NEW YORK--(BUSINESS WIRE)--
KKR Real Estate Finance Trust Inc. (the “Company” or “KREF”) (NYSE:KREF)
today announced the Company closed two floating-rate senior loan
transactions totaling $257.3 million subsequent to the third quarter
conference call in November. For the full year 2017, KREF originated
$1.5 billion of senior loans, resulting in a $2.1 billion portfolio.
“2017 was a very active year for KREF,” said Chris Lee and Matt Salem,
Co-Chief Executive Officers of KREF. “We originated $1.5 billion in
loans, increased our borrowing capacity to $1.8 billion and successfully
completed an IPO, raising approximately $226 million in net proceeds. We
continue to increase our brand awareness and expand our client base and
differentiate ourselves through creativity, flexibility and certainty of
execution. We are pleased with the Company’s progress in 2017 and are
confident in our ability to build on the momentum and grow our portfolio
in 2018.”
Recent Investment Activity
In January 2018, KREF closed a $75.5 million floating-rate senior loan
($70.0 million of which was funded at closing) secured by a 37-story,
656,000 square foot, class-A office building located in St. Paul,
Minnesota. The loan has a four-year initial term with a one-year
extension option, carries a coupon of LIBOR+3.6% and has an appraised
loan-to-value (“LTV”) of approximately 73%.
In November 2017, KREF closed a $181.8 million floating-rate senior loan
($129.5 million of which was funded at closing) secured by a 1.1 million
square foot, class-A office complex located in Minneapolis, Minnesota.
The loan has a three-year initial term with two one-year extension
options, carries a coupon of LIBOR+3.75% and has an LTV of approximately
75%.
The weighted average underwritten internal rate of return of the two
loans is 11.1%.
The following table summarizes key features of the two recently closed
floating-rate senior loan transactions ($ in thousands):
|
|
| |
|
| Month |
|
| Maximum |
|
| Initial Face |
|
| Interest |
|
| |
|
| |
| Description/Location |
|
| Property Type |
|
| Originated |
|
| Face Amount |
|
| Amount Funded |
|
| Rate(A) |
|
| Maturity Date(B) |
|
| LTV |
|
Senior Loan, St. Paul, MN(C) | | |
Office
| | |
January 2018
| | |
$
|
75,500
| | |
$
|
70,000
| | |
L + 3.6%
| | |
February 2023
| | |
73
|
%
|
|
Senior Loan, Minneapolis, MN | | |
Office
| | |
November 2017
| | |
|
181,800
|
|
|
|
129,476
|
|
|
L + 3.8
| | |
December 2022
| | |
75
|
|
|
Total/Weighted Average
| | | | | | | | |
$
|
257,300
|
|
|
$
|
199,476
|
|
|
L + 3.7%
| | | | | |
74
|
%
|
|
(A)
|
|
|
Floating rate based on one-month USD LIBOR
|
|
(B)
| | |
Maturity date assumes all extension options are exercised.
|
|
(C)
| | |
Initial interest rate of L+5.0% steps down to L+3.6% based on
certain performance hurdles.
|
|
|
2017 Investment Summary
KREF originated 12 floating-rate senior loans totaling $1.5 billion in
2017. The loans have a weighted average LTV and coupon of 68% and
L+4.0%, 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
residential condominium located across major markets in New York,
Colorado, California, Georgia, Minnesota and Hawaii.
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 assets. KREF is externally managed and
advised by an affiliate of KKR & Co. L.P. 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 the
section entitled “Risk Factors” in the Company’s prospectus dated May 4,
2017 filed with the Securities and Exchange Commission on May 8, 2017.
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 our 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 the loans included in each 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 the loans included
in each 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 IRRs will
equal the weighted average underwritten IRRs shown.
View source version on businesswire.com: http://www.businesswire.com/news/home/20180117005374/en/
Media:
Kristi Huller or Cara Major, 212-750-8300
[email protected]
or
Investor
Relations:
Sasha Hamilton, 212-401-0447
[email protected]
Source: KKR Real Estate Finance Trust
