Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 27, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-38082 | |
Entity Registrant Name | KKR Real Estate Finance Trust Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 47-2009094 | |
Entity Address, Address Line One | 9 West 57th Street, | |
Entity Address, Address Line Two | Suite 4200 | |
Entity Address, City or Town | New York, | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10019 | |
City Area Code | 212 | |
Local Phone Number | 750-8300 | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Trading Symbol | KREF | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 55,478,573 | |
Entity Central Index Key | 0001631596 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | |
Assets | |||
Cash and cash equivalents | $ 369,867 | $ 67,619 | |
Commercial mortgage loans, held-for-investment | 5,089,968 | 4,931,042 | |
Less: Allowance for credit losses | (65,979) | 0 | |
Commercial mortgage loans, held-for-investment, net | 5,023,989 | 4,931,042 | |
Equity method investments | 34,441 | 37,469 | |
Accrued interest receivable | 17,263 | 16,305 | |
Other assets | 10,121 | 4,583 | |
Total Assets | 5,455,681 | 5,057,018 | |
Liabilities | |||
Secured financing agreements, net | 3,368,329 | 2,884,887 | |
Collateralized loan obligation, net | 805,008 | 803,376 | |
Convertible notes, net | 139,420 | 139,075 | |
Loan participations sold, net | 64,972 | 64,966 | |
Dividends payable | 24,204 | 25,036 | |
Accrued interest payable | 7,513 | 6,686 | |
Accounts payable, accrued expenses and other liabilities | [1] | 8,907 | 3,363 |
Due to affiliates | 5,022 | 5,917 | |
Total Liabilities | 4,423,375 | 3,933,306 | |
Commitments and Contingencies (Note 11) | |||
Temporary Equity | |||
Redeemable preferred stock | 2,108 | 1,694 | |
Permanent Equity | |||
Preferred stock, 50,000,000 authorized (1 share with par value of $0.01 issued and outstanding as of March 31, 2020 and December 31, 2019) | 0 | 0 | |
Common stock, 300,000,000 authorized (55,838,032 and 57,486,583 shares with par value of $0.01 issued and outstanding as of March 31, 2020 and December 31, 2019, respectively) | 575 | 575 | |
Additional paid-in capital | 1,167,602 | 1,165,995 | |
Accumulated deficit | (82,777) | (8,594) | |
Repurchased stock, 3,511,240 and 1,862,689 shares repurchased as of March 31, 2020 and December 31, 2019, respectively | (55,202) | (35,958) | |
Total KKR Real Estate Finance Trust Inc. stockholders’ equity | 1,030,198 | 1,122,018 | |
Total Permanent Equity | 1,030,198 | 1,122,018 | |
Total Liabilities and Equity | 5,455,681 | 5,057,018 | |
Unfunded Loan Commitments | |||
Assets | |||
Less: Allowance for credit losses | (4,304) | 0 | |
Liabilities | |||
Accounts payable, accrued expenses and other liabilities | $ 4,300 | $ 0 | |
[1] | Includes $4.3 million and $0.0 million of reserve for unfunded loan commitments at March 31, 2020 and December 31, 2019, respectively. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock authorized (shares) | 50,000,000 | 50,000,000 |
Preferred stock issued (shares) | 1 | 1 |
Preferred stock outstanding (shares) | 1 | 1 |
Preferred stock par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock authorized (shares) | 300,000,000 | 300,000,000 |
Number of shares issued (shares) | 55,838,032 | 57,486,583 |
Common stock outstanding (shares) | 55,838,032 | 57,486,583 |
Common stock par value (usd per share) | $ 0.01 | $ 0.01 |
Treasury stock, held (shares) | 3,511,240 | 1,862,689 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Net Interest Income | ||
Interest income | $ 71,079 | $ 64,751 |
Interest expense | 39,082 | 34,842 |
Total net interest income | 31,997 | 29,909 |
Other Income | ||
Income (loss) from equity method investments | (1,901) | 1,125 |
Change in net assets related to CMBS consolidated variable interest entities | 0 | 342 |
Other income | 360 | 482 |
Total other income (loss) | (1,541) | 1,949 |
Operating Expenses | ||
General and administrative | 3,767 | 2,361 |
Provision for credit losses, net | 55,274 | 0 |
Management fees to affiliate | 4,299 | 4,287 |
Incentive compensation to affiliate | 1,606 | 953 |
Total operating expenses | 64,946 | 7,601 |
Income (Loss) Before Income Taxes, Preferred Dividends and Redemption Value Adjustment | (34,490) | 24,257 |
Income tax expense | 82 | 9 |
Net Income (Loss) | (34,572) | 24,248 |
Preferred Stock Dividends and Redemption Value Adjustment | 592 | (457) |
Net Income (Loss) Attributable to Common Stockholders | $ (35,164) | $ 24,705 |
Net Income (Loss) Per Share of Common Stock | ||
Basic (usd per share) | $ (0.61) | $ 0.43 |
Diluted (usd per share) | $ (0.61) | $ 0.43 |
Weighted Average Number of Shares of Common Stock Outstanding | ||
Basic (shares) | 57,346,726 | 57,387,386 |
Diluted (shares) | 57,346,726 | 57,477,234 |
Dividends Declared per Basic and Diluted Share of Common Stock (usd per share) | $ 0.43 | $ 0.43 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Thousands | Total | Redeemable Preferred Stock | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Repurchased Stock | Total KKR Real Estate Finance Trust Inc. Stockholders' Equity |
Beginning balance (shares) at Dec. 31, 2018 | 1 | 57,596,217 | ||||||
Beginning balance at Dec. 31, 2018 | $ 0 | $ 576 | $ 1,163,845 | $ (225) | $ (31,854) | $ 1,132,342 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Repurchase of common stock (shares) | (212,809) | |||||||
Repurchase of common stock | $ (2) | (4,104) | (4,106) | |||||
Offering costs | (518) | (518) | ||||||
Common dividends declared | $ (24,761) | (24,761) | (24,761) | |||||
Adjustment of redeemable preferred stock to redemption value | $ (618) | 618 | 618 | |||||
Stock-based compensation | 991 | 991 | ||||||
Net income (loss) | 24,087 | 24,087 | ||||||
Ending balance (shares) at Mar. 31, 2019 | 1 | 57,383,408 | ||||||
Ending balance at Mar. 31, 2019 | $ 0 | $ 574 | 1,164,318 | (281) | (35,958) | 1,128,653 | ||
Beginning balance at Dec. 31, 2018 | 2,846 | |||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||
Preferred dividends declared, per share | (161) | |||||||
Adjustment of redeemable preferred stock to redemption value | (618) | 618 | 618 | |||||
Net income (loss) | 161 | |||||||
Ending balance at Mar. 31, 2019 | 2,228 | |||||||
Beginning balance (shares) at Dec. 31, 2018 | 1 | 57,596,217 | ||||||
Beginning balance at Dec. 31, 2018 | $ 0 | $ 576 | 1,163,845 | (225) | (31,854) | 1,132,342 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Repurchase of common stock (shares) | (212,809) | |||||||
Repurchase of common stock | $ (4,100) | |||||||
Ending balance (shares) at Dec. 31, 2019 | 1 | 57,486,583 | ||||||
Ending balance at Dec. 31, 2019 | 1,122,018 | $ 0 | $ 575 | 1,165,995 | (8,594) | (35,958) | 1,122,018 | |
Beginning balance at Dec. 31, 2018 | 2,846 | |||||||
Ending balance at Dec. 31, 2019 | $ 1,694 | 1,694 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Repurchase of common stock (shares) | (1,648,551) | (1,648,551) | ||||||
Repurchase of common stock | $ (19,200) | (19,244) | (19,244) | |||||
Preferred dividends declared, per share | 0 | |||||||
Common dividends declared | (24,010) | (24,010) | (24,010) | |||||
Adjustment of redeemable preferred stock to redemption value | 414 | (414) | (414) | |||||
Stock-based compensation | 1,607 | 1,607 | ||||||
Net income (loss) | (34,750) | (34,750) | ||||||
Ending balance (shares) at Mar. 31, 2020 | 1 | 55,838,032 | ||||||
Ending balance at Mar. 31, 2020 | 1,030,198 | $ 0 | $ 575 | $ 1,167,602 | (82,777) | $ (55,202) | 1,030,198 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||
Preferred dividends declared, per share | (178) | |||||||
Adjustment of redeemable preferred stock to redemption value | 414 | $ (414) | $ (414) | |||||
Net income (loss) | 178 | |||||||
Ending balance at Mar. 31, 2020 | $ 2,108 | $ 2,108 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Equity (Unaudited) (Parenthetical) - $ / shares | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | |
Statement of Stockholders' Equity [Abstract] | |||
Dividends Declared per Share of Common Stock (usd per share) | $ 0.43 | $ 0.43 | $ 0.43 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash Flows From Operating Activities | ||
Net income (loss) | $ (34,572) | $ 24,248 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Amortization of deferred debt issuance costs and discounts | 5,388 | 4,377 |
Accretion of net deferred loan fees and discounts | (4,333) | (6,464) |
Change in non-cash net assets of consolidated variable interest entities | 0 | 154 |
(Income) Loss from equity method investments | 2,789 | (468) |
Provision for credit losses, net | 55,274 | 0 |
Stock-based compensation expense | 1,607 | 991 |
Changes in operating assets and liabilities: | ||
Accrued interest receivable, net | (958) | 724 |
Other assets | (687) | 470 |
Accrued interest payable | 827 | 1,019 |
Accounts payable, accrued expenses and other liabilities | 1,895 | 546 |
Due to affiliates | 146 | 14 |
Net cash provided by (used in) operating activities | 27,376 | 25,611 |
Cash Flows From Investing Activities | ||
Proceeds from sale/syndication and principal repayments of commercial mortgage loans, held-for-investment | 179,553 | 561,815 |
Origination of commercial mortgage loans, held-for-investment | (334,146) | (323,539) |
Investment in commercial mortgage-backed securities, equity method investee | 0 | (1,770) |
Net cash provided by (used in) investing activities | (154,593) | 236,506 |
Cash Flows From Financing Activities | ||
Proceeds from borrowings under secured financing agreements | 805,967 | 335,708 |
Payments of common stock dividends | (24,719) | (24,899) |
Payments of preferred stock dividends | (303) | (271) |
Principal repayments on borrowings under secured financing agreements | (324,825) | (424,665) |
Payments of debt and collateralized debt obligation issuance costs | (2,206) | (1,258) |
Payments of stock issuance costs | (157) | (717) |
Payments to reacquire common stock | (23,252) | (4,106) |
Tax withholding on stock-based compensation | (1,040) | 0 |
Net cash provided by (used in) financing activities | 429,465 | (120,208) |
Net Increase (Decrease) in Cash, Cash Equivalents | 302,248 | 141,909 |
Cash, Cash Equivalents at Beginning of Period | 67,619 | 86,531 |
Cash, Cash Equivalents at End of Period | 369,867 | 228,440 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid during the period for interest | 33,376 | 30,834 |
Cash paid during the period for income taxes | 0 | 127 |
Supplemental Schedule of Non-Cash Investing and Financing Activities | ||
Dividend declared, not yet paid | 24,204 | 24,850 |
Deferred financing costs, not yet paid | 86 | 0 |
Deferred issuance costs, not yet paid | $ 101 | $ 0 |
Business and Organization
Business and Organization | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Organization | Business and Organization KKR Real Estate Finance Trust Inc. (together with its consolidated subsidiaries, referred to throughout this report as the "Company", " KREF ", "we", "us" and "our") is a Maryland corporation that was formed and commenced operations on October 2, 2014 as a mortgage real estate investment trust (" REIT ") that focuses primarily on originating and acquiring senior loans secured by commercial real estate ("CRE") assets. KREF has elected and intends to maintain its qualification to be taxed as a REIT under the requirements of the Internal Revenue Code of 1986, as amended (the " Internal Revenue Code "), for U.S. federal income tax purposes. As such, KREF will generally not be subject to U.S. federal income tax on that portion of its income that it distributes to stockholders if it distributes at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. See Note 14 regarding taxes applicable to KREF . KREF is externally managed by KKR Real Estate Finance Manager LLC (" Manager "), an indirect subsidiary of KKR & Co. Inc. (together with its subsidiaries, " KKR "), through a management agreement (" Management Agreement ") pursuant to which the Manager provides a management team and other professionals who are responsible for implementing KREF ’s business strategy, subject to the supervision of KREF ’s board of directors. For its services, the Manager is entitled to management fees and incentive compensation, both defined in, and in accordance with the terms of, the Management Agreement (Note 12 ). As of March 31, 2020 , KKR beneficially owned 22,008,616 shares of KREF 's common stock, of which 2,008,616 shares were held by KKR on behalf of a third-party investor. KREF 's principal business activities are related to the origination and purchase of credit investments related to CRE. Management assesses the performance of KREF 's current portfolio of leveraged and unleveraged commercial mortgage loans and commercial mortgage-backed securities (" CMBS ") as a whole and makes operating decisions accordingly. As a result, management presents KREF 's operations within a single reporting segment. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation — The accompanying unaudited condensed consolidated financial statements and related notes of KREF are prepared in accordance with accounting principles generally accepted in the United States of America (" GAAP ") for interim financial information and instructions to Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Accordingly, certain information and footnote disclosures normally included in the consolidated financial statements have been condensed or omitted. The condensed consolidated financial statements include the accounts of KREF and its consolidated subsidiaries, and all intercompany transactions and balances have been eliminated. In the opinion of management, all adjustments considered necessary for a fair presentation of KREF ’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K. Risks and Uncertainties — The recent outbreak of the coronavirus pandemic (“COVID-19”) around the globe continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. The impact of the outbreak has been rapidly evolving around the globe, with several countries taking drastic measures to limit the spread of the virus by instituting quarantines or lockdowns and imposing travel restrictions. Such actions are creating significant disruptions to global supply chains, and adversely impacting several industries, including but not limited to, airlines, hospitality, retail and the broader real estate industry. The major disruption caused by COVID-19 brought to a halt most economic activity in most of the United States resulting in a significant increase in unemployment claims and will likely result in a significant decline in the U.S. Gross Domestic Product (“GDP”). COVID-19 could have a continued and prolonged adverse impact on economic and market conditions and trigger a period of global economic slowdown which could have a material adverse effect on the Company’s results and financial condition. The full impact of COVID-19 on the real estate industry, the credit markets and consequently on the Company’s financial condition and results of operations is uncertain and cannot be predicted at the current time as it depends on several factors beyond the control of the Company including, but not limited to (i) the uncertainty around the severity and duration of the outbreak, (ii) the effectiveness of the United States public health response, (iii) the pandemic’s impact on the U.S. and global economies, (iv) the timing, scope and effectiveness of additional governmental responses to the pandemic, (v) the timing and speed of economic recovery, including the availability of a treatment or vaccination for COVID-19 and (vi) the negative impact on our borrowers, real estate values and cost of capital. Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Management makes subjective estimates to project cash flows KREF expects to receive on its investments in loans and securities as well as the related market discount rates, which significantly impacts the interest income, impairments, allowance for loan loss and fair values recorded or disclosed. The effects of COVID-19 may negatively and materially impact significant estimates and assumptions used by the Company including, but not limited to estimates of expected credit losses, valuation of our equity method investments and the fair value estimates of the Company’s assets and liabilities . Actual results could materially differ from those estimates. Consolidation — KREF consolidates those entities for which (i) it controls through either majority ownership or voting rights or (ii) management determines that KREF is the primary beneficiary of entities deemed to be variable interest entities (" VIE s"). Variable Interest Entities — VIE s are entities (i) in which equity investors do not have an interest with the characteristics of a controlling financial interest, (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties or (iii) established with non-substantive voting rights. A VIE is required to be consolidated only by its primary beneficiary, which is defined as the party that has the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and that has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could be potentially significant to the VIE (Note 8 ). To assess whether KREF has the power to direct the activities of a VIE that most significantly impact the VIE ’s economic performance, KREF considers all the facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes, first, identifying the activities that most significantly impact the VIE ’s economic performance; and second, identifying which party, if any, has power to direct those activities. To assess whether KREF has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE , KREF considers all of its economic interests and applies judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE . Collateralized Loan Obligation — KREF consolidates a collateralized loan obligation that closed in November 2018 (“ KREF 2018-FL1” or “CLO”) (Note 5 ). Management determined that KREF 2018-FL1 Ltd. and KREF 2018-FL1 LLC (the "CLO Issuers"), wholly-owned subsidiaries of KREF , were VIEs and that KREF was the primary beneficiary. KREF is the primary beneficiary of the VIEs since it has the ability to control the most significant activities of the CLO Issuers through ownership of non-investment grade rated subordinated controlling tranches, has the obligation to absorb losses, and the right to receive benefits, that could potentially be significant to these entities. As a result, KREF consolidates the CLO Issuers. The collateral assets of the CLO, comprised of a pool of loan participations (Note 5 ) are included in “Commercial mortgage loans, held-for-investment, net” on the accompanying Condensed Consolidated Balance Sheets. The liabilities of KREF 's consolidated CLO Issuers consist solely of obligations to the senior CLO noteholders, excluding subordinated CLO tranches held by KREF as such interests are eliminated in consolidation, are presented in “Collateralized loan obligation, net” in the accompanying Condensed Consolidated Balance Sheets. The collateral assets of the CLO can only be used to settle the obligations of the consolidated CLO. The interest income from the CLO collateral assets and the interest expense on the CLO liabilities are presented on a gross basis in “Interest income” and “Interest expense”, respectively, in KREF 's Condensed Consolidated Statements of Income. CMBS — KREF consolidates those trusts that issue beneficial ownership interests in mortgage loans secured by CRE (commonly known as CMBS ) when KREF holds a variable interest in, and management considers KREF to be the primary beneficiary of, those trusts. Management believes the performance of the assets that underlie CMBS issuances most significantly impacts the economic performance of the trust, and the primary beneficiary is generally the entity that conducts activities that most significantly impact the performance of the underlying assets. In particular, the most subordinate tranches of CMBS expose the holder to the greater variability of economic performance when compared to more senior tranches since the subordinate tranches absorb a disproportionately higher amount of the credit risk related to the underlying assets. Generally, a trust designates the most junior subordinate tranche outstanding as the controlling class, which entitles the holder of the controlling class to unilaterally appoint and remove the special servicer for the trust. The special servicer is responsible for the servicing and administration of delinquent and nonperforming loans as well as real estate owned (" REO ") properties held as collateral delivered on foreclosed loans. While the special servicer cannot prevent losses, its services to the trust are designed to mitigate credit losses to holders of the CMBS . For any CMBS trust that KREF consolidates, KREF holds an unrated tranche that represents the most subordinated tranche of the CMBS issued by that trust, which include the controlling class. As the holder of the most subordinate tranche, KREF is in a first loss position and has the right to receive benefits. As the holder of the controlling class, KREF has the ability to unilaterally appoint and remove the special servicer for the trust. In these cases, management considers KREF to be the primary beneficiary and consolidates that CMBS trust. For VIE s in which management determines KREF is the primary beneficiary, all of the underlying assets, liabilities and equity of the trusts are recorded on KREF 's books, and the initial investment, along with any associated unrealized holding gains and losses, are eliminated in consolidation. Similarly, the interest income earned from these trusts is eliminated in consolidation. Management elected the fair value option for KREF 's initial and subsequent recognition of the assets and liabilities of KREF 's consolidated CMBS VIE s in order to provide users of the financial statements with better information regarding the effects of credit risk and other market factors on the CMBS beneficially held by KREF 's stockholders. Since the changes in fair value include the interest income and interest expense associated with these CMBS VIE s, management does not consider the separate presentation of the components of fair value changes to be relevant. Management has elected to present these items in aggregate as " Other Income — Change in net assets related to CMBS consolidated variable interest entities " in the accompanying Condensed Consolidated Statements of Income; the residual difference between the fair value of the trust's assets and liabilities represents KREF 's beneficial interest in the CMBS VIE s. Management separately presents the assets and liabilities of KREF 's consolidated VIE s as individual line items on KREF 's Condensed Consolidated Balance Sheets for entities in which the VIE s assets can only be used to settle the VIE ’s obligations. The liabilities of KREF 's consolidated VIE s consist solely of obligations to the CMBS holders of the consolidated trust, excluding CMBS held by KREF as such interests are eliminated in consolidation, and the interest accrued thereon, presented as "Liabilities — Variable interest entity liabilities, at fair value ." The assets of KREF 's consolidated VIEs consist principally of commercial mortgage loans and the interest accrued thereon, and are likewise presented as a single line item entitled " Assets — Commercial mortgage loans held in variable interest entities, at fair value ." Assets of a CMBS trust, as a whole, can only be used to settle the obligations of the consolidated CMBS VIE . The assets of KREF 's CMBS VIE s are not individually accessible by, and obligations of the CMBS VIE s are not recourse to, the bondholders. KREF derives the fair value of its Level 3 CMBS VIE assets from its Level 3 CMBS VIE liabilities, which management considers to possess more observable market value data than the CMBS VIE assets. See "— Fair Value — Valuation of CMBS Consolidated VIEs " for additional discussion regarding management's valuation of consolidated CMBS VIE s. During the three months ended September 30, 2019, KREF sold the remaining directly held CMBS investments, including an unrated tranche that represented the most subordinated tranche of the CMBS issued by that trust, including the controlling class. Accordingly, KREF deconsolidated the respective CMBS trust (Note 8 ). Temporary Equity — KREF 's Special Non-Voting Preferred Stock (“SNVPS”) became redeemable in the second quarter of 2018. As a result, starting with the second quarter of 2018, KREF adjusts the carrying value of the SNVPS to its redemption value quarterly. Accordingly, KREF adjusted the carrying value of the SNVPS to its redemption value of $2.1 million as of March 31, 2020 and recorded a $0.4 million non-cash redemption value adjustment to the SNVPS (“SNVPS Redemption Value Adjustment”) during the three months ended March 31, 2020 . Such adjustment is treated similar to a dividend on preferred stock for GAAP purposes, accordingly, the SNVPS Redemption Value Adjustment is therefore deducted from (or added back to) “Net Income (Loss)” to arrive at “Net Income (Loss) Attributable to Common Stockholders” on KREF 's Condensed Consolidated Statements of Income. Equity method investments — Investments are accounted for under the equity method when KREF has significant influence over the operations of an investee, but KREF does not consolidate that investment. Equity method investments, for which management has not elected a fair value option, are initially recorded at cost and subsequently adjusted for KREF 's share of net income or loss and cash contributions and distributions each period. Management determined that KREF 's investment in the Manager is an interest in a VIE , however KREF is not the primary beneficiary. KREF does not have substantive participating or kick-out rights nor the power to direct activities and the obligation to absorb losses of the Manager that could be significant to the Manager . KREF accounts for its investment in the Manager using the equity method (Note 8 ). Management determined that KREF 's investment in an aggregator vehicle alongside KKR Real Estate Credit Opportunity Partners L.P. (" RECOP I ") is an interest in a VIE , however KREF is not the primary beneficiary and does not have substantive participating or kick-out rights. Management elected the fair value option for KREF 's investment in RECOP I . KREF records its share of net asset value in RECOP I in “ Equity method investments ” on its Condensed Consolidated Balance Sheets and its share of unrealized gains or losses in " Income from equity method investments " in its Condensed Consolidated Statements of Income. KREF classifies distributions received from equity method investees using the cumulative earnings approach. Distributions received up to the cumulative earnings from each equity method investee are considered returns on investment and presented within “Cash Flows from Operating Activities” in the Condensed Consolidated Statements of Cash Flows; excess distributions received are considered returns of investment and presented within “Cash Flows from Investing Activities” in the Condensed Consolidated Statements of Cash Flows. Fair Value — GAAP requires the categorization of the fair value of financial instruments into three broad levels that form a hierarchy based on the transparency of inputs to the valuation. Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 - Inputs are other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability. Level 3 - Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. KREF follows this hierarchy for its financial instruments. The classifications are based on the lowest level of input that is significant to the fair value measurement. Estimates of fair value for cash and cash equivalents, restricted cash, and convertible notes are measured using observable, quoted market prices, or Level 1 inputs. Valuation Process — The Manager reviews the valuation of Level 3 financial instruments as part of KKR 's quarterly process. As of March 31, 2020 , KKR’s valuation process for Level 3 measurements, as described below, subjected valuations to the review and oversight of various committees. KKR has a global valuation committee assisted by the asset class-specific valuation committees, including a real estate valuation committee that reviews and approves all preliminary Level 3 valuations for real estate assets, including the financial instruments held by KREF . The global valuation committee is responsible for coordinating and implementing KKR ’s valuation process to ensure consistency in the application of valuation principles across portfolio investments and between periods. All Level 3 valuations are also subject to approval by the global valuation committee. Valuation of Commercial Mortgage Loans and Participation Sold — Management generally considers KREF 's commercial mortgage loans Level 3 assets in the fair value hierarchy as such assets are illiquid, structured investments that are specific to the underlying property and its operating performance (Note 13). On a quarterly basis, management engages an independent valuation firm to estimate the fair value of each loan categorized as a Level 3 asset. Management reviews the quarterly loan valuation estimates provided by the independent valuation firm. These loans are generally valued using a discounted cash flow model using discount rates derived from observable market data applied to the capital structure of the respective sponsor and estimated property value. In the event that management's estimate of fair value differs from the fair value estimate provided by the independent valuation firm, KREF ultimately relies solely upon the valuation prepared by the investment personnel of the Manager. Valuation of CLO Consolidated VIEs — Management estimates the fair value of the CLO liabilities using prices obtained from an independent valuation firm. If prices received from the independent valuation firm are inconsistent with values determined in connection with management’s independent review, management makes inquiries to the independent valuation firm about the prices received and related methods. In the event management determines the price obtained from an independent valuation firm to be unreliable or an inaccurate representation of the fair value of the CLO liabilities (based on considerations given to observable market data), management then compiles evidence independently and presents the independent valuation firm with such evidence supporting a different value. As a result, the independent valuation firm may revise their price accordingly. However, if management continues to disagree with the price from the independent valuation firm, in light of evidence presented that management compiled independently and believes to be compelling, management considers the independent valuation firm's quotation unreliable or inaccurate representation of the fair value of the CLO liabilities. In the event that the quotation from the independent valuation firm is not available or determined to be unreliable or an inadequate representation of the fair value of the CLO liabilities, valuations are prepared using inputs based on non-binding broker quotes obtained from independent, well-known, major financial brokers that are CLO market makers. In validating any non-binding broker quote used in this circumstance, management compares the non-binding quote to the observable market data points at such time and used to validate prices received from the independent valuation firm in addition to understanding the valuation methodologies used by the market makers. These market participants utilize a similar methodology as the independent valuation firm to value the CLO liabilities, with the key input of expected yield determined independently based on both observable and unobservable factors (as described above). To avoid reliance on any single broker-dealer, management receives a minimum of two non-binding quotes, of which the average is used. Valuation of CMBS Consolidated VIEs — Management categorizes the financial assets and liabilities of the CMBS trusts that KREF consolidates as Level 3 assets and liabilities in the fair value hierarchy and has elected the fair value option for financial assets and liabilities of each CMBS trust. Management has adopted the measurement alternative included in Accounting Standards Update (" ASU ") No. 2014-13, Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity (" ASU 2014-13"). Pursuant to ASU 2014-13, management measures both the financial assets and financial liabilities of the CMBS trusts consolidated by KREF using the fair value of the financial liabilities, which management considers more observable than the fair value of the financial assets. Accordingly, KREF presents the CMBS issued by a consolidated trust, but not beneficially owned by KREF 's stockholders, as financial liabilities in KREF 's condensed consolidated financial statements, measured at their estimated fair value; KREF measures the financial assets as the total estimated fair value of the CMBS issued by a consolidated trust, regardless of whether such CMBS represent interests beneficially owned by KREF 's stockholders. Under the measurement alternative prescribed by ASU 2014-13, KREF 's " Net Income (Loss) " reflects the economic interests in the consolidated CMBS beneficially owned by KREF 's stockholders, presented as " Change in net assets related to CMBS consolidated variable interest entities " in the Condensed Consolidated Statements of Income, which includes applicable (i) changes in the fair value of CMBS beneficially owned by KREF , (ii) interest and servicing fees earned from the CMBS trust and (iii) other residual returns or losses of the CMBS trust, if any (Note 8 ). Other Valuation Matters — For Level 3 financial assets originated, or otherwise acquired, and financial liabilities assumed during the calendar month immediately preceding a quarter end that were conducted in an orderly transaction with an unrelated party, management generally believes that the transaction price provides the most observable indication of fair value given the illiquid nature of these financial instruments, unless management is aware of any circumstances that may cause a material change in the fair value through the remainder of the reporting period. For instance, significant changes to the underlying property or its planned operations may cause material changes in the fair value of commercial mortgage loans acquired, or originated, by KREF . KREF ’s determination of fair value is based upon the best information available for a given circumstance and may incorporate assumptions that are management’s best estimates after consideration of a variety of internal and external factors. When an independent valuation firm expresses an opinion on the fair value of a financial instrument in the form of a range, management selects a value within the range provided by the independent valuation firm, generally the midpoint, to assess the reasonableness of management’s estimated fair value for that financial instrument. See Note 13 for additional information regarding the valuation of KREF 's financial assets and liabilities. Sales of Financial Assets and Financing Agreements — KREF will, from time to time, transfer loans, securities and other assets as well as finance assets in the form of secured borrowings. In each case, management evaluates whether the transaction constitutes a sale through legal isolation of the transferred financial asset from KREF , the ability of the transferee to pledge or exchange the transferred asset without constraint and the transfer of control of the transferred asset. For transfers that constitute sales, KREF (i) recognizes the financial assets it retains and liabilities it has incurred, if any, (ii) derecognizes the financial assets it has sold, and derecognizes liabilities when extinguished and (iii) recognizes a realized gain, or loss, based upon the excess, or deficient, proceeds received over the carrying value of the transferred asset. KREF does not recognize a gain, or loss, on interests retained, if any, where management elected the fair value option prior to sale. Balance Sheet Measurement Cash and Cash Equivalents and Restricted Cash — KREF considers cash equivalents as highly liquid short-term investments with maturities of 90 days or less when purchased. Substantially all amounts on deposit with major financial institutions exceed insured limits. KREF must also maintain sufficient cash and cash equivalents to satisfy liquidity covenants related to its secured financing agreements. However, such amounts are not restricted from use in KREF 's current operations, and KREF does not present these cash and cash equivalents as restricted. As of March 31, 2020 and December 31, 2019 , KREF was required to maintain unrestricted cash and cash equivalents of at least $50.4 million and $33.4 million , respectively, to satisfy its liquidity covenants (Note 4 ). Adoption of ASU No. 2016-13, Financial Instruments — Credit Losses — On January 1, 2020, KREF adopted ASU No. 2016-13, Financial Instruments-Credit Losses, and subsequent amendments (“ASU 2016-13”), which replaces the incurred loss methodology with an expected loss model known as the Current Expected Credit Loss ("CECL") model. CECL amends the previous credit loss model to reflect a reporting entity's current estimate of all expected credit losses, not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, and off-balance sheet credit exposures such as unfunded loan commitments. The allowance for credit losses required under ASU 2016-13 is deducted from the respective loans’ amortized cost basis on our condensed consolidated balance sheets. The allowance for credit losses attributed to unfunded loan commitments is included in “Accounts payable, accrued expenses and other liabilities” in the condensed consolidated balance sheets. The guidance also requires a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption. In connection with KREF’s adoption of ASU 2016-13 on January 1, 2020, KREF implemented new processes including the utilization of loan loss forecasting models, updates to KREF's reserve policy documentation, changes to internal reporting processes and related internal controls. KREF has implemented loan loss forecasting models for estimating expected life-time credit losses, at the individual loan level, for its commercial mortgage loan portfolio. The CECL forecasting methods used by KREF include (i) a probability of default and loss given default method using underlying third-party CMBS/CRE loan database with historical loan losses from 1998 to 2019 and (ii) probability weighted expected cash flow method, depending on the type of loan and the availability of relevant historical market loan loss data. KREF might use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral, and availability of relevant historical market loan loss data. KREF estimates the CECL expected credit losses for its loan portfolio, including unfunded loan commitments, at the individual loan level. Significant inputs to KREF’s forecasting methods include (i) key loan-specific inputs such as loan-to-value ("LTV"), vintage year, loan-term, underlying property type, occupancy, geographic location, and expected timing and amount of future loan fundings, (ii) performance against the underwritten business plan and KREF's internal loan risk rating and (iii) a macro-economic forecast. Given the uncertain economic environment and the lack of clarity on the economic outlook, which largely depends on the severity and duration of the COVID-19 pandemic and how quickly normal economic activity resumes, the Company determined that a shorter forecast period of two quarters is appropriate with reversion to historical mean losses over two additional quarters. These estimates may change in future periods based on available future macro-economic data and might result in a material change in the Company’s future estimates of expected credit losses for its loan portfolio. KREF considers the individual loan internal risk rating as the primary credit quality indicator underlying the CECL assessment. In certain instances, KREF considers relevant loan-specific qualitative factors to certain loans to estimate its CECL expected credit losses. KREF considers loan investments that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans. For such loans that KREF determines that foreclosure of the collateral is probable, the Company measures the expected losses based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. For collateral-dependent loans that KREF determines foreclosure is not probable, KREF applies a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan. Based on KREF's loan portfolio at January 1, 2020, the pre COVID-19 economic environment and the respective expectations for future economic conditions at the time, KREF recorded a cumulative-effect adjustment to KREF's accumulated deficit as of January 1, 2020 of $15.0 million , or $0.26 per common share, of which $1.1 million , or $0.02 per common share, is attributable to unfunded loan commitments. The following table illustrates the day-one financial statements impact of the adoption of ASU 2016-13 on January 1, 2020: Pre-adoption Transition Adjustment Post-adoption Assets Commercial mortgage loans, held-for-investment $ 4,931,042 $ — $ 4,931,042 Less: Allowance for credit losses — (13,909 ) (13,909 ) Commercial mortgage loans, held-for-investment, net $ 4,931,042 $ (13,909 ) $ 4,917,133 Liabilities Accounts payable, accrued expenses and other liabilities (A) $ 3,363 $ 1,100 $ 4,463 Permanent Equity Accumulated deficit $ (8,594 ) $ (15,009 ) $ (23,603 ) (A) Includes reserve for unfunded loan commitments. Commercial Mortgage Loans Held‑For‑Investment and Allowance for Credit Losses — KREF recognizes its investments in commercial mortgage loans based on management's intent, and KREF 's ability, to hold those investments through their contractual maturity. Management classifies those loans that management does not intend to sell in the foreseeable future, and KREF is able to hold until maturity, as held-for-investment. Loans that are held‑for‑investment are carried at their aggregate outstanding face amount, net of applicable (i) unamortized origination or acquisition premiums and discounts, (ii) unamortized deferred nonrefundable fees and other direct loan origination costs, and (iii) allowance for credit losses, net of charge-offs or write-downs of impaired loans. If a loan is determined to be impaired, management writes down the loan through a charge to the "Allowance for credit losses". See "— Expense Recognition — Commercial Mortgage Loans, Held-For-Investment" for additional discussion regarding management’s determination for loan losses. KREF applies the interest method to amortize origination or acquis |
Commercial Mortgage Loans
Commercial Mortgage Loans | 3 Months Ended |
Mar. 31, 2020 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract] | |
Commercial Mortgage Loans | Commercial Mortgage Loans The following table summarizes KREF 's investments in commercial mortgage loans as of March 31, 2020 and December 31, 2019 : Weighted Average Loan Type Outstanding Face Amount Amortized Cost (A) Carrying Value (B) Loan Count Floating Rate Loan % (C) Coupon (C) Life (Years) (D) March 31, 2020 Loans held-for-investment Senior loans (E) $ 5,059,468 $ 5,032,066 $ 4,970,847 37 100.0 % 4.8 % 3.9 Mezzanine loans 58,731 57,902 53,142 3 90.6 10.0 4.3 $ 5,118,199 $ 5,089,968 $ 5,023,989 40 99.9 % 4.9 % 3.9 December 31, 2019 Loans held-for-investment Senior loans (E) $ 4,919,298 $ 4,890,408 4,890,408 37 100.0 % 5.0 % 4.1 Mezzanine loans 41,400 40,634 40,634 2 86.7 9.6 4.6 $ 4,960,698 $ 4,931,042 4,931,042 39 99.9 % 5.1 % 4.1 (A) Amortized cost represents the outstanding face amount of loan, net of applicable unamortized discounts and loan origination fees. (B) Carrying value represents the amortized cost of loan, net of applicable allowance for credit losses. (C) Average weighted by outstanding face amount of loan. Weighted average coupon assumes the greater of applicable one-month LIBOR rates of 0.99% and 1.76% as of March 31, 2020 and December 31, 2019 , respectively, or the applicable contractual LIBOR floor. (D) The weighted average life of each loan is based on the expected timing of the receipt of contractual principal repayments assuming all extension options are exercised by the borrower. (E) Senior loans may include accommodation mezzanine loans in connection with the senior mortgage financing. Also, includes vertical loan participations sold with a face amount of $65.0 million and a carrying value of $65.0 million as of March 31, 2020 and December 31, 2019 , respectively. Includes CLO loan participations of $1.0 billion as of March 31, 2020 and December 31, 2019 , respectively. Activity — For the three months ended March 31, 2020 , the loan portfolio activity was as follows: Held-for-Investment Held-for-Sale Total Carrying amount at December 31, 2019 $ 4,931,042 $ — $ 4,931,042 Purchases and originations, net (A) 334,146 — 334,146 Proceeds from sales and principal repayments (179,553 ) — (179,553 ) Accretion of loan discount and other amortization, net (B) 4,333 — 4,333 Amortized cost at March 31, 2020 5,089,968 — 5,089,968 Cumulative-effect adjustment upon adoption of ASU 2016-13 (13,909 ) — (13,909 ) Provision for credit losses, net (52,070 ) — (52,070 ) Carrying amount at March 31, 2020 $ 5,023,989 $ — $ 5,023,989 (A) Net of applicable premiums, discounts and deferred loan origination costs. Includes fundings on previously originated loans. (B) Includes accretion of applicable discounts, certain fees and deferred loan origination costs. As of March 31, 2020 and December 31, 2019 , there was $28.2 million and $29.7 million , respectively, of unamortized deferred loan fees and discounts included in commercial mortgage loans, held-for-investment, net in the Condensed Consolidated Balance Sheets. KREF recognized prepayment fee income and net accelerated fees income of $0.0 million and $0.2 million , respectively, during the three months ended March 31, 2020 . KREF recognized prepayment fee income and net accelerated fees income of $0.2 million and $2.3 million , respectively, during the three months ended March 31, 2019 . Loan Risk Ratings — As further described in Note 2 , our Manager evaluates KREF 's commercial mortgage loan portfolio on a quarterly basis. In conjunction with the quarterly commercial mortgage loan portfolio review, KREF 's Manager assesses the risk factors of each loan and assigns a risk rating based on a variety of factors. Loans are rated “1” (very low risk) through “5” Impaired/Loss Likely), which ratings are defined in Note 2 . The following table allocates the principal balance and net book value of the loan portfolio based on KREF 's internal risk ratings: March 31, 2020 December 31, 2019 Risk Rating Number of Loans Net Book Value Total Loan Exposure (A) Total Loan Exposure % Risk Rating Number of Loans Net Book Value Total Loan Exposure (A) Total Loan Exposure % 1 2 $ 157,360 $ 158,074 3.0 % 1 1 $ 85,730 $ 86,000 1.7 % 2 3 288,303 291,268 5.6 2 5 450,827 451,858 9.0 3 28 3,855,849 4,001,127 77.0 3 33 4,394,485 4,501,440 89.3 4 7 722,477 746,330 14.4 4 — — — — 5 — — — — 5 — — — — 40 $ 5,023,989 $ 5,196,799 100.0 % 39 $ 4,931,042 $ 5,039,298 100.0 % (A) In certain instances, KREF finances its loans through the non-recourse sale of a senior interest that is not included in the condensed consolidated financial statements. Total loan exposure includes the entire loan KREF originated and financed, including $143.6 million of such non-consolidated interests as of March 31, 2020 and December 31, 2019 , respectively. As of March 31, 2020 , the average risk rating of KREF 's portfolio was 3.0 (Average Risk) , weighted by total loan exposure, as compared to 2.9 (Average Risk) as of December 31, 2019 . Loan Vintage — The following tables present the amortized cost of the loan portfolio at March 31, 2020 , by KREF's internal risk rating and year of origination. The risk ratings are updated as of March 31, 2020 . March 31, 2020 Amortized Cost by Year of Origination Risk Rating Number of Loans Outstanding Face Amount 2020 2019 2018 2017 2016 2015 Total Carrying Amount Commercial Mortgage Loans 1 2 $ 158,074 $ — $ — $ 157,618 $ — $ — $ — $ 157,618 $ 157,360 2 3 291,268 — 61,014 41,894 187,488 — — 290,396 288,303 3 28 3,922,527 284,979 2,407,120 1,056,354 149,807 — — 3,898,260 3,855,849 4 7 746,330 — 75,578 328,408 209,418 — 130,290 743,694 722,477 5 — — — — — — — — — — 40 $ 5,118,199 $ 284,979 $ 2,543,712 $ 1,584,274 $ 546,713 $ — $ 130,290 $ 5,089,968 $ 5,023,989 Allowance for Credit Losses — For the three months ended March 31, 2020 , the changes to allowance for credit losses were as follows: Commercial Mortgage Loans Unfunded Loan Commitments Total Balance at December 31, 2019 $ — $ — $ — Cumulative-effect adjustment upon adoption of ASU 2016-13 13,909 1,100 15,009 Provision for credit losses, net 52,070 3,204 55,274 Write-offs charged — — — Recoveries — — — Balance at March 31, 2020 $ 65,979 $ 4,304 $ 70,283 The increase in the provision for credit losses during the three months ended March 31, 2020 of $55.3 million , compared to the January 1, 2020 cumulative-effect adjustment upon adoption of ASU 2016-13 of $15.0 million , is primarily attributed to the significant adverse change in the economic outlook due to the COVID-19 pandemic. In addition, the average risk ratings of our loans increased from 2.9 as of December 31, 2019 to 3.0 as of March 31, 2020 . Concentration of Credit Risk — The following tables present the geographies and property types of collateral underlying KREF 's commercial mortgage loans as a percentage of the loans' face amounts: March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019 Geography Collateral Property Type New York 22.3 % 22.5 % Multifamily 56.2 % 58.3 % Illinois 9.4 9.7 Office 28.2 25.5 Pennsylvania 9.0 9.2 Retail 4.6 4.7 Virginia 7.9 8.2 Hospitality 4.2 4.4 Massachusetts 7.5 7.7 Condo (Residential) 2.8 3.0 California 6.8 6.9 Industrial 2.7 2.8 Washington 6.7 6.9 Student Housing 1.3 1.3 Texas 5.6 2.5 Total 100.0 % 100.0 % Florida 5.3 6.9 Georgia 4.3 4.3 Minnesota 3.7 3.7 New Jersey 3.0 3.1 Colorado 3.0 2.8 Oregon 2.4 2.5 Alabama 1.2 1.2 Other U.S. 1.9 1.9 Total 100.0 % 100.0 % |
Debt Obligations
Debt Obligations | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations The following table summarizes KREF 's secured master repurchase agreements and other financing arrangements in place as of March 31, 2020 and December 31, 2019 : March 31, 2020 December 31, 2019 Facility Collateral Facility Month Issued Outstanding Face Amount Carrying Value (A) Maximum Facility Size Final Stated Maturity Weighted Average Funding Cost (B) Weighted Average Life (Years) (B) Outstanding Face Amount Amortized Cost Basis Carrying Value Weighted Average Life (Years) (C) Carrying Value (A) Master Repurchase Agreements (D) Wells Fargo (E) Oct 2015 $ 468,452 $ 465,504 $ 1,000,000 Nov 2023 2.5 % 2.4 $ 652,850 $ 648,616 $ 640,202 3.8 $ 464,933 Morgan Stanley (F) Dec 2016 405,188 403,452 600,000 Dec 2022 2.8 2.3 544,943 541,399 537,693 4.7 392,279 Goldman Sachs (G) Sep 2016 221,863 220,881 400,000 Oct 2020 3.2 0.6 311,385 311,021 305,483 2.5 223,867 Term Lending Agreement KREF Lending V (H) Jun 2019 896,815 895,983 900,000 Jun 2026 2.7 2.0 1,094,762 1,087,399 1,075,115 4.1 868,816 Warehouse Facility HSBC Facility (I) Mar 2020 45,417 44,614 500,000 Mar 2023 2.4 2.8 64,408 63,510 62,617 4.9 — Asset Specific Financing BMO Facility (J) Aug 2018 82,267 81,527 300,000 n.a 2.9 3.6 106,074 105,413 100,710 3.7 141,120 Revolving Credit Agreement Revolver (K) Dec 2018 335,000 335,000 335,000 Dec 2023 3.7 3.7 n.a n.a n.a n.a — Total / Weighted Average $ 2,455,002 $ 2,446,961 $ 4,035,000 2.8 % 2.3 $ 2,091,015 (A) Net of $8.0 million and $9.5 million unamortized debt issuance costs as of March 31, 2020 and December 31, 2019 , respectively. (B) Average weighted by the outstanding face amount of borrowings inclusive of deferred financing costs. (C) Average based on the fully extended loan maturity, weighted by the outstanding face amount of the collateral. (D) Borrowings under these repurchase agreements are collateralized by senior loans, held-for-investment, and bear interest equal to the sum of (i) a floating rate index, equal to one-month LIBOR, or an index approximating LIBOR, and (ii) a margin, based on the collateral. As of March 31, 2020 and December 31, 2019 , the percentage of the outstanding face amount of the collateral sold and not borrowed under these repurchase agreements, or average "haircut" weighted by outstanding face amount of collateral, was 27.4% (or 25.7% if KREF had borrowed the maximum amount approved by its repurchase agreement counterparties as of such dates). (E) The current stated maturity date is November 2021 , which does not reflect two , twelve -month facility term extensions available to KREF , which is contingent upon certain covenants and thresholds. As of March 31, 2020 , the collateral-based margin was between 1.25% and 2.15% . (F) In February 2020, the Morgan Stanley repurchase agreement was amended to change the initial maturity to December 2020, with two one-year extension options upon giving written notice and another two one-year extension periods subject to approval by Morgan Stanley. KREF has the option to increase the facility amount to $750.0 million . As of March 31, 2020 , the collateral-based margin was between 1.75% and 1.85% . (G) The current stated maturity date is October 30, 2020, which does not reflect KREF's option to extend the maturity date to October 31, 2022 by (i) electing to permanently reduce the maximum advance rate for each pledged loan to the lesser of 65% or the advance rate in effect for such loan at October 30, 2020, and (ii) payment of the applicable contractual fee, subject to the satisfaction of certain conditions. As of March 31, 2020 , the collateral-based margin was between 1.85% and 2.00% . (H) In June 2019, KREF Lending V LLC, a wholly-owned indirect subsidiary of KREF , entered into a Master Repurchase and Securities Contract Agreement (the "Term Lending Agreement") with Morgan Stanley Mortgage Capital Holdings LLC ("Administrative Agent"), as administrative agent on behalf of Morgan Stanley Bank, N.A. ("Initial Buyer"), which provides for current and future financings of up to $900.0 million on a non-mark-to-market basis. The Initial Buyer subsequently syndicated a portion of the facility to multiple financial institutions. As of March 31, 2020 , the Initial Buyer held 48.9% of the total commitment under the facility. Borrowings under the Term Lending Agreement are collateralized by certain loans, held for investment, and bear interest equal to one-month LIBOR, plus a 1.9% margin. The Term Lending Agreement has an initial maturity of June 2021, subject to five one -year extension options, which may be exercised by KREF upon the satisfaction of certain customary conditions and thresholds. (I) In March 2020, KREF Lending VIII LLC, a wholly-owned indirect subsidiary of KREF, entered into a $500.0 million Loan and Security Agreement with HSBC Bank USA, National Association (“HSBC Facility”). The facility, which matures in March 2023, provides warehouse financing on a non-mark-to-market basis with partial recourse to KREF. As of March 31, 2020 , the collateral-based margin was 1.50% . (J) In August 2018, KREF entered into a $200.0 million loan financing facility with BMO Harris Bank ("BMO Facility"). The facility provides asset-based financing on a non-mark to market basis with matched-term up to five years with partial recourse to KREF . During May 2019, KREF increased the borrowing capacity to $300.0 million . As of March 31, 2020 , the collateral-based margin was between 1.50% and 1.70% . (K) In December 2018, KREF entered into a $100.0 million corporate revolving credit facility (“Revolver”) administered by Morgan Stanley Senior Funding, Inc. Additional lenders were added in 2019 increasing the borrowing capacity to $250.0 million and subsequently in February 2020, further increasing the borrowing capacity under the Revolver to $335.0 million as of March 31, 2020 . The current stated maturity of the facility is December 2023. Borrowings under the facility bear interest at a per annum rate equal to the sum of (i) a floating rate index and (ii) a fixed margin. Borrowings under this facility are full recourse to certain guarantor wholly-owned subsidiaries of KREF . As of March 31, 2020 , the carrying value excluded $3.1 million unamortized debt issuance costs presented as " — Other assets" in KREF 's Condensed Consolidated Balance Sheets. The preceding table excludes loan participations sold (Note 7 ). As of March 31, 2020 and December 31, 2019 , KREF had outstanding repurchase agreements and a Term Lending Agreement where the amount at risk with any individual counterparty, or group of related counterparties, exceeded 10.0% of KREF ’s stockholders' equity. The amount at risk under these agreements is the net counterparty exposure, defined as the excess of the carrying amount (or market value, if higher than the carrying amount, for repurchase agreements) of the assets sold under agreement to repurchase, including accrued interest plus any cash or other assets on deposit to secure the repurchase obligation, over the amount of the repurchase liability, adjusted for accrued interest. The following table summarizes certain characteristics of KREF 's repurchase agreements where the amount at risk with any individual counterparty, or group of related counterparties, exceeded 10.0% of KREF ’s stockholders' equity as of March 31, 2020 and December 31, 2019 : Outstanding Face Amount Net Counterparty Exposure Percent of Stockholders' Equity Weighted Average Life (Years) (A) March 31, 2020 Wells Fargo $ 468,452 $ 173,529 16.8 % 2.4 Morgan Stanley 405,188 133,989 13.0 2.3 Term Lending Agreement (B) 896,815 181,356 17.6 2.0 Total / Weighted Average $ 1,770,455 $ 488,874 47.4 % 2.2 December 31, 2019 Wells Fargo $ 468,452 $ 178,827 15.9 % 2.6 Morgan Stanley 394,499 136,764 12.2 2.5 Term Lending Agreement (B) 870,051 203,800 18.2 2.1 Total / Weighted Average $ 1,733,002 $ 519,391 46.3 % 2.4 (A) Average weighted by the outstanding face amount of borrowings under the secured financing agreement. (B) There were multiple counterparties to the Term Lending Agreement. Morgan Stanley Bank, N.A. represented 8.6% and 8.9% of the net counterparty exposure as a percent of stockholders' equity as of March 31, 2020 and December 31, 2019, respectively. Debt obligations included in the tables above are obligations of KREF ’s consolidated subsidiaries, which own the related collateral, and such collateral is generally not available to other creditors of KREF . While KREF is generally not required to post margin under certain repurchase agreement terms for changes in general capital market conditions such as changes in credit spreads or interest rates, KREF may be required to post margin for changes in conditions to specific loans that serve as collateral for those repurchase agreements. Such changes may include declines in the appraised value of