Kkr Real Estate Finance Trust Inc. · NYSE:KREF
Kkr Real Estate Finance Trust — Investor Presentation (April 2024)
40 slides from Kkr Real Estate Finance Trust's investor presentation, April 2024
Slide 1: Investor Presentation
Investor Presentation APRIL 2024
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 KREF’s Manager Fully Best In Class Portfolio Conservative Balance Sheet Integrated with KKR $7.5 B $8.7 B 14% Investment Portfolio Financing Capacity KKR Ownership in KREF 100% 58% 78% $553 B $28 B Senior Loans Multifamily & Fully Non-Mark-to-Market(2) Glo
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 Strong Levels of Sponsorship Liquidity KKR Real Estate Finance Trust (“KREF”) benefits from its integration within K
Slide 5: KKR Sponsorship
KKR Sponsorship
Slide 6: KKR Platform – A Leading Global Asset Manager
KKR Platform – A Leading Global Asset Manager Founded 1976 $553 B $28 B 750+ 25 / 18 Assets Under Management Internal Balance Sheet Investment Professionals Cities / Countries KKR Real Estate Attributes KKR operates with a single culture that $69 billion in AUM in Real Estate strategies globally(1)
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 $51B of Collateral Value(1) Integrated Real Estate Platform Own or lend on Real Estate $251B RE assets Real Estate Equity C
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 $98B of AUM, 199 KKR Credit Integration Driv
Slide 9: Experienced Leadership Team
Experienced Leadership Team
Slide 10: KKR Real Estate Credit Investment Committee
KKR Real Estate Credit Investment Committee Diversity of Manager’s Investment Committee creates a thorough vetting process US Investment Committee Matt Salem Patrick Mattson Ralph Rosenberg Chris Lee Joel Traut CEO KREF President & COO KREF Chairman of KREF Board Vice Chairman of KREF Board Partner
Slide 11: KKR Real Estate Finance Trust Team
KKR Real Estate Finance Trust Team Leadership Team Ralph Rosenberg Chris Lee Matt Salem Patrick Mattson Kendra Decious Chairman of the Board Vice Chairman of the Board Chief Executive Officer President Chief Financial Officer Member of the Board Chief Operating Officer Treasurer Senior Investment Te
Slide 12: Differentiated Investment Strategy
Differentiated Investment Strategy
Slide 13: Differentiated, Conservative Investment Strategy
Differentiated, Conservative Investment Strategy Lending on institutional quality real estate owned by high-quality sponsors in top markets Institutional Quality Top Markets with High-Quality, Experienced & Commercial Real Estate Strong Underlying Fundamentals Well-Capitalized Sponsors Select Exampl
Slide 14: Best In Class Investment Portfolio
Best In Class Investment Portfolio
Slide 15: KREF Loan Portfolio by the Numbers
KREF Loan Portfolio by the Numbers Total Portfolio(1) Investment Type(2) Interest Rate Type ($ in Millions) Property Type (4) Geography (3) 4% 4% 13% 4% Washington, D.C. Office(5) Multifamily 8% 19% 4% 16% 92% 9% Other <4%: 19% (1) Includes real estate owned and CMBS B-Pieces held through an equity
Slide 16: Multifamily and Office Loan Overview
Multifamily and Office Loan Overview Multifamily: 43% of Loan Portfolio Office: 22% of Loan Portfolio $100 M 70% 0% $152 M 62% 2.0% Average Loan Size(1) W.A. LTV(2) Construction Loans Average Loan Size(1) W.A. LTV(2) Co-Working Exposure 83% 91% 2015 62% 74% 9.8 years W.A. Occupancy W.A. Occupancy Me
Slide 17: KREF Office Loan Portfolio Overview
KREF Office Loan Portfolio Overview Approximately two-thirds of the outstanding principal balance of KREF’s Office segment is Risk- Rated 3 or better KREF Office Loan Portfolio Office Portfolio Breakdown Current Current Investment Loan Commitment Principal Loan Max Term Location Date Purpose ($ Mill
