KKR Real Estate Finance Trust (US:KREF)2024-07-22 20:46Financial Performance - KKR Real Estate Finance Trust Inc. reported a net loss of $25.254 million for the quarter ended June 30, 2023, compared to a loss of $20.124 million for the same period in 2022[134]. - Net income attributable to common stockholders for the three months ended June 30, 2024, was $20,223, compared to a net loss of $25,772 in the same period of 2023[145]. - Net income for the six months ended June 30, 2024, was $22,099, compared to a net loss of $45,378 in the same period of 2023, representing a significant turnaround[149]. - The company reported a net income of $25,528 for the three months ended June 30, 2024, compared to a net loss of $3,429 in the previous quarter, marking an increase of 844%[232]. Dividends - The company declared common dividends of $0.43 per share, totaling $29.716 million for the quarter ended June 30, 2023[134]. - The company declared a dividend of $17.333 million that was not yet paid as of June 30, 2024[136]. - Dividends declared per share of common stock were $0.25 for the three months ended June 30, 2024, down from $0.43 in the same period of 2023[145]. - The company must distribute at least 90% of its REIT taxable income to stockholders in the form of dividends to comply with REIT provisions[272]. Cash Flow and Liquidity - Cash paid for interest during the six months ended June 30, 2024, was $215.524 million, an increase from $207.352 million in the same period of 2023[136]. - Net cash provided by operating activities was $65,131, down from $77,108 in the prior year, indicating a decrease of approximately 15.5%[149]. - Cash, cash equivalents, and restricted cash at the end of the period totaled $112,673, down from $222,920 at the end of the previous year, a decrease of approximately 49.5%[149]. - The company has $107.2 million in cash on its balance sheet as of June 30, 2024, down from $135.9 million as of December 31, 2023[264]. Assets and Liabilities - KREF's total stockholders' equity as of June 30, 2023, was $1.459 billion, down from $1.513 billion at the end of March 2023[134]. - Total liabilities and equity decreased to $7,063,766 as of June 30, 2024, from $7,547,618 as of December 31, 2023[144]. - The accumulated deficit increased to $(337,547) as of June 30, 2024, from $(314,370) as of December 31, 2023[144]. - The debt-to-equity ratio improved to 1.9x as of June 30, 2024, down from 2.3x as of December 31, 2023[253]. Interest Income and Expense - Interest income for the three months ended June 30, 2024, was $149,249, a decrease of 2% from $151,620 in the previous quarter[232]. - Interest expense increased to $215,524,000 for the six months ended June 30, 2024, compared to $207,352,000 in the prior year[269]. - Net interest income for the three months ended June 30, 2024, was $40,433, a decrease of 6% from $43,952 in the same period of 2023[145]. Credit Quality and Provisions - The company reported a provision for credit losses of $37,811, significantly lower than the $116,802 reported in the same period of 2023, indicating improved credit quality[149]. - The provision for credit losses decreased significantly by 86% to $4,545 for the three months ended June 30, 2024, down from $33,266 in the previous quarter[232]. - The estimated CECL credit loss allowance was $114.5 million, equating to $1.65 per share as of June 30, 2024[194]. Financing and Investment Strategy - The company continues to expand and diversify its financing sources, particularly those that provide non-mark-to-market financing[206]. - The company expects future investment activity to focus on originating floating-rate senior loans financed through repurchase and other financing facilities[196]. - The company’s financing strategies include repurchase facilities, term lending agreements, and collateralized loan obligations, which may be affected by market conditions[301]. Market Conditions and Risks - The company experienced fluctuations in interest rates and credit spreads, which could significantly impact income generation from loans and investments[116]. - Market values of commercial real estate assets are subject to volatility due to various economic factors, which could impact collateral values and repayment capabilities[302]. - A 50 basis point decrease in index rates is expected to reduce cash flows by approximately $0.9 million, or $0.01 per common share, for the next three-month period[285].