property that secures a loan or a negative change in the borrower's ability or willingness to repay a loan. To the extent that KREF is required to post margin, KREF 's liquidity could be significantly impacted. Both KREF and its lenders work cooperatively to monitor the performance of the properties and operations related to KREF 's loan investments to mitigate investment-specific credit risks. Additionally, KREF incorporates terms in the loans it originates to further mitigate risks related to loan nonperformance. Term Loan Financing In April 2018, KREF , through its consolidated subsidiaries, entered into a term loan financing agreement (“Term Loan Facility”) with third party lenders for an initial borrowing capacity of $200.0 million that was subsequently increased to $1.0 billion in October 2018. The facility provides asset-based financing on a non-mark-to-market basis with matched term up to five years and is non-recourse to KREF . Borrowings under the facility are collateralized by senior loans, held-for-investment, and bear interest equal to one-month LIBOR plus a margin. As of March 31, 2020 , the weighted average margin and interest rate on the facility were 1.5% and 2.5% , respectively. As of December 31, 2019 , the weighted average margin and interest rate on the facility were 1.5% and 3.2% , respectively. The following tables summarize our borrowings under the Term Loan Facility: March 31, 2020 Term Loan Facility Count Outstanding Face Amount Amortized Cost Carrying Value Wtd. Avg. Yield/Cost (A) Guarantee (B) Wtd. Avg. Term (C) Collateral assets 13 $ 1,183,614 $ 1,176,148 $ 1,161,259 L + 3.1% n.a. February 2024 Financing provided n.a. 924,855 921,368 921,368 L + 1.9% n.a. February 2024 December 31, 2019 Term Loan Facility Count Outstanding Face Amount Amortized Cost Carrying Value Wtd. Avg. Yield/Cost (A) Guarantee (B) Wtd. Avg. Term (C) Collateral assets 12 $ 1,003,995 $ 997,081 $ 997,081 L + 3.0% n.a. November 2023 Financing provided n.a. 798,180 793,872 793,872 L + 1.9% n.a. November 2023 (A) Floating rate loans and related liabilities are indexed to one-month LIBOR. KREF's net interest rate exposure is in direct proportion to its interest in the net assets indexed to that rate. In addition to cash coupon, yield/cost includes the amortization of deferred origination/financing costs. (B) Financing under the Term Loan Facility is non-recourse to KREF. (C) The weighted-average term is determined using the maximum maturity date of the corresponding loans, assuming all extension options are exercised by the borrower. Activity — For the three months ended March 31, 2020 , the activity related to the carrying value of KREF ’s secured financing agreements were as follows: Secured Financing Agreements, Net Balance as of December 31, 2019 $ 2,884,887 Principal borrowings 805,967 Principal repayments/sales/deconsolidation (324,825 ) Deferred debt issuance costs (927 ) Amortization of deferred debt issuance costs 3,227 Balance as of March 31, 2020 $ 3,368,329 Maturities — KREF ’s secured financing agreements, term loan financing and other consolidated debt obligations in place as of March 31, 2020 had current contractual maturities as follows: Year Nonrecourse Recourse (A) Total 2020 $ 561,504 $ 159,674 $ 721,178 2021 436,116 — 436,116 2022 983,579 288,762 1,272,341 2023 359,417 378,496 737,913 2024 174,241 38,068 212,309 $ 2,514,857 $ 865,000 $ 3,379,857 (A) Except for the Revolver, which is full recourse, amounts borrowed subject to a maximum 25.0% recourse limit. The Revolver expires in December 2023. Covenants — KREF is required to comply with customary loan covenants and event of default provisions related to its secured financing agreements and Revolver, including, but not limited to, negative covenants relating to restrictions on operations with respect to KREF ’s status as a REIT , and financial covenants. Such financial covenants include an interest income to interest expense ratio covenant ( 1.5 to 1.0); a minimum consolidated tangible net worth covenant ( 75.0% of the aggregate cash proceeds of any equity issuances made and any capital contributions received by KREF and certain subsidiaries or up to approximately $880.2 million depending upon the facility); a cash liquidity covenant (the greater of $10.0 million or 5.0% of KREF 's recourse indebtedness); and a total indebtedness covenant ( 75.0% of KREF 's total assets, net of VIE liabilities and non- recourse indebtedness). As of March 31, 2020 and December 31, 2019 , KREF was in compliance with its financial debt covenants. |
Collateralized Loan Obligation
Collateralized Loan Obligation | 3 Months Ended |
Mar. 31, 2020 | |
Transfers and Servicing [Abstract] | |
Collateralized Loan Obligation | Collateralized Loan Obligation In November 2018, KREF financed a pool of loan participations from our existing loan portfolio through a managed CLO. KREF 2018-FL1 provides KREF with match-term financing on a non-mark-to-market and non-recourse basis. KREF 2018-FL1 has a two -year reinvestment feature that allows principal proceeds of the collateral assets to be reinvested in qualifying replacement assets, subject to the satisfaction of certain conditions set forth in the indenture. The following tables outline KREF 2018-FL1 collateral assets and respective borrowing as of March 31, 2020 and December 31, 2019 : March 31, 2020 Collateralized Loan Obligation Count Face Amount Amortized Cost Carrying Value Wtd. Avg. (B) Wtd. Avg. Term (C) Collateral assets (A) 22 $ 1,000,000 $ 1,000,000 $ 990,072 L + 2.8% November 2023 Financing provided 1 810,000 805,008 805,008 L + 2.2% June 2036 December 31, 2019 Collateralized Loan Obligation Count Face Amount Amortized Cost Carrying Value Wtd. Avg. (B) Wtd. Avg. Term (C) Collateral assets (A) 22 $ 1,000,000 $ 1,000,000 $ 1,000,000 L + 2.8% November 2023 Financing provided 1 810,000 803,376 803,376 L + 1.8% June 2036 (A) Collateral assets represent 19.5% and 20.2% of the face amount of KREF 's commercial mortgage loans as of March 31, 2020 and December 31, 2019 , respectively. As of March 31, 2020 and December 31, 2019 , 100% of KREF loans financed through the CLO are floating rate loans. (B) Yield on collateral assets is based on cash coupon. Financing cost includes amortization of deferred financing costs incurred in connection with the CLO. (C) Loan term represents weighted-average final maturity, assuming extension options are exercised by the borrower. Repayments of CLO notes are dependent on timing of related collateral loan asset repayments post reinvestment period. The term of the CLO notes represents the rated final distribution date. The following table presents the KREF 2018-FL1 Assets and Liabilities included in KREF ’s Condensed Consolidated Balance Sheets: Assets March 31, 2020 December 31, 2019 Commercial mortgage loans, held-for-investment 1,000,000 1,000,000 Less: Allowance for credit losses (9,928 ) — Commercial mortgage loans, held-for-investment, net 990,072 1,000,000 Accrued interest receivable 3,328 3,280 Other assets 5 5 Total $ 993,405 $ 1,003,285 Liabilities Collateralized loan obligation, net 805,008 803,376 Accrued interest payable 906 1,254 Accounts payable, accrued expenses and other liabilities 72 72 Total $ 805,986 $ 804,702 The following table presents the components of net interest income of KREF 2018-FL1 included in KREF ’s Condensed Consolidated Statements of Income: For the Three Months Ended March 31, 2020 2019 Net Interest Income Interest income $ 11,836 $ 14,426 Interest expense (A) 8,768 9,943 Net interest income $ 3,068 $ 4,483 (A) Includes $1.6 million and $0.8 million of deferred financing costs amortization for the three months ended March 31, 2020 and 2019 , respectively. KREF 's unamortized deferred financing costs related to KREF 2018-FL1 were $5.0 million and $8.8 million , as of March 31, 2020 and 2019 , respectively. |
Convertible Notes, Net
Convertible Notes, Net | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Convertible Notes, Net | Convertible Notes, Net In May 2018, the Company issued $143.75 million of Convertible Notes, which bear interest at a rate of 6.125% per year, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2018. The Convertible Notes mature on May 15, 2023, unless earlier repurchased or converted. The Convertible Notes’ issuance costs of $5.1 million are amortized through interest expense over the life of the Convertible Notes. The initial conversion rate for the Convertible Notes is 43.9386 shares of KREF’s common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $22.76 per share of KREF’s common stock, which represents a 10% conversion premium over the last reported sale price of $20.69 per share of KREF’s common stock on the New York Stock Exchange on May 15, 2018. The conversion rate is subject to adjustment under certain circumstances. In addition, upon a make-whole fundamental change as defined within the indenture governing the Convertible Notes, the Company will, under certain circumstances, increase the applicable conversion rate for a holder that elects to convert its Notes in connection with such make-whole fundamental change. Prior to February 15, 2023, the Convertible Notes will be convertible only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. KREF will satisfy any conversion elections by paying or delivering, as the case may be, cash, shares of KREF’s common stock or a combination of cash and shares of KREF’s common stock, at its election. KREF has the intent and ability to settle the Convertible Notes in cash and, as a result, the Convertible Notes did not have an impact on our diluted earnings per share. Upon the issuance of the Convertible Notes, KREF recorded a $1.8 million discount based on the implied value of the conversion option and an assumed effective interest rate of 6.50% , as well as $5.1 million of initial issuance costs, inclusive of the $0.8 million paid to an affiliate of KREF. Inclusive of the amortization of this discount and the issuance costs, KREF’s total cost of the May 2018 Convertible Notes issuance is 6.92% per annum. The following table details our interest expense related to the Convertible Notes: For the Three Months Ended March 31, 2020 2019 Cash coupon $ 2,201 $ 2,201 Discount and issuance cost amortization 346 342 Total interest expense 2,547 2,543 The following table details the net book value of our Convertible Notes on our Condensed Consolidated Balance Sheets: March 31, 2020 December 31, 2019 Face value $ 143,750 $ 143,750 Deferred financing costs (3,205 ) (3,460 ) Unamortized discount (1,125 ) (1,215 ) Net book value $ 139,420 $ 139,075 Accrued interest payable for the Convertible Notes was $3.3 million and $1.1 million as of March 31, 2020 and December 31, 2019 , respectively. Refer to Note 2 |
Loan Participations Sold
Loan Participations Sold | 3 Months Ended |
Mar. 31, 2020 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract] | |
Loan Participations Sold | Loan Participations Sold KREF finances certain loan investments through the syndication of a non-recourse, or limited-recourse, loan participation to unaffiliated third parties. In October 2019, KREF syndicated a $65.0 million vertical participation in one of its loan investments with a principal balance of $328.5 million to an unaffiliated third party, at par value. Such syndication did not qualify for "sale" accounting under GAAP and therefore is consolidated in KREF's condensed consolidated financial statements as of March 31, 2020 and December 31, 2019 . The following tables summarize the loan participation sold liabilities that KREF recognized since the corresponding syndications of the respective loan participations were not treated as "sales" as of March 31, 2020 and December 31, 2019 : March 31, 2020 Loan Participations Sold Count Principal Balance Amortized Cost Carrying Value Yield/Cost (A) Guarantee Term Total loan 1 $ 329,576 $ 328,117 $ 325,724 L + 2.5% n.a. July 2024 Vertical loan participation (B) 1 65,000 64,972 64,972 L + 2.5% n.a. July 2024 December 31, 2019 Loan Participations Sold Count Principal Balance Amortized Cost Carrying Value Yield/Cost (A) Guarantee Term Total loan 1 $ 328,500 $ 326,881 $ 326,881 L + 2.5% n.a. July 2024 Vertical loan participation (B) 1 65,000 64,966 64,966 L + 2.5% n.a. July 2024 (A) Floating rate loans and related liabilities are indexed to one-month LIBOR. KREF 's net interest rate exposure is in direct proportion to its interest in the net assets of the senior loan. (B) During the three months ended March 31, 2020 and 2019 , KREF recorded $0.7 million and $0.6 million of interest income and $0.7 million and $0.7 million of interest expense, respectively, related to the total loan participations sold. |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | Variable Interest Entities Collateralized Loan Obligation — KREF is the primary beneficiary of a collateralized loan obligation consolidated as a VIE that closed in November 2018 (Note 5 ). Management considers the CLO Issuers, wholly-owned subsidiaries of KREF , to be the primary beneficiary as the CLO Issuers have the ability to control the most significant activities of the CLO, the obligation to absorb losses, and the right to receive benefits of the CLO through the subordinate interests the CLO Issuers own. Equity method investments — KREF holds two investments in entities that it records using the equity method. As of March 31, 2020 , KREF held a 3.5% interest in RECOP I , an unconsolidated VIE of which KREF is not the primary beneficiary, at its fair value of $34.2 million . The aggregator vehicle in which KREF invests is controlled and advised by affiliates of the Manager . RECOP I intends to primarily acquire junior tranches of CMBS newly issued by third parties but may also make purchases on the secondary market. KREF will not pay any fees to RECOP I , but KREF bears its pro rata share of RECOP I 's expenses. KREF reported its share of the net asset value of RECOP I in its Condensed Consolidated Balance Sheets, presented as “ Equity method investments ” and its share of net income, presented as “ Income from equity method investments ” in the Condensed Consolidated Statements of Income. As of March 31, 2020 , the non-voting limited liability company interests issued by the Manager , a VIE , and held by a Taxable REIT Subsidiary (" TRS ") of KREF for the benefit of the holder of the SNVPS represented 4.7% of the Manager ’s outstanding limited liability company interests (Note 9 ). KREF reported its allocable percentage of the assets and liabilities of the Manager in its Condensed Consolidated Balance Sheets, presented as “ Equity method investments ” and its share of net income, presented as “ Income from equity method investments ” in the Condensed Consolidated Statements of Income. CMBS — KREF beneficially owned and directly held CMBS with an unpaid principal balance and fair value of $34.9 million and $12.5 million , respectively, as of December 31, 2018. During the three months ended September 30, 2019, KREF sold its remaining directly held CMBS investments, comprised of (i) a controlling beneficial interest in a CMBS trust held and (ii) interest-only bonds, for $9.8 million , resulting in a net loss of $2.7 million , which is included in "Other Income - (Loss) gain on sale of investments" in the accompanying Condensed Consolidated Statements of Income. Consequently, KREF deconsolidated the respective CMBS trust upon sale. |
Equity
Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Equity | Equity Authorized Capital — On October 2, 2014, KREF 's board of directors authorized KREF to issue up to 350,000,000 shares of stock, at $0.01 par value per share, consisting of 300,000,000 shares of common stock and 50,000,000 shares of preferred stock, subject to certain restrictions on transfer and ownership of shares. Restrictions placed on the transfer and ownership of shares relate to KREF 's REIT qualification requirements. Common Stock — As further described below, since December 2015, KREF issued the following shares of common stock: Pricing Date Shares Issued Net Proceeds As of December 31, 2015 13,636,416 $ 272,728 February 2016 2,000,000 40,000 May 2016 3,000,138 57,130 June 2016 (A) 21,838 — August 2016 5,500,000 109,875 As of December 31, 2016 24,158,392 479,733 February 2017 7,386,208 147,662 April 2017 10,379,738 207,595 May 2017- Initial Public Offering 11,787,500 219,356 As of December 31, 2017 53,711,838 1,054,346 August 2018 5,000,000 98,326 November 2018 500,000 9,351 As of December 31, 2018 59,211,838 1,162,023 (A) KREF did not receive any proceeds with respect to 21,838 shares of common stock issued to certain current and former employees of, and non-employee consultants to, KKR and third-party investors in the private placement completed in March 2016, in accordance with KREF 's Stockholders Agreement dated as of March 29, 2016 . KREF did not issue additional common stock between January 1, 2019 and March 31, 2020 . In March 2016, KREF obtained $277.4 million of capital commitments in connection with the completion of a private placement priced at $20.00 per share. Of these capital commitments, $190.1 million consisted of approximately $178.4 million from third parties and approximately $11.8 million from certain current and former employees of, and non-employee consultants to, KKR . KKR committed a total of $400.0 million and third parties committed a total of $248.0 million subsequent to the private placement completion. In connection with the completion of the private placement, KREF formed an advisory board consisting of certain third-party investors. The advisory board possessed certain protective approval rights over KREF 's activities outside its ordinary course of business, including certain business combinations and equity issuances. The advisory board dissolved upon KREF 's public listing on May 5, 2017. In February 2017 and April 2017, KREF called a portion of capital from investors in the private placements closed during the year ended December 31, 2016 and issued 7,386,208 and 10,379,738 common shares, at $20.00 per share, for net proceeds of $147.7 million and $207.6 million , respectively. In connection with the capital commitments described above, third-party investors and certain current and former employees of, and non-employee consultants to, KKR were allocated non-voting limited liability company interests of the Manager . For each $100.0 million shares of KREF ’s common stock acquired by investors through the private placement, the investors were allocated non-voting limited liability company interests, representing 6.67% of the Manager ’s then-outstanding total limited liability company interests. Each investor was allocated its pro rata share of the non-voting limited liability company interests of the Manager based on the investor’s shares of KREF ’s common stock. In May 2017, KREF completed its initial public offering of 11,787,500 shares of its common stock at a price to the public of $20.50 per share, which included 1,537,500 shares of common stock issued in connection with the underwriters' exercise in full of their option to purchase additional shares. The value of KREF 's common stock prior to its listing on the New York Stock Exchange was based upon its equity value using a combination of net asset value (market) and discounted cash flow (income) approaches. In August 2018, KREF completed an underwritten public offering of 5,000,000 shares of its common stock at $19.90 per share, less applicable transaction costs, resulting in $98.3 million in net proceeds. In November 2018, KREF completed an underwritten offering of 4,500,000 shares of its common stock at $20.00 per share, consisting of 500,000 shares issued and sold by KREF and 4,000,000 shares sold by pre-initial public offering third-party investors, resulting in $9.4 million in net proceeds to KREF . As of March 31, 2020 and December 31, 2019 , KKR beneficially owned 22,008,616 shares of KREF 's common stock, of which 2,008,616 shares were held by KKR on behalf of a third-party investor (Note 1 ). During the three months ended March 31, 2020 and 2019 , no shares of common stock were issued related to the vesting of restricted stock units. Upon any payment of shares as a result of restricted stock unit vesting, the related tax withholding obligation will generally be satisfied by KREF , reducing the number of shares to be delivered by a number of shares necessary to satisfy the related applicable tax withholding obligation. Refer to Note 10 for further detail. Of t he 59,211,838 comm on shares KREF issued, there were 55,838,032 common shares outstanding as of March 31, 2020 , which includes 137,434 net shares of common stock issued in connection with vested restricted stock units and is net of 3,511,240 common shares repurchased as of March 31, 2020 . Share Repurchase Program — On June 14, 2019, KREF 's board of directors approved an extension of its existing share repurchase program. The share repurchase program, as extended, permits us to repurchase up to $100.0 million in shares of KREF 's common stock during the period from July 1, 2019 through June 30, 2020. Of this total authorized amount, $50.0 million may be covered by a pre-set trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act that provides for repurchases of our common stock when the market price per share of our common stock is below book value per share (calculated in accordance with GAAP as of the end of the most recent period for which financial statements are available), and the remaining $50.0 million may be used for repurchases in the open market, or pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act, or in privately negotiated transactions, or otherwise. During the year ended December 31, 2019 , KREF repurchased 212,809 shares of common stock under the repurchase program at an average price per share of $19.25 for a total of $4.1 million . During the three months ended March 31, 2020 , KREF repurchased 1,648,551 shares of common stock under the repurchase program at an average price per share of $11.64 for a total of $19.2 million . In addition, KREF repurchased 262,492 shares of common stock at an average price per share of $15.24 for a total of $4.0 million , which settled subsequent to March 31, 2020 . Payments for these shares are presented within “Payments to reacquire common stock” on the Condensed Consolidated Statements of Cash Flows. The unsettled shares are presented within “Other assets” on the Condensed Consolidated Balance Sheets. At the Market Stock Offering Program — On February 22, 2019, KREF entered into an equity distribution agreement with certain sales agents, pursuant to which KREF may sell, from time to time, up to an aggregate sales price of $100.0 million of its common stock pursuant to a continuous offering program (the “ATM”). Sales of KREF ’s common stock made pursuant to the ATM may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended. The timing and amount of actual sales will depend on a variety of factors including market conditions, the trading price of KREF ’s common stock, KREF ’s capital needs, and KREF ’s determination of the appropriate sources of funding to meet such needs. KREF did not sell any shares of its common stock under the ATM during the three months ended March 31, 2020 . Dividends — During the three months ended March 31, 2020 and 2019 , KREF 's board of directors declared the following dividends on shares of its common stock and special voting preferred stock: Amount Declaration Date Record Date Payment Date Per Share Total 2020 March 16, 2020 March 31, 2020 April 15, 2020 $ 0.43 $ 24,010 $ 24,010 2019 March 18, 2019 March 29, 2019 April 12, 2019 $ 0.43 $ 24,761 $ 24,761 Special Voting Preferred Stock — In March 2016, KREF issued one share of special voting preferred stock to KKR Fund Holdings L.P. (" KKR Fund Holdings ") for $20.00 per share, which KKR Fund Holdings transferred to its subsidiary, KKR REFT Asset Holdings LLC. The holder of the special voting preferred stock has special voting rights related to the election of members to KREF 's board of directors until KKR and its affiliates cease to own at least 25.0% of KREF 's issued and outstanding common stock (of which 2,008,616 shares were held on behalf of a third-party investor). KKR and its affiliates beneficially owned 22,008,616 shares of KREF's common stock, representing 39.4% and 38.3% of KREF’s issued and outstanding common stock as of March 31, 2020 and December 31, 2019, respectively. Special Non-Voting Preferred Stock — In connection with KREF 's existing investors’ subscription for shares of KREF 's common stock in the private placements prior to the initial public offering of KREF 's equity on May 5, 2017, those investors were also allocated a class of non-voting limited liability company interest in the Manager (" Non-Voting Manager Units "). In February 2017, KREF issued an investor one share of SNVPS , at $0.01 per share, in lieu of that investor receiving Non-Voting Manager Units to facilitate compliance by the investor with regulatory requirements applicable to it. The corresponding Non-Voting Manager Units are held by a wholly-owned TRS of KREF ("KREF TRS"). All distributions received by KREF TRS from these Non-Voting Manager Units are passed through to the investor as preferred distributions on its SNVPS , less applicable taxes and withholdings. Except for the Non-Voting Manager Units , an indirect subsidiary of KKR ("KKR Member"), owns and controls the limited liability company interests of the Manager . Dividends on the SNVPS are payable quarterly, and will accrue whether or not KREF has earnings, there are assets legally available for the payment of those dividends or those dividends have been declared. Any dividend payment made on the SNVPS shall first be credited against the earliest accumulated but unpaid dividend due with respect to the SNVPS. Upon redemption of the SNVPS or liquidation of KREF, the holder of the SNVPS is entitled to payment of $0.01 per share, together with any accumulated but unpaid preferred distributions, including respective call or put amounts (as defined), before any holder of junior security interests, which includes KREF 's common stock. As KREF does not control the circumstances under which the holder of the SNVPS may redeem its interests, management considers the SNVPS as temporary equity (Note 2 ). KREF will redeem the SNVPS at the option of the holder. Upon redemption, KREF will pay a price in cash equal to $0.01 per share of the SNVPS , together with any accumulated but unpaid preferred distributions, including respective call or put amounts (as defined), and the SNVPS will be canceled automatically and cease to be outstanding. Concurrently, upon redemption of the SNVPS, KKR Member will acquire from KREF TRS its respective Non-Voting Manager Units, resulting in a one-time gain, thus substantially eliminating the historical cumulative impact of the SNVPS redemption value adjustments recorded in KREF 's permanent equity. Earnings (Loss) per Share — The following table illustrates the computation of basic and diluted earnings (loss) per share for the three months ended March 31, 2020 and 2019 : Three Months Ended March 31, 2020 2019 Numerator Net income (loss) attributable to common stockholders $ (35,164 ) $ 24,705 Denominator Basic weighted average common shares outstanding 57,346,726 57,387,386 Dilutive restricted stock units — 89,848 Diluted weighted average common shares outstanding 57,346,726 57,477,234 Net income (loss) attributable to common stockholders, per: Basic common share $ (0.61 ) $ 0.43 Diluted common share $ (0.61 ) $ 0.43 |
Stock-based Compensation
