equity, as well as the Americas, Europe, and Asia Real Estate Loans $44B of Collateral Value(1) Integrated Real Estate Platform Own or lend on Real Estate $206B RE assets CMBS Equity $53B of
Slide 8: 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 $94B of AUM, 209 KKR Credit Integration Driv
Slide 9: Experienced Leadership Team
Experienced Leadership Team 9
Slide 10: KKR Real Estate Credit Investment Committee
KKR Real Estate Credit Investment Committee Diversity of Manager’s Investment Committee creates a thorough vetting process US Investment Committee Matt Salem Patrick Mattson Ralph Rosenberg Chris Lee Joel Traut CEO KREF President & COO KREF Chairman of KREF Board Vice Chairman of KREF Board Partner
Slide 11: KKR Real Estate Finance Trust Team
KKR Real Estate Finance Trust Team Leadership Team Ralph Rosenberg Chris Lee Matt Salem Patrick Mattson Kendra Decious Chairman of the Board Vice Chairman of the Board Chief Executive Officer President Chief Financial Officer Member of the Board Chief Operating Officer Treasurer Senior Investment Te
Slide 12: Differentiated Investment Strategy
Differentiated Investment Strategy 12
Slide 13: Differentiated, Conservative Investment Strategy
Differentiated, Conservative Investment Strategy Lending on institutional quality real estate owned by high-quality sponsors in top markets Institutional Quality Top Markets with High-Quality, Experienced & Commercial Real Estate Strong Underlying Fundamentals Well-Capitalized Sponsors 80% Select Ex
Slide 14: Targeted Strike Zone
Targeted Strike Zone Representative Terms on Newly-Originated Senior Loans Loan Size $50-$500+ million Collateral Primarily Transitional CRE Properties Sponsorship Well-Established, Capitalized & Experienced Geographies Top 30 U.S. Markets Property Types Multifamily, Office, Life Science, Industrial
Slide 15: Rigorous Investment Screening and Selection Process
Rigorous Investment Screening and Selection Process Large opportunity set funneled through rigorous screening and approval process Rigorous Screening The “KKR Edge” Multidisciplinary Review Over the last twelve months, KREF screened Deals Screened: $118.8B(1) $118.8 billion of financing opportunitie
Slide 16: Best In Class Investment Portfolio
Best In Class Investment Portfolio 16
Slide 17: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio Growth Investment Type(2) Interest Rate Type 100% Floating ($ in Millions) Property Type (4) Geography(1) (3) 5% 10% 5% Office(5) Multifamily 6% Washington, D.C. 8% 18% 85% 16% 11% Other <5%: 21% Note: The charts above are based on total assets. Tot
Slide 18: Multifamily and Office Loan Overview
Multifamily and Office Loan Overview Multifamily: 45% of Loan Portfolio Office: 26% of Loan Portfolio $100 M 69% 0% $169 M 63% 2.4% Average Loan Size(1) W.A. LTV(2) Construction Loans Average Loan Size(1) W.A. LTV(2) Co-Working Exposure 78% 90% 2016 69% 72% 8.4 years W.A. Occupancy W.A. Occupancy Me
Slide 19: Case Studies: Largest Three Multifamily Loans
Case Studies: Largest Three Multifamily Loans Investment Arlington Multifamily Los Angeles Multifamily Sunbelt Multifamily Portfolio Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date September 2021 February 2021 May 2019 912-unit Class-B+ and 198
Slide 20: Case Studies: Largest Three Office Loans
Case Studies: Largest Three Office Loans Investment Bellevue Office Mountain View Office Minneapolis Office Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date September 2021 July 2021 November 2017 Class-A Office Five Class-A Office Buildings Two
Slide 21: Case Studies: Largest Three Industrial Loans
Case Studies: Largest Three Industrial Loans Investment Western U.S. Industrial Portfolio Bronx Industrial U.S. Industrial Portfolio Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date April 2022 August 2021 June 2022 14 Class A/B Industrial Proper
Slide 22: Case Studies: 4Q'22 Loan Originations
Case Studies: 4Q'22 Loan Originations Investment National Self Storage Miami Multifamily North Carolina Multifamily Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date December 2022 October 2022 November 2022 11 Asset, 12k Unit, 1.5 Million RSF 282
Slide 23: Portfolio Credit Quality Overview
Portfolio Credit Quality Overview Collected 100% of interest payments due on loan portfolio Loan-to-Value(1)(2) Risk Rating Distribution (% of total loan portfolio) (% of loan portfolio) Weighted Average Weighted Average 3Q'22 LTV(3): 67% 3Q'22 Risk Rating(3): 3.1 0 1 69 3 2 Loan Count Weighted Aver
Slide 24: Case Studies: Watch List Loans (Risk Rating 5)
Case Studies: Watch List Loans (Risk Rating 5) Investment Minneapolis Office Philadelphia Office Philadelphia Office Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date November 2017 April 2019 June 2018 Collateral Two Class-A Office Buildings 4-Bu
Slide 25: Case Studies: Watch List Loans (Risk Rating 4)
Case Studies: Watch List Loans (Risk Rating 4) Investment Mountain View Office Washington, D.C. Office West Hollywood Multifamily Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date July 2021 December 2019 January 2022 Collateral Five Class-A Offic
Slide 26: Conservative Liability Management
Conservative Liability Management 26
Slide 27: Financing Overview: 77% Non-Mark-To-Market
