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KREF

KKR Real Estate Finance Trust NYSE:KREF Stock Report

Last Price

US$17.58

Market Cap

US$1.2b

7D

-7.7%

1Y

-17.6%

Updated

28 Sep, 2022

Data

Company Financials +
KREF fundamental analysis
Snowflake Score
Valuation3/6
Future Growth1/6
Past Performance2/6
Financial Health3/6
Dividends3/6

KREF Stock Overview

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.

KKR Real Estate Finance Trust Competitors

Price History & Performance

Summary of all time highs, changes and price drops for KKR Real Estate Finance Trust
Historical stock prices
Current Share PriceUS$17.58
52 Week HighUS$23.40
52 Week LowUS$16.47
Beta0.76
1 Month Change-10.26%
3 Month Change0.75%
1 Year Change-17.62%
3 Year Change-8.91%
5 Year Change-17.19%
Change since IPO-20.56%

Recent News & Updates

Sep 13

KKR Real Estate Finance Trust declares $0.43 dividend

KKR Real Estate Finance Trust (NYSE:KREF) declares $0.43/share quarterly dividend, in line with previous. Forward yield 8.83% Payable Oct. 14; for shareholders of record Sept. 30; ex-div Sept. 29. See KREF Dividend Scorecard, Yield Chart, & Dividend Growth.

Jul 26

KKR Real Estate: Seeking The Best REIT For Retirement Income

KREF has the backing of KKR and yields nearly 10% annually. The portfolio of commercial loans has grown to $7.9B and consists of 99% senior loans that are 100% performing and mostly floating rate. The commercial REIT sector has been depressed since the Covid-19 pandemic but is showing signs of recovery in the second half of 2022, and KREF is well-positioned for growth. One of the main reasons why I enjoy writing for Seeking Alpha is because of the prolific exchange of information, ideas, and opinions that can be generated from a piece of research analysis on an investing topic or suggestion. I am not a financial expert or a subject matter expert on real estate investments, but I do appreciate the fact that a good choice at the right time can provide me with some long-term income if I do my research well and respect other people's opinions (but not necessarily agree). Recently, I wrote an article on a business development company ("BDC") that offers a high yield and some capital appreciation potential for long-term investors. That article generated a lot of discussion in the comments section regarding whether it was the best BDC to recommend investors buy at the time that I wrote the article (it was a Hold recommendation in that case, yet the discussion was about when to buy). As I look to build out my long-term growth and income portfolio, I am looking at several real estate investment trusts ("REITs") to either buy or add to my current holdings. While the market churns along in 2022, punishing many of the high yield sectors that were outperforming over the 5-year period prior to this year, I am looking at clues for what will outperform going forward. So, I search for high yield investments that have performed well in the past and appear to be well-positioned for this new inflationary, possibly recessionary environment that we find ourselves in now. A space that I am particularly interested in right now is commercial REITs. As an investment vehicle REITs tend to pay out high yields due to the requirement to disburse at least 90% of its income each year to retain REIT status. There are many types of REIT investments in many different sectors, and other authors on SA cover the industry in far more detail than I will here. For example, this recent article from Hoya Capital discusses the "return to the office" trends that are occurring now that the majority of the Covid-19 pandemic is over, and work from home full-time is transitioning back to at least part-time in the office for many employees, including myself. In this article, I am concentrating on a particular commercial REIT for this analysis - KKR Real Estate Finance Trust Inc. (KREF). KREF offers investors relative price stability and a nearly 10% annual yield based on the current quarterly dividend of $0.43. KREF focuses primarily on the office and multi-family segments of the commercial real estate sector. I feel that the commercial REIT sector is in a good place for investors to either start a new long position or add to an existing one as the market has beaten down the prices of many of them recently. According to some recent research published by JP Morgan Chase, the industry outlook for commercial real estate looks positive for the second half of the year: Despite rising interest rates-with the potential for more hikes in the coming months-commercial real estate has seen success in 2022. Although the forecast varies among asset classes, the overall industry outlook remains positive heading into the second half of the year. One of the more popular and larger commercial REITs that gets a lot of coverage on SA is Starwood Property Trust (STWD). In fact, a recent article from Gen Alpha discussed some of the reasons why now is a good time to buy STWD. I like the stock and I may decide to add it my portfolio again, as I held it previously but decided to sell when the Covid-19 pandemic hurt many of the commercial REITs. I initially purchased shares of STWD back in June 2020 for an average price of around $15 but finally sold all of my shares in February of this year for $23. STWD then went down to a 52-week low of $19.69 before climbing back to $22.59 as of the close on July 22, 2022. In May of this year, I came across KREF. With a market cap of about $1.3B, KREF is not as large as STWD at $6.9 billion. But KREF has the backing of KKR (KKR), a $43B private equity and global investment firm with $479B in assets under management ("AUM"). I started buying shares of KREF in May for around $19 and have averaged down into the mid $17s in July with an average cost basis now of about $18. In addition to KREF, which I will go into more detail about below, I am also currently holding long positions in two other commercial REITs - Ready Capital (RC) and Arbor Realty Trust (ABR). I decided to compare the total returns of each of these REITs to try to determine which is the best buy based on past results, and then try to predict which will do the best going forward. Comparing Commercial REITs Timing of buys is crucial to comparing long-term returns based on historical results. If we consider the time period of the past 3 years, which was pre-pandemic until now, ABR is the clear winner. 3-yr Comparison of commercial REITs (Seeking Alpha) But ABR has suffered more volatility in the past one-year period and is now lagging the others if you look at results from just one year ago until today. Based on the total return over the past 1 year, RC is the winner with KREF in 2nd place. 1-yr comparison of commercial REITs (Seeking Alpha) With my particular investment objectives and risk tolerance, I do not necessarily need to choose the best one to buy today, if I hold for the long term. As another author on SA likes to say, I do not have to win the race with the horses that I bet on, I only need to place. And that is especially true with REITs that pay a high yield distribution with an annual yield of 9% or more, as is the case with KREF. Why KREF and Why Now? Taking a closer look at KREF reveals that they are a leading provider of structured commercial real estate loans. With an investment portfolio of $7.9B the loans are 99% senior loans and 100% performing. The average loan size is $121M, and 58% are multifamily and industrial loans. Founded in 2011, KREF offers an integrated real estate platform and owns or lends on $172B in real estate assets. KKR owns 14% of KREF and offers global reach in financing and sourcing opportunities. KREF Overview (July 2022 investor presentation) This relationship with KKR provides more than just a broad global base to source new opportunities, it also adds elements of multi-disciplinary quality and leadership experience that results in a rigorous screening and selection process for loan originations. The result is a high-quality portfolio of 99% senior secured loans that are 100% floating rate, spread geographically across most of the largest MSAs (metropolitan statistical areas) in the U.S. In fact, 84% of the loans are in the top 15 MSAs and 92% are in the top 20 MSAs and are held with high quality sponsors with typical LTV of 75% or less. The fully extended weighted average loan maturity is 3.6 years as of Q222. KREF loan portfolio (July investor presentation) Financing Overview and Recent Performance During 2021, the company made 37 loans to high quality institutional sponsors and two thirds of those loans were made to repeat borrowers. In the 4th quarter of 2021, they made 18 loans totaling $1.8B, 13 of which were multifamily, 2 in office, 2 in life sciences, and a $66 million loan in hospitality. In the 4th quarter 2021, the company took a write-off on loans leading to a loss in the quarter for the first time since going public. From the Q421 earnings call transcript: For the fourth quarter of 2021, we had GAAP net income of $35.2 million or $0.59 per share. Distributable earnings this quarter were negative $2.9 million or negative $0.05 per share due to $0.55 per share in realized losses on loan write-offs this quarter. In May 2022, the company celebrated its 5th anniversary as a public company. Reported earnings were $0.47 for the quarter. First quarter loan originations consisted of 9 floating rate senior loans totaling $844 million with $618 million of initial funding. They received $282M in loan repayments and 100% of interest payments due in Q1.