Stock-based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation | Stock-based Compensation KREF is externally managed by the Manager and does not currently have any employees. However, as of March 31, 2020 , the Manager, certain individuals employed by the Manager and affiliates of the Manager, and certain members of KREF 's board of directors were compensated, in part, through the issuance of stock-based awards. As of March 31, 2020 , KREF had restricted stock unit (“RSU”) awards outstanding under the KKR Real Estate Finance Trust Inc. 2016 Omnibus Incentive Plan that was adopted on February 12, 2016 and amended and restated on November 17, 2016 (the " Incentive Plan ") to certain members of KREF ’s board of directors and employees of the Manager or its affiliates, none of whom are KREF employees. RSUs awarded to employees of the Manager or its affiliates, generally vest over three consecutive one -year periods and awards to certain members of KREF 's board of directors vest over a one-year period, pursuant to the terms of the respective award agreements and the terms of the Incentive Plan. RSU awards are not entitled to dividends until KREF issues shares of its common stock, which are issuable on a one -to-one basis upon the RSU award vesting. The following table summarizes the activity in KREF ’s outstanding RSUs and the weighted-average grant date fair value per RSU: Restricted Stock Units Weighted Average Grant Date Fair Value Per RSU (A) Unvested as of December 31, 2019 641,214 $ 20.02 Granted — — Vested — — Forfeited/ cancelled (739 ) 19.46 Unvested as of March 31, 2020 640,475 $ 20.02 (A) The grant-date fair value is based upon the last sale price of KREF’s common stock at the date of grant. KREF expects the unvested RSUs outstanding to vest during the following years: Year Restricted Stock Units 2020 291,676 2021 232,133 2022 116,666 Total 640,475 Upon adoption of ASU No. 2018-07 in June 2018, KREF recognizes the compensation cost of RSUs awarded to employees of the Manager, or one or more of its affiliates, on a straight-line basis over the awards’ term at their grant date fair value, consistent with the RSUs awarded to certain members of KREF 's board of directors. During the three months ended March 31, 2020 and 2019 , KREF recognized $1.6 million and $1.0 million , respectively, of stock-based compensation expense included in “General and administrative” expense in the Condensed Consolidated Statements of Income. As of March 31, 2020 , there was $9.7 million of total unrecognized stock-based compensation expense related to unvested share-based compensation arrangements. This cost is expected to be recognized over a weighted average period of 1.2 years. Upon any payment of shares as a result of restricted stock unit vesting, the related tax withholding obligation will generally be satisfied by KREF , reducing the number of shares to be delivered by a number of shares necessary to satisfy the related applicable tax withholding obligation. The amount results in a cash payment related to this tax liability and a corresponding adjustment to additional paid in capital in the Condensed Consolidated Statement of Changes in Stockholders' Equity. No shares were delivered for vested RSUs during the three months ended March 31, 2020 . Refer to Note 12 for additional information regarding the Incentive Plan. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies As of March 31, 2020 , KREF was subject to the following commitments and contingencies: Litigation — From time to time, KREF may be involved in various claims and legal actions arising in the ordinary course of business. KREF establishes an accrued liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable. As of March 31, 2020 , KREF was not involved in any material legal proceedings regarding claims or legal actions against KREF . Indemnifications — In the normal course of business, KREF enters into contracts that contain a variety of representations and warranties that provide general indemnifications and other indemnities relating to contractual performance. In addition, certain of KREF ’s subsidiaries have provided certain indemnities relating to environmental and other matters and has provided nonrecourse carve-out guarantees for fraud, willful misconduct and other customary wrongful acts, each in connection with the financing of certain real estate investments that KREF has made. KREF ’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against KREF that have not yet occurred. However, KREF expects the risk of material loss to be low. Capital Commitments — As of March 31, 2020 , KREF had future funding requirements of $592.8 million related to its investments in commercial mortgage loans. These future funding commitments primarily relate to construction projects, capital improvements, tenant improvements and leasing commissions. Generally, funding commitments are subject to certain conditions that must be met, such as customary construction draw certifications, minimum credit metrics or executions of new leases before advances are made to the borrower. In January 2017, KREF committed $40.0 million to invest in an aggregator vehicle alongside RECOP I . The two-year investment period for RECOP I ended in April 2019. As of March 31, 2020 , KREF had a remaining commitment of $4.3 million to RECOP I . Impact of the COVID-19 Pandemic — Due to the current COVID-19 pandemic in the United States and globally, KREF 's operating partners, borrowers and their tenants, the properties securing our investments, and the economy as a whole have been, and will continue to be, adversely impacted. The magnitude and duration of the COVID-19 pandemic and its impact on KREF 's borrowers and their tenants, cash flows and future results of operations could be significant and will largely depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the COVID-19 pandemic, the success of actions taken to contain or treat the pandemic, and reactions by consumers, companies, governmental entities and capital markets. The prolonged duration and impact of the COVID-19 pandemic could materially disrupt KREF 's business operations and impact its financial performance. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Management Agreement — The Management Agreement between KREF and the Manager is a three -year agreement that provides for automatic one -year renewal periods starting October 8, 2017, subject to certain termination and nonrenewal rights, which in the case of KREF are exercisable by a two-thirds vote by the independent directors of KREF 's board of directors. If the independent directors of KREF 's board of directors decline to renew the Management Agreement other than for cause, KREF is required to pay the Manager a termination fee equal to three times the total 24 -month trailing average annual management fee and incentive compensation earned by the Manager through the most recently completed calendar quarter. For administrative efficiency purposes, the Management Agreement was amended in August 2019 to change the expiration date of each automatic renewal period from October 7th to December 31st. Pursuant to the Management Agreement , the Manager , as agent to KREF and under the supervision of KREF 's board of directors, manages the investments, subject to investment guidelines approved by KREF 's board of directors; financing activities; and day-to-day business and affairs of KREF and its subsidiaries. For its services to KREF , the Manager is entitled to a quarterly management fee equal to the greater of $62,500 or 0.375% of a weighted average adjusted equity and quarterly incentive compensation equal to 20.0% of the excess of (a) the trailing 12 -month adjusted earnings over (b) 7.0% of the trailing 12 -month weighted average adjusted equity (“Hurdle Rate”), less incentive compensation KREF already paid to the Manager with respect to the first three calendar quarters of such trailing 12 -month period. The quarterly incentive compensation is calculated and paid in arrears with a three months lag. Adjusted equity generally represents the proceeds received by KREF and its subsidiaries from equity issuances, without duplication and net of offering costs, and core earnings, reduced by distributions, equity repurchases, and incentive compensation paid. Core Earnings generally represent the net income, or loss, attributable to equity interests in KREF and its subsidiaries, without duplication, as well as realized losses not otherwise included in such net income, or loss, excluding non-cash equity compensation expense, incentive compensation, depreciation and amortization and unrealized gains or losses, from and after the effective date to the end of the most recently completed calendar quarter. KREF 's board of directors, after majority approval by independent directors, may also exclude one-time events pursuant to changes in GAAP and certain material non-cash income or expense items from adjusted earnings. For purposes of calculating incentive compensation, both adjusted equity and adjusted earnings exclude the effects of equity issued by KREF and its subsidiaries that provides for fixed distributions or other debt characteristics. KREF is also required to reimburse the Manager or its affiliates for documented costs and expenses incurred by it and its affiliates on behalf of KREF except those specifically required to be borne by the Manager under the Management Agreement. The Manager is responsible for, and KREF does not reimburse the Manager or its affiliates for, the expenses related to investment personnel of the Manager and its affiliates who provide services to KREF . However, KREF does reimburse the Manager for KREF 's allocable share of compensation paid to certain of the Manager ’s non-investment personnel, based on the percentage of time devoted by such personnel to KREF 's affairs. Incentive Plan — KREF 's compensation committee or board of directors may administer the Incentive Plan , which provides for awards of stock options; stock appreciation rights ; restricted stock; RSUs; limited partnership interests of KKR Real Estate Finance Holdings L.P. (the " Operating Partnership "), a wholly owned subsidiary of KREF , that are directly or indirectly convertible into or exchangeable or redeemable for shares of KREF 's common stock pursuant to the limited partnership agreement of the Operating Partnership (“OP Interests”); awards payable by (i) delivery of KREF 's common stock or other equity interests, or (ii) reference to the value of KREF 's common stock or other equity interests, including OP Interests; cash-based awards; or performance compensation awards. No more than 7.5% of the issued and outstanding shares of common stock on a fully diluted basis, assuming the exercise of all outstanding stock options granted under the Incentive Plan and the conversion of all warrants and convertible securities into shares of common stock, or a total of 4,028,387 shares of common stock, will be available for awards under the Incentive Plan . In addition, (i) the maximum number of shares of common stock subject to awards granted during a single fiscal year to any non-employee director (as defined in the Incentive Plan ), taken together with any cash fees paid to such non-employee director during the fiscal year, may not exceed $1.0 million and (ii) the maximum amount that can be paid to any participant for a single fiscal year during a performance period (or with respect to each single fiscal year if a performance period extends beyond a single fiscal year) pursuant to a performance compensation award denominated in cash will be $10.0 million . No awards may be granted under the Incentive Plan on and after February 12, 2026. The Incentive Plan will continue to apply to awards granted prior to such date. During the three months ended March 31, 2020 and 2019 , no awards were granted to KREF 's directors and employees of the Manager. As of March 31, 2020 , 3,250,478 shares of common stock remained available for awards under the Incentive Plan . Due to Affiliates — The following table contains the amounts presented in KREF 's Condensed Consolidated Balance Sheets that it owes to affiliates: March 31, 2020 December 31, 2019 Management fees $ 4,299 $ 4,280 Expense reimbursements and other 723 1,637 $ 5,022 $ 5,917 Affiliates Expenses — The following table contains the amounts included in KREF 's Condensed Consolidated Statements of Income that arose from transactions with the Manager: Three Months Ended March 31, 2020 2019 Management fees $ 4,299 $ 4,287 Incentive compensation 1,606 953 Expense reimbursements and other (A) 299 365 $ 6,204 $ 5,605 (A) KREF presents these amounts in " Operating Expenses — General and administrative " in its Condensed Consolidated Statements of Income. Affiliate expense reimbursements presented in the table above exclude the out-of-pocket amounts paid by the Manager to parties unaffiliated with the Manager on behalf of KREF , and for which KREF reimburses the Manager in cash. For the three months ended March 31, 2020 and 2019 , these cash reimbursements totaled $1.5 million and $0.5 million , respectively. In connection with the Term Loan Facility (Note 4 ), KREF paid KKR Capital Markets ("KCM"), an affiliate of the Manager, a structuring fee equal to 0.75% of the respective committed loan advances, as defined. Such fees are capitalized as deferred financing cost and amortized to interest expense over the life of the facility. During the three months ended March 31, 2020 and 2019 , KREF incurred $0.0 million and $1.5 million , respectively, in structuring fees in connection with the facility. In connection with the BMO Facility, and in consideration for structuring and sourcing this arrangement, KREF is obligated to pay KCM a structuring fee equal to 0.35% of the respective committed loan advances under the agreement. Such fees are capitalized as deferred financing cost and amortized to interest expense over the life of the facility. During the three months ended March 31, 2020 and 2019 , KREF incurred $0.0 million and $0.2 million , respectively, in structuring fees in connection with the facility. In connection with the CLO issuance, and in consideration for its services as the co-placement agent, KREF incurred and paid KCM a $0.9 million placement agent fee equal to 0.105% of the CLO proceeds in the fourth quarter of 2018. The fee was capitalized as deferred financing cost and amortized to interest expense over the estimated life of the CLO. In connection with the Revolver, and in consideration for structuring and sourcing this arrangement, KREF paid KCM a structuring fee equal to 0.75% of the aggregate amount of commitments first made available. The structuring fees are capitalized as deferred financing cost included within Other Assets in the Condensed Consolidated Balance Sheet and amortized to interest expense over the life of the Revolver. During the three months ended March 31, 2020 and 2019 , KREF incurred $0.6 million and $0.3 million , respectively, in structuring fees in connection with the Revolver. In connection with the ATM, KCM, in its capacity as one of the sales agents, will receive commissions for the shares of KREF ’s common stock it sells. This amount is not to exceed, but may be less than, 2.0% of the gross sales price per share. KREF did not sell any shares under the ATM during the three months ended March 31, 2020 . In connection with the HSBC Facility, and in consideration for structuring and sourcing this arrangement, KREF is obligated to pay KCM a structuring fee equal to 0.25% of the respective committed loan advances under the agreement. Such fees are capitalized as deferred financing cost and amortized to interest expense over the lesser of the initial term of the loan or the facility. During the three months ended March 31, 2020 , KREF incurred and paid KCM $0.1 million in structuring fees in connection with the facility. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying values and fair values of KREF ’s financial assets and liabilities recorded at fair value on a recurring basis, as well as other financial instruments not carried at fair value, as of March 31, 2020 were as follows: Fair Value Principal Balance (A) Amortized Cost (B) Carrying Value (C) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 369,867 $ 369,867 $ 369,867 $ 369,867 $ — $ — $ 369,867 Commercial mortgage loans, held-for-investment, net (D) 5,118,199 5,089,968 5,023,989 — — 4,956,766 4,956,766 Equity method investments 34,441 34,441 34,441 — — 34,441 34,441 $ 5,522,507 $ 5,494,276 $ 5,428,297 $ 369,867 $ — $ 4,991,207 $ 5,361,074 Liabilities Secured financing agreements, net $ 3,379,857 $ 3,368,329 $ 3,368,329 $ — $ — $ 3,379,857 $ 3,379,857 Collateralized loan obligation, net 810,000 805,008 805,008 — — 770,497 770,497 Convertible notes, net 143,750 139,420 139,420 121,956 — — 121,956 Loan participations sold, net 65,000 64,972 64,972 — — 64,972 64,972 $ 4,398,607 $ 4,377,729 $ 4,377,729 $ 121,956 $ — $ 4,215,326 $ 4,337,282 (A) The principal balance of commercial mortgage loans excludes premiums and unamortized discounts. (B) The amortized cost of commercial mortgage loans is net of $28.2 million unamortized origination discounts and deferred nonrefundable fees. The amortized cost of secured financing agreements is net of $11.5 million unamortized debt issuance costs. The amortized cost of collateralized loan obligations is net of $5.0 million unamortized debt issuance costs. (C) The carrying value of commercial mortgage loans is net of $66.0 million allowance for credit losses. (D) Includes $1.0 billion of CLO loan participations as of March 31, 2020 . Includes senior loans for which KREF syndicated a vertical loan participation that did not qualify for sale accounting under GAAP, with a carrying value and a fair value of $65.0 million as of March 31, 2020 . The carrying values and fair values of KREF ’s financial assets recorded at fair value on a recurring basis, as well as other financial instruments for which fair value is disclosed, as of December 31, 2019 were as follows: Fair Value Principal Balance (A) Amortized Cost (B) Carrying Value Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 67,619 $ 67,619 $ 67,619 $ 67,619 $ — $ — $ 67,619 Commercial mortgage loans, held-for-investment, net (C) 4,960,698 4,931,042 4,931,042 — — 4,937,808 4,937,808 Equity method investments 37,469 37,469 37,469 — — 37,469 37,469 $ 5,065,786 $ 5,036,130 $ 5,036,130 $ 67,619 $ — $ 4,975,277 $ 5,042,896 Liabilities Secured financing agreements, net $ 2,898,716 $ 2,884,887 $ 2,884,887 $ — $ — $ 2,898,716 $ 2,898,716 Collateralized loan obligation, net 810,000 803,376 803,376 — — 810,867 810,867 Convertible notes, net 143,750 139,075 139,075 150,719 — — 150,719 Loan participations sold, net 65,000 64,966 64,966 — — 64,966 64,966 $ 3,917,466 $ 3,892,304 $ 3,892,304 $ 150,719 $ — $ 3,774,549 $ 3,925,268 (A) The principal balance of commercial mortgage loans excludes premiums and unamortized discounts. (B) The amortized cost of commercial mortgage loans is presented net of $29.7 million unamortized origination discounts and deferred nonrefundable fees. The amortized cost of secured financing agreements is presented net of $13.8 million unamortized debt issuance costs. The amortized cost of collateralized loan obligations is presented net of $6.6 million unamortized debt issuance costs. (C) Includes $1.0 billion of CLO loan participations as of December 31, 2019 . Includes senior loans for which KREF syndicated a vertical loan participation that did not qualify for sale accounting under GAAP, with a carrying value and a fair value of $65.0 million as of December 31, 2019 . During the three months ended March 31, 2020 , KREF received a distribution of $0.9 million and recorded a loss of $2.2 million related to its investment in RECOP I , which includes a $3.0 million unrealized mark-to-market loss. The following table contains the Level 3 inputs used to value assets and liabilities on a recurring and nonrecurring basis or where KREF discloses fair value as of March 31, 2020 : Fair Value Valuation Methodologies Unobservable Inputs (A) Weighted Average (B) Range Assets (C) Commercial mortgage loans, held-for-investment (D) $4,956,766 Discounted cash flow Discount rate 4.8% 3.7% - 12.7% Loan-to-value ratio N/A N/A $4,956,766 Liabilities (E) Collateralized loan obligation, net $770,497 Discounted cash flow Yield 3.7% 2.8% - 9.0% $770,497 (A) An increase (decrease) in the valuation input results in a decrease (increase) in value. (B) Represents the average of the input value, weighted by the unpaid principal balance of the financial instrument. (C) KREF carries a $34.2 million investment in an aggregator vehicle alongside RECOP I (Note 8 ) at its pro rata share of the aggregator's net asset value, which management believes approximates fair value. (D) Commercial mortgage loans are generally valued using a discounted cash flow model using discount rate derived from relevant market indices and/or estimates of the underlying property's value. (E) Does not include $65.0 million of vertical loan syndication which was syndicated at par value and included in “Loan participation sold, net” in the accompanying Condensed Consolidated Balance Sheet. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Certain assets not measured at fair value on an ongoing basis but subject to fair value adjustments only in certain circumstances, such as when there is evidence of impairment, are measured at fair value on a nonrecurring basis. For commercial mortgage loans held-for-sale, KREF applies the lower of cost or fair value accounting and may be required, from time to time, to record a nonrecurring fair value adjustment. For commercial mortgage loans held-for-investment and preferred interest in joint venture held-to-maturity, KREF applies the amortized cost method of accounting, but may be required, from time to time, to record a nonrecurring fair value adjustment in the form of a valuation provision or impairment. KREF did not report any significant financial assets or liabilities at fair value on a nonrecurring basis as of March 31, 2020 or December 31, 2019 . Assets and Liabilities for Which Fair Value is Only Disclosed KREF does not carry its secured financing agreements at fair value as management did not elect the fair value option for these liabilities. As of March 31, 2020 , the fair value of KREF |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes KREF has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with its taxable year ended December 31, 2014. A REIT is generally not subject to U.S. federal and state income tax on that portion of its income that is distributed to stockholders if it distributes at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. A REIT will also be subject to a nondeductible excise tax to the extent certain percentages of its taxable income are not distributed within specified dates. While KREF currently expects to distribute at least 90% of its net taxable income for the taxable year ending December 31, 2020, KREF will continue to evaluate its capital and liquidity needs in light of the significant uncertainties created by the COVID-19 pandemic, including the potential for a continued and prolonged adverse impact on economic and market conditions. KREF consolidates subsidiaries that incur U.S. federal, state and local income taxes, based on the tax jurisdiction in which each subsidiary operates. During each of the three months ended March 31, 2020 and 2019 , KREF recorded a current income tax provision (benefit) of $0.1 million and $0.0 million respectively, related to operations of its taxable REIT subsidiaries and various other state and local taxes. There were no deferred tax assets or liabilities as of March 31, 2020 and December 31, 2019 . As of March 31, 2020 , tax years 2016 |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events The following events occurred subsequent to March 31, 2020 : Investing Activities Funding of Previously Closed Loans KREF funded approximately $27.0 million for previously closed loans. Loan Repayments KREF received approximately $42.0 million from loan repayments. Financing Activities KREF net repaid $25.4 million under its financing agreements, including (i) Revolver repayment of $100.0 million and (ii) $60.0 million of proceeds from the Term Loan Financing Facility. Corporate Activities Stock Repurchase In April 2020, KREF repurchased 389,086 shares of its common stock at an average price per share of $14.92 for a total of $5.8 million , (inclusive of 262,492 shares with March trade dates that settled in April 2020 - Note 9). Year-to-date as of April 28, 2020, KREF repurchased 2,037,637 shares of common stock at an average price of $12.27 for a total of $25.0 million . Dividends In April 2020 , KREF paid $24.0 million in dividends on its common stock, or $0.43 per share, with respect to the first quarter of 2020 , to stockholders of record on March 31, 2020 . |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation — The accompanying unaudited condensed consolidated financial statements and related notes of KREF are prepared in accordance with accounting principles generally accepted in the United States of America (" GAAP ") for interim financial information and instructions to Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Accordingly, certain information and footnote disclosures normally included in the consolidated financial statements have been condensed or omitted. The condensed consolidated financial statements include the accounts of KREF and its consolidated subsidiaries, and all intercompany transactions and balances have been eliminated. In the opinion of management, all adjustments considered necessary for a fair presentation of KREF ’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K. |
Risks and Uncertainties | Risks and Uncertainties — The recent outbreak of the coronavirus pandemic (“COVID-19”) around the globe continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. The impact of the outbreak has been rapidly evolving around the globe, with several countries taking drastic measures to limit the spread of the virus by instituting quarantines or lockdowns and imposing travel restrictions. Such actions are creating significant disruptions to global supply chains, and adversely impacting several industries, including but not limited to, airlines, hospitality, retail and the broader real estate industry. The major disruption caused by COVID-19 brought to a halt most economic activity in most of the United States resulting in a significant increase in unemployment claims and will likely result in a significant decline in the U.S. Gross Domestic Product (“GDP”). COVID-19 could have a continued and prolonged adverse impact on economic and market conditions and trigger a period of global economic slowdown which could have a material adverse effect on the Company’s results and financial condition. The full impact of COVID-19 on the real estate industry, the credit markets and consequently on the Company’s financial condition and results of operations is uncertain and cannot be predicted at the current time as it depends on several factors beyond the control of the Company including, but not limited to (i) the uncertainty around the severity and duration of the outbreak, (ii) the effectiveness of the United States public health response, (iii) the pandemic’s impact on the U.S. and global economies, (iv) the timing, scope and effectiveness of additional governmental responses to the pandemic, (v) the timing and speed of economic recovery, including the availability of a treatment or vaccination for COVID-19 and (vi) the negative impact on our borrowers, real estate values and cost of capital. |
Use of Estimates | Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Management makes subjective estimates to project cash flows KREF expects to receive on its investments in loans and securities as well as the related market discount rates, which significantly impacts the interest income, impairments, allowance for loan loss and fair values recorded or disclosed. The effects of COVID-19 may negatively and materially impact significant estimates and assumptions used by the Company including, but not limited to estimates of expected credit losses, valuation of our equity method investments and the fair value estimates of the Company’s assets and liabilities . Actual results could materially differ from those estimates. |
