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Kkr Real Estate Finance Trust Inc (KREF)
NYSE:KREF
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Kkr Real Estate Finance
(NYSE:KREF)
69Neutral
Positive Factors
Analyst Rating
The analyst maintains a Market Outperform rating for KKR Real Estate Finance Trust Inc. (KREF), suggesting confidence in the stock's potential performance.
Dividend Coverage
Distributable earnings excluding losses easily covered the dividend by 124%.
Loan Origination
KREF originated two loans totaling $224M of new commitments, which is a positive indication of deal momentum.
Negative Factors
CECL Loan Reserves
GAAP earnings were negatively impacted by a $5M increase to CECL loan reserves.
Dividend Yield
The current dividend yield of KREF is lower than the peer group median yield, which may be less attractive to income-focused investors.
Earnings Performance
KREF reported DEPS of a loss of -$0.21, lower than the estimate and consensus.
Kkr Real Estate Finance (KREF) vs. S&P 500 (SPY)
Market Cap
$640.95M
Dividend Yield10.75%
Average Volume (3M)546.29K
Price to Earnings (P/E)49.4
Beta (1Y)1.04
Revenue Growth-10.24%
EPS GrowthN/A
CountryUS
EmployeesN/A
SectorReal Estate
Sector Strength70
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)0.19
Shares Outstanding68,713,590
10 Day Avg. Volume661,114
30 Day Avg. Volume546,286
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)4.31
Price to Cash Flow (P/CF)10.70
P/FCF Ratio0.60
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$12.45Price Target Upside42.45% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
Kkr Real Estate Finance Business Overview & Revenue Model
Company DescriptionKKR Real Estate Finance Trust Inc. (KREF) is a publicly traded real estate finance company primarily engaged in originating and acquiring senior loans secured by commercial real estate assets. The company operates within the real estate and financial services sector, focusing on providing customized financing solutions to property owners and developers across various commercial real estate sectors, including office, multifamily, industrial, and retail properties. KREF leverages the expertise and resources of its parent company, KKR & Co., a leading global investment firm, to deliver competitive financial products and services.
How the Company Makes MoneyKKR Real Estate Finance Trust Inc. generates revenue primarily through interest income from its portfolio of senior loans, which are secured by commercial real estate assets. The company's revenue model is based on the spread between the interest income earned on these loans and the cost of capital, including interest expenses on borrowings and other liabilities. KREF also benefits from origination fees and other transaction-related income associated with its loan activities. Additionally, the company may engage in strategic partnerships and utilize its relationship with KKR & Co. to identify investment opportunities and enhance its market position, contributing to its overall earnings.
Kkr Real Estate Finance Financial Statement Overview
Summary
Kkr Real Estate Finance maintains financial stability with a strong equity base and effective cost management. However, the company faces challenges in consistent revenue and profit growth, with fluctuating cash flows and inconsistent profitability. Continued focus on operational efficiency and stable cash flows is crucial.Income Statement
The company's revenue growth has been inconsistent, with a significant decline in 2024 compared to 2023. Gross profit margins remain stable, indicating effective cost management. However, net profit margins are volatile, influenced by fluctuating net income, which reflects operational challenges.65
Positive
Balance Sheet
The balance sheet shows a strong equity position with a stable equity ratio, suggesting sound financial health. The absence of debt in 2024 and a reduction in liabilities contribute to a lower risk profile. However, the fluctuating return on equity indicates inconsistent profitability.72
Positive
Cash Flow
Operating cash flow has generally increased over the years, signaling strong cash-generating capabilities. However, free cash flow and its growth rate have been inconsistent, reflecting potential challenges in maintaining steady cash flows relative to net income.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 151.72M | 175.22M | 174.73M | 151.94M | 125.63M | Gross Profit |
| 151.72M | 164.03M | 163.62M | 122.29M | 101.86M | EBIT |
| 5.07M | -58.53M | 274.77M | 137.87M | 54.81M | EBITDA |
| 0.00 | 426.44M | 274.26M | 137.87M | 54.81M | Net Income Common Stockholders |
| 34.33M | -30.85M | 38.10M | 137.18M | 54.40M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 104.93M | 135.90M | 239.79M | 271.49M | 110.83M | Total Assets |
| 6.35B | 7.55B | 7.80B | 6.70B | 4.97B | Total Debt |
| 3.86B | 6.06B | 6.16B | 5.29B | 3.88B | Net Debt |
| 3.76B | 5.93B | 5.92B | 5.02B | 3.77B | Total Liabilities |
| 4.95B | 6.14B | 6.23B | 5.34B | 3.92B | Stockholders Equity |
| 1.35B | 1.40B | 1.57B | 1.36B | 1.05B |
| Cash Flow | Free Cash Flow | |||
| 132.56M | 155.72M | 141.13M | 124.79M | 115.06M | Operating Cash Flow |
| 132.56M | 155.72M | 141.13M | 124.79M | 115.06M | Investing Cash Flow |
| 1.12B | 13.49M | -1.18B | -1.54B | 88.71M | Financing Cash Flow |
| -1.29B | -271.51M | 1.01B | 1.58B | -160.56M |
Kkr Real Estate Finance Technical Analysis
Negative
8.74
Price Trends
10.55
Negative
10.46
Negative
10.56
Negative
Market Momentum
0.04
Positive
45.75
Neutral
5.58
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KREF, the sentiment is Negative. The current price of 8.74 is below the 20-day moving average (MA) of 10.29, below the 50-day MA of 10.55, and below the 200-day MA of 10.56, indicating a bearish trend. The MACD of 0.04 indicates Positive momentum. The RSI at 45.75 is Neutral, neither overbought nor oversold. The STOCH value of 5.58 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KREF.
