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1. Company Snapshot

1.a. Company Description

KKR Real Estate Finance Trust Inc., a mortgage real estate investment trust, focuses primarily on originating and acquiring senior loans secured by commercial real estate (CRE) assets.It engages in the origination and purchase of credit investments related to CRE, including leveraged and unleveraged commercial mortgage loans, and commercial mortgage-backed securities.The company has elected to be taxed as a real estate investment trust and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders.


KKR Real Estate Finance Trust Inc.was incorporated in 2014 and is headquartered in New York, New York.

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1.b. Last Insights on KREF

KKR Real Estate Finance Trust Inc.'s recent performance was negatively impacted by a quarterly loss of $0.03 per share, falling short of the Zacks Consensus Estimate of $0.01. This compares unfavorably to earnings of $0.4 per share in the same period last year. The company's third-quarter 2025 results revealed a decline in profitability. Furthermore, the firm's decision to reprice and upsize its $650 million Senior Secured Term Loan B, although intended to optimize its debt structure, may have raised concerns among investors regarding its financial management.

1.c. Company Highlights

2. KKR Real Estate Finance Trust's Q3 2025 Earnings: A Closer Look at Financial Performance

KKR Real Estate Finance Trust reported distributable earnings of negative $0.03 per share, missing analyst estimates of $0.01 per share. The company's distributable earnings excluding losses were $0.18 per share, compared to the $0.25 per share dividend. Revenue growth is expected to decline by 5.7% next year, indicating a challenging environment. The company's liquidity position remains strong, with near-record levels of $933 million, including over $200 million in cash and a $700 million undrawn corporate revolver.

Publication Date: Oct -28

📋 Highlights
  • Originations Growth:: Closed $110M in originations (Q3 2025) with $400M expected in Q4 2025, targeting $10B in global investments for 2025.
  • Liquidity Position:: Ended Q3 with $933M liquidity, including $200M cash and $700M undrawn revolver, enabling strategic portfolio management.
  • Distributable Earnings Shortfall:: Reported negative $0.03/share distributable earnings (excluding losses: -$0.18/share) vs. $0.25/share dividend, citing long-term coverage goals.
  • Repayments & Redeployment:: Received $480M in repayments (Q3) and $1.1B YTD, with $1.5B+ repayments expected in 2026 to fuel future originations.
  • ROE Improvement Timeline:: Current ROE at half required level, aiming to double it in 12–36 months via resolving challenged assets and redeploying capital.

Liquidity and Capital Management

The company's strong liquidity position provides flexibility to manage the portfolio and capitalize on new opportunities. In the third quarter, KKR Real Estate Finance Trust successfully upsized its Term Loan B by $100 million to $650 million, reducing the coupon to SOFR plus 250 basis points and locking in more efficient funding, as noted by Patrick Mattson, "The loan repriced 75 basis points tighter, reducing the coupon to SOFR plus two fifty basis points and locked in more efficient funding."

Valuation and Dividend Yield

The stock's current valuation metrics indicate a dividend yield of 11.44%, suggesting an attractive income opportunity. The Price-to-Book Ratio is 0.47, which is a relevant metric for financial sector companies. With a challenging revenue growth outlook, the dividend yield may be an important consideration for investors. The Free Cash Flow Yield is 13.23%, indicating a relatively strong cash generation capability.

Portfolio Management and Outlook

The company is proactively managing its $5.9 billion portfolio, with $480 million in repayments received during the quarter. KKR Real Estate Finance Trust expects to originate approximately $1 billion in new loans in 2025, with a strong pipeline of potential investments. As Matt Salem noted, "Underlying activity level remains strong, we continue to see robust market activity." The company's ability to manage its portfolio and capitalize on new opportunities will be crucial in navigating the challenging environment.

