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Kkr Reit (KREF)
NYSE:KREF
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Kkr Real Estate Finance
(NYSE:KREF)
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Rating:49Neutral
Price Target:
$7.00
▲(2.79% Upside)
Action:ReiteratedDate:02/06/26
KREF scores below average primarily due to deteriorating profitability and elevated leverage, reinforced by bearish technicals (below key moving averages with negative momentum). Offsetting factors include resilient cash generation, strong liquidity and financing flexibility discussed on the call, and a very high dividend yield—though dividend uncertainty limits the benefit.
Positive Factors
Strong liquidity and financing capacity
Material liquidity and large undrawn capacity give KREF durable flexibility to fund originations, absorb loan losses, and execute the portfolio resolution plan without forced asset sales. With limited near‑term facility maturities, the funding cushion reduces refinancing risk while management works to recycle capital.
Resilient operating and free cash flow
Consistent positive operating and free cash flow provides a persistent internal funding source for debt service, workouts, and selective originations. This cash resiliency supports the company through earnings volatility and underpins the ability to pursue capital recycling and gradual deleveraging over multiple quarters.
Leverage within stated target ranges
Maintaining leverage near target ranges reflects disciplined capital allocation and risk management by management. Operating within stated risk metrics supports sustainable originations and reduces tail risk to equity if markets worsen, enabling measured balance‑sheet adjustments during the multi‑quarter resolution program.
Negative Factors
Sharp revenue and earnings decline
A marked drop in revenue and return to sizable GAAP losses weakens persistent earnings power, reducing internal capital for dividends and loan loss coverage. Sustained profitability pressure could constrain originations and force deeper balance‑sheet adjustments over several quarters if recovery lags.
Elevated asset-quality risk and CECL provisions
Rising CECL provisions and downgrades, particularly tied to life‑science and other watch‑list loans, signal persistent credit stress. These exposures may require multi‑year recoveries or principal concessions, pressuring book value and earnings visibility as workouts and REO monetizations progress.
Dividend and capital allocation uncertainty
Active review of the dividend introduces durable uncertainty for income investors and may indicate management prioritizing balance‑sheet repair over distributions. Potential cuts would affect shareholder income stability and could alter investor base and access to equity capital during the multi‑quarter repositioning.
Kkr Real Estate Finance (KREF) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$441.06M
Dividend Yield11.33%
Average Volume (3M)979.51K
Price to Earnings (P/E)―
Beta (1Y)0.49
Revenue Growth-24.37%
EPS Growth-19.19%
CountryUS
EmployeesN/A
SectorReal Estate
Sector Strength53
IndustryREIT - Mortgage
Share Statistics
EPS (TTM)0.22
Shares Outstanding64,275,640
10 Day Avg. Volume1,086,451
30 Day Avg. Volume979,515
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)0.47
Price to Sales (P/S)1.20
P/FCF Ratio8.23
Enterprise Value/Market Cap11.44
Enterprise Value/Revenue11.02
Enterprise Value/Gross Profit12.48
Enterprise Value/Ebitda18.36
Forecast
1Y Price Target
$8.33Price Target Upside22.32% Upside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)0.53
Revenue Forecast (FY)$114.53M
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 Earnings Call Summary
Earnings Call Date:Feb 03, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 27, 2026
Earnings Call Sentiment Neutral
The call described meaningful progress on liquidity, financing, geographic diversification, and targeted portfolio actions (including share repurchases and plans to unlock REO value), but also disclosed near-term headwinds including a GAAP net loss, $44M of incremental CECL provisions, watch-list and life science asset risk, and expected earnings pressure in 2026 while management executes an aggressive resolution strategy. The company’s strong liquidity, financing flexibility, and clear remediation plan are positives, yet the immediate earnings and asset-quality challenges create notable near-term uncertainty.Q4-2025 Updates
Positive Updates
Strengthened Liquidity and Financing Flexibility
Ended 4Q25 with over $880M of liquidity (including $85M cash, $74M servicer-held repayments and $700M undrawn revolver). Total financing capacity of $8.2B with $3.5B undrawn and 74% of financing non-mark-to-market; no final facility maturities until 2027 and corporate debt due 2030.
Term Loan and Revolver Upsizes and Improved Pricing
Closed a 7-year Term Loan B initially $550M and upsized/repriced to $650M (≈+18.2% increase in balance) reducing coupon to SOFR + 250 bps; corporate revolver upsized from $610M to $700M (≈+14.8%).