Kkr Real Estate Finance Risk Analysis
Kkr Real Estate Finance disclosed 85 risk factors in its most recent earnings report. Kkr Real Estate Finance reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Kkr Real Estate Finance Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $640.95M | 49.36 | 2.50% | 10.75% | -10.24% | ― | |
61 Neutral | $512.61M | ― | -4.17% | 14.13% | 33.72% | -15.41% | |
61 Neutral | $602.68M | 11.23 | 6.62% | 23.80% | 52.96% | ― | |
61 Neutral | $4.21B | 15.62 | -3.65% | 12.27% | 6.29% | -21.37% | |
58 Neutral | $581.61M | 9.61 | 6.45% | 13.37% | -10.05% | ― | |
52 Neutral | $720.77M | 16.81 | 4.13% | 13.53% | 27.92% | ― | |
43 Neutral | $831.65M | ― | -19.41% | 19.11% | -24.40% | -210.65% |
* Real Estate Sector Average
Performance Comparison
KREF
Kkr Real Estate Finance
8.60
-0.10
-1.15%
RWT
Redwood
5.10
-0.07
-1.35%
NYMT
New York Mortgage
5.32
-0.80
-13.07%
RC
Ready Capital
4.43
-2.87
-39.32%
ORC
Orchid Island Capital
6.13
-0.90
-12.80%
TRTX
Tpg Re Finance
6.80
0.28
4.29%
Kkr Real Estate Finance Earnings Call Summary
Earnings Call Date: Feb 3, 2025 | % Change Since: -11.00% | Next Earnings Date: Apr 23, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a positive outlook with strong liquidity and a decrease in watchlist percentage, indicating better asset management. However, challenges remain with distributable losses, ongoing issues in the office and life science sectors, and high leverage levels.Highlights
Decreased Watchlist Percentage
Reduced watchlist percentage from 13% in Q4 2023 to 8% in Q4 2024, indicating improved asset management outcomes.
Strong Liquidity Position
Maintained strong liquidity with $685 million available at the end of Q4 2024 and no corporate maturities until 2027.
Repayment and Origination Activity
Fourth quarter repayments exceeded $450 million, with full-year repayments totaling $1.5 billion. Expect originations to outpace repayments in the near term.
Proactive Management of CECL Allowance
Modified San Carlos Life Science loan, resulting in a $36 million subordinated note write-off and a decrease in total CECL reserve to $120 million.
Lowlights
Distributable Loss
Reported a distributable loss of negative $14.7 million or negative $0.21 per share for Q4 2024.
Challenges in Office and Life Science Sectors
Continued challenges with office and life science sectors, including a large modification on the San Carlos Life Science loan and ongoing watchlist loans.
High Leverage Concerns
Total leverage ratio at 3.6 times, with a debt-to-equity ratio of 1.6 times.
Company Guidance
During the KKR Real Estate Finance Trust's Fourth Quarter 2024 earnings call, several key metrics and guidance were shared. The company reported a GAAP net income of $14.6 million or $0.21 per share, while book value remained relatively stable at $14.76 per share. A distributable loss of $14.7 million or $0.21 per share was noted for the quarter, alongside a $0.25 per share dividend, yielding 10%. The company's watchlist percentage of loans decreased from 13% in Q4 2023 to 8% by the end of 2024. They repaid over $450 million in the fourth quarter, contributing to a total of $1.5 billion in full-year repayments, and closed two new loans totaling $225 million in January 2025. With $685 million in liquidity and no corporate maturities until 2027, KREF remains focused on leveraging its robust pipeline, confident in higher-quality asset opportunities and potential shareholder value optimization. The company anticipates repayments to exceed $1 billion again in 2025, with expectations for originations to outpace these repayments, reflecting an active lending market.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.