Slide 18: KREF Life Science Loan Portfolio Overview
KREF Life Science Loan Portfolio Overview 100% of KREF’s Risk-Rated 3 exposure is located in the top two Life Science markets KREF Life Science Loan Portfolio Life Science Portfolio Breakdown Current Current Investment Loan Commitment Principal Loan Max Term 5-Rated Location Date Purpose ($ Millions
Slide 19: Portfolio Credit Quality Overview
Portfolio Credit Quality Overview Collected 97% of interest payments due on the loan portfolio Loan-to-Value(1) Risk Rating Distribution Loan Count 0 2 60 4 3 4Q '23 Weighted Average LTV(2): 65% Weighted Average Risk Rating(2): 3.2 Loan Count 0 2 57 4 4 1Q '24 Weighted Average LTV(2): 65% Weighted A
Slide 20: Watch List Migrations Quarter-over-Quarter
Watch List Migrations Quarter-over-Quarter In 1Q'24, KREF had two risk-rating downgrades 4Q’23 Watch List Intra-Quarter Activity 1Q’24 Watch List Total Principal: $512 million Risk Rating: 5 Total Principal: $700 million(1) Mountain View Office Mountain View Office Minneapolis Office Minneapolis Off
Slide 21: Case Studies: Watch List Loans (Risk Rating 5)
Case Studies: Watch List Loans (Risk Rating 5) Investment Mountain View Office Minneapolis Office Boston Office Seattle Life Science Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan(2) Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date July 2021 November 2017 February 2
Slide 22: Case Studies: Watch List Loans (Risk Rating 4)
Case Studies: Watch List Loans (Risk Rating 4) Investment San Carlos Life Science San Diego Multifamily West Hollywood Multifamily Raleigh Multifamily Loan Type Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Floating-Rate Senior Loan Investment Date February 2022 Octob
Slide 23: Overview of Real Estate Owned
Overview of Real Estate Owned As of March 31, 2024, approximately $165 million of equity(1) was held in our current and projected Real Estate Owned (REO) properties REO: Current and Projected Location Property Type Carrying Value(2) Carrying Value ($ in millions) per Square Foot Current REO Portland
Slide 24: Conservative Liability Management
Conservative Liability Management
Slide 25: Financing Overview: 78% Non-Mark-To-Market
Financing Overview: 78% Non-Mark-To-Market Diversified financing sources totaling $8.7 billion with $2.9 billion of undrawn capacity Summary of Outstanding Financing Leverage Ratios Outstanding Maximum Weighted Avg. Advance Non- ($ in Millions) Capacity Principal Coupon(1) Rate MTM Amount (2) Term C
Slide 26: KREF Debt Maturities
KREF Debt Maturities No corporate debt or final facility maturities due until 2026 Upcoming Debt Maturities by Year ($ in Millions) Note: Based on outstanding principal balance of secured financing agreements (does not include KREF’s secured term loan or collateralized loan obligations (CLOs)). Matu
Slide 27: Financing Overview: Term Credit Facilities
Financing Overview: Term Credit Facilities ($ in Millions) Counterparty Total or Weighted Average Drawn $617 $387 $330 $1,335 Capacity $1,000 $600 $400 $2,000 Collateral: Loans / Principal 8 Loans / $958 9 Loans / $551 7 Loans / $508 24 Loans / $2,017 Balance Final Stated Maturity(1) September 2026
Slide 28: Liquidity Overview
Liquidity Overview In addition to the available liquidity below, KREF had $108 million of unencumbered senior loans that can be pledged to financing facilities subject to lender approval as of March 31, 2024 Sources of Available Liquidity (4) ($ in Millions) (1) (1) Represents under-levered amounts
Slide 29: Earnings Sensitivity to Change in SOFR
