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Kkr Real Estate Finance Trust Inc (KREF)
NYSE:KREF
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Kkr Real Estate Finance
(NYSE:KREF)
Rating:54Neutral
Price Target:―
Positive Factors
Analyst Recommendation
Analyst's recommendation reiterates a Market Outperform rating for KKR Real Estate Finance Trust Inc. (KREF).
Dividend Coverage
Distributable earnings excluding losses easily covered the dividend by 124%.
Loan Origination
KREF has originated $224M of new loans, signaling a shift back to offense.
Negative Factors
Credit Risk
Credit risk migration slipped with 10% of the loan portfolio now rated 4/5, up from 8% previously.
Earnings Impact
GAAP earnings were negatively impacted by a $5M additional CECL loan loss provision.
Realized Loss
Distributable earnings were materially negatively impacted by a $36M realized loss associated with the modification/resolution of the loan backed by a life science property in San Carlos.
Kkr Real Estate Finance (KREF) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$632.52M
Dividend Yield11.26%
Average Volume (3M)616.98K
Price to Earnings (P/E)57.8
Beta (1Y)0.76
Revenue Growth-16.46%
EPS GrowthN/A
CountryUS
EmployeesN/A
SectorReal Estate
Sector Strength62
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)0.25
Shares Outstanding67,806,290
10 Day Avg. Volume472,002
30 Day Avg. Volume616,979
Financial Highlights & Ratios
PEG Ratio-0.48
Price to Book (P/B)0.48
Price to Sales (P/S)0.00
P/FCF Ratio5.73
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$10.38Price Target Upside16.89% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Kkr Real Estate Finance Business Overview & Revenue Model
Company DescriptionKKR 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.
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 exhibits financial resilience with a strong balance sheet and positive cash flow trends. However, the income statement's volatility and historical high leverage require careful monitoring.Income Statement
Kkr Real Estate Finance shows a strong gross profit margin with consistent positive net income in recent periods. The TTM data highlights a substantial increase in revenue compared to the previous year, but net profit margin has been volatile. EBIT margin is improving, suggesting operational efficiency gains. However, the fluctuations in revenue growth and net income suggest potential instability.67
Positive
Balance Sheet
The balance sheet is robust with no total debt reported in the most recent TTM period, indicating strategic debt management. The equity ratio is stable, and return on equity is positive, reflecting efficient use of equity capital. However, historical data suggests high leverage, which may pose risks if not managed carefully.72
Positive
Cash Flow
Cash flow analysis reveals a positive trend in free cash flow, with significant growth in recent TTM data. The operating cash flow to net income ratio indicates strong cash generation capabilities. However, the free cash flow to net income ratio has varied, pointing to possible fluctuations in cash flow sustainability.65
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 258.17M | 151.72M | 175.22M | 174.73M | 151.94M | 125.63M | Gross Profit |
| 238.25M | 155.17M | 164.03M | 163.62M | 122.29M | 101.86M | EBIT |
| 115.42M | 5.07M | -58.53M | 274.77M | 137.87M | 54.81M | EBITDA |
| 234.58M | 0.00 | 426.44M | 274.26M | 137.87M | 54.81M | Net Income Common Stockholders |
| 33.84M | 35.59M | -30.85M | 38.10M | 137.18M | 54.40M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 106.41M | 104.93M | 135.90M | 239.79M | 271.49M | 110.83M | Total Assets |
| 6.55B | 6.35B | 7.55B | 7.80B | 6.70B | 4.97B | Total Debt |
| 4.00B | 3.86B | 6.06B | 6.16B | 5.29B | 3.88B | Net Debt |
| 3.90B | 3.76B | 5.93B | 5.92B | 5.02B | 3.77B | Total Liabilities |
| 5.19B | 4.95B | 6.14B | 6.23B | 5.34B | 3.92B | Stockholders Equity |
| 1.31B | 1.35B | 1.40B | 1.57B | 1.36B | 1.05B |
| Cash Flow | Free Cash Flow | ||||
| 108.00M | 132.56M | 155.72M | 141.13M | 124.79M | 115.06M | Operating Cash Flow |
| 113.99M | 132.56M | 155.72M | 141.13M | 124.79M | 115.06M | Investing Cash Flow |
| 659.01M | 1.12B | 13.49M | -1.18B | -1.54B | 88.71M | Financing Cash Flow |
| -784.45M | -1.29B | -271.51M | 1.01B | 1.58B | -160.56M |
Kkr Real Estate Finance Technical Analysis
Negative
8.88
Price Trends
9.69
Negative
10.04
Negative
10.52
Negative
Market Momentum
-0.10
Positive
38.42
Neutral
16.97
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 8.88 is below the 20-day moving average (MA) of 9.23, below the 50-day MA of 9.69, and below the 200-day MA of 10.52, indicating a bearish trend. The MACD of -0.10 indicates Positive momentum. The RSI at 38.42 is Neutral, neither overbought nor oversold. The STOCH value of 16.97 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 1 New Risks
1.