Shareholder Returns

KREFUS Mortgage REITsUS Market
7D-7.7%-13.6%-2.0%
1Y-17.6%-36.5%-20.3%

Return vs Industry: KREF exceeded the US Mortgage REITs industry which returned -38.5% over the past year.

Return vs Market: KREF exceeded the US Market which returned -22.1% over the past year.

Price Volatility

Is KREF's price volatile compared to industry and market?
KREF volatility
KREF Average Weekly Movement2.8%
Mortgage REITs Industry Average Movement4.8%
Market Average Movement6.9%
10% most volatile stocks in US Market15.8%
10% least volatile stocks in US Market2.8%

Stable Share Price: KREF is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: KREF's weekly volatility (3%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
2014n/aMatt Salemhttps://www.kkrreit.com

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 Fundamentals Summary

How do KKR Real Estate Finance Trust's earnings and revenue compare to its market cap?
KREF fundamental statistics
Market CapUS$1.22b
Earnings (TTM)US$116.38m
Revenue (TTM)US$186.12m

10.5x

P/E Ratio

6.5x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
KREF income statement (TTM)
RevenueUS$186.12m
Cost of RevenueUS$4.92m
Gross ProfitUS$181.19m
Other ExpensesUS$64.82m
EarningsUS$116.38m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)1.68
Gross Margin97.36%
Net Profit Margin62.53%
Debt/Equity Ratio356.8%

How did KREF perform over the long term?

See historical performance and comparison

Dividends

9.8%

Current Dividend Yield

91%

Payout Ratio

Does KREF pay a reliable dividends?

