KKR Real Estate Finance Trust Q4 Earnings Call Highlights

Core Insights - KKR Real Estate Finance Trust (KREF) reported a fourth-quarter 2025 GAAP net loss of $32 million, or $0.49 per share, while distributable earnings were $14 million, or $0.22 per share, and a cash dividend of $0.25 was paid for the fourth quarter [4][3][5] Financing and Liquidity - The company has a total financing capacity of $8.2 billion, including $3.5 billion of undrawn capacity, with 74% of financing remaining non-mark-to-market [1] - KREF ended Q4 with near-record liquidity of over $880 million, having increased its corporate revolver to $700 million from $610 million [7][2] - The company has no facility maturities until 2027 and no corporate debt due until 2030 [1][7] Portfolio Performance - The weighted average risk rating on the portfolio was 3.2 at year-end, with a debt-to-equity ratio of 2.2x and a total leverage ratio of 3.9x [9] - In Q4, KREF downgraded certain loans, resulting in total incremental CECL provisions of $44 million [8][6] - New originations in 2025 totaled $1.1 billion, with over 75% concentrated in multifamily and industrial loans, while Q4 new originations were $424 million, exceeding repayments of $380 million [10] Geographic Expansion and Strategy - KREF closed its first loan in Europe and made subsequent investments, marking a milestone for geographic diversification [11] - The company plans to pursue an aggressive resolution strategy for its watchlist assets and REO portfolio in 2026, aiming to unlock approximately $0.13 per share of value [12][11] Dividend and Share Repurchase - The board is actively evaluating the dividend as part of broader capital allocation discussions, particularly in light of the transitional year [15] - KREF repurchased over $9 million of common stock in Q4 at a weighted average share price of $8.24, totaling $43 million for the full year 2025 [16]