Real estate valuation is inherently subjective and uncertain, and is subject to change, especially during periods of volatility. Q4, 2024
Kkr Real Estate Finance Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $625.28M | 11.24 | 6.22% | 12.68% | -13.64% | ― | |
61 Neutral | $763.78M | 17.78 | 5.23% | 20.87% | 61.59% | ― | |
60 Neutral | $2.75B | 10.29 | 0.33% | 8508.22% | 5.95% | -17.48% | |
54 Neutral | $632.52M | 57.76 | 2.42% | 11.26% | -16.46% | ― | |
50 Neutral | $583.33M | ― | 2.63% | 12.29% | 33.94% | 96.99% | |
48 Neutral | $732.15M | 25.93 | 2.92% | 12.54% | 6.72% | 228.13% | |
46 Neutral | $750.23M | ― | -12.42% | 22.34% | -31.47% | -204.79% |
* Real Estate Sector Average
Performance Comparison
KREF
Kkr Real Estate Finance
8.97
0.29
3.34%
RWT
Redwood
5.44
-0.23
-4.06%
NYMT
New York Mortgage
6.42
1.25
24.18%
RC
Ready Capital
4.13
-3.19
-43.58%
ORC
Orchid Island Capital
6.92
-0.24
-3.35%
TRTX
Tpg Re Finance
7.59
0.11
1.47%
Kkr Real Estate Finance Earnings Call Summary
Earnings Call Date:Apr 23, 2025
(Q1-2025)
| % Change Since: -4.31%|
Next Earnings Date:Jul 28, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view of KKR Real Estate Finance Trust's performance. While the company demonstrated strong liquidity, a significant pipeline, and made strategic moves in share buybacks and European market expansion, it also faced challenges such as a reported net loss, market uncertainty, and specific loan downgrades.Q1-2025 Updates
Positive Updates
Strong Liquidity and No Near-term Maturities
KKR Real Estate Finance Trust reported having over $700 million in liquidity and no corporate maturities until 2030, having extended their corporate revolver and refinanced the Term Loan B.
Significant Pipeline and Active Quarter
The company has a robust pipeline totaling over $30 billion, and closed four loans for a total of $376 million during the quarter. 80% of these were secured by Class A, multi-family properties.
Investment in Share Buybacks
KKR repurchased $10 million of its own stock at a weighted average price of $11.03, raising the total shares repurchased in the past two quarters to $20 million.
European Market Expansion
The company is actively looking at opportunities to diversify its portfolio and add duration by focusing on the European lending market.
Negative Updates
Net Loss Reported
KKR reported a GAAP net loss of $10.6 million or 15 cents per share for the first quarter of 2025.
Real Estate Market Uncertainty
Market volatility and recession expectations have increased, delaying the early recovery of real estate, with tariff implementations adding to the uncertainty.
Raleigh Loan Downgrade
A multifamily loan in Raleigh, North Carolina, was downgraded due to inability to drive rents and an upcoming maturity date, leading to a potential modification or ownership position.
Challenges in Life Science Sector
The Life Science sector, comprising 12% of the loan portfolio, faces cyclical headwinds, which could be exacerbated by economic downturns or NIH funding cuts.
Company Guidance
In the first quarter of 2025, KKR Real Estate Finance Trust Inc. reported a GAAP net loss of $10.6 million, equivalent to 15 cents per share, while the book value per share was $14.44 as of March 31. Distributable earnings were $17 million, or 25 cents per share, aligning with their dividend. The company has secured a strong liquidity position, with over $700 million available, and no corporate maturities until 2030, thanks to refinancing their Term Loan B with a new seven-year facility. The real estate credit market has seen increased volatility, with senior loan spreads widening by 10 to 15 basis points, transitional loans by 15 to 20 basis points, and BMBF spreads by 50 to 75 basis points. Their pipeline is robust, totaling over $30 billion, and the company closed four loans worth $376 million, mainly secured by Class A multi-family properties with a weighted average LTV of 69% and a coupon of SOFR plus 277 basis points. Despite challenges, KKR remains focused on diversifying its portfolio, particularly in the European lending market, and exploring new issuance opportunities in CMBS.Kkr Real Estate Finance Corporate Events
Executive/Board ChangesShareholder MeetingsBusiness Operations and Strategy
KKR Real Estate Finance Approves 2025 Incentive Plan
Neutral
May 1, 2025
At the 2025 Annual Meeting held on April 25, 2025, KKR Real Estate Finance Trust Inc. received stockholder approval for its 2025 Omnibus Incentive Plan. The meeting also saw the election of eight directors and the ratification of Deloitte & Touche LLP as the independent registered public accounting firm for the fiscal year ending December 31, 2025. Additionally, the compensation of the company’s executive officers was approved on an advisory basis. These decisions reflect the company’s ongoing efforts to strengthen its governance and operational framework, potentially impacting its strategic direction and stakeholder confidence.
Spark’s Take on KREF Stock
According to Spark, TipRanks’ AI Analyst, KREF is a Neutral.
KREF shows financial strength in terms of liquidity and pipeline potential, yet faces challenges with income volatility and market uncertainties. The high P/E ratio suggests overvaluation despite an attractive dividend. Technical indicators imply bearish momentum, which could deter potential investors.
To see Spark’s full report on KREF stock, click here.
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.