Financing Overview: 77% Non-Mark-To-Market Diversified financing sources totaling $9.1 billion with $2.9 billion of undrawn capacity Summary of Outstanding Financing Leverage Ratios Maximum Outstanding Weighted Avg. Advance Non- ($ in Millions) Capacity Face Amount Coupon(1) Rate MTM (2) Term Credit
Slide 28: Focused on Growing Non-MTM Financing Capacity
Focused on Growing Non-MTM Financing Capacity Creating a diversified liability structure built on non-mark-to-market financing has been a top priority Summary of Non-MTM Financing Growth Since June 30, 2021 $ in Millions $125 $4,111 $516 Term Lending $1,350 Agreements $540 540 Bespoke Liabilities As
Slide 29: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Counterparty Total or Weighted Average Drawn $673 $595 $169 $1,436 Capacity $1,000 $600 $240 $1,840 Collateral: Loans / Principal 10 Loans / $924 11 Loans / $808 7 Loans / $364 28 Loans / $2,096 Balance Final Stated Maturity(1) September 202
Slide 30: Liquidity Overview
Liquidity Overview In addition to the available liquidity below, KREF had $179 million of unencumbered senior loans that can be pledged to financing facilities subject to lender approval as of December 31, 2022 Sources of Available Liquidity ($ in Millions) (1) (1) Represents under-levered amounts u
Slide 31: Portfolio Positioned for Higher Rate Environment
Portfolio Positioned for Higher Rate Environment 100% floating-rate loan portfolio continues to benefit from a rising rate environment 55% indexed to Term SOFR and 45% to one-month LIBOR Annual Net Interest Income Per Share Sensitivity to Change in Market Rates One-month LIBOR = 4.39% ($ Impact Per
Slide 32: Recent Operating Performance
Recent Operating Performance Net Income and Distributable Earnings Dividends and Book Value Per Share ($ in Millions) 1Q'22 2Q'22 3Q'22 4Q'22 1Q'22 2Q'22 3Q'22 4Q'22 Net income (loss)(1): Dividend per share: $29.8 $19.4 ($48.4) $14.6 $0.43 $0.43 $0.43 $0.43 Distributable earnings(2): Dividend yield
Slide 33: Key Highlights
Key Highlights Best in class investment portfolio – 57% Fully integrated with KKR; aligned with Multifamily and Industrial; 7% Life Science shareholders – 14% ownership; ~$64B of real estate AUM Scaled investment portfolio – +17% in net funded Experienced leadership & asset management portfolio grow
Slide 34: Appendix
Appendix KREF
Slide 35: Portfolio Details
Portfolio Details ($ in Millions) Committed Current Investment Total Whole Net Max Remaining Loan Per Risk # Investment(1) Location Property Type Principal Principal Coupon(4)(5) LTV(4)(8) Date Loan(2) Amount Equity(3) Term (Yrs)(4)(6) SF / Unit / Key(7) Rating Amount(2) Senior Loans(9) 1 Senior Loa
Slide 36: Portfolio Details
Portfolio Details ($ in Millions) Committed Current Investment Total Whole Net Max Remaining Loan Per Risk # Investment(1) Location Property Type Principal Principal Coupon(4)(5) LTV(4)(8) Date Loan(2) Amount Equity(3) Term (Yrs)(4)(6) SF / Unit / Key(7) Rating Amount(2) Senior Loans(9) 51 Senior Lo
Slide 37: Portfolio Details
Portfolio Details (1) Our total portfolio represents the current principal amount on senior, mezzanine and corporate loans, net equity in RECOP I, which holds CMBS B-Piece investments, and net carrying value of our sole REO investment. Excludes one impaired mezzanine loan with an outstanding princip
Slide 38: Fully Extended Loan Maturities
Fully Extended Loan Maturities Fully extended weighted average loan maturity of 3.3 years(1) Fully Extended Loan Maturities(1) ($ in Millions) (1) Excludes CMBS B-Pieces held through an equity method investment 38
Slide 39: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) December 31, 2022 December 31, 2021 Assets Cash and cash equivalents(1) $ 239,791 $ 271,487 Commercial real estate loans, held-for-investment 7,494,138 6,316,733 Less: Allowance for credit losses (106,974) (22,244) Commerci
Slide 40: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended Year Ended December 31, 2022 September 30, 2022 December 31, 2021 December 31, 2022 December 31, 2021 December 31, 2020 Net Interest Income Interest income $ 143,508 $ 114,627 $ 72,715 $ 421,968 $ 2
Slide 41: Reconciliation of GAAP Net Income (Loss) to Distributable Earnings
Reconciliation of GAAP Net Income (Loss) to Distributable Earnings (in thousands - except share and per share data) Year Ended Three Months Ended December 31, Per Diluted December 31, September 30, 2022 Share(1) 2022 2022 June 30, 2022 March 31, 2022 Net Income (Loss) Attributable to Common Stockhol
Slide 42: Reconciliation of GAAP Net Income to Distributable Earnings
Reconciliation of GAAP Net Income to Distributable Earnings (in thousands - except share and per share data) Year Ended December 31, Per Diluted December 31, Per Diluted December 31, Per Diluted 2022 Share(1) 2021 Share(1) 2020 Share(1) Net Income (Loss) Attributable to Common Stockholders $ 15,371
Slide 43: Key Definitions
Key Definitions “Distributable Earnings": Commencing for all periods ending on or after December 31, 2020, the Company has elected to present Distributable Earnings, a measure that is not prepared in accordance with GAAP, as a supplemental basis to KREF’s net income as determined in accordance with
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