Consolidation | Consolidation — KREF consolidates those entities for which (i) it controls through either majority ownership or voting rights or (ii) management determines that KREF is the primary beneficiary of entities deemed to be variable interest entities (" VIE s"). Variable Interest Entities — VIE s are entities (i) in which equity investors do not have an interest with the characteristics of a controlling financial interest, (ii) do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties or (iii) established with non-substantive voting rights. A VIE is required to be consolidated only by its primary beneficiary, which is defined as the party that has the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and that has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could be potentially significant to the VIE (Note 8 ). To assess whether KREF has the power to direct the activities of a VIE that most significantly impact the VIE ’s economic performance, KREF considers all the facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes, first, identifying the activities that most significantly impact the VIE ’s economic performance; and second, identifying which party, if any, has power to direct those activities. To assess whether KREF has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE , KREF considers all of its economic interests and applies judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE . Collateralized Loan Obligation — KREF consolidates a collateralized loan obligation that closed in November 2018 (“ KREF 2018-FL1” or “CLO”) (Note 5 ). Management determined that KREF 2018-FL1 Ltd. and KREF 2018-FL1 LLC (the "CLO Issuers"), wholly-owned subsidiaries of KREF , were VIEs and that KREF was the primary beneficiary. KREF is the primary beneficiary of the VIEs since it has the ability to control the most significant activities of the CLO Issuers through ownership of non-investment grade rated subordinated controlling tranches, has the obligation to absorb losses, and the right to receive benefits, that could potentially be significant to these entities. As a result, KREF consolidates the CLO Issuers. The collateral assets of the CLO, comprised of a pool of loan participations (Note 5 ) are included in “Commercial mortgage loans, held-for-investment, net” on the accompanying Condensed Consolidated Balance Sheets. The liabilities of KREF 's consolidated CLO Issuers consist solely of obligations to the senior CLO noteholders, excluding subordinated CLO tranches held by KREF as such interests are eliminated in consolidation, are presented in “Collateralized loan obligation, net” in the accompanying Condensed Consolidated Balance Sheets. The collateral assets of the CLO can only be used to settle the obligations of the consolidated CLO. The interest income from the CLO collateral assets and the interest expense on the CLO liabilities are presented on a gross basis in “Interest income” and “Interest expense”, respectively, in KREF 's Condensed Consolidated Statements of Income. CMBS — KREF consolidates those trusts that issue beneficial ownership interests in mortgage loans secured by CRE (commonly known as CMBS ) when KREF holds a variable interest in, and management considers KREF to be the primary beneficiary of, those trusts. Management believes the performance of the assets that underlie CMBS issuances most significantly impacts the economic performance of the trust, and the primary beneficiary is generally the entity that conducts activities that most significantly impact the performance of the underlying assets. In particular, the most subordinate tranches of CMBS expose the holder to the greater variability of economic performance when compared to more senior tranches since the subordinate tranches absorb a disproportionately higher amount of the credit risk related to the underlying assets. Generally, a trust designates the most junior subordinate tranche outstanding as the controlling class, which entitles the holder of the controlling class to unilaterally appoint and remove the special servicer for the trust. The special servicer is responsible for the servicing and administration of delinquent and nonperforming loans as well as real estate owned (" REO ") properties held as collateral delivered on foreclosed loans. While the special servicer cannot prevent losses, its services to the trust are designed to mitigate credit losses to holders of the CMBS . For any CMBS trust that KREF consolidates, KREF holds an unrated tranche that represents the most subordinated tranche of the CMBS issued by that trust, which include the controlling class. As the holder of the most subordinate tranche, KREF is in a first loss position and has the right to receive benefits. As the holder of the controlling class, KREF has the ability to unilaterally appoint and remove the special servicer for the trust. In these cases, management considers KREF to be the primary beneficiary and consolidates that CMBS trust. For VIE s in which management determines KREF is the primary beneficiary, all of the underlying assets, liabilities and equity of the trusts are recorded on KREF 's books, and the initial investment, along with any associated unrealized holding gains and losses, are eliminated in consolidation. Similarly, the interest income earned from these trusts is eliminated in consolidation. Management elected the fair value option for KREF 's initial and subsequent recognition of the assets and liabilities of KREF 's consolidated CMBS VIE s in order to provide users of the financial statements with better information regarding the effects of credit risk and other market factors on the CMBS beneficially held by KREF 's stockholders. Since the changes in fair value include the interest income and interest expense associated with these CMBS VIE s, management does not consider the separate presentation of the components of fair value changes to be relevant. Management has elected to present these items in aggregate as " Other Income — Change in net assets related to CMBS consolidated variable interest entities " in the accompanying Condensed Consolidated Statements of Income; the residual difference between the fair value of the trust's assets and liabilities represents KREF 's beneficial interest in the CMBS VIE s. Management separately presents the assets and liabilities of KREF 's consolidated VIE s as individual line items on KREF 's Condensed Consolidated Balance Sheets for entities in which the VIE s assets can only be used to settle the VIE ’s obligations. The liabilities of KREF 's consolidated VIE s consist solely of obligations to the CMBS holders of the consolidated trust, excluding CMBS held by KREF as such interests are eliminated in consolidation, and the interest accrued thereon, presented as "Liabilities — Variable interest entity liabilities, at fair value ." The assets of KREF 's consolidated VIEs consist principally of commercial mortgage loans and the interest accrued thereon, and are likewise presented as a single line item entitled " Assets — Commercial mortgage loans held in variable interest entities, at fair value ." Assets of a CMBS trust, as a whole, can only be used to settle the obligations of the consolidated CMBS VIE . The assets of KREF 's CMBS VIE s are not individually accessible by, and obligations of the CMBS VIE s are not recourse to, the bondholders. KREF derives the fair value of its Level 3 CMBS VIE assets from its Level 3 CMBS VIE liabilities, which management considers to possess more observable market value data than the CMBS VIE assets. See "— Fair Value — Valuation of CMBS Consolidated VIEs " for additional discussion regarding management's valuation of consolidated CMBS VIE s. During the three months ended September 30, 2019, KREF sold the remaining directly held CMBS investments, including an unrated tranche that represented the most subordinated tranche of the CMBS issued by that trust, including the controlling class. Accordingly, KREF deconsolidated the respective CMBS trust (Note 8 ). Temporary Equity — KREF 's Special Non-Voting Preferred Stock (“SNVPS”) became redeemable in the second quarter of 2018. As a result, starting with the second quarter of 2018, KREF adjusts the carrying value of the SNVPS to its redemption value quarterly. Accordingly, KREF adjusted the carrying value of the SNVPS to its redemption value of $2.1 million as of March 31, 2020 and recorded a $0.4 million non-cash redemption value adjustment to the SNVPS (“SNVPS Redemption Value Adjustment”) during the three months ended March 31, 2020 . Such adjustment is treated similar to a dividend on preferred stock for GAAP purposes, accordingly, the SNVPS Redemption Value Adjustment is therefore deducted from (or added back to) “Net Income (Loss)” to arrive at “Net Income (Loss) Attributable to Common Stockholders” on KREF 's Condensed Consolidated Statements of Income. |
Equity method investments | Equity method investments — Investments are accounted for under the equity method when KREF has significant influence over the operations of an investee, but KREF does not consolidate that investment. Equity method investments, for which management has not elected a fair value option, are initially recorded at cost and subsequently adjusted for KREF 's share of net income or loss and cash contributions and distributions each period. Management determined that KREF 's investment in the Manager is an interest in a VIE , however KREF is not the primary beneficiary. KREF does not have substantive participating or kick-out rights nor the power to direct activities and the obligation to absorb losses of the Manager that could be significant to the Manager . KREF accounts for its investment in the Manager using the equity method (Note 8 ). Management determined that KREF 's investment in an aggregator vehicle alongside KKR Real Estate Credit Opportunity Partners L.P. (" RECOP I ") is an interest in a VIE , however KREF is not the primary beneficiary and does not have substantive participating or kick-out rights. Management elected the fair value option for KREF 's investment in RECOP I . KREF records its share of net asset value in RECOP I in “ Equity method investments ” on its Condensed Consolidated Balance Sheets and its share of unrealized gains or losses in " Income from equity method investments " in its Condensed Consolidated Statements of Income. KREF classifies distributions received from equity method investees using the cumulative earnings approach. Distributions received up to the cumulative earnings from each equity method investee are considered returns on investment and presented within “Cash Flows from Operating Activities” in the Condensed Consolidated Statements of Cash Flows; excess distributions received are considered returns of investment and presented within “Cash Flows from Investing Activities” in the Condensed Consolidated Statements of Cash Flows. |
Fair Value | Fair Value — GAAP requires the categorization of the fair value of financial instruments into three broad levels that form a hierarchy based on the transparency of inputs to the valuation. Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 - Inputs are other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability. Level 3 - Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. KREF follows this hierarchy for its financial instruments. The classifications are based on the lowest level of input that is significant to the fair value measurement. Estimates of fair value for cash and cash equivalents, restricted cash, and convertible notes are measured using observable, quoted market prices, or Level 1 inputs. Valuation Process — The Manager reviews the valuation of Level 3 financial instruments as part of KKR 's quarterly process. As of March 31, 2020 , KKR’s valuation process for Level 3 measurements, as described below, subjected valuations to the review and oversight of various committees. KKR has a global valuation committee assisted by the asset class-specific valuation committees, including a real estate valuation committee that reviews and approves all preliminary Level 3 valuations for real estate assets, including the financial instruments held by KREF . The global valuation committee is responsible for coordinating and implementing KKR ’s valuation process to ensure consistency in the application of valuation principles across portfolio investments and between periods. All Level 3 valuations are also subject to approval by the global valuation committee. Valuation of Commercial Mortgage Loans and Participation Sold — Management generally considers KREF 's commercial mortgage loans Level 3 assets in the fair value hierarchy as such assets are illiquid, structured investments that are specific to the underlying property and its operating performance (Note 13). On a quarterly basis, management engages an independent valuation firm to estimate the fair value of each loan categorized as a Level 3 asset. Management reviews the quarterly loan valuation estimates provided by the independent valuation firm. These loans are generally valued using a discounted cash flow model using discount rates derived from observable market data applied to the capital structure of the respective sponsor and estimated property value. In the event that management's estimate of fair value differs from the fair value estimate provided by the independent valuation firm, KREF ultimately relies solely upon the valuation prepared by the investment personnel of the Manager. Valuation of CLO Consolidated VIEs — Management estimates the fair value of the CLO liabilities using prices obtained from an independent valuation firm. If prices received from the independent valuation firm are inconsistent with values determined in connection with management’s independent review, management makes inquiries to the independent valuation firm about the prices received and related methods. In the event management determines the price obtained from an independent valuation firm to be unreliable or an inaccurate representation of the fair value of the CLO liabilities (based on considerations given to observable market data), management then compiles evidence independently and presents the independent valuation firm with such evidence supporting a different value. As a result, the independent valuation firm may revise their price accordingly. However, if management continues to disagree with the price from the independent valuation firm, in light of evidence presented that management compiled independently and believes to be compelling, management considers the independent valuation firm's quotation unreliable or inaccurate representation of the fair value of the CLO liabilities. In the event that the quotation from the independent valuation firm is not available or determined to be unreliable or an inadequate representation of the fair value of the CLO liabilities, valuations are prepared using inputs based on non-binding broker quotes obtained from independent, well-known, major financial brokers that are CLO market makers. In validating any non-binding broker quote used in this circumstance, management compares the non-binding quote to the observable market data points at such time and used to validate prices received from the independent valuation firm in addition to understanding the valuation methodologies used by the market makers. These market participants utilize a similar methodology as the independent valuation firm to value the CLO liabilities, with the key input of expected yield determined independently based on both observable and unobservable factors (as described above). To avoid reliance on any single broker-dealer, management receives a minimum of two non-binding quotes, of which the average is used. Valuation of CMBS Consolidated VIEs — Management categorizes the financial assets and liabilities of the CMBS trusts that KREF consolidates as Level 3 assets and liabilities in the fair value hierarchy and has elected the fair value option for financial assets and liabilities of each CMBS trust. Management has adopted the measurement alternative included in Accounting Standards Update (" ASU ") No. 2014-13, Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity (" ASU 2014-13"). Pursuant to ASU 2014-13, management measures both the financial assets and financial liabilities of the CMBS trusts consolidated by KREF using the fair value of the financial liabilities, which management considers more observable than the fair value of the financial assets. Accordingly, KREF presents the CMBS issued by a consolidated trust, but not beneficially owned by KREF 's stockholders, as financial liabilities in KREF 's condensed consolidated financial statements, measured at their estimated fair value; KREF measures the financial assets as the total estimated fair value of the CMBS issued by a consolidated trust, regardless of whether such CMBS represent interests beneficially owned by KREF 's stockholders. Under the measurement alternative prescribed by ASU 2014-13, KREF 's " Net Income (Loss) " reflects the economic interests in the consolidated CMBS beneficially owned by KREF 's stockholders, presented as " Change in net assets related to CMBS consolidated variable interest entities " in the Condensed Consolidated Statements of Income, which includes applicable (i) changes in the fair value of CMBS beneficially owned by KREF , (ii) interest and servicing fees earned from the CMBS trust and (iii) other residual returns or losses of the CMBS trust, if any (Note 8 ). Other Valuation Matters — For Level 3 financial assets originated, or otherwise acquired, and financial liabilities assumed during the calendar month immediately preceding a quarter end that were conducted in an orderly transaction with an unrelated party, management generally believes that the transaction price provides the most observable indication of fair value given the illiquid nature of these financial instruments, unless management is aware of any circumstances that may cause a material change in the fair value through the remainder of the reporting period. For instance, significant changes to the underlying property or its planned operations may cause material changes in the fair value of commercial mortgage loans acquired, or originated, by KREF . KREF ’s determination of fair value is based upon the best information available for a given circumstance and may incorporate assumptions that are management’s best estimates after consideration of a variety of internal and external factors. When an independent valuation firm expresses an opinion on the fair value of a financial instrument in the form of a range, management selects a value within the range provided by the independent valuation firm, generally the midpoint, to assess the reasonableness of management’s estimated fair value for that financial instrument. |
Sale of Financial Assets and Financing Agreements | Sales of Financial Assets and Financing Agreements — KREF will, from time to time, transfer loans, securities and other assets as well as finance assets in the form of secured borrowings. In each case, management evaluates whether the transaction constitutes a sale through legal isolation of the transferred financial asset from KREF , the ability of the transferee to pledge or exchange the transferred asset without constraint and the transfer of control of the transferred asset. For transfers that constitute sales, KREF (i) recognizes the financial assets it retains and liabilities it has incurred, if any, (ii) derecognizes the financial assets it has sold, and derecognizes liabilities when extinguished and (iii) recognizes a realized gain, or loss, based upon the excess, or deficient, proceeds received over the carrying value of the transferred asset. KREF does not recognize a gain, or loss, on interests retained, if any, where management elected the fair value option prior to sale. |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents and Restricted Cash — KREF considers cash equivalents as highly liquid short-term investments with maturities of 90 days or less when purchased. Substantially all amounts on deposit with major financial institutions exceed insured limits. KREF must also maintain sufficient cash and cash equivalents to satisfy liquidity covenants related to its secured financing agreements. However, such amounts are not restricted from use in KREF 's current operations, and KREF |
Recent Accounting Pronouncements | Adoption of ASU No. 2016-13, Financial Instruments — Credit Losses — On January 1, 2020, KREF adopted ASU No. 2016-13, Financial Instruments-Credit Losses, and subsequent amendments (“ASU 2016-13”), which replaces the incurred loss methodology with an expected loss model known as the Current Expected Credit Loss ("CECL") model. CECL amends the previous credit loss model to reflect a reporting entity's current estimate of all expected credit losses, not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, and off-balance sheet credit exposures such as unfunded loan commitments. The allowance for credit losses required under ASU 2016-13 is deducted from the respective loans’ amortized cost basis on our condensed consolidated balance sheets. The allowance for credit losses attributed to unfunded loan commitments is included in “Accounts payable, accrued expenses and other liabilities” in the condensed consolidated balance sheets. The guidance also requires a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption. In connection with KREF’s adoption of ASU 2016-13 on January 1, 2020, KREF implemented new processes including the utilization of loan loss forecasting models, updates to KREF's reserve policy documentation, changes to internal reporting processes and related internal controls. KREF has implemented loan loss forecasting models for estimating expected life-time credit losses, at the individual loan level, for its commercial mortgage loan portfolio. The CECL forecasting methods used by KREF include (i) a probability of default and loss given default method using underlying third-party CMBS/CRE loan database with historical loan losses from 1998 to 2019 and (ii) probability weighted expected cash flow method, depending on the type of loan and the availability of relevant historical market loan loss data. KREF might use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral, and availability of relevant historical market loan loss data. KREF estimates the CECL expected credit losses for its loan portfolio, including unfunded loan commitments, at the individual loan level. Significant inputs to KREF’s forecasting methods include (i) key loan-specific inputs such as loan-to-value ("LTV"), vintage year, loan-term, underlying property type, occupancy, geographic location, and expected timing and amount of future loan fundings, (ii) performance against the underwritten business plan and KREF's internal loan risk rating and (iii) a macro-economic forecast. Given the uncertain economic environment and the lack of clarity on the economic outlook, which largely depends on the severity and duration of the COVID-19 pandemic and how quickly normal economic activity resumes, the Company determined that a shorter forecast period of two quarters is appropriate with reversion to historical mean losses over two additional quarters. These estimates may change in future periods based on available future macro-economic data and might result in a material change in the Company’s future estimates of expected credit losses for its loan portfolio. KREF considers the individual loan internal risk rating as the primary credit quality indicator underlying the CECL assessment. In certain instances, KREF considers relevant loan-specific qualitative factors to certain loans to estimate its CECL expected credit losses. KREF considers loan investments that are both (i) expected to be substantially repaid through the operation or sale of the underlying collateral, and (ii) for which the borrower is experiencing financial difficulty, to be “collateral-dependent” loans. For such loans that KREF determines that foreclosure of the collateral is probable, the Company measures the expected losses based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. For collateral-dependent loans that KREF determines foreclosure is not probable, KREF applies a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan. Based on KREF's loan portfolio at January 1, 2020, the pre COVID-19 economic environment and the respective expectations for future economic conditions at the time, KREF recorded a cumulative-effect adjustment to KREF's accumulated deficit as of January 1, 2020 of $15.0 million , or $0.26 per common share, of which $1.1 million , or $0.02 per common share, is attributable to unfunded loan commitments. The following table illustrates the day-one financial statements impact of the adoption of ASU 2016-13 on January 1, 2020: Pre-adoption Transition Adjustment Post-adoption Assets Commercial mortgage loans, held-for-investment $ 4,931,042 $ — $ 4,931,042 Less: Allowance for credit losses — (13,909 ) (13,909 ) Commercial mortgage loans, held-for-investment, net $ 4,931,042 $ (13,909 ) $ 4,917,133 Liabilities Accounts payable, accrued expenses and other liabilities (A) $ 3,363 $ 1,100 $ 4,463 Permanent Equity Accumulated deficit $ (8,594 ) $ (15,009 ) $ (23,603 ) (A) Includes reserve for unfunded loan commitments. |
Commercial Mortgage Loans Held-For-Investment and Allowance for Credit Losses | Commercial Mortgage Loans Held‑For‑Investment and Allowance for Credit Losses — KREF recognizes its investments in commercial mortgage loans based on management's intent, and KREF 's ability, to hold those investments through their contractual maturity. Management classifies those loans that management does not intend to sell in the foreseeable future, and KREF is able to hold until maturity, as held-for-investment. Loans that are held‑for‑investment are carried at their aggregate outstanding face amount, net of applicable (i) unamortized origination or acquisition premiums and discounts, (ii) unamortized deferred nonrefundable fees and other direct loan origination costs, and (iii) allowance for credit losses, net of charge-offs or write-downs of impaired loans. If a loan is determined to be impaired, management writes down the loan through a charge to the "Allowance for credit losses". See "— Expense Recognition — Commercial Mortgage Loans, Held-For-Investment" for additional discussion regarding management’s determination for loan losses. KREF applies the interest method to amortize origination or acquisition premiums and discounts and deferred nonrefundable fees or other direct loan origination costs, or on a straight-line basis when it approximates the interest method. Loans for which management elects the fair value option at the time of origination, or acquisition, are carried at fair value on a recurring basis (Note 3 ). |
Commercial Mortgage Loans Held-For-Sale | Commercial Mortgage Loans Held‑For‑Sale — Loans that KREF originates or acquires, which KREF is unable to hold, or management intends to sell or otherwise dispose of, in the foreseeable future are classified as held‑for‑sale and are carried at the lower of amortized cost or fair value. Commercial Mortgage Loans, Held-For-Sale — For commercial mortgage loans held-for-sale, KREF applies the lower of cost or fair value accounting and may be required, from time to time, to record a nonrecurring fair value adjustment. |
Secured Financing Agreements and Convertible Notes, Net | Secured Financing Agreements — KREF 's secured financing agreements, including uncommitted repurchase facilities, Term Lending Agreement, Warehouse Facility, Asset Specific Financings and Term Loan Financings, are treated as floating-rate collateralized financing arrangements carried at their contractual amounts, net of unamortized debt issuance costs (Note 4 ). Included within KREF 's secured financing agreements is KREF 's corporate revolving credit facility ("Revolver"), which is full recourse to certain guarantor wholly-owned subsidiaries of KREF . Convertible Notes, Net — KREF accounts for its convertible debt with a cash conversion feature in accordance with ASC 470-20 “Debt with Conversion and Other Options” which requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. The initial proceeds from the sale of convertible notes are allocated between a liability component and an equity component in a manner that reflects interest expense at the rate of similar nonconvertible debt that could have been issued at such time. The equity component represents the excess initial proceeds received over the fair value of the liability component of the notes as of the date of issuance. KREF measured the estimated fair value of the debt component of the 6.125% convertible senior notes due May 15, 2023 (“Convertible Notes”) as of the issuance date based on KREF ’s nonconvertible debt borrowing rate. The equity component of the Convertible Notes is reflected within additional paid-in capital on the Condensed Consolidated Balance Sheets, and the resulting debt discount is amortized over the period during which such Convertible Notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense using the interest method, or on a straight line basis when it approximates the interest method. The additional non-cash interest expense attributable to such convertible notes will increase in subsequent periods through the maturity date as the notes accrete to their par value over the same period (Note 6 ). |
Loan Participations Sold, Net | Loan Participations Sold, Net — In connection with its investments in CRE loans, KREF finances certain investments through the syndication of non-recourse, or limited-recourse, loan participation to unaffiliated third parties. KREF ’s presentation of the senior loan and related financing involved in the syndication depends upon whether the transaction is recognized as a sale under GAAP, though such differences in presentation do not generally impact KREF ’s net stockholders’ equity or net income aside from timing differences in the recognition of certain transaction costs. To the extent that a sale is recognized under GAAP from the syndication, KREF derecognizes the participation in the senior/whole loan that KREF sold and continues to carry the retained portion of the loan as an investment. While KREF does not generally expect to recognize a material gain or loss on these sales, KREF would realize a gain or loss in an amount equal to the difference between the net proceeds received from the third party purchaser and its carrying value of the loan participation that KREF sold at time of sale. Furthermore, KREF recognizes interest income only on the portion of the loan that it retains as a result of the sale. To the extent that a sale is not recognized under GAAP from the syndication, KREF does not derecognize the participation in the senior/whole loan that it sold. Instead, KREF recognizes a loan participation sold liability in an amount equal to the principal of the loan participation syndicated less any unamortized discounts or financing costs resulting from the syndication. KREF continues to recognize interest income on the entire senior loan, including the interest attributable to the loan participation sold, as well as interest expense on the loan participation sold liability (Note 7 ). |
Dividends Payable | Dividends Payable — KREF accrues for dividends on its common stock and the redeemable preferred stock upon declaration of such dividends. In March 2020, KREF's board of directors declared a dividend of $0.43 per share of common stock to shareholders of record as of March 31, 2020 , which was accrued in “Dividends payable” on KREF’s Condensed Consolidated Balance Sheet as of March 31, 2020 and was subsequently paid on April 15, 2020 . |
Special Non-Voting Preferred Stock | Special Non-Voting Preferred Stock — Equity instruments that are redeemable for cash or other assets are classified as temporary equity if the instrument is redeemable, at the option of the holder, at a fixed or determinable price on a fixed or determinable date or upon the occurrence of an event that is not solely within the control of the issuer. Redeemable equity instruments are initially carried at the fair value of the equity instrument at the issuance date, which is subsequently adjusted at each balance sheet date if the instrument is currently redeemable or probable of becoming redeemable. KREF accounted for the SNVPS as redeemable preferred stock since a third party holds a redemption option, exercisable after May 5, 2018, and such redemption is not solely within KREF 's control. The SNVPS became redeemable in the second quarter of 2018. As a result, starting with the second quarter of 2018, KREF adjusts the carrying value of the SNVPS to its redemption value |