Geographic Diversification — First Europe Loan
Closed KREF's first loan in Europe and completed additional European investments in 4Q25, establishing a foundation for continued geographic diversification and ability to capture relative value across U.S. and Europe.
Originations and Portfolio Composition
Full-year 2025 originations totaled $1.1B; 4Q25 originations were $424M versus $380M of repayments (4Q net +$44M). Over 75% of 2025 new originations concentrated in multifamily and industrial sectors, with multifamily the largest exposure and emphasis on Class A product.
Capital Return and Share Repurchases
Repurchased >$9M of common stock in 4Q25 at an average price of $8.24; for full-year 2025 repurchases totaled $43M at an average price of $9.35, resulting in approximately $0.32 of accretion to book value per share. ~$47M remains available under the buyback authorization.
Earnings and Cash Dividend
Reported distributable earnings of $14M (or $0.22 per share) in 4Q25 and paid a $0.25 cash dividend for the quarter. Board is actively evaluating dividend as part of capital allocation amid portfolio transition.
Portfolio Positioning and Value Creation Plan
Company positioned much of REO for liquidity in 2026 and plans an aggressive resolution strategy for a significant portion of watch list assets and select office assets aimed at compressing stock-to-book discount and unlocking an estimated ~$0.13 per share embedded value in REO assets.
Capital Structure and Leverage Within Targets
Weighted average portfolio risk rating 3.2; debt-to-equity 2.2x and total leverage ratio 3.9x, consistent with company’s target ranges, supporting disciplined origination and capital allocation.
Negative Updates
GAAP Net Loss and Negative EPS
Reported a GAAP net loss of $32M for 4Q25, equivalent to negative $0.49 per share, indicating near-term GAAP earnings weakness despite positive distributable earnings.
Incremental CECL Provisions and Downgraded Loans
Recorded $44M of incremental CECL provisions in the quarter after downgrades of the Cambridge Life Science and San Diego multifamily loans to risk rating 5; anticipate an additional CECL increase in 1Q26 related to a likely downgrade of the Boston Life Science loan (currently risk rating 3).
Watch List and REO Drag on Earnings
Significant REO and watch-list assets continue to drag on earnings; management acknowledges the aggressive resolution plan will put additional pressure on near-term earnings until monetizations and conversions to performing loans occur.
Life Science Sector Risks and Potential Long Recovery
Life science exposures noted as the most challenging sector; investors and some market participants expect multi-year recoveries (potentially 5+ years) which may require meaningful basis reductions or principal concessions to resolve, creating downside risk to book value if market realizations occur.
Dividend Under Active Review
Board is actively evaluating the dividend as part of capital allocation decisions during the transitional year; potential for dividend reduction or change introduces uncertainty for income-focused investors.
Near-Term Earnings Uncertainty Despite Liquidity
Although liquidity is strong, management expects heightened earnings volatility in 2026 as they execute portfolio resolutions, with the possibility that a material portion of the portfolio may be non-earning or earn below market while transitioning.
Company Guidance
KKR Real Estate Finance Trust said 2026 will be a transitional year as it implements an aggressive resolution strategy for REO, watch‑list and select office assets, aiming to unlock roughly $0.13 per share from REO while acknowledging near‑term pressure on earnings; management expects full‑year repayments of over $1.5 billion in 2026 (up from $1.5B in 2025) and will recycle capital into new originations while remaining at the high end of its target leverage (debt‑to‑equity 2.2x; total leverage 3.9x) and a weighted average risk rating of 3.2. The company finished Q4 with book value $13.04, GAAP net loss $(32)M (‑$0.49/share), distributable earnings $14M ($0.22/share) and paid a $0.25 cash dividend; Q4 originations were $424M versus $380M of repayments (2025 originations totaled $1.1B vs $1.5B repayments). Liquidity remains strong at >$880M (including $85M cash, $74M servicer‑held repayments and $700M undrawn revolver), total financing capacity $8.2B (≈$3.5B undrawn), 74% of financing non‑mark‑to‑market, a $650M 7‑year Term Loan B at SOFR+250bps, a $700M revolver, no final facility maturities until 2027 (corporate debt due 2030), Q4 incremental CECL of $44M, and ~$47M remaining on the share buyback authorization; the Board is actively evaluating the dividend as capital allocation decisions are made.Kkr Real Estate Finance Financial Statement Overview
