KKR Real Estate Finance Trust (US:KREF)2025-04-23 21:24Financial Performance - Net income attributable to common stockholders was $(10,550), compared to $(8,739) in the same period last year, indicating a worsening performance[17]. - Net income for the three months ended March 31, 2025, was a loss of $5,749,000 compared to a loss of $3,429,000 for the same period in 2024, indicating a decline in profitability[24]. - KREF reported a decrease in interest income from $48,860,000 in Q1 2024 to $36,971,000 in Q1 2025, a decline of 24.3%[154]. - KREF's net interest income for the three months ended March 31, 2025, was $11,913,000, down 17.9% from $14,495,000 in the same period of 2024[154]. - The company declared a dividend of $0.25 per share on common stock, totaling $16,956,000 for the quarter ended March 31, 2025[177]. Assets and Liabilities - Total assets increased to $6,554,529, up from $6,350,398 as of December 31, 2024, representing a growth of approximately 3.2%[15]. - Total liabilities rose to $5,190,974, an increase of 4.8% from $4,951,519 as of December 31, 2024[15]. - Total equity decreased to $1,363,555 from $1,398,879, a decline of approximately 2.5%[15]. - KREF's total assets amounted to $1,928,556,000, a decrease of 8.7% from $2,113,282,000 on December 31, 2024[154]. - KREF's total liabilities decreased from $1,770,201,000 on December 31, 2024, to $1,584,648,000 as of March 31, 2025, reflecting a reduction of 10.5%[154]. Credit Losses and Allowances - Provision for credit losses, net, was $24,863, a decline of 25.3% compared to $33,266 in the prior year[17]. - The allowance for credit losses increased to $142,337 from $117,103, reflecting a rise of 21.5%[15]. - The allowance for credit losses increased to $144.4 million as of March 31, 2025, up from $117.1 million at the end of 2024, reflecting a provision of $24.9 million for the first quarter[117]. - KREF's allowance for credit losses on commercial real estate loans decreased from $20,005,000 to $18,263,000, indicating improved credit quality[154]. Cash Flow and Investments - Cash flows from operating activities provided $15,916,000 in Q1 2025, down from $34,488,000 in Q1 2024, reflecting a decrease in operational cash generation[24]. - KREF reported a net cash used in investing activities of $220,466,000 in Q1 2025, contrasting with net cash provided of $236,756,000 in Q1 2024, highlighting a shift in investment strategy[24]. - Proceeds from principal repayments of commercial real estate loans were $182,095,000 in Q1 2025, compared to $334,680,000 in Q1 2024, showing a significant reduction in loan repayments[24]. Stock and Dividends - The company declared dividends of $0.25 per share for common stock, consistent with the previous year[17]. - KREF's common stock repurchase program allows for up to $100,000,000 in repurchases, with $80,200,000 remaining capacity as of March 31, 2025[171]. - During the three months ended March 31, 2025, KREF repurchased 889,100 shares at an average price of $11.03, totaling $9,800,000[171]. - KREF declared $0.4 million and $0.3 million of nonforfeitable dividends on unvested RSUs and outstanding deferred stock units (DSUs) for the three months ended March 31, 2025 and 2024, respectively[188]. Loan Portfolio and Risk Ratings - As of March 31, 2025, KREF's total loans held-for-investment amounted to $6,108,987, with a carrying value of $5,966,650[102]. - The loan portfolio activity for the three months ended March 31, 2025, included originations of $400,204 and repayments of $183,595, resulting in a net increase in amortized cost[105]. - KREF's commercial real estate loan portfolio had an average risk rating of 3.1 as of March 31, 2025, consistent with the previous quarter[113]. - The carrying value of loans rated 3 was $5.16 billion, representing 85% of the outstanding principal as of March 31, 2025[112]. - KREF had three risk-rated 5 loans on nonaccrual status as of March 31, 2025, with outstanding principal balances of $194.4 million, $112.2 million, and $85.2 million respectively[118][119][120]. Financing and Debt - KREF's secured financing agreements are treated as floating-rate collateralized financing arrangements carried at their contractual amounts, net of unamortized debt issuance costs[73]. - The weighted average funding cost for KREF's secured financing was 6.4% as of March 31, 2025[145]. - KREF's master repurchase agreements with Wells Fargo and Morgan Stanley had outstanding principals of $760,823 and $731,249, respectively, representing 47.8% of stockholders' equity[142]. - The total principal borrowings for the three months ended March 31, 2025, were $603,390, while principal repayments were $377,004[145]. Management and Strategy - KREF's management continues to focus on originating and acquiring transitional senior loans secured by commercial real estate assets, aligning with its business strategy as a mortgage REIT[27]. - KREF applies the Current Expected Credit Loss (CECL) model to estimate expected credit losses, incorporating historical experience and forward-looking information[61]. - KREF's board of directors may exclude one-time events and certain material non-cash income or expense items from distributable earnings for incentive compensation calculations[206].