Repurchased Stock | Repurchased Stock — KREF accounts for repurchases of its common stock based on the settlement date and presents repurchased stock in “Repurchased stock” on its Condensed Consolidated Balance Sheets (Note 9). Payments for stock repurchases that are not yet settled as of the reporting date are presented within “Other assets” on the Condensed Consolidated Balance Sheets. As of March 31, 2020, KREF did not retire any repurchased stock. |
Income Recognition | Income Recognition Interest Income — Loans where management expects to collect all contractually required principal and interest payments are considered performing loans. KREF accrues interest income on performing loans based on the outstanding principal amount and contractual terms of the loan. Interest income also includes origination fees and direct loan origination costs for loans that KREF originates, but where management did not elect the fair value option, as a yield adjustment using the interest method over the loan term, or on a straight line basis when it approximates the interest method. KREF expenses origination fees and direct loan origination costs for loans acquired, but not originated, by KREF as well as loans for which management elected the fair value option, as incurred. Other Income — KREF recognizes interest income earned on its cash balances and miscellaneous fee income in “Other income” on its Condensed Consolidated Statements of Income. Interest income on cash balances totaled $0.3 million and $0.2 million for the three months ended March 31, 2020 and 2019 , respectively. Realized Gain (Loss) on Sale of Investments — KREF recognizes the excess, or deficiency, of net proceeds received, less the net carrying value of such investments, as realized gains or losses, respectively. KREF reverses cumulative, unrealized gains or losses previously reported in its Condensed Consolidated Statements of Income with respect to the investment sold at the time of sale. |
Loan Impairment | 80%), and the loan covenants are unlikely to fully mitigate some risks. Interest payments may come from an interest reserve or sponsor equity. 5—Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss. The underlying property performance is significantly behind underwritten expectations, the sponsor has failed to execute its business plan and/or the sponsor has missed interest payments. The market fundamentals have deteriorated, or property performance has unexpectedly declined or valuations for comparable properties have declined meaningfully since loan origination. Current cash flow does not support debt service payments. With the current capital structure, the sponsor might not be incentivized to protect its equity without a restructuring of the loan. The loan exhibits a very high loan-to-value ratio (>90%), and default may be imminent." id="sjs-B21">Commercial Mortgage Loans, Held-For-Investment — For each loan in KREF 's portfolio, management performs a quarterly evaluation of impairment indicators of loans classified as held‑for‑investment using applicable loan, property, market and sponsor information obtained from borrowers, loan servicers and local market participants. Such indicators may include the net present value of the underlying collateral, property operating cash flows, the sponsor’s financial wherewithal and competency in managing the property, macroeconomic trends, and property submarket-specific economic factors. The evaluation of these indicators of impairment requires significant judgment by management to determine whether failure to collect contractual amounts is probable. If management deems that it is probable that KREF will be unable to collect all amounts owed according to the contractual terms of a loan, impairment of that loan is indicated. If management considers a loan to be impaired, management writes-down the loan through a charge to the "Allowance for credit losses" based on the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. Significant judgment is required in determining impairment and in estimating the resulting credit loss allowance, and actual losses, if any, could materially differ from those estimates. Management considers loans to be past due when a monthly payment is due and unpaid for 60 days or more. Loans are placed on nonaccrual status and considered non-performing when full payment of principal and interest is in doubt, which generally occurs when principal or interest is 120 days or more past due unless the loan is both well secured and in the process of collection. Interest received on loans placed on nonaccrual status are accounted for under the cost-recovery method, until qualifying for return to accrual. Management may return a loan to accrual status when repayment of principal and interest is reasonably assured under the terms of the restructured loan. As of March 31, 2020 , KREF did not hold any loans that management placed on nonaccrual status or otherwise considered past due. In conjunction with reviewing commercial mortgage loans held-for-investment for impairment, the Manager evaluates KREF 's commercial mortgage loans on a quarterly basis, assesses the risk factors of each loan, and assigns a risk rating based on a variety of factors, including, without limitation, underlying real estate performance and asset value, values of comparable properties, durability and quality of property cash flows, sponsor experience and financial wherewithal, and the existence of a risk-mitigating loan structure. Additional key considerations include loan-to-value ratios, debt service coverage ratios, loan structure, real estate and credit market dynamics, and risk of default or principal loss. Based on a five-point scale, KREF 's loans are rated "1" through "5," from less risk to greater risk, which ratings are defined as follows: 1—Very Low Risk—The underlying property performance has surpassed underwritten expectations, and the sponsor’s business plan is generally complete. The property demonstrates stabilized occupancy and/or rental rates resulting in strong current cash flow and/or a very low loan-to-value ratio (<65%). At the level of performance, it is very likely that the underlying loan can be refinanced easily in the period’s prevailing capital market conditions. 2—Low Risk—The underlying property performance has matched or exceeded underwritten expectations, and the sponsor’s business plan may be ahead of schedule or has achieved some or many of the major milestones from a risk mitigation perspective. The property has achieved improving occupancy at market rents, resulting in sufficient current cash flow and/or a low loan-to-value ratio (65%-70%). Operating trends are favorable, and the underlying loan can be refinanced in today’s prevailing capital market conditions. The sponsor/manager is well capitalized or has demonstrated a history of success in owning or operating similar real estate. 3—Average Risk—The underlying property performance is in-line with underwritten expectations, or the sponsor may be in the early stages of executing its business plan. Current cash flow supports debt service payments, or there is an ample interest reserve or loan structure in place to provide the sponsor time to execute the value-improvement plan. The property exhibits a moderate loan-to-value ratio (<75%). Loan structure appropriately mitigates additional risks. The sponsor/manager has a stable credit history and experience owning or operating similar real estate. 4—High Risk/Potential for Loss: A loan that has a risk of realizing a principal loss. The underlying property performance is behind underwritten expectations, or the sponsor is behind schedule in executing its business plan. The underlying market fundamentals may have deteriorated, comparable property valuations may be declining or property occupancy has been volatile, resulting in current cash flow that may not support debt service payments. The loan exhibits a high loan-to-value ratio (>80%), and the loan covenants are unlikely to fully mitigate some risks. Interest payments may come from an interest reserve or sponsor equity. 5—Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss. The underlying property performance is significantly behind underwritten expectations, the sponsor has failed to execute its business plan and/or the sponsor has missed interest payments. The market fundamentals have deteriorated, or property performance has unexpectedly declined or valuations for comparable properties have declined meaningfully since loan origination. Current cash flow does not support debt service payments. With the current capital structure, the sponsor might not be incentivized to protect its equity without a restructuring of the loan. The loan exhibits a very high loan-to-value ratio (>90%), and default may be imminent. |
Accrued Interest Receivables | Accrued Interest Receivables — KREF elected not to measure an allowance for credit losses for accrued interest receivables. KREF generally writes off accrued interest receivable balance when interest is 120 days or more past due unless the loan is both well secured and in the process of collection. Write-offs of accrued interest receivable are recognized as “Provision for credit losses, net” in the Condensed Consolidated Statements of Income. KREF did not write-off any accrued interest receivable during the three months ended March 31, 2020 . |
Interest Expense | Interest Expense — KREF expenses contractual interest due in accordance with KREF 's financing agreements as incurred. |
Deferred Debt Issuance Costs | Deferred Debt Issuance Costs — KREF capitalizes and amortizes deferred financing costs incurred in connection with financing arrangements over their respective expected term using the interest method, or on a straight line basis when it approximates the interest method. KREF presents such expensed amounts, as well as deferred amounts written off, as additional interest expense in its Condensed Consolidated Statements of Income. |
General and Administrative Expenses | General and Administrative Expenses — KREF expenses general and administrative costs, including legal, diligence and audit fees; information technology costs; insurance premiums; and other costs as incurred. |
Management and Incentive Compensation to Affiliate | Management and Incentive Compensation to Affiliate — KREF expenses management fees and incentive compensation earned by the Manager on a quarterly basis in accordance with the Management Agreement (Note 12 ). |
Income Taxes | Income Taxes — Certain activities of KREF are conducted through joint ventures that are formed as limited liability companies, taxed as partnerships, and consolidated by KREF . Some of these joint ventures are subject to state and local income taxes, based on the tax jurisdictions in which they operate. In addition, certain activities of KREF are conducted through taxable REIT subsidiaries consolidated by KREF . Taxable REIT subsidiaries are subject to federal, state and local income taxes (Note 14 ). As of March 31, 2020 and December 31, 2019 , KREF did not have any material deferred tax assets or liabilities arising from future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in accordance with GAAP and their respective tax bases. KREF recognizes tax benefits for uncertain tax positions only if it is more likely than not that the position is sustainable based on its technical merits. Interest and penalties on uncertain tax positions are included as a component of the provision for income taxes in KREF 's Condensed Consolidated Statements of Income. As of March 31, 2020 , KREF did not have any material uncertain tax positions. |
Stock-Based Compensation | Stock-Based Compensation KREF 's stock-based compensation consists of awards issued to employees of the Manager or its affiliates that vest over the life of the awards, as well as restricted stock units issued to certain members of KREF 's board of directors. The Company recognizes the compensation cost of stock-based awards to its directors and employees of the Manager or its affiliates on a straight-line basis over the awards’ term at their grant date fair value. KREF |
Earnings per Share | Earnings per Share KREF presents basic and diluted earnings per share (" EPS "). Basic EPS, or Net Income (Loss) Per Share of Common Stock, Basic , is calculated by dividing Net Income (Loss) Attributable to Common Stockholders by the Basic Weighted Average Number of Shares of Common Stock Outstanding, for the period. Diluted EPS , or Net Income (Loss) Per Share of Common Stock, Diluted, is calculated by starting with Basic EPS |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Impact of Adoption of ASU 2016-13 | The following table illustrates the day-one financial statements impact of the adoption of ASU 2016-13 on January 1, 2020: Pre-adoption Transition Adjustment Post-adoption Assets Commercial mortgage loans, held-for-investment $ 4,931,042 $ — $ 4,931,042 Less: Allowance for credit losses — (13,909 ) (13,909 ) Commercial mortgage loans, held-for-investment, net $ 4,931,042 $ (13,909 ) $ 4,917,133 Liabilities Accounts payable, accrued expenses and other liabilities (A) $ 3,363 $ 1,100 $ 4,463 Permanent Equity Accumulated deficit $ (8,594 ) $ (15,009 ) $ (23,603 ) (A) Includes reserve for unfunded loan commitments. |
Commercial Mortgage Loans (Tabl
Commercial Mortgage Loans (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract] | |
Summary and Activity of Loans Held-for-investment and Held-for-sale | The following table summarizes KREF 's investments in commercial mortgage loans as of March 31, 2020 and December 31, 2019 : Weighted Average Loan Type Outstanding Face Amount Amortized Cost (A) Carrying Value (B) Loan Count Floating Rate Loan % (C) Coupon (C) Life (Years) (D) March 31, 2020 Loans held-for-investment Senior loans (E) $ 5,059,468 $ 5,032,066 $ 4,970,847 37 100.0 % 4.8 % 3.9 Mezzanine loans 58,731 57,902 53,142 3 90.6 10.0 4.3 $ 5,118,199 $ 5,089,968 $ 5,023,989 40 99.9 % 4.9 % 3.9 December 31, 2019 Loans held-for-investment Senior loans (E) $ 4,919,298 $ 4,890,408 4,890,408 37 100.0 % 5.0 % 4.1 Mezzanine loans 41,400 40,634 40,634 2 86.7 9.6 4.6 $ 4,960,698 $ 4,931,042 4,931,042 39 99.9 % 5.1 % 4.1 (A) Amortized cost represents the outstanding face amount of loan, net of applicable unamortized discounts and loan origination fees. (B) Carrying value represents the amortized cost of loan, net of applicable allowance for credit losses. (C) Average weighted by outstanding face amount of loan. Weighted average coupon assumes the greater of applicable one-month LIBOR rates of 0.99% and 1.76% as of March 31, 2020 and December 31, 2019 , respectively, or the applicable contractual LIBOR floor. (D) The weighted average life of each loan is based on the expected timing of the receipt of contractual principal repayments assuming all extension options are exercised by the borrower. (E) Senior loans may include accommodation mezzanine loans in connection with the senior mortgage financing. Also, includes vertical loan participations sold with a face amount of $65.0 million and a carrying value of $65.0 million as of March 31, 2020 and December 31, 2019 , respectively. Includes CLO loan participations of $1.0 billion as of March 31, 2020 and December 31, 2019 , respectively. KREF 's internal risk ratings: March 31, 2020 December 31, 2019 Risk Rating Number of Loans Net Book Value Total Loan Exposure (A) Total Loan Exposure % Risk Rating Number of Loans Net Book Value Total Loan Exposure (A) Total Loan Exposure % 1 2 $ 157,360 $ 158,074 3.0 % 1 1 $ 85,730 $ 86,000 1.7 % 2 3 288,303 291,268 5.6 2 5 450,827 451,858 9.0 3 28 3,855,849 4,001,127 77.0 3 33 4,394,485 4,501,440 89.3 4 7 722,477 746,330 14.4 4 — — — — 5 — — — — 5 — — — — 40 $ 5,023,989 $ 5,196,799 100.0 % 39 $ 4,931,042 $ 5,039,298 100.0 % (A) In certain instances, KREF finances its loans through the non-recourse sale of a senior interest that is not included in the condensed consolidated financial statements. Total loan exposure includes the entire loan KREF originated and financed, including $143.6 million of such non-consolidated interests as of March 31, 2020 and December 31, 2019 , respectively. three months ended March 31, 2020 , the loan portfolio activity was as follows: Held-for-Investment Held-for-Sale Total Carrying amount at December 31, 2019 $ 4,931,042 $ — $ 4,931,042 Purchases and originations, net (A) 334,146 — 334,146 Proceeds from sales and principal repayments (179,553 ) — (179,553 ) Accretion of loan discount and other amortization, net (B) 4,333 — 4,333 Amortized cost at March 31, 2020 5,089,968 — 5,089,968 Cumulative-effect adjustment upon adoption of ASU 2016-13 (13,909 ) — (13,909 ) Provision for credit losses, net (52,070 ) — (52,070 ) Carrying amount at March 31, 2020 $ 5,023,989 $ — $ 5,023,989 (A) Net of applicable premiums, discounts and deferred loan origination costs. Includes fundings on previously originated loans. (B) Includes accretion of applicable discounts, certain fees and deferred loan origination costs. |
Amortized Cost of Loan Portfolio | The following tables present the amortized cost of the loan portfolio at March 31, 2020 , by KREF's internal risk rating and year of origination. The risk ratings are updated as of March 31, 2020 . March 31, 2020 Amortized Cost by Year of Origination Risk Rating Number of Loans Outstanding Face Amount 2020 2019 2018 2017 2016 2015 Total Carrying Amount Commercial Mortgage Loans 1 2 $ 158,074 $ — $ — $ 157,618 $ — $ — $ — $ 157,618 $ 157,360 2 3 291,268 — 61,014 41,894 187,488 — — 290,396 288,303 3 28 3,922,527 284,979 2,407,120 1,056,354 149,807 — — 3,898,260 3,855,849 4 7 746,330 — 75,578 328,408 209,418 — 130,290 743,694 722,477 5 — — — — — — — — — — 40 $ 5,118,199 $ 284,979 $ 2,543,712 $ 1,584,274 $ 546,713 $ — $ 130,290 $ 5,089,968 $ 5,023,989 |
Allowance for Credit Losses | Allowance for Credit Losses — For the three months ended March 31, 2020 , the changes to allowance for credit losses were as follows: Commercial Mortgage Loans Unfunded Loan Commitments Total Balance at December 31, 2019 $ — $ — $ — Cumulative-effect adjustment upon adoption of ASU 2016-13 13,909 1,100 15,009 Provision for credit losses, net 52,070 3,204 55,274 Write-offs charged — — — Recoveries — — — Balance at March 31, 2020 $ 65,979 $ 4,304 $ 70,283 |
Concentration of Risk, by Risk Factor | The following tables present the geographies and property types of collateral underlying KREF 's commercial mortgage loans as a percentage of the loans' face amounts: March 31, 2020 December 31, 2019 March 31, 2020 December 31, 2019 Geography Collateral Property Type New York 22.3 % 22.5 % Multifamily 56.2 % 58.3 % Illinois 9.4 9.7 Office 28.2 25.5 Pennsylvania 9.0 9.2 Retail 4.6 4.7 Virginia 7.9 8.2 Hospitality 4.2 4.4 Massachusetts 7.5 7.7 Condo (Residential) 2.8 3.0 California 6.8 6.9 Industrial 2.7 2.8 Washington 6.7 6.9 Student Housing 1.3 1.3 Texas 5.6 2.5 Total 100.0 % 100.0 % Florida 5.3 6.9 Georgia 4.3 4.3 Minnesota 3.7 3.7 New Jersey 3.0 3.1 Colorado 3.0 2.8 Oregon 2.4 2.5 Alabama 1.2 1.2 Other U.S. 1.9 1.9 Total 100.0 % 100.0 % |
Debt Obligations (Tables)
Debt Obligations (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Instruments | For the three months ended March 31, 2020 , the activity related to the carrying value of KREF ’s secured financing agreements were as follows: Secured Financing Agreements, Net Balance as of December 31, 2019 $ 2,884,887 Principal borrowings 805,967 Principal repayments/sales/deconsolidation (324,825 ) Deferred debt issuance costs (927 ) Amortization of deferred debt issuance costs 3,227 Balance as of March 31, 2020 $ 3,368,329 The following table summarizes KREF 's secured master repurchase agreements and other financing arrangements in place as of March 31, 2020 and December 31, 2019 : March 31, 2020 December 31, 2019 Facility Collateral Facility Month Issued Outstanding Face Amount Carrying Value (A) Maximum Facility Size Final Stated Maturity Weighted Average Funding Cost (B) Weighted Average Life (Years) (B) Outstanding Face Amount Amortized Cost Basis Carrying Value Weighted Average Life (Years) (C) Carrying Value (A) Master Repurchase Agreements (D) Wells Fargo (E) Oct 2015 $ 468,452 $ 465,504 $ 1,000,000 Nov 2023 2.5 % 2.4 $ 652,850 $ 648,616 $ 640,202 3.8 $ 464,933 Morgan Stanley (F) Dec 2016 405,188 403,452 600,000 Dec 2022 2.8 2.3 544,943 541,399 537,693 4.7 392,279 Goldman Sachs (G) Sep 2016 221,863 220,881 400,000 Oct 2020 3.2 0.6 311,385 311,021 305,483 2.5 223,867 Term Lending Agreement KREF Lending V (H) Jun 2019 896,815 895,983 900,000 Jun 2026 2.7 2.0 1,094,762 1,087,399 1,075,115 4.1 868,816 Warehouse Facility HSBC Facility (I) Mar 2020 45,417 44,614 500,000 Mar 2023 2.4 2.8 64,408 63,510 62,617 4.9 — Asset Specific Financing BMO Facility (J) Aug 2018 82,267 81,527 300,000 n.a 2.9 3.6 106,074 105,413 100,710 3.7 141,120 Revolving Credit Agreement Revolver (K) Dec 2018 335,000 335,000 335,000 Dec 2023 3.7 3.7 n.a n.a n.a n.a — Total / Weighted Average $ 2,455,002 $ 2,446,961 $ 4,035,000 2.8 % 2.3 $ 2,091,015 (A) Net of $8.0 million and $9.5 million unamortized debt issuance costs as of March 31, 2020 and December 31, 2019 , respectively. (B) Average weighted by the outstanding face amount of borrowings inclusive of deferred financing costs. (C) Average based on the fully extended loan maturity, weighted by the outstanding face amount of the collateral. (D) Borrowings under these repurchase agreements are collateralized by senior loans, held-for-investment, and bear interest equal to the sum of (i) a floating rate index, equal to one-month LIBOR, or an index approximating LIBOR, and (ii) a margin, based on the collateral. As of March 31, 2020 and December 31, 2019 , the percentage of the outstanding face amount of the collateral sold and not borrowed under these repurchase agreements, or average "haircut" weighted by outstanding face amount of collateral, was 27.4% (or 25.7% if KREF had borrowed the maximum amount approved by its repurchase agreement counterparties as of such dates). (E) The current stated maturity date is November 2021 , which does not reflect two , twelve -month facility term extensions available to KREF , which is contingent upon certain covenants and thresholds. As of March 31, 2020 , the collateral-based margin was between 1.25% and 2.15% . (F) In February 2020, the Morgan Stanley repurchase agreement was amended to change the initial maturity to December 2020, with two one-year extension options upon giving written notice and another two one-year extension periods subject to approval by Morgan Stanley. KREF has the option to increase the facility amount to $750.0 million . As of March 31, 2020 , the collateral-based margin was between 1.75% and 1.85% . (G) The current stated maturity date is October 30, 2020, which does not reflect KREF's option to extend the maturity date to October 31, 2022 by (i) electing to permanently reduce the maximum advance rate for each pledged loan to the lesser of 65% or the advance rate in effect for such loan at October 30, 2020, and (ii) payment of the applicable contractual fee, subject to the satisfaction of certain conditions. As of March 31, 2020 , the collateral-based margin was between 1.85% and 2.00% . (H) In June 2019, KREF Lending V LLC, a wholly-owned indirect subsidiary of KREF , entered into a Master Repurchase and Securities Contract Agreement (the "Term Lending Agreement") with Morgan Stanley Mortgage Capital Holdings LLC ("Administrative Agent"), as administrative agent on behalf of Morgan Stanley Bank, N.A. ("Initial Buyer"), which provides for current and future financings of up to $900.0 million on a non-mark-to-market basis. The Initial Buyer subsequently syndicated a portion of the facility to multiple financial institutions. As of March 31, 2020 , the Initial Buyer held 48.9% of the total commitment under the facility. Borrowings under the Term Lending Agreement are collateralized by certain loans, held for investment, and bear interest equal to one-month LIBOR, plus a 1.9% margin. The Term Lending Agreement has an initial maturity of June 2021, subject to five one -year extension options, which may be exercised by KREF upon the satisfaction of certain customary conditions and thresholds. (I) In March 2020, KREF Lending VIII LLC, a wholly-owned indirect subsidiary of KREF, entered into a $500.0 million Loan and Security Agreement with HSBC Bank USA, National Association (“HSBC Facility”). The facility, which matures in March 2023, provides warehouse financing on a non-mark-to-market basis with partial recourse to KREF. As of March 31, 2020 , the collateral-based margin was 1.50% . (J) In August 2018, KREF entered into a $200.0 million loan financing facility with BMO Harris Bank ("BMO Facility"). The facility provides asset-based financing on a non-mark to market basis with matched-term up to five years with partial recourse to KREF . During May 2019, KREF increased the borrowing capacity to $300.0 million . As of March 31, 2020 , the collateral-based margin was between 1.50% and 1.70% . (K) In December 2018, KREF entered into a $100.0 million corporate revolving credit facility (“Revolver”) administered by Morgan Stanley Senior Funding, Inc. Additional lenders were added in 2019 increasing the borrowing capacity to $250.0 million and subsequently in February 2020, further increasing the borrowing capacity under the Revolver to $335.0 million as of March 31, 2020 . The current stated maturity of the facility is December 2023. Borrowings under the facility bear interest at a per annum rate equal to the sum of (i) a floating rate index and (ii) a fixed margin. Borrowings under this facility are full recourse to certain guarantor wholly-owned subsidiaries of KREF . As of March 31, 2020 , the carrying value excluded $3.1 million unamortized debt issuance costs presented as " — Other assets" in KREF 's Condensed Consolidated Balance Sheets. March 31, 2020 Term Loan Facility Count Outstanding Face Amount Amortized Cost Carrying Value Wtd. Avg. Yield/Cost (A) Guarantee (B) Wtd. Avg. Term (C) Collateral assets 13 $ 1,183,614 $ 1,176,148 $ 1,161,259 L + 3.1% n.a. February 2024 Financing provided n.a. 924,855 921,368 921,368 L + 1.9% n.a. February 2024 December 31, 2019 Term Loan Facility Count Outstanding Face Amount Amortized Cost Carrying Value Wtd. Avg. Yield/Cost (A) Guarantee (B) Wtd. Avg. Term (C) Collateral assets 12 $ 1,003,995 $ 997,081 $ 997,081 L + 3.0% n.a. November 2023 Financing provided n.a. 798,180 793,872 793,872 L + 1.9% n.a. November 2023 (A) Floating rate loans and related liabilities are indexed to one-month LIBOR. KREF's net interest rate exposure is in direct proportion to its interest in the net assets indexed to that rate. In addition to cash coupon, yield/cost includes the amortization of deferred origination/financing costs. (B) Financing under the Term Loan Facility is non-recourse to KREF. (C) The weighted-average term is determined using the maximum maturity date of the corresponding loans, assuming all extension options are exercised by the borrower. |
Schedule of Repurchase Agreements | The following table summarizes certain characteristics of KREF 's repurchase agreements where the amount at risk with any individual counterparty, or group of related counterparties, exceeded 10.0% of KREF ’s stockholders' equity as of March 31, 2020 and December 31, 2019 : Outstanding Face Amount Net Counterparty Exposure Percent of Stockholders' Equity Weighted Average Life (Years) (A) March 31, 2020 Wells Fargo $ 468,452 $ 173,529 16.8 % 2.4 Morgan Stanley 405,188 133,989 13.0 2.3 Term Lending Agreement (B) 896,815 181,356 17.6 2.0 Total / Weighted Average $ 1,770,455 $ 488,874 47.4 % 2.2 December 31, 2019 Wells Fargo $ 468,452 $ 178,827 15.9 % 2.6 Morgan Stanley 394,499 136,764 12.2 2.5 Term Lending Agreement (B) 870,051 203,800 18.2 2.1 Total / Weighted Average $ 1,733,002 $ 519,391 46.3 % 2.4 (A) Average weighted by the outstanding face amount of borrowings under the secured financing agreement. (B) There were multiple counterparties to the Term Lending Agreement. Morgan Stanley Bank, N.A. represented 8.6% and 8.9% of the net counterparty exposure as a percent of stockholders' equity as of March 31, 2020 and December 31, 2019, respectively. |
Schedule of Maturities of Debt Obligations | KREF ’s secured financing agreements, term loan financing and other consolidated debt obligations in place as of March 31, 2020 had current contractual maturities as follows: Year Nonrecourse Recourse (A) Total 2020 $ 561,504 $ 159,674 $ 721,178 2021 436,116 — 436,116 2022 983,579 288,762 1,272,341 2023 359,417 378,496 737,913 2024 174,241 38,068 212,309 $ 2,514,857 $ 865,000 $ 3,379,857 (A) Except for the Revolver, which is full recourse, amounts borrowed subject to a maximum 25.0% recourse limit. The Revolver expires in December 2023. |
Collateralized Loan Obligation
Collateralized Loan Obligation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Transfers and Servicing [Abstract] | |
Schedule of Collateral Assets and Respective Borrowings | The following tables outline KREF 2018-FL1 collateral assets and respective borrowing as of March 31, 2020 and December 31, 2019 : March 31, 2020 Collateralized Loan Obligation Count Face Amount Amortized Cost Carrying Value Wtd. Avg. (B) Wtd. Avg. Term (C) Collateral assets (A) 22 $ 1,000,000 $ 1,000,000 $ 990,072 L + 2.8% November 2023 Financing provided 1 810,000 805,008 805,008 L + 2.2% June 2036 December 31, 2019 Collateralized Loan Obligation Count Face Amount Amortized Cost Carrying Value Wtd. Avg. (B) Wtd. Avg. Term (C) Collateral assets (A) 22 $ 1,000,000 $ 1,000,000 $ 1,000,000 L + 2.8% November 2023 Financing provided 1 810,000 803,376 803,376 L + 1.8% June 2036 (A) Collateral assets represent 19.5% and 20.2% of the face amount of KREF 's commercial mortgage loans as of March 31, 2020 and December 31, 2019 , respectively. As of March 31, 2020 and December 31, 2019 , 100% of KREF loans financed through the CLO are floating rate loans. (B) Yield on collateral assets is based on cash coupon. Financing cost includes amortization of deferred financing costs incurred in connection with the CLO. (C) Loan term represents weighted-average final maturity, assuming extension options are exercised by the borrower. Repayments of CLO notes are dependent on timing of related collateral loan asset repayments post reinvestment period. The term of the CLO notes represents the rated final distribution date. |