Summary
Financials are mixed: cash flow is a relative strength (positive operating and free cash flow across periods, with a modest 2025 rebound), but the income statement deteriorated sharply with revenue down materially and a return to a sizable net loss in 2025. Leverage remains elevated despite some improvement, increasing downside risk if earnings remain pressured.Income Statement
Revenue has weakened materially, with a sharp decline in 2024 (-13%) followed by a much steeper drop in 2025 (-46%). Profitability is also volatile: the company moved from a profit in 2024 ($35.6M net income) back to a sizable loss in 2025 (-$69.9M). Earlier years show it can be profitable (notably 2020–2022), but the recent trajectory points to pressured earnings power and lower consistency.33
Negative
Balance Sheet
Leverage has been high for most of the period, with debt-to-equity typically around ~3.7x to ~4.3x (2020–2023), improving to ~2.9x in 2024. Total assets have also trended down from 2022–2024, suggesting balance-sheet contraction. Equity remains meaningful ($1.17B–$1.57B historically), but the combination of elevated leverage and recent losses increases risk, even with some deleveraging evident in 2024.40
Negative
Cash Flow
Cash generation is comparatively steadier than earnings: operating cash flow has remained positive each year provided, and free cash flow is also positive throughout. While free cash flow declined in 2024 (-19%), it rebounded modestly in 2025 (+4%). Overall, cash flow resiliency is a strength, though the downshift in 2024 and weaker profitability in 2025 suggest coverage could tighten if operating conditions remain pressured.62
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 457.96M | 592.62M | 660.19M | 436.51M | 285.76M |
| Gross Profit | 404.40M | 543.02M | 620.34M | 399.08M | 256.11M |
| EBITDA | 274.92M | 448.47M | 427.86M | 273.75M | 252.31M |
| Net Income | -47.05M | 35.59M | -30.85M | 38.10M | 137.18M |
Balance Sheet | |||||
| Total Assets | 6.46B | 6.35B | 7.55B | 7.80B | 6.70B |
| Cash, Cash Equivalents and Short-Term Investments | 84.62M | 104.93M | 135.90M | 239.79M | 271.49M |
| Total Debt | 4.69B | 4.90B | 6.06B | 6.16B | 5.29B |
| Total Liabilities | 5.24B | 4.95B | 6.14B | 6.23B | 5.34B |
| Stockholders Equity | 1.17B | 1.35B | 1.40B | 1.57B | 1.36B |
Cash Flow | |||||
| Free Cash Flow | 66.70M | 124.46M | 153.85M | 139.46M | 124.79M |
| Operating Cash Flow | 72.28M | 132.56M | 155.72M | 141.13M | 124.79M |
| Investing Cash Flow | 264.29M | 1.12B | 13.49M | -1.18B | -1.54B |
| Financing Cash Flow | -355.78M | -1.29B | -271.51M | 1.01B | 1.58B |
Kkr Real Estate Finance Technical Analysis
Negative
6.81
Price Trends
8.03
Negative
8.24
Negative
8.57
Negative
Market Momentum
-0.37
Positive
25.43
Positive
11.65
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 6.81 is below the 20-day moving average (MA) of 7.58, below the 50-day MA of 8.03, and below the 200-day MA of 8.57, indicating a bearish trend. The MACD of -0.37 indicates Positive momentum. The RSI at 25.43 is Positive, neither overbought nor oversold. The STOCH value of 11.65 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 86 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
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
61 Neutral | $708.35M | 13.56 | 5.25% | 13.31% | -0.93% | -1.92% | |
59 Neutral | $662.09M | 14.76 | 5.32% | 10.48% | -10.86% | -5.90% | |
49 Neutral | $441.06M | -6.51 | -3.86% | 11.33% | -24.37% | -19.19% | |
49 Neutral | $815.83M | ― | -6.84% | 13.13% | 34.68% | -251.91% | |
44 Neutral | $290.21M | -0.89 | -14.78% | 26.82% | -43.56% | -166.72% | |
43 Neutral | $343.54M | -0.74 | -19.24% | ― | -65.32% | -325.73% |
* Real Estate Sector Average
KREF
Kkr Real Estate Finance
6.69
-3.55
-34.67%
RWT
Redwood
5.99
0.35
6.21%
RC
Ready Capital
1.69
-4.46
-72.53%
TRTX
Tpg Re Finance
8.34
0.91
12.25%
FBRT
Franklin BSP Realty Trust
8.99
-3.01
-25.06%
CMTG
Claros Mortgage Trust
2.24
-0.63
-21.95%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.