Return on Equity and Path to Improvement

The company's current Return on Equity (ROE) is around half of what's needed to support the existing dividend. Matt Salem suggested that resolving challenged properties and loans is key to improving ROE, with a rough timeline of 12-36 months to double the ROE. The near-term opportunities include assets in Portland, Oregon, and West Hollywood, while the medium-term opportunities include assets in Mountain View and Seattle, Washington.

3. NewsRoom

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KKR Real Estate Finance Trust Inc. (KREF) Q3 2025 Earnings Call Transcript

Oct -22

Source: seekingalpha.com

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KKR Real Estate Finance (KREF) Reports Q3 Loss, Lags Revenue Estimates

Oct -21

Source: zacks.com

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KKR Real Estate Finance Trust Inc. Reports Third Quarter 2025 Results

Oct -21

Source: businesswire.com

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KKR Real Estate Finance Trust Inc. to Announce Third Quarter 2025 Results

Oct -07

Source: businesswire.com

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KKR Real Estate Finance Trust Inc. Announces Closing of Reprice and Upsize of $650 Million Senior Secured Term Loan B

Sep -11

Source: businesswire.com

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I'm Avoiding Most High-Yielding Mortgage REITs, Except For A Few

Jul -27

Source: seekingalpha.com

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KKR Real Estate Finance Trust Inc. (KREF) Q2 2025 Earnings Call Transcript

Jul -23

Source: seekingalpha.com

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KKR Real Estate Finance (KREF) Reports Q2 Loss, Lags Revenue Estimates

Jul -22

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.30%)

6. Segments

Real Estate Investment Trust

Expected Growth: 7.3%

KKR Real Estate Finance Trust Inc.'s 7.3% growth is driven by increasing demand for commercial real estate, diversification of investment portfolio, and strategic expansion into new markets. Additionally, the trust's focus on originating and acquiring senior loans and securities has contributed to its growth, along with a strong balance sheet and access to capital.

7. Detailed Products

Commercial Mortgage Loans

KKR Real Estate Finance Trust Inc. provides commercial mortgage loans to borrowers for the acquisition, refinancing, or renovation of commercial properties.

Mezzanine Loans

KKR Real Estate Finance Trust Inc. offers mezzanine loans to borrowers for the development or redevelopment of commercial properties.

Preferred Equity

KKR Real Estate Finance Trust Inc. provides preferred equity investments to borrowers for the acquisition, refinancing, or renovation of commercial properties.

Bridge Loans

KKR Real Estate Finance Trust Inc. offers bridge loans to borrowers for the temporary financing of commercial properties.

8. KKR Real Estate Finance Trust Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

KKR Real Estate Finance Trust Inc. operates in a niche market, providing real estate debt financing solutions. While there are substitutes available, the company's specialized offerings and strong relationships with borrowers mitigate the threat of substitutes.

Bargaining Power Of Customers

KKR Real Estate Finance Trust Inc.'s customers, primarily real estate investors and developers, have limited bargaining power due to the company's specialized financing solutions and strong market position.

Bargaining Power Of Suppliers

KKR Real Estate Finance Trust Inc. has a diversified funding base, reducing its reliance on any single supplier. Additionally, the company's strong relationships with its suppliers further mitigate the bargaining power of suppliers.

Threat Of New Entrants

The barriers to entry in the real estate debt financing market are relatively high, requiring significant capital and expertise. This limits the threat of new entrants and provides a competitive advantage to established players like KKR Real Estate Finance Trust Inc.

Intensity Of Rivalry

The real estate debt financing market is competitive, with several established players. However, KKR Real Estate Finance Trust Inc.'s strong brand, diversified funding base, and specialized offerings help the company maintain a competitive edge.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 84.83%
Debt Cost 7.40%
Equity Weight 15.17%
Equity Cost 8.92%
WACC 7.63%
Leverage 559.38%

11. Quality Control: KKR Real Estate Finance Trust Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

8.57$

Current Price

8.57$

Potential

-0.00%

Expected Cash-Flows