Schedule of Assets and Liabilities Included in Consolidated Balance Sheet | The following table presents the KREF 2018-FL1 Assets and Liabilities included in KREF ’s Condensed Consolidated Balance Sheets: Assets March 31, 2020 December 31, 2019 Commercial mortgage loans, held-for-investment 1,000,000 1,000,000 Less: Allowance for credit losses (9,928 ) — Commercial mortgage loans, held-for-investment, net 990,072 1,000,000 Accrued interest receivable 3,328 3,280 Other assets 5 5 Total $ 993,405 $ 1,003,285 Liabilities Collateralized loan obligation, net 805,008 803,376 Accrued interest payable 906 1,254 Accounts payable, accrued expenses and other liabilities 72 72 Total $ 805,986 $ 804,702 |
Schedule of Net Interest Income Included in Consolidated Statement of Income | The following table presents the components of net interest income of KREF 2018-FL1 included in KREF ’s Condensed Consolidated Statements of Income: For the Three Months Ended March 31, 2020 2019 Net Interest Income Interest income $ 11,836 $ 14,426 Interest expense (A) 8,768 9,943 Net interest income $ 3,068 $ 4,483 (A) Includes $1.6 million and $0.8 million of deferred financing costs amortization for the three months ended March 31, 2020 and 2019 , respectively. KREF 's unamortized deferred financing costs related to KREF 2018-FL1 were $5.0 million and $8.8 million , as of March 31, 2020 and 2019 , respectively. |
Convertible Notes, Net (Tables)
Convertible Notes, Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Interest Expense, Debt | The following table details our interest expense related to the Convertible Notes: For the Three Months Ended March 31, 2020 2019 Cash coupon $ 2,201 $ 2,201 Discount and issuance cost amortization 346 342 Total interest expense 2,547 2,543 |
Net Book Value | The following table details the net book value of our Convertible Notes on our Condensed Consolidated Balance Sheets: March 31, 2020 December 31, 2019 Face value $ 143,750 $ 143,750 Deferred financing costs (3,205 ) (3,460 ) Unamortized discount (1,125 ) (1,215 ) Net book value $ 139,420 $ 139,075 |
Loan Participations Sold (Table
Loan Participations Sold (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract] | |
Schedule of Participating Mortgage Loans | The following tables summarize the loan participation sold liabilities that KREF recognized since the corresponding syndications of the respective loan participations were not treated as "sales" as of March 31, 2020 and December 31, 2019 : March 31, 2020 Loan Participations Sold Count Principal Balance Amortized Cost Carrying Value Yield/Cost (A) Guarantee Term Total loan 1 $ 329,576 $ 328,117 $ 325,724 L + 2.5% n.a. July 2024 Vertical loan participation (B) 1 65,000 64,972 64,972 L + 2.5% n.a. July 2024 December 31, 2019 Loan Participations Sold Count Principal Balance Amortized Cost Carrying Value Yield/Cost (A) Guarantee Term Total loan 1 $ 328,500 $ 326,881 $ 326,881 L + 2.5% n.a. July 2024 Vertical loan participation (B) 1 65,000 64,966 64,966 L + 2.5% n.a. July 2024 (A) Floating rate loans and related liabilities are indexed to one-month LIBOR. KREF 's net interest rate exposure is in direct proportion to its interest in the net assets of the senior loan. (B) During the three months ended March 31, 2020 and 2019 , KREF recorded $0.7 million and $0.6 million of interest income and $0.7 million and $0.7 million of interest expense, respectively, related to the total loan participations sold. |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Schedule of Common Stock Issued | As further described below, since December 2015, KREF issued the following shares of common stock: Pricing Date Shares Issued Net Proceeds As of December 31, 2015 13,636,416 $ 272,728 February 2016 2,000,000 40,000 May 2016 3,000,138 57,130 June 2016 (A) 21,838 — August 2016 5,500,000 109,875 As of December 31, 2016 24,158,392 479,733 February 2017 7,386,208 147,662 April 2017 10,379,738 207,595 May 2017- Initial Public Offering 11,787,500 219,356 As of December 31, 2017 53,711,838 1,054,346 August 2018 5,000,000 98,326 November 2018 500,000 9,351 As of December 31, 2018 59,211,838 1,162,023 (A) KREF did not receive any proceeds with respect to 21,838 shares of common stock issued to certain current and former employees of, and non-employee consultants to, KKR and third-party investors in the private placement completed in March 2016, in accordance with KREF 's Stockholders Agreement dated as of March 29, 2016 . KREF did not issue additional common stock between January 1, 2019 and March 31, 2020 . |
Dividends Declared | During the three months ended March 31, 2020 and 2019 , KREF 's board of directors declared the following dividends on shares of its common stock and special voting preferred stock: Amount Declaration Date Record Date Payment Date Per Share Total 2020 March 16, 2020 March 31, 2020 April 15, 2020 $ 0.43 $ 24,010 $ 24,010 2019 March 18, 2019 March 29, 2019 April 12, 2019 $ 0.43 $ 24,761 $ 24,761 |
Schedule of Earnings Per Share, Basic and Diluted | The following table illustrates the computation of basic and diluted earnings (loss) per share for the three months ended March 31, 2020 and 2019 : Three Months Ended March 31, 2020 2019 Numerator Net income (loss) attributable to common stockholders $ (35,164 ) $ 24,705 Denominator Basic weighted average common shares outstanding 57,346,726 57,387,386 Dilutive restricted stock units — 89,848 Diluted weighted average common shares outstanding 57,346,726 57,477,234 Net income (loss) attributable to common stockholders, per: Basic common share $ (0.61 ) $ 0.43 Diluted common share $ (0.61 ) $ 0.43 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule of Restricted Stock Units activity | The following table summarizes the activity in KREF ’s outstanding RSUs and the weighted-average grant date fair value per RSU: Restricted Stock Units Weighted Average Grant Date Fair Value Per RSU (A) Unvested as of December 31, 2019 641,214 $ 20.02 Granted — — Vested — — Forfeited/ cancelled (739 ) 19.46 Unvested as of March 31, 2020 640,475 $ 20.02 (A) The grant-date fair value is based upon the last sale price of KREF’s common stock at the date of grant. |
Schedule of RSUs Outstanding to Vest | KREF expects the unvested RSUs outstanding to vest during the following years: Year Restricted Stock Units 2020 291,676 2021 232,133 2022 116,666 Total 640,475 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
Amounts Due to Affiliates | Due to Affiliates — The following table contains the amounts presented in KREF 's Condensed Consolidated Balance Sheets that it owes to affiliates: March 31, 2020 December 31, 2019 Management fees $ 4,299 $ 4,280 Expense reimbursements and other 723 1,637 $ 5,022 $ 5,917 Affiliates Expenses — The following table contains the amounts included in KREF 's Condensed Consolidated Statements of Income that arose from transactions with the Manager: Three Months Ended March 31, 2020 2019 Management fees $ 4,299 $ 4,287 Incentive compensation 1,606 953 Expense reimbursements and other (A) 299 365 $ 6,204 $ 5,605 (A) KREF presents these amounts in " Operating Expenses — General and administrative " in its Condensed Consolidated Statements of Income. Affiliate expense reimbursements presented in the table above exclude the out-of-pocket amounts paid by the Manager to parties unaffiliated with the Manager on behalf of KREF , and for which KREF reimburses the Manager in cash. For the three months ended March 31, 2020 and 2019 , these cash reimbursements totaled $1.5 million and $0.5 million , respectively. |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Assets and Liabilities Recorded at Fair Value on Recurring Basis | The carrying values and fair values of KREF ’s financial assets and liabilities recorded at fair value on a recurring basis, as well as other financial instruments not carried at fair value, as of March 31, 2020 were as follows: Fair Value Principal Balance (A) Amortized Cost (B) Carrying Value (C) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 369,867 $ 369,867 $ 369,867 $ 369,867 $ — $ — $ 369,867 Commercial mortgage loans, held-for-investment, net (D) 5,118,199 5,089,968 5,023,989 — — 4,956,766 4,956,766 Equity method investments 34,441 34,441 34,441 — — 34,441 34,441 $ 5,522,507 $ 5,494,276 $ 5,428,297 $ 369,867 $ — $ 4,991,207 $ 5,361,074 Liabilities Secured financing agreements, net $ 3,379,857 $ 3,368,329 $ 3,368,329 $ — $ — $ 3,379,857 $ 3,379,857 Collateralized loan obligation, net 810,000 805,008 805,008 — — 770,497 770,497 Convertible notes, net 143,750 139,420 139,420 121,956 — — 121,956 Loan participations sold, net 65,000 64,972 64,972 — — 64,972 64,972 $ 4,398,607 $ 4,377,729 $ 4,377,729 $ 121,956 $ — $ 4,215,326 $ 4,337,282 (A) The principal balance of commercial mortgage loans excludes premiums and unamortized discounts. (B) The amortized cost of commercial mortgage loans is net of $28.2 million unamortized origination discounts and deferred nonrefundable fees. The amortized cost of secured financing agreements is net of $11.5 million unamortized debt issuance costs. The amortized cost of collateralized loan obligations is net of $5.0 million unamortized debt issuance costs. (C) The carrying value of commercial mortgage loans is net of $66.0 million allowance for credit losses. (D) Includes $1.0 billion of CLO loan participations as of March 31, 2020 . Includes senior loans for which KREF syndicated a vertical loan participation that did not qualify for sale accounting under GAAP, with a carrying value and a fair value of $65.0 million as of March 31, 2020 . The carrying values and fair values of KREF ’s financial assets recorded at fair value on a recurring basis, as well as other financial instruments for which fair value is disclosed, as of December 31, 2019 were as follows: Fair Value Principal Balance (A) Amortized Cost (B) Carrying Value Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 67,619 $ 67,619 $ 67,619 $ 67,619 $ — $ — $ 67,619 Commercial mortgage loans, held-for-investment, net (C) 4,960,698 4,931,042 4,931,042 — — 4,937,808 4,937,808 Equity method investments 37,469 37,469 37,469 — — 37,469 37,469 $ 5,065,786 $ 5,036,130 $ 5,036,130 $ 67,619 $ — $ 4,975,277 $ 5,042,896 Liabilities Secured financing agreements, net $ 2,898,716 $ 2,884,887 $ 2,884,887 $ — $ — $ 2,898,716 $ 2,898,716 Collateralized loan obligation, net 810,000 803,376 803,376 — — 810,867 810,867 Convertible notes, net 143,750 139,075 139,075 150,719 — — 150,719 Loan participations sold, net 65,000 64,966 64,966 — — 64,966 64,966 $ 3,917,466 $ 3,892,304 $ 3,892,304 $ 150,719 $ — $ 3,774,549 $ 3,925,268 (A) The principal balance of commercial mortgage loans excludes premiums and unamortized discounts. (B) The amortized cost of commercial mortgage loans is presented net of $29.7 million unamortized origination discounts and deferred nonrefundable fees. The amortized cost of secured financing agreements is presented net of $13.8 million unamortized debt issuance costs. The amortized cost of collateralized loan obligations is presented net of $6.6 million unamortized debt issuance costs. (C) Includes $1.0 billion of CLO loan participations as of December 31, 2019 . Includes senior loans for which KREF syndicated a vertical loan participation that did not qualify for sale accounting under GAAP, with a carrying value and a fair value of $65.0 million as of December 31, 2019 . |
Fair Value Inputs, Liabilities, Level 3 Inputs | The following table contains the Level 3 inputs used to value assets and liabilities on a recurring and nonrecurring basis or where KREF discloses fair value as of March 31, 2020 : Fair Value Valuation Methodologies Unobservable Inputs (A) Weighted Average (B) Range Assets (C) Commercial mortgage loans, held-for-investment (D) $4,956,766 Discounted cash flow Discount rate 4.8% 3.7% - 12.7% Loan-to-value ratio N/A N/A $4,956,766 Liabilities (E) Collateralized loan obligation, net $770,497 Discounted cash flow Yield 3.7% 2.8% - 9.0% $770,497 (A) An increase (decrease) in the valuation input results in a decrease (increase) in value. (B) Represents the average of the input value, weighted by the unpaid principal balance of the financial instrument. (C) KREF carries a $34.2 million investment in an aggregator vehicle alongside RECOP I (Note 8 ) at its pro rata share of the aggregator's net asset value, which management believes approximates fair value. (D) Commercial mortgage loans are generally valued using a discounted cash flow model using discount rate derived from relevant market indices and/or estimates of the underlying property's value. (E) Does not include $65.0 million of vertical loan syndication which was syndicated at par value and included in “Loan participation sold, net” in the accompanying Condensed Consolidated Balance Sheet. |
Business and Organization (Deta
Business and Organization (Details) - KKR - shares | Mar. 31, 2020 | Dec. 31, 2019 |
KREF | ||
Related Party Transaction [Line Items] | ||
Common stock (shares) | 22,008,616 | 22,008,616 |
KKR Real Estate FInance Trust Inc. on Behalf of Third Party | ||
Related Party Transaction [Line Items] | ||
Common stock (shares) | 2,008,616 | 2,008,616 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 01, 2020 | Mar. 31, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | May 31, 2018 |
Related Party Transaction [Line Items] | |||||||
Redeemable preferred stock | $ 2,108 | $ 2,108 | $ 1,694 | ||||
Unrestricted cash and cash equivalents balance to satisfy liquidity covenants | 50,400 | 50,400 | 33,400 | ||||
Accrued share buybacks | 4,000 | 4,000 | |||||
Deferred financing/debt issuance costs | 3,100 | 3,100 | 2,400 | ||||
Accrued expenses | 3,500 | 3,500 | 2,700 | ||||
Good faith deposits | $ 1,200 | $ 1,200 | 700 | ||||
Dividends Declared per Share of Common Stock (usd per share) | $ 0.43 | $ 0.43 | $ 0.43 | ||||
Interest receivable | $ 17,263 | $ 17,263 | 16,305 | ||||
Redeemable Preferred Stock | |||||||
Related Party Transaction [Line Items] | |||||||
Redeemable preferred stock | 2,108 | 2,108 | $ 2,228 | $ 1,694 | $ 2,846 | ||
Adjustment of redeemable preferred stock to redemption value | 400 | ||||||
Collateralized Loan Obligations | |||||||
Related Party Transaction [Line Items] | |||||||
Interest receivable | 300 | 300 | $ 200 | ||||
Convertible Notes Payable | Notes Due in 2023 | |||||||
Related Party Transaction [Line Items] | |||||||
Debt instrument, interest rate, stated percentage | 6.125% | ||||||
Accounting Standards Update 2016-13 | |||||||
Related Party Transaction [Line Items] | |||||||
Cumulative-effect adjustment upon adoption of ASU 2016-13 | $ 15,000 | ||||||
Cumulative-effect adjustment upon adoption of ASU 2016-13 (in USD per share) | $ 0.26 | ||||||
Unfunded Loan Commitments | |||||||
Related Party Transaction [Line Items] | |||||||
Allowance for credit losses | $ 4,300 | $ 4,300 | |||||
Unfunded Loan Commitments | Accounting Standards Update 2016-13 | |||||||
Related Party Transaction [Line Items] | |||||||
Cumulative-effect adjustment upon adoption of ASU 2016-13 | $ 1,100 | ||||||
Cumulative-effect adjustment upon adoption of ASU 2016-13 (in USD per share) | $ 0.02 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Impact of Adoption of ASU 2016-13 (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Commercial mortgage loans, held-for-investment | $ 5,089,968 | $ 4,931,042 | $ 4,931,042 | ||
Less: Allowance for credit losses | (65,979) | 0 | 0 | ||
Commercial mortgage loans, held-for-investment, net | 5,023,989 | 4,931,042 | 4,931,042 | ||
Accounts payable, accrued expenses and other liabilities | 8,907 | [1] | 3,363 | 3,363 | [1] |
Accumulated deficit | $ (82,777) | (8,594) | $ (8,594) | ||
Cumulative-effect adjustment upon adoption of ASU 2016-13 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Commercial mortgage loans, held-for-investment | 0 | ||||
Less: Allowance for credit losses | (13,909) | ||||
Commercial mortgage loans, held-for-investment, net | (13,909) | ||||
Accounts payable, accrued expenses and other liabilities | 1,100 | ||||
Accumulated deficit | (15,009) | ||||
Cumulative-effect, adjusted balance for ASU 2016-13 | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Commercial mortgage loans, held-for-investment | 4,931,042 | ||||
Less: Allowance for credit losses | (13,909) | ||||
Commercial mortgage loans, held-for-investment, net | 4,917,133 | ||||
Accounts payable, accrued expenses and other liabilities | 4,463 | ||||
Accumulated deficit | $ (23,603) | ||||
[1] | Includes $4.3 million and $0.0 million of reserve for unfunded loan commitments at March 31, 2020 and December 31, 2019, respectively. |
Commercial Mortgage Loans - Loa
Commercial Mortgage Loans - Loans Held-for-investment and Loans Held-for-sale (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020USD ($)loan | Dec. 31, 2019USD ($)loan | Jan. 01, 2020USD ($) | |
Investment Holdings [Line Items] | |||
Amortized Cost | $ 5,089,968 | $ 4,931,042 | $ 4,931,042 |
Carrying Value | 5,023,989 | 4,931,042 | $ 4,931,042 |
Loans held-for-investment | |||
Investment Holdings [Line Items] | |||
Outstanding Face Amount | 5,118,199 | 4,960,698 | |
Amortized Cost | 5,089,968 | 4,931,042 | |
Carrying Value | $ 5,023,989 | $ 4,931,042 | |
Loan Count (in loans) | loan | 40 | 39 | |
Floating Rate Loan | 99.90% | 99.90% | |
Coupon | 4.90% | 5.10% | |
Life | 3 years 10 months 24 days | 4 years 1 month 6 days | |
Loans held-for-investment | Senior loans | |||
Investment Holdings [Line Items] | |||
Outstanding Face Amount | $ 5,059,468 | $ 4,919,298 | |
Amortized Cost | 5,032,066 | 4,890,408 | |
Carrying Value | $ 4,970,847 | $ 4,890,408 | |
Loan Count (in loans) | loan | 37 | 37 | |
Floating Rate Loan | 100.00% | 100.00% | |
Coupon | 4.80% | 5.00% | |
Life | 3 years 10 months 24 days | 4 years 1 month 6 days | |
Loans held-for-investment | Mezzanine loans | |||
Investment Holdings [Line Items] | |||
Outstanding Face Amount | $ 58,731 | $ 41,400 | |
Amortized Cost | 57,902 | 40,634 | |
Carrying Value | $ 53,142 | $ 40,634 | |
Loan Count (in loans) | loan | 3 | 2 | |
Floating Rate Loan | 90.60% | 86.70% | |
Coupon | 10.00% | 9.60% | |
Life | 4 years 3 months 18 days | 4 years 7 months 6 days | |
Vertical Loan Participation | Loans held-for-investment | Senior loans | |||
Investment Holdings [Line Items] | |||
Outstanding Face Amount | $ 65,000 | $ 65,000 | |
Amortized Cost | 65,000 | 65,000 | |
Collateralized Loan Obligations | Loans held-for-investment | Senior loans | |||
Investment Holdings [Line Items] | |||
Outstanding Face Amount | $ 1,000,000 | $ 1,000,000 | |
LIBOR | |||
Investment Holdings [Line Items] | |||
Interest rate | 0.99% | 1.76% |
Commercial Mortgage Loans - Act
Commercial Mortgage Loans - Activities Related to Carrying Value of Mortgage Loans (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 |
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | ||||
Beginning balance | $ 4,931,042 | $ 4,931,042 | ||
Purchases and originations, net | 334,146 | |||
Proceeds from sales and principal repayments | (179,553) | |||
Accretion of loan discount and other amortization, net | 4,333 | |||
Amortized Cost | 4,931,042 | 5,089,968 | $ 4,931,042 | |
Provision for credit losses, net | (55,274) | $ 0 | ||
Ending balance | 4,931,042 | 5,023,989 | ||
Loans held-for-investment | ||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | ||||
Beginning balance | 4,931,042 | 4,931,042 | ||
Purchases and originations, net | 334,146 | |||
Proceeds from sales and principal repayments | (179,553) | |||
Accretion of loan discount and other amortization, net | 4,333 | |||
Amortized Cost | 5,089,968 | $ 4,931,042 | ||
Ending balance | 5,023,989 | |||
Loans held-for-sale | ||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | ||||
Beginning balance | 0 | 0 | ||
Purchases and originations, net | 0 | |||
Proceeds from sales and principal repayments | 0 | |||
Accretion of loan discount and other amortization, net | 0 | |||
Amortized Cost | 0 | |||
Ending balance | 0 | |||
Cumulative-effect adjustment upon adoption of ASU 2016-13 | ||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | ||||
Amortized Cost | 0 | |||
Provision for credit losses, net | (13,909) | |||
Ending balance | (13,909) | |||
Cumulative-effect adjustment upon adoption of ASU 2016-13 | Loans held-for-investment | ||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | ||||
Provision for credit losses, net | (13,909) | |||
Cumulative-effect adjustment upon adoption of ASU 2016-13 | Loans held-for-sale | ||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | ||||
Provision for credit losses, net | $ 0 | |||
CRE Loans | ||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | ||||
Provision for credit losses, net | 52,070 | |||
CRE Loans | Loans held-for-investment | ||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | ||||
Provision for credit losses, net | (52,070) | |||
CRE Loans | Loans held-for-sale | ||||
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | ||||
Provision for credit losses, net | $ 0 |
Commercial Mortgage Loans - Nar
Commercial Mortgage Loans - Narrative (Details) $ in Millions | 3 Months Ended | |||
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Jan. 01, 2020USD ($) | Dec. 31, 2019USD ($) | |
Investment Holdings [Line Items] | ||||
Unamortized origination discounts and deferred nonrefundable fees | $ 28.2 | $ 29.7 | ||
Prepayment penalties | 0 | $ 0.2 | ||
Net accelerated fees | $ 0.2 | $ 2.3 | ||
Weighted average loan risk rating | 3 | 2.9 | ||
Increase in allowance for credit losses | $ 55.3 | |||
Loans held-for-investment | ||||
Investment Holdings [Line Items] | ||||
Unamortized origination discounts and deferred nonrefundable fees | $ 28.2 | $ 29.7 | ||
Accounting Standards Update 2016-13 | ||||
Investment Holdings [Line Items] | ||||
Cumulative-effect adjustment upon adoption of ASU 2016-13 | $ 15 |
Commercial Mortgage Loans - L_2
Commercial Mortgage Loans - Loan Risk Ratings (Details) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020USD ($)loan | Dec. 31, 2019USD ($)loan | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Total Loan Exposure | $ 143,600 | $ 143,600 |
Commercial Mortgage Loans | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of Loans (in loans) | loan | 40 | 39 |
Net Book Value | $ 5,023,989 | $ 4,931,042 |
Total Loan Exposure | $ 5,196,799 | $ 5,039,298 |
Total Loan Exposure % | 100.00% | 100.00% |
Very Low Risk | Commercial Mortgage Loans | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of Loans (in loans) | loan | 2 | 1 |
Net Book Value | $ 157,360 | $ 85,730 |
Total Loan Exposure | $ 158,074 | $ 86,000 |
Total Loan Exposure % | 3.00% | 1.70% |
Low Risk | Commercial Mortgage Loans | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of Loans (in loans) | loan | 3 | 5 |
Net Book Value | $ 288,303 | $ 450,827 |
Total Loan Exposure | $ 291,268 | $ 451,858 |
Total Loan Exposure % | 5.60% | 9.00% |
Average Risk | Commercial Mortgage Loans | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of Loans (in loans) | loan | 28 | 33 |
Net Book Value | $ 3,855,849 | $ 4,394,485 |
Total Loan Exposure | $ 4,001,127 | $ 4,501,440 |
Total Loan Exposure % | 77.00% | 89.30% |
High Risk/Potential for Loss | Commercial Mortgage Loans | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of Loans (in loans) | loan | 7 | 0 |
Net Book Value | $ 722,477 | $ 0 |
Total Loan Exposure | $ 746,330 | $ 0 |
Total Loan Exposure % | 14.40% | 0.00% |
Impaired/Loss Likely | Commercial Mortgage Loans | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of Loans (in loans) | loan | 0 | 0 |
Net Book Value | $ 0 | $ 0 |
Total Loan Exposure | $ 0 | $ 0 |
Total Loan Exposure % | 0.00% | 0.00% |
Commercial Mortgage Loans - Amo
Commercial Mortgage Loans - Amortized Cost of Loan Portfolio (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020USD ($)loan | Dec. 31, 2019USD ($)loan | Jan. 01, 2020USD ($) | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Total | $ 5,089,968 | $ 4,931,042 | $ 4,931,042 |
Carrying amount | $ 5,023,989 | $ 4,931,042 | $ 4,931,042 |
Commercial Mortgage Loans | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans (in loans) | loan | 40 | 39 | |
Outstanding Face Amount | $ 5,118,199 | ||
2020 | 284,979 | ||
2019 | 2,543,712 | ||
2018 | 1,584,274 | ||
2017 | 546,713 | ||
2016 | 0 | ||
2015 | 130,290 | ||
Total | 5,089,968 | ||
Carrying amount | $ 5,023,989 | ||
Very Low Risk | Commercial Mortgage Loans | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans (in loans) | loan | 2 | 1 | |
Outstanding Face Amount | $ 158,074 | ||
2020 | 0 | ||
2019 | 0 | ||
2018 | 157,618 | ||
2017 | 0 | ||
2016 | 0 | ||
2015 | 0 | ||
Total | 157,618 | ||
Carrying amount | $ 157,360 | ||
Low Risk | Commercial Mortgage Loans | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans (in loans) | loan | 3 | 5 | |
Outstanding Face Amount | $ 291,268 | ||
2020 | 0 | ||
2019 | 61,014 | ||
2018 | 41,894 | ||
2017 | 187,488 | ||
2016 | 0 | ||
2015 | 0 | ||
Total | 290,396 | ||
Carrying amount | $ 288,303 | ||
Average Risk | Commercial Mortgage Loans | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans (in loans) | loan | 28 | 33 | |
Outstanding Face Amount | $ 3,922,527 | ||
2020 | 284,979 | ||
2019 | 2,407,120 | ||
2018 | 1,056,354 | ||
2017 | 149,807 | ||
2016 | 0 | ||
2015 | 0 | ||
Total | 3,898,260 | ||
Carrying amount | $ 3,855,849 | ||
High Risk/Potential for Loss | Commercial Mortgage Loans | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans (in loans) | loan | 7 | 0 | |
Outstanding Face Amount | $ 746,330 | ||
2020 | 0 | ||
2019 | 75,578 | ||
2018 | 328,408 | ||
2017 | 209,418 | ||
2016 | 0 | ||
2015 | 130,290 | ||
Total | 743,694 | ||
Carrying amount | $ 722,477 | ||
Impaired/Loss Likely | Commercial Mortgage Loans | |||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | |||
Number of Loans (in loans) | loan | 0 | 0 | |
Outstanding Face Amount | $ 0 | ||
2020 | 0 | ||
2019 | 0 | ||
2018 | 0 | ||
2017 | 0 | ||
2016 | 0 | ||
2015 | 0 | ||
Total | 0 | ||
Carrying amount | $ 0 |
Commercial Mortgage Loans - All
Commercial Mortgage Loans - Allowance for Credit Losses (Details) - USD ($) $ in Thousands | Jan. 01, 2020 | Mar. 31, 2020 |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at December 31, 2019 | $ 0 | $ 0 |
Provision for credit losses, net | 55,300 | |
Balance at March 31, 2020 | 0 | 65,979 |
Commercial Mortgage Loans | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at December 31, 2019 | 0 | 0 |
Provision for credit losses, net | 52,070 | |
Write-offs charged | 0 | |
Recoveries | 0 | |
Balance at March 31, 2020 | 65,979 | |
Unfunded Loan Commitments | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at December 31, 2019 | 0 | 0 |
Provision for credit losses, net | 3,204 | |
Write-offs charged | 0 | |
Recoveries | 0 | |
Balance at March 31, 2020 | 4,304 | |
Total | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at December 31, 2019 | 0 | 0 |
Provision for credit losses, net | 55,274 | |
Write-offs charged | 0 | |
Recoveries | 0 | |
Balance at March 31, 2020 | $ 70,283 | |
Cumulative-effect adjustment upon adoption of ASU 2016-13 | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at March 31, 2020 | 13,909 | |
Cumulative-effect adjustment upon adoption of ASU 2016-13 | Commercial Mortgage Loans | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Provision for credit losses, net | 13,909 | |
Cumulative-effect adjustment upon adoption of ASU 2016-13 | Unfunded Loan Commitments | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Provision for credit losses, net | 1,100 | |
Cumulative-effect adjustment upon adoption of ASU 2016-13 | Total | ||
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Provision for credit losses, net | $ 15,009 |
Commercial Mortgage Loans - Con
Commercial Mortgage Loans - Concentration of Credit Risk (Details) - Loans held-for-investment | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Geography | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 100.00% | 100.00% |
Geography | New York | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 22.30% | 22.50% |
Geography | Illinois | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 9.40% | 9.70% |
Geography | Pennsylvania | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 9.00% | 9.20% |
Geography | Virginia | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 7.90% | 8.20% |
Geography | Massachusetts | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 7.50% | 7.70% |
Geography | California | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 6.80% | 6.90% |
Geography | Washington | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 6.70% | 6.90% |
Geography | Texas | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 5.60% | 2.50% |
Geography | Florida | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 5.30% | 6.90% |
Geography | Georgia | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 4.30% | 4.30% |
Geography | Minnesota | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 3.70% | 3.70% |
Geography | New Jersey | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 3.00% | 3.10% |
