On October 23, 2023, KKR Real Estate Finance Trust Inc (KREF, Financial) released its financial results for the third quarter of 2023. The company reported a net income attributable to common stockholders of $21.4 million, or $0.31 per diluted share. This is a significant improvement from the net loss of $25.8 million, or $0.37 per diluted share, reported in the previous quarter. However, Distributable Earnings decreased to $17.4 million, or $0.25 per diluted share, compared to $33.1 million, or $0.48 per diluted share, in Q2 2023.
Financial Highlights
KREF's liquidity position was strong at $715.7 million, including $108.0 million of cash and $500.0 million of undrawn capacity on the corporate revolving credit agreement. The company funded $164.9 million for loans closed in previous quarters and received loan repayments of $152.3 million.
The current loan portfolio stood at $7.8 billion, with 99.0% floating rate and a weighted average unlevered all-in yield of 8.9%. Multifamily and industrial assets represented 55% of the loan portfolio. The weighted average loan-to-value ratio was 65%.
In September 2023, KREF restructured a $103.4 million senior office loan in Chicago, IL into a senior mortgage loan and a subordinated note. The $15.0 million subordinated note was written off as of September 30, 2023.
Management Commentary
Matt Salem, Chief Executive Officer of KREF, said: “KREF’s pro-active asset management, which leverages the market presence and proprietary information from KKR’s broader real estate equity and credit business as well as our dedicated special servicing and asset management platform, K-Star, creates differentiated outcomes.”
Patrick Mattson, President and Chief Operating Officer of KREF, added: “KREF is well positioned in this market environment with best-in-class non-mark-to-market financing, high levels of liquidity and deep relationships with our financing partners and borrowers.”
Portfolio Performance and Summary
KREF collected 96.0% of interest payments due on the loan portfolio for the three months ended September 30, 2023. The average risk rating of the company's portfolio was 3.2, consistent with that as of June 30, 2023.
The company's book value per share was $16.29 as of September 30, 2023, compared to $16.38 as of June 30, 2023. This includes the impact of a CECL allowance of $221.7 million, or ($3.21) per share.
Subsequent Events
In October 2023, KREF paid $29.7 million in dividends on its common stock, or $0.43 per share, with respect to the third quarter of 2023, to stockholders of record on September 29, 2023.
