KKR Real Estate Finance Trust (KREF) - 2024 Q2 - Quarterly Results

Financial and Operational Highlights KREF reported Q2 2024 net income of $20.2 million but a $108.7 million distributable loss, driven by $136.0 million in realized losses, while maintaining strong liquidity Q2 2024 vs Q1 2024 Financial Results (per diluted share) | Metric | Q2 2024 | Q1 2024 | | :--- | :--- | :--- | | Net Income (Loss) Attributable to Common Stockholders | $20.2M ($0.29/share) | ($8.7)M (($0.13)/share) | | Distributable Earnings (Loss) | ($108.7)M (($1.57)/share) | $26.7M ($0.39/share) | - The company took title to two properties (office and life science) and wrote off a mezzanine office loan, resulting in a combined realized loss of $136.0 million[4] - Maintained a strong liquidity position of $643.9 million and reduced total leverage ratio to 3.9x after receiving $384.5 million in loan repayments[4] - The $6.6 billion loan portfolio is 99% floating rate, with 60% in Multifamily and Industrial assets, and a weighted average LTV of 65%[4] - Management commentary highlighted meaningful progress in working through the portfolio, resulting in increased liquidity, lower leverage, and a stable book value[4] Portfolio Summary KREF's portfolio as of June 30, 2024, totaled $6.9 billion outstanding principal, primarily senior loans ($6.6 billion) with a 65% weighted average LTV Portfolio Composition as of June 30, 2024 ($ in millions) | Investment | Outstanding Principal Amount | Carrying Value | Weighted Average LTV | | :--- | :--- | :--- | :--- | | Senior Loans | $6,575.9 | $6,450.3 | 65% | | Real Estate Assets | $335.5 | $335.5 | n.a. | | CMBS B-Pieces | $35.3 | $35.3 | 58% | | Total/Weighted Average | $6,946.7 | $6,821.1 | 65% | Non-GAAP Financial Measures KREF reconciled GAAP Net Income of $20.2 million to a $108.7 million Distributable Loss for Q2 2024, primarily due to a $135.8 million net realized loss on loan write-offs Reconciliation to Distributable Loss for Q2 2024 ($ in thousands) | Metric | Amount | | :--- | :--- | | Net Income Attributable to Common Stockholders | $20,223 | | Adjustments (Non-cash equity comp, unrealized gains, etc.) | $7,531 | | Distributable Earnings before realized loss | $27,754 | | Net realized loss on loan write-offs | ($135,811) | | Distributable Loss | ($108,672) | - The significant Distributable Loss was driven by a $135.8 million charge for net realized losses, which included a $98.5 million write-off on two senior loans upon deed-in-lieu of foreclosure and a $37.5 million write-off of a mezzanine loan[7] Corporate Information KREF, a REIT managed by KKR & Co. Inc., specializes in transitional senior loans for commercial real estate and will host a conference call to discuss results and non-GAAP measures - The company will host a conference call on Tuesday, July 23, 2024, at 10:00 a.m. Eastern Time to discuss its financial results[9] - KREF is a REIT that primarily originates or acquires transitional senior loans collateralized by institutional-quality commercial real estate assets and is externally managed by an affiliate of KKR & Co. Inc[12] - Distributable Earnings is a non-GAAP measure defined as GAAP net income adjusted for non-cash items (like equity compensation and unrealized gains/losses) and including realized losses, to better represent the company's capacity to pay dividends[16][19]