See KREF dividend history and benchmarks
When do you need to buy KREF by to receive an upcoming dividend?
KKR Real Estate Finance Trust dividend dates
Ex Dividend DateSep 29 2022
Dividend Pay DateOct 14 2022
Days until Ex dividend1 day
Days until Dividend pay date14 days

Does KREF pay a reliable dividends?

See KREF dividend history and benchmarks
We’ve recently updated our valuation analysis.

Valuation

Is KREF undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for KREF?

Other financial metrics that can be useful for relative valuation.

KREF key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenuen/a
Enterprise Value/EBITDAn/a
PEG Ratio2.2x

Price to Earnings Ratio vs Peers

How does KREF's PE Ratio compare to its peers?

KREF PE Ratio vs Peers
The above table shows the PE ratio for KREF vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average7.6x
RC Ready Capital
6.2x1.0%US$1.3b
ARI Apollo Commercial Real Estate Finance
7.9x12.7%US$1.3b
BRMK Broadmark Realty Capital
9.5x14.5%US$740.1m
ABR Arbor Realty Trust
6.8x1.2%US$2.3b
KREF KKR Real Estate Finance Trust
10.5x4.7%US$1.2b

Price-To-Earnings vs Peers: KREF is expensive based on its Price-To-Earnings Ratio (10.5x) compared to the peer average (7.6x).


Price to Earnings Ratio vs Industry

How does KREF's PE Ratio compare vs other companies in the US Mortgage REITs Industry?

Price-To-Earnings vs Industry: KREF is expensive based on its Price-To-Earnings Ratio (10.5x) compared to the US Mortgage REITs industry average (10.2x)


Price to Earnings Ratio vs Fair Ratio

What is KREF's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

KREF PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio10.5x
Fair PE Ratio11.6x

Price-To-Earnings vs Fair Ratio: KREF is good value based on its Price-To-Earnings Ratio (10.5x) compared to the estimated Fair Price-To-Earnings Ratio (11.6x).


Share Price vs Fair Value

What is the Fair Price of KREF when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: KREF ($17.58) is trading below our estimate of fair value ($20.71)

Significantly Below Fair Value: KREF is trading below fair value, but not by a significant amount.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.


Discover undervalued companies

Future Growth

How is KKR Real Estate Finance Trust forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


4.7%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: KREF's forecast earnings growth (4.7% per year) is above the savings rate (1.9%).

Earnings vs Market: KREF's earnings (4.7% per year) are forecast to grow slower than the US market (14.8% per year).

High Growth Earnings: KREF's earnings are forecast to grow, but not significantly.

Revenue vs Market: KREF's revenue (6.3% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: KREF's revenue (6.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: KREF's Return on Equity is forecast to be low in 3 years time (9.5%).


Discover growth companies

Past Performance

How has KKR Real Estate Finance Trust performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


14.1%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: KREF has high quality earnings.

Growing Profit Margin: KREF's current net profit margins (62.5%) are lower than last year (73.5%).


Past Earnings Growth Analysis

Earnings Trend: KREF's earnings have grown by 14.1% per year over the past 5 years.

Accelerating Growth: KREF's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: KREF had negative earnings growth (-1.9%) over the past year, making it difficult to compare to the Mortgage REITs industry average (-1.6%).


Return on Equity

High ROE: KREF's Return on Equity (8.1%) is considered low.


Discover strong past performing companies

Financial Health

How is KKR Real Estate Finance Trust's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: KREF's short term assets ($7.6B) exceed its short term liabilities ($50.0M).

Long Term Liabilities: KREF's short term assets ($7.6B) exceed its long term liabilities ($6.0B).


Debt to Equity History and Analysis

Debt Level: KREF's net debt to equity ratio (349.7%) is considered high.

Reducing Debt: KREF's debt to equity ratio has reduced from 514.1% to 356.8% over the past 5 years.

Debt Coverage: KREF's debt is not well covered by operating cash flow (2.3%).

Interest Coverage: Insufficient data to determine if KREF's interest payments on its debt are well covered by EBIT.


Balance Sheet


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Dividend

What is KKR Real Estate Finance Trust current dividend yield, its reliability and sustainability?

Dividend Score

3/6

Dividend Score 3/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


9.78%

Current Dividend Yield

Dividend Yield vs Market

KKR Real Estate Finance Trust Dividend Yield vs Market
How does KKR Real Estate Finance Trust dividend yield compare to the market?
SegmentDividend Yield
Company (KKR Real Estate Finance Trust)9.8%
Market Bottom 25% (US)1.6%
Market Top 25% (US)4.6%
Industry Average (Mortgage REITs)13.6%
Analyst forecast in 3 Years (KKR Real Estate Finance Trust)9.8%

Notable Dividend: KREF's dividend (9.78%) is higher than the bottom 25% of dividend payers in the US market (1.67%).