Earnings Sensitivity to Change in SOFR 99% floating-rate loan portfolio indexed to Term SOFR Quarterly Net Interest Income Per Share Sensitivity to Change in Market Rates(1) Term SOFR = 5.33% ($ Impact Per Share) As of March 31, 2024 Change in SOFR Note: Based on portfolio as of March 31, 2024 (1) E
Slide 30: Recent Operating Performance
Recent Operating Performance Net Income and Distributable Earnings Dividends and Book Value Per Share ($ in Millions) 1Q'23 4Q'23 1Q'24 1Q'23 4Q'23 1Q'24 Net income (loss)(1): Dividend per share: ($30.8) ($18.7) ($8.7) $0.43 $0.43 $0.25 Distributable earnings (loss)(2): Dividend yield on book value
Slide 31: Key Highlights
Key Highlights Best in class investment portfolio – 58% Fully integrated with KKR; aligned with Multifamily and Industrial shareholders – 14% ownership; $69B of real estate AUM Scaled investment portfolio – $7.5 billion Experienced leadership & asset management predominantly senior loan portfolio te
Slide 32: Appendix
Appendix
Slide 33: Portfolio Details
Portfolio Details ($ in Millions) Outstanding Investment Total Whole Committed Net Max Remaining Loan Per Origination Risk # Investment(1) Location Property Type Principal / Coupon(4)(5) Date Loan(2) Principal Equity(3) Term (Yrs)(4)(6) SF / Unit / Key(7) LTV(4)(8) Rating Investment Amount(2) Amount
Slide 34: Portfolio Details
Portfolio Details ($ in Millions) Committed Outstanding # Investment(1) Location Property Type Investment Total Whole Principal / Net Coupon(4)(5) Max Remaining Loan Per Origination Risk Date Loan(2) Principal Equity(3) Term (Yrs)(4)(6) SF / Unit / Key(7) LTV(4)(8) Rating Investment Amount(2) Amount
Slide 35: Portfolio Details
Portfolio Details 1. Our total portfolio represents the current principal amount on senior and mezzanine loans, net equity in RECOP I, which holds CMBS B-Piece investments, and net carrying value of our REO investments. Excludes loans that were fully written off. For Senior Loan 9, the total whole l
Slide 36: Fully Extended Loan Maturities
Fully Extended Loan Maturities Fully extended weighted average loan maturity of 2.5 years Fully Extended Loan Maturities ($ in Millions) Note: Based on current principal amount. Excludes real estate owned and CMBS B-Pieces held through an equity method investment 36
Slide 37: Consolidated Balance Sheets
Consolidated Balance Sheets (in thousands - except share and per share data) March 31, 2024 December 31, 2023 Assets Cash and cash equivalents $ 106,517 $ 135,898 Commercial real estate loans, held-for-investment 7,113,256 7,343,548 Less: Allowance for credit losses (243,634) (210,470) Commercial re
Slide 38: Consolidated Statements of Income
Consolidated Statements of Income (in thousands - except share and per share data) Three Months Ended March 31, 2024 December 31, 2023 March 31, 2023 Net Interest Income Interest income $ 151,620 $ 165,024 $ 152,530 Interest expense 112,476 118,532 105,976 Total net ineterest income 39,144 46,492 46
Slide 39: Reconciliation of GAAP Net Income (Loss) to Distributable Earnings (Loss)
Reconciliation of GAAP Net Income (Loss) to Distributable Earnings (Loss) (in thousands - except share and per share data) Three Month Ended Per Diluted December 31, Per Diluted Per Diluted March 31, 2024 Share(1) 2023 Share(1) March 31, 2023 Share(1) Net Income (Loss) Attributable to Common Stockho
Slide 40: Key Definitions
Key Definitions “Distributable Earnings": The Company defines Distributable Earnings as net income (loss) attributable to common stockholders or, without duplication, owners of the Company's subsidiaries, computed in accordance with GAAP, including realized losses not otherwise included in GAAP net
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