KKR Real Estate Finance Trust Inc. Originates $2.7 Billion of Senior Loans in 2018

NEW YORK–(BUSINESS WIRE)–KKR Real Estate Finance Trust Inc. (the “Company” or “KREF”) (NYSE:KREF)
today announced the Company in 2018 originated 19 floating-rate senior
loans totaling $2.7 billion of commitments, an 84% increase over 2017
loan originations. As of year-end, the outstanding funded portfolio was
$4.1 billion, representing a 98% increase in portfolio size since
December 31, 2017.

“2018 was a very active year for KREF,” said Chris Lee and Matt Salem,
Co-Chief Executive Officers of KREF. “We improved our brand awareness,
expanded our client base and differentiated ourselves through
creativity, flexibility and certainty of execution, which resulted in a
quarterly and an annual originations record for the Company. We continue
to focus on capital preservation, improving our liability structure and
lending to experienced sponsors on institutional-quality real estate
located in the most liquid markets. This has led to an increase in the
average loan size to $144 million, up 16% compared to 2017. We are
pleased with the Company’s progress in 2018 and are confident in our
ability to build on the momentum in 2019.”

Fourth Quarter 2018 Activity Summary

  • KREF closed 7 floating-rate senior loans totaling $908.0 million. The
    loans have a weighted average appraised loan-to-value (“LTV”) and
    coupon of 69.2% and L+3.0%, respectively, and were underwritten to
    generate a weighted average internal rate of return of 12.1%.

 

 

 

 

Month

 

 

Maximum

 

 

Initial Face

 

 

Interest

 

 

 

 

Description/Location

 

 

Property Type

 

 

Originated

 

 

Face Amount

 

 

Amount Funded

 

 

Rate(A)

 

 

Maturity Date(B)

 

 

LTV

Senior Loan, Queens, NY

Multifamily

October 2018

$

45,000

$

42,000

L + 2.8%

November 2023

70%

Senior Loan, Philadelphia, PA

Multifamily

October 2018

$

77,000

$

77,000

L + 2.7%

November 2023

73%

Senior Loan, Ft. Lauderdale, FL

Hotel

November 2018

$

150,000

$

140,000

L + 2.9%

December 2023

62%

Senior Loan, West Palm Beach, FL

Multifamily

November 2018

$

135,000

$

122,000

L + 2.9%

December 2023

73%

Senior Loan, San Diego, CA

Multifamily

November 2018

$

103,500

$

81,018

L + 3.2%

December 2023

74%

Senior Loan, New York, NY

Multifamily

December 2018

$

163,000

$

148,000

L + 2.6%

December 2023

67%

Senior Loan, New York, NY

Multifamily

December 2018

$

234,482

 

 

$

182,213

 

 

L + 3.6%

January 2024

70%

Total/Weighted Average

$

907,982

 

 

$

792,231

 

 

L + 3.0%

69%

(A) Floating rate based on one-month USD LIBOR
(B) Maturity date
assumes all extension options are exercised.

  • KREF funded approximately $63.1 million for loans closed prior to the
    quarter-end.
  • KREF received $110.8 million from loan repayments.

2018 Activity Summary

  • KREF closed 19 floating-rate senior loans totaling $2.7 billion in
    2018. The loans have a weighted average LTV and coupon of 69.8% and
    L+3.0%, respectively, and were underwritten to generate a weighted
    average internal rate of return of 11.9%. The loans are secured by a
    mix of property types including multifamily, office, industrial and
    hotel located across major markets. Multifamily and office property
    types represented 91.8% of total origination volume.
  • Current funded portfolio as of December 31 of $4.1 billion is 100%
    performing, 98.4% floating-rate and 83.4% invested in multifamily and
    office property types.
  • KREF total financing capacity as of December 31 was $4.1 billion of
    which 51% was non-mark-to-market.

About KREF
KKR Real Estate Finance Trust Inc. (NYSE:KREF) is
a real estate finance company that focuses primarily on originating and
acquiring senior loans secured by commercial real estate properties.
KREF is externally managed and advised by an affiliate of KKR Co. Inc.
For additional information about KREF, please visit its website at www.kkrreit.com.

Forward-Looking Statements
This release contains certain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, which reflect the Company’s current
views with respect to, among other things, its future operations and
financial performance. The forward-looking statements are based on the
Company’s beliefs, assumptions and expectations, taking into account all
information currently available to it. These beliefs, assumptions and
expectations can change as a result of many possible events or factors,
not all of which are known to the Company or are within its control,
including those described under Part I—Item 1A. “Risk Factors” of the
Company’s Annual Report on Form 10-K for the fiscal year ended December
31, 2017, filed with the Securities and Exchange Commission (“SEC”), as
such factors may be updated from time to time in the Company’s periodic
filings with the SEC. Accordingly, actual outcomes or results may differ
materially from those indicated in this release. All forward looking
statements in this release speak only as of the date of this release.
The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future developments or otherwise, except as required by law.

Definitions
“Loan-to-value ratio”: Generally based on the
initial loan amount divided by the as-is appraised value as of the date
the loan was originated.

“Internal Rate of Return”: IRR is the annualized effective compounded
return rate that accounts for the time-value of money and represents the
rate of return on an investment over a holding period expressed as a
percentage of the investment. It is the discount rate that makes the net
present value of all cash outflows (the costs of investment) equal to
the net present value of cash inflows (returns on investment). It is
derived from the negative and positive cash flows resulting from or
produced by each transaction (or for a transaction involving more than
one investment, cash flows resulting from or produced by each of the
investments), whether positive, such as investment returns, or negative,
such as transaction expenses or other costs of investment, taking into
account the dates on which such cash flows occurred or are expected to
occur, and compounding interest accordingly. The weighted average
underwritten IRR for the investments shown reflects the returns
underwritten by KKR Real Estate Finance Manager LLC, the Company’s
external manager, taking into account certain assumptions around
leverage up to no more than the maximum approved advance rate, and
calculated on a weighted average basis assuming no dispositions, early
prepayments or defaults but assuming that extension options are
exercised and that the cost of borrowings remains constant over the
remaining term. With respect to certain loans included in the weighted
average underwritten IRR shown, the calculation assumes certain
estimates with respect to the timing and magnitude of the initial and
future fundings for the total loan commitment and associated loan
repayments, and assumes no defaults. With respect to certain loans
included in the weighted average underwritten IRR shown, the calculation
assumes the one-month spot USD LIBOR as of the date the loan was
originated. There can be no assurance that the actual weighted average
IRR will equal the weighted average underwritten IRR shown.