High Dividend: KREF's dividend (9.78%) is in the top 25% of dividend payers in the US market (4.69%)


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, KREF has been paying a dividend for less than 10 years.

Growing Dividend: KREF's dividend payments have increased, but the company has only paid a dividend for 5 years.


Earnings Payout to Shareholders

Earnings Coverage: With its high payout ratio (91.2%), KREF's dividend payments are not well covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: At its current cash payout ratio (88.2%), KREF's dividend payments are covered by cash flows.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

2.0yrs

Average management tenure


CEO

Matt Salem (48 yo)

0.58yr

Tenure

US$1,979,366

Compensation

Mr. Matthew A. Salem, also known as Matt, is the Chief Executive Officer of KKR Real Estate Finance Trust Inc. since March 9, 2020 and serves as its Director since February 01, 2022. He is a Partner at KKR...


Leadership Team

Experienced Management: KREF's management team is considered experienced (2 years average tenure).


Board Members

Experienced Board: KREF's board of directors are considered experienced (5.3 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

NYSE:KREF Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
07 Jun 22SellUS$82,917,500KKR & Co. Inc.Company4,250,000US$19.51

Ownership Breakdown

What is the ownership structure of KREF?
Owner TypeNumber of SharesOwnership Percentage
Individual Insiders787,0461.1%
VC/PE Firms10,000,00014.4%
General Public14,720,26021.3%
Institutions43,745,38263.2%

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 24.5%.


Top Shareholders

Top 25 shareholders own 66.86% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
14.44%
KKR & Co. Inc.
10,000,000$175.8m-29.82%1.28%
12.59%
BlackRock, Inc.
8,717,697$153.3m20.75%no data
7.7%
The Vanguard Group, Inc.
5,330,546$93.7m20.52%no data
5.05%
Nan Shan Life Insurance Co Ltd, Asset Management Arm
3,500,000$61.5m0%0.82%
2.75%
The Townsend Group, LLC
1,902,095$33.4m0%no data
2.68%
Mirae Asset Global Investments Co., Ltd
1,855,890$32.6m7.34%0.05%
2.68%
Goldman Sachs Asset Management, L.P.
1,854,196$32.6m-16.82%0.01%
2.45%
State Street Global Advisors, Inc.
1,694,415$29.8m14.33%no data
1.98%
J.P. Morgan Asset Management, Inc.
1,369,086$24.1m38.66%no data
1.86%
Pacific Investment Management Company LLC
1,285,600$22.6m0%0.11%
1.51%
Stephens Capital Management
1,046,405$18.4m11.23%0.39%
1.29%
Geode Capital Management, LLC
894,666$15.7m20.74%no data
1.15%
Invesco Capital Management LLC
799,394$14.1m-6.66%0.01%
1.1%
Morgan Stanley, Investment Banking and Brokerage Investments
760,849$13.4m16.42%no data
1.02%
JRM Investment Counsel, LLC
704,432$12.4m5.84%6.29%
1.01%
Northern Trust Global Investments
696,287$12.2m22.72%no data
0.69%
Citadel Advisors LLC
476,152$8.4m13.48%0.01%
0.69%
BNY Mellon Asset Management
474,700$8.3m8.31%no data
0.68%
TD Asset Management, Inc.
473,900$8.3m-3.74%0.01%
0.64%
Principal Global Investors, LLC
444,169$7.8m3.02%0.01%
0.63%
Aviva Investors Asia Pte Ltd.
436,558$7.7m0%2.23%
0.62%
Two Sigma Advisers, LP
431,500$7.6m14.37%0.02%
0.61%
Nuveen Investments, Inc.
422,035$7.4m-8.27%0.03%
0.54%
American Century Investment Management Inc
372,714$6.6m0%0.01%
0.51%
Charles Schwab Investment Management, Inc.
356,542$6.3m17.47%no data

Company Information

KKR Real Estate Finance Trust Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: KKR Real Estate Finance Trust Inc.
  • Ticker: KREF
  • Exchange: NYSE
  • Founded: 2014
  • Industry: Mortgage REITs
  • Sector: Diversified Financials
  • Implied Market Cap: US$1.217b
  • Shares outstanding: 69.25m
  • Website: https://www.kkrreit.com

Location

  • KKR Real Estate Finance Trust Inc.
  • 30 Hudson Yards
  • Suite 7500
  • New York
  • New York
  • 10001
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
KREFNYSE (New York Stock Exchange)YesCommon StockUSUSDMay 2017
8KRDB (Deutsche Boerse AG)YesCommon StockDEEURMay 2017
KREF.PRANYSE (New York Stock Exchange)6.5% SER A PFDUSUSDApr 2021

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/09/28 00:00
End of Day Share Price2022/09/28 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.