Geography | Colorado | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 3.00% | 2.80% |
Geography | Oregon | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 2.40% | 2.50% |
Geography | Alabama | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 1.20% | 1.20% |
Geography | Other U.S. | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 1.90% | 1.90% |
Collateral Property Type | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 100.00% | 100.00% |
Collateral Property Type | Multifamily | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 56.20% | 58.30% |
Collateral Property Type | Office | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 28.20% | 25.50% |
Collateral Property Type | Retail | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 4.60% | 4.70% |
Collateral Property Type | Hospitality | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 4.20% | 4.40% |
Collateral Property Type | Condo (Residential) | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 2.80% | 3.00% |
Collateral Property Type | Industrial | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 2.70% | 2.80% |
Collateral Property Type | Student Housing | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 1.30% | 1.30% |
Debt Obligations - Summary of D
Debt Obligations - Summary of Debt (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Mar. 31, 2020USD ($) | Feb. 29, 2020extension | Jun. 30, 2019USD ($)extension | Mar. 31, 2020USD ($)extension | Dec. 31, 2019USD ($) | May 31, 2019USD ($) | Dec. 31, 2018USD ($) | Aug. 31, 2018USD ($) | |
Debt Instrument [Line Items] | ||||||||
Outstanding Face Amount | $ 3,379,857,000 | $ 3,379,857,000 | ||||||
Unamortized debt issuance costs | $ 8,000,000 | $ 8,000,000 | $ 9,500,000 | |||||
Average haircut weighted by outstanding face amount of collateral | 27.40% | 27.40% | 27.40% | |||||
Average haircut weighted by outstanding face amount of collateral if maximum amount is borrowed | 25.70% | 25.70% | 25.70% | |||||
Deferred financing/debt issuance costs | $ 3,100,000 | $ 3,100,000 | $ 2,400,000 | |||||
Morgan Stanley | Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum Facility Size | $ 750,000,000 | $ 750,000,000 | ||||||
Number of extensions | extension | 2 | |||||||
Extension term | 1 year | |||||||
BMO | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Collateral based margin | 1.50% | 1.50% | ||||||
BMO | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Collateral based margin | 1.70% | 1.70% | ||||||
Secured Financing Agreements | Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Carrying Value | $ 3,368,329,000 | $ 3,368,329,000 | 2,884,887,000 | |||||
Secured Financing Agreements | Wells Fargo | Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding Face Amount | 468,452,000 | 468,452,000 | ||||||
Carrying Value | 465,504,000 | 465,504,000 | 464,933,000 | |||||
Maximum Facility Size | $ 1,000,000,000 | $ 1,000,000,000 | ||||||
Weighted Average Funding Cost | 2.50% | 2.50% | ||||||
Weighted Average Life | 2 years 4 months 24 days | |||||||
Outstanding Face Amount | $ 652,850,000 | $ 652,850,000 | ||||||
Amortized Cost Basis | 648,616,000 | 648,616,000 | ||||||
Carrying amount | $ 640,202,000 | $ 640,202,000 | ||||||
Weighted Average Life | 3 years 9 months 18 days | |||||||
Number of extensions | extension | 2 | |||||||
Extension term | 12 months | |||||||
Secured Financing Agreements | Wells Fargo | Facility | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Collateral based margin | 1.25% | 1.25% | ||||||
Secured Financing Agreements | Wells Fargo | Facility | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Collateral based margin | 2.15% | 2.15% | ||||||
Secured Financing Agreements | Morgan Stanley | Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding Face Amount | $ 405,188,000 | $ 405,188,000 | ||||||
Carrying Value | 403,452,000 | 403,452,000 | 392,279,000 | |||||
Maximum Facility Size | $ 600,000,000 | $ 600,000,000 | ||||||
Weighted Average Funding Cost | 2.80% | 2.80% | ||||||
Weighted Average Life | 2 years 3 months 18 days | |||||||
Outstanding Face Amount | $ 544,943,000 | $ 544,943,000 | ||||||
Amortized Cost Basis | 541,399,000 | 541,399,000 | ||||||
Carrying amount | $ 537,693,000 | $ 537,693,000 | ||||||
Weighted Average Life | 4 years 8 months 12 days | |||||||
Secured Financing Agreements | Morgan Stanley | Facility | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Collateral based margin | 1.75% | 1.75% | ||||||
Secured Financing Agreements | Morgan Stanley | Facility | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Collateral based margin | 1.85% | 1.85% | ||||||
Secured Financing Agreements | Goldman Sachs | Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding Face Amount | $ 221,863,000 | $ 221,863,000 | ||||||
Carrying Value | 220,881,000 | 220,881,000 | 223,867,000 | |||||
Maximum Facility Size | $ 400,000,000 | $ 400,000,000 | ||||||
Weighted Average Funding Cost | 3.20% | 3.20% | ||||||
Weighted Average Life | 7 months 6 days | |||||||
Outstanding Face Amount | $ 311,385,000 | $ 311,385,000 | ||||||
Amortized Cost Basis | 311,021,000 | 311,021,000 | ||||||
Carrying amount | $ 305,483,000 | $ 305,483,000 | ||||||
Weighted Average Life | 2 years 6 months | |||||||
Maximum advance rate | 65.00% | 65.00% | ||||||
Secured Financing Agreements | Goldman Sachs | Facility | Minimum | ||||||||
Debt Instrument [Line Items] | ||||||||
Collateral based margin | 1.85% | 1.85% | ||||||
Secured Financing Agreements | Goldman Sachs | Facility | Maximum | ||||||||
Debt Instrument [Line Items] | ||||||||
Collateral based margin | 2.00% | 2.00% | ||||||
Secured Financing Agreements | HSBC | Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Weighted Average Funding Cost | 2.40% | 2.40% | ||||||
Weighted Average Life | 2 years 9 months 18 days | |||||||
Outstanding Face Amount | $ 64,408,000 | $ 64,408,000 | ||||||
Amortized Cost Basis | 63,510,000 | 63,510,000 | ||||||
Carrying amount | 62,617,000 | $ 62,617,000 | ||||||
Weighted Average Life | 4 years 10 months 24 days | |||||||
Secured Financing Agreements | BMO | Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding Face Amount | 82,267,000 | $ 82,267,000 | ||||||
Carrying Value | 81,527,000 | 81,527,000 | 141,120,000 | |||||
Maximum Facility Size | $ 300,000,000 | $ 300,000,000 | ||||||
Weighted Average Funding Cost | 2.90% | 2.90% | ||||||
Weighted Average Life | 3 years 7 months 6 days | |||||||
Outstanding Face Amount | $ 106,074,000 | $ 106,074,000 | ||||||
Amortized Cost Basis | 105,413,000 | 105,413,000 | ||||||
Carrying amount | 100,710,000 | $ 100,710,000 | ||||||
Weighted Average Life | 3 years 8 months 12 days | |||||||
Revolving Credit Facility | Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding Face Amount | 335,000,000 | $ 335,000,000 | ||||||
Carrying Value | 335,000,000 | 335,000,000 | 0 | |||||
Maximum Facility Size | $ 335,000,000 | $ 335,000,000 | ||||||
Weighted Average Funding Cost | 3.70% | 3.70% | ||||||
Weighted Average Life | 3 years 8 months 12 days | |||||||
Revolving Credit Facility | Morgan Stanley | Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum Facility Size | 250,000,000 | $ 100,000,000 | ||||||
Deferred financing/debt issuance costs | $ 3,100,000 | $ 3,100,000 | ||||||
Loan Facility | BMO | Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Maximum Facility Size | $ 300,000,000 | $ 200,000,000 | ||||||
Total Debt | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding Face Amount | 2,455,002,000 | 2,455,002,000 | ||||||
Carrying Value | 2,446,961,000 | 2,446,961,000 | 2,091,015,000 | |||||
Maximum Facility Size | $ 4,035,000,000 | $ 4,035,000,000 | ||||||
Weighted Average Funding Cost | 2.80% | 2.80% | ||||||
Weighted Average Life | 2 years 3 months 18 days | |||||||
KREF Lending V LLC | Secured Financing Agreements | Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding Face Amount | $ 896,815,000 | $ 896,815,000 | ||||||
Carrying Value | 895,983,000 | 895,983,000 | 868,816,000 | |||||
Maximum Facility Size | $ 900,000,000 | $ 900,000,000 | $ 900,000,000 | |||||
Weighted Average Funding Cost | 2.70% | 2.70% | ||||||
Weighted Average Life | 2 years | |||||||
Outstanding Face Amount | $ 1,094,762,000 | $ 1,094,762,000 | ||||||
Amortized Cost Basis | 1,087,399,000 | 1,087,399,000 | ||||||
Carrying amount | $ 1,075,115,000 | $ 1,075,115,000 | ||||||
Weighted Average Life | 4 years 1 month 6 days | |||||||
Number of extensions | extension | 5 | |||||||
Extension term | 1 year | |||||||
KREF Lending V LLC | Secured Financing Agreements | Initial Buyer | Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Percentage of total commitment | 48.90% | 48.90% | ||||||
KREF Lending V LLC | Loan and Security Agreement | HSBC | ||||||||
Debt Instrument [Line Items] | ||||||||
Face value | $ 500,000,000 | $ 500,000,000 | ||||||
HSBC | Secured Financing Agreements | Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Outstanding Face Amount | 45,417,000 | 45,417,000 | ||||||
Carrying Value | 44,614,000 | 44,614,000 | $ 0 | |||||
Maximum Facility Size | $ 500,000,000 | $ 500,000,000 | ||||||
LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate | 0.99% | 1.76% | ||||||
Term Lending | LIBOR | KREF Lending V LLC | Secured Financing Agreements | Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate | 1.90% | |||||||
Collateral Based Margin | LIBOR | Loan and Security Agreement | HSBC | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate | 1.50% |
Debt Obligations - Repurchase A
Debt Obligations - Repurchase Agreement (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Repurchase Agreement Counterparty [Line Items] | ||
Outstanding Face Amount | $ 3,379,857 | |
Wells Fargo | ||
Repurchase Agreement Counterparty [Line Items] | ||
Outstanding Face Amount | 468,452 | $ 468,452 |
Net Counterparty Exposure | $ 173,529 | $ 178,827 |
Percent of Stockholders' Equity | 16.80% | 15.90% |
Weighted Average Life | 2 years 4 months 24 days | 2 years 7 months 6 days |
Morgan Stanley | ||
Repurchase Agreement Counterparty [Line Items] | ||
Outstanding Face Amount | $ 405,188 | $ 394,499 |
Net Counterparty Exposure | $ 133,989 | $ 136,764 |
Percent of Stockholders' Equity | 13.00% | 12.20% |
Weighted Average Life | 2 years 3 months 18 days | 2 years 6 months |
Term Lending Agreement | ||
Repurchase Agreement Counterparty [Line Items] | ||
Outstanding Face Amount | $ 870,051 | |
Net Counterparty Exposure | $ 203,800 | |
Percent of Stockholders' Equity | 18.20% | |
Weighted Average Life | 2 years 1 month 6 days | |
Total | ||
Repurchase Agreement Counterparty [Line Items] | ||
Outstanding Face Amount | $ 1,770,455 | $ 1,733,002 |
Net Counterparty Exposure | $ 488,874 | $ 519,391 |
Percent of Stockholders' Equity | 47.40% | 46.30% |
Weighted Average Life | 2 years 2 months 12 days | 2 years 4 months 24 days |
KREF Lending V LLC | Morgan Stanley | ||
Repurchase Agreement Counterparty [Line Items] | ||
Percent of Stockholders' Equity | 8.60% | 8.90% |
KREF Lending V LLC | Term Lending Agreement | ||
Repurchase Agreement Counterparty [Line Items] | ||
Outstanding Face Amount | $ 896,815 | |
Net Counterparty Exposure | $ 181,356 | |
Percent of Stockholders' Equity | 17.60% | |
Weighted Average Life | 2 years |
Debt Obligations - Term Loan Fa
Debt Obligations - Term Loan Facility (Details) - Facility - Term Loan Facility | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020USD ($)loan | Dec. 31, 2019USD ($)loan | Oct. 31, 2018USD ($) | Apr. 30, 2018USD ($) | |
Debt Instrument [Line Items] | ||||
Borrowing capacity | $ 1,000,000,000 | $ 200,000,000 | ||
Term (in years) | 5 years | |||
Number of collateralized loans (in loans) | loan | 13 | 12 | ||
Outstanding face amount | $ 1,183,614,000 | $ 1,003,995,000 | ||
Amortized Cost | 1,176,148,000 | 997,081,000 | ||
Carrying Value | 1,161,259,000 | 997,081,000 | ||
Face value | 924,855,000 | 798,180,000 | ||
Carrying value | $ 921,368,000 | $ 793,872,000 | ||
Interest rate | 1.90% | 1.90% | ||
Collateralized Assets | ||||
Debt Instrument [Line Items] | ||||
Interest rate | 3.10% | 3.00% | ||
Minimum | ||||
Debt Instrument [Line Items] | ||||
Weighted average yield, financing provided | 1.50% | 1.50% | ||
Maximum | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, interest rate, stated percentage | 2.50% | 3.20% |
Debt Obligations - Debt Activit
Debt Obligations - Debt Activity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Debt Instrument, Increase (Decrease), Net [Roll Forward] | ||
Deferred debt issuance costs | $ (2,206) | $ (1,258) |
Facility | Secured Financing Agreements | ||
Debt Instrument, Increase (Decrease), Net [Roll Forward] | ||
Beginning balance | 2,884,887 | |
Principal borrowings | 805,967 | |
Principal repayments/sales/deconsolidation | (324,825) | |
Deferred debt issuance costs | (927) | |
Amortization of deferred debt issuance costs and premium/discount on debt obligations | 3,227 | |
Ending balance | $ 3,368,329 |
Debt Obligations - Maturities (
Debt Obligations - Maturities (Details) $ in Thousands | Mar. 31, 2020USD ($) |
Debt Instrument [Line Items] | |
2020 | $ 721,178 |
2021 | 436,116 |
2022 | 1,272,341 |
2023 | 737,913 |
2024 | 212,309 |
Total | 3,379,857 |
Nonrecourse | |
Debt Instrument [Line Items] | |
2020 | 561,504 |
2021 | 436,116 |
2022 | 983,579 |
2023 | 359,417 |
2024 | 174,241 |
Total | 2,514,857 |
Recourse | |
Debt Instrument [Line Items] | |
2020 | 159,674 |
2021 | 0 |
2022 | 288,762 |
2023 | 378,496 |
2024 | 38,068 |
Total | $ 865,000 |
Maximum | |
Debt Instrument [Line Items] | |
Recourse limit | 25.00% |
Debt Obligations - Covenants (D
Debt Obligations - Covenants (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Debt Disclosure [Abstract] | |
Interest income to interest expense ratio | 1.5 |
Percent of aggregate cash proceeds and any capital contributions | 75.00% |
Amount of aggregate cash proceeds and any capital contributions | $ 880,200,000 |
Cash liquidity covenant amount (greater of) | $ 10,000,000 |
Cash liquidity covenant, percent of recourse indebtedness (greater of) | 5.00% |
Total indebtedness covenant, percent of total assets, net of VIE liabilities | 75.00% |
Collateralized Loan Obligatio_2
Collateralized Loan Obligation - Schedule of Collateral Assets and Respective Borrowings (Details) | 1 Months Ended | ||
Nov. 30, 2018 | Mar. 31, 2020USD ($)collateral_assetborrowing | Dec. 31, 2019USD ($)collateral_assetborrowing | |
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | |||
Term of reinvestment feature | 2 years | ||
Percentage of commercial mortgage loans | 19.50% | 20.20% | |
Percentage of collateralized loan obligations under floating rate loans | 100.00% | 100.00% | |
Collateralized loan obligation, net | Variable Interest Entity, Primary Beneficiary | |||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | |||
Weighted average yield, financing provided | 2.20% | 1.80% | |
Financing provided, count (in borrowings) | borrowing | 1 | 1 | |
Face amount, Financing provided | $ 810,000,000 | $ 810,000,000 | |
Carrying value, Financing provided | $ 805,008,000 | $ 803,376,000 | |
Collateralized Loan Obligations | Variable Interest Entity, Primary Beneficiary | |||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | |||
Collateral assets, count (in collateral assets) | collateral_asset | 22 | 22 | |
Face amount, Collateral assets | $ 1,000,000,000 | $ 1,000,000,000 | |
Carrying value, Collateral assets | $ 993,405,000 | $ 1,003,285,000 | |
Weighted average yield, collateral assets | 2.80% | 2.80% | |
Commercial Mortgage Loans, Held-For-Investment and Cash | Collateralized Loan Obligations | Variable Interest Entity, Primary Beneficiary | |||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | |||
Amortized cost, collateral assets | $ 1,000,000,000 | $ 1,000,000,000 | |
Carrying value, Collateral assets | $ 990,072,000 | $ 1,000,000,000 |
Collateralized Loan Obligatio_3
Collateralized Loan Obligation - Schedule of Assets and Liabilities Included in Consolidated Balance Sheet (Details) - Variable Interest Entity, Primary Beneficiary - Collateralized Loan Obligations - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Assets | $ 993,405 | $ 1,003,285 |
Liabilities | 805,986 | 804,702 |
Commercial mortgage loans, held-for-investment, net | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Commercial mortgage loans, held-for-investment | 1,000,000 | 1,000,000 |
Assets | 990,072 | 1,000,000 |
Less: Allowance for credit losses | (9,928) | 0 |
Accrued interest receivable | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Assets | 3,328 | 3,280 |
Other assets | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Assets | 5 | 5 |
Collateralized loan obligation, net | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Liabilities | 805,008 | 803,376 |
Accrued interest payable | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Liabilities | 906 | 1,254 |
Accounts payable, accrued expenses and other liabilities | ||
Assets and Associated Liabilities of Transfers Accounted for as Secured Borrowings [Line Items] | ||
Liabilities | $ 72 | $ 72 |
Collateralized Loan Obligatio_4
Collateralized Loan Obligation - Schedule of Net Interest Income Included in Consolidated Statement of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Variable Interest Entity [Line Items] | |||
Interest income | $ 71,079 | $ 64,751 | |
Interest expense | 39,082 | 34,842 | |
Total net interest income | 31,997 | 29,909 | |
Unamortized debt issuance costs | 8,000 | $ 9,500 | |
Collateralized Loan Obligations | |||
Variable Interest Entity [Line Items] | |||
Unamortized debt issuance costs | 5,000 | $ 6,600 | |
Variable Interest Entity, Primary Beneficiary | Collateralized Loan Obligations | |||
Variable Interest Entity [Line Items] | |||
Interest income | 11,836 | 14,426 | |
Interest expense | 8,768 | 9,943 | |
Total net interest income | 3,068 | 4,483 | |
Deferred financing costs amortization | 1,600 | 800 | |
Unamortized debt issuance costs | $ 5,000 | $ 8,800 |
Convertible Notes, Net - Narrat
Convertible Notes, Net - Narrative (Details) | 1 Months Ended | 3 Months Ended | |||
May 31, 2018USD ($)$ / shares | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($) | May 15, 2018$ / shares | |
Debt Instrument [Line Items] | |||||
Affiliate expenses | $ 6,204,000 | $ 5,605,000 | |||
Accrued interest payable | $ 7,513,000 | $ 6,686,000 | |||
Notes Due in 2023 | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, interest rate, effective percentage | 6.92% | ||||
Convertible Notes Payable | |||||
Debt Instrument [Line Items] | |||||
Face value | $ 143,750,000 | 143,750,000 | |||
Debt issuance costs, gross | 3,205,000 | 3,460,000 | |||
Convertible Notes Payable | Notes Due in 2023 | |||||
Debt Instrument [Line Items] | |||||
Face value | $ 143,750,000 | ||||
Debt instrument, interest rate, stated percentage | 6.125% | ||||
Debt issuance costs, gross | $ 5,100,000 | ||||
Debt instrument, conversion ratio | 0.0439386 | ||||
Debt Instrument, convertible, conversion price (usd per share) | $ / shares | $ 22.76 | ||||
Debt instrument, convertible, conversion premium | 10.00% | ||||
Debt instrument, convertible, conversion price less premium (usd per share) | $ / shares | $ 20.69 | ||||
Amortization of debt discount | $ 1,800,000 | ||||
Debt instrument, interest rate, effective percentage | 6.50% | ||||
Accrued interest payable | $ 3,300,000 | $ 1,100,000 | |||
KKR Credit & Markets | Convertible Debt | |||||
Debt Instrument [Line Items] | |||||
Affiliate expenses | $ 800,000 |
Convertible Notes, Net - Intere
Convertible Notes, Net - Interest Expense, Debt (Details) - Convertible Notes Payable - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Debt Instrument [Line Items] | ||
Cash coupon | $ 2,201 | $ 2,201 |
Discount and issuance cost amortization | 346 | 342 |
Total interest expense | $ 2,547 | $ 2,543 |
Convertible Notes, Net - Net Bo
Convertible Notes, Net - Net Book Value (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Debt Instrument [Line Items] | ||
Net book value | $ 139,420 | $ 139,075 |
Convertible Notes Payable | ||
Debt Instrument [Line Items] | ||
Face value | 143,750 | 143,750 |
Deferred financing costs | (3,205) | (3,460) |
Unamortized discount | (1,125) | (1,215) |
Net book value | $ 139,420 | $ 139,075 |
Loan Participations Sold - Narr
Loan Participations Sold - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Oct. 31, 2019 |
Participating Mortgage Loans [Line Items] | |||
Carrying Value | $ 64,972 | $ 64,966 | |
Vertical Loan Participation | |||
Participating Mortgage Loans [Line Items] | |||
Carrying Value | 64,972 | 64,966 | $ 65,000 |
Principal balance | 65,000 | 65,000 | |
Total loan | |||
Participating Mortgage Loans [Line Items] | |||
Carrying Value | 325,724 | 326,881 | |
Principal balance | $ 329,576 | $ 328,500 | $ 328,500 |
Loan Participations Sold (Detai
Loan Participations Sold (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020USD ($)loan | Mar. 31, 2019USD ($) | Dec. 31, 2019USD ($)loan | Oct. 31, 2019USD ($) | |
Participating Mortgage Loans [Line Items] | ||||
Carrying Value | $ 64,972 | $ 64,966 | ||
Interest income | $ 31,997 | $ 29,909 | ||
Total loan | ||||
Participating Mortgage Loans [Line Items] | ||||
Number of loans sold (in loans) | loan | 1 | 1 | ||
Principal Balance | $ 329,576 | $ 328,500 | $ 328,500 | |
Amortized Cost | 328,117 | 326,881 | ||
Carrying Value | $ 325,724 | $ 326,881 | ||
Yield/cost | 2.50% | 2.50% | ||
Vertical Loan Participation | ||||
Participating Mortgage Loans [Line Items] | ||||
Number of loans sold (in loans) | loan | 1 | 1 | ||
Principal Balance | $ 65,000 | $ 65,000 | ||
Amortized Cost | 64,972 | 64,966 | ||
Carrying Value | $ 64,972 | $ 64,966 | $ 65,000 | |
Yield/cost | 2.50% | 2.50% | ||
Loan participations | ||||
Participating Mortgage Loans [Line Items] | ||||
Interest income | $ 700 | 600 | ||
Interest expense | $ 700 | $ 700 |
Variable Interest Entities - Na
Variable Interest Entities - Narrative (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020USD ($)investment | Sep. 30, 2019USD ($) | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Variable Interest Entity [Line Items] | ||||
Number of equity method investments | investment | 2 | |||
Equity method investments | $ 34,441 | $ 37,469 | ||
CMBS | ||||
Variable Interest Entity [Line Items] | ||||
Unpaid principal balance | $ 34,900 | |||
Fair value | $ 12,500 | |||
Fair value of sold investment | $ 9,800 | |||
Loss on sale of CMBS | $ 2,700 | |||
Nonconsolidated | RECOP | ||||
Variable Interest Entity [Line Items] | ||||
Ownership percentage in VIE | 3.50% | |||
Nonconsolidated | KKR Manager | ||||
Variable Interest Entity [Line Items] | ||||
Ownership percentage in VIE | 4.70% |
Equity - Narrative (Details)
Equity - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 4 Months Ended | 12 Months Ended | ||||||||||
Apr. 28, 2020 | Nov. 30, 2018 | Aug. 31, 2018 | May 31, 2017 | Apr. 30, 2017 | Feb. 28, 2017 | Mar. 31, 2016 | Mar. 31, 2020 | Mar. 31, 2019 | Apr. 28, 2020 | Dec. 31, 2019 | Jun. 14, 2019 | Feb. 22, 2019 | Oct. 02, 2014 | |
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Common stock and preferred stock, shares authorized (shares) | 350,000,000 | |||||||||||||
Common stock par value (usd per share) | $ 0.01 | $ 0.01 | $ 0.01 | |||||||||||
Common stock authorized (shares) | 300,000,000 | 300,000,000 | 300,000,000 | |||||||||||
Preferred stock authorized (shares) | 50,000,000 | 50,000,000 | 50,000,000 | |||||||||||
Value of stock acquired per transaction for LLC interest allocation | $ 100,000,000 | |||||||||||||
Accumulated shares repurchased (shares) | 3,511,240 | |||||||||||||
Stock repurchase program, authorized amount (up to) | $ 100,000,000 | |||||||||||||
Stock repurchase program, remaining authorized repurchase amount | $ 50,000,000 | |||||||||||||
Repurchase of common stock (shares) | 1,648,551 | 212,809 | ||||||||||||
Treasury stock acquired, average cost per share (dollars per share) | $ 11.64 | $ 19.25 | ||||||||||||
Repurchase of common stock | $ 19,200,000 | $ 4,100,000 | ||||||||||||
Repurchase of common stock, subsequently settled (in shares) | 262,492 | |||||||||||||
Repurchase of common stock, average cost per share (usd per share) | $ 15.24 | |||||||||||||
Repurchase of common stock, subsequently settled | $ 4,000,000 | |||||||||||||
Common Stock | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Share price (usd per share) | $ 19.90 | |||||||||||||
Sale of stock, number of shares issued in transaction | 5,000,000 | |||||||||||||
Voting Preferred Stock | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Issuance of stock (shares) | 1 | |||||||||||||
Preferred stock share price (usd per share) | $ 20 | |||||||||||||
Ownership percentage to retain voting rights | 25.00% | |||||||||||||
Redeemable Preferred Stock | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Issuance of stock (shares) | 1 | |||||||||||||
Preferred stock share price (usd per share) | $ 0.01 | |||||||||||||
Liquidation preference (usd per share) | $ 0.01 | |||||||||||||
Redemption price (usd per share) | $ 0.01 | |||||||||||||
Common Stock | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Common stock issued related to vesting RSUs (shares) | 137,434 | |||||||||||||
Repurchase of common stock (shares) | 1,648,551 | 212,809 | ||||||||||||
Repurchase of common stock | $ 2,000 | |||||||||||||
KKR Real Estate FInance Manager L.L.C | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Common stock, percent of limited liability company interest | 6.67% | |||||||||||||
KREF | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Common stock issued related to vesting of restricted stock units (shares) | 55,838,032 | |||||||||||||
KREF | Common Stock | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Common stock issued related to vesting of restricted stock units (shares) | 59,211,838 | |||||||||||||
KREF | KKR | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Common stock (shares) | 22,008,616 | 22,008,616 | ||||||||||||
Issued and outstanding common stock owned, percentage | 39.40% | 38.30% | ||||||||||||
KKR Real Estate FInance Trust Inc. on Behalf of Third Party | KKR | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Common stock (shares) | 2,008,616 | 2,008,616 | ||||||||||||
Private Placement | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Capital commitment | $ 277,400,000 | |||||||||||||
Share price (usd per share) | $ 20 | |||||||||||||
Private Placement | Common Stock | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Share price (usd per share) | $ 20 | |||||||||||||
Sale of stock, number of shares issued in transaction | 10,379,738 | 7,386,208 | ||||||||||||
Sale of stock, consideration received on transaction | $ 207,600,000 | $ 147,700,000 | ||||||||||||
Private Placement, Third-parties and Current and Former Employees of, and Consultants to, KKR | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Capital commitment | $ 190,100,000 | |||||||||||||
Private Placement, Third-parties | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Capital commitment | 178,400,000 | |||||||||||||
Private Placement, Current and Former Employees of, and Consultants to, KKR | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Capital commitment | 11,800,000 | |||||||||||||
Private Placement, KKR Fund Holdings | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Capital commitment | 400,000,000 | |||||||||||||
Private Placement, Third-parties Subsequent to Private Placement Completion | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Capital commitment | $ 248,000,000 | |||||||||||||
IPO | Common Stock | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Share price (usd per share) | $ 20.50 | |||||||||||||
Sale of stock, number of shares issued in transaction | 11,787,500 | |||||||||||||
Underwritten offering | Common Stock | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Share price (usd per share) | $ 20 | |||||||||||||
Sale of stock, number of shares issued in transaction | 4,500,000 | 1,537,500 | ||||||||||||
Sale of stock, consideration received on transaction | $ 9,400,000 | $ 98,300,000 | ||||||||||||
Underwritten offering sold by the Company | Common Stock | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Sale of stock, number of shares issued in transaction | 500,000 | |||||||||||||
Underwritten offering sold by third-party investors | Common Stock | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Sale of stock, number of shares issued in transaction | 4,000,000 | |||||||||||||
ATM | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Stock repurchase program, authorized amount (up to) | $ 100,000,000 | |||||||||||||
Subsequent Event | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Repurchase of common stock (shares) | 389,086 | 2,037,637 | ||||||||||||
Treasury stock acquired, average cost per share (dollars per share) | $ 14.92 | $ 12.27 |
Equity - Schedule of Common Sto
Equity - Schedule of Common Stock Issued (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Common Stock, Net | ||||
Common Stock Issuance [Roll Forward] | ||||
Beginning balance (shares) | 53,711,838 | 24,158,392 | 13,636,416 | |
Ending balance (shares) | 59,211,838 | 53,711,838 | 24,158,392 | |
Common Stock Including Additional Paid in Capital & Offering Costs | ||||
Common Stock Issuance [Roll Forward] | ||||
Beginning balance | $ 1,054,346 | $ 479,733 | $ 272,728 | |
Ending balance | $ 1,162,023 | $ 1,054,346 | $ 479,733 | |
Private Placement | ||||
Common Stock Issuance [Roll Forward] | ||||
Ending balance (shares) | 21,838 | |||
February 2016 | Common Stock, Net | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock (shares) | 2,000,000 | |||
February 2016 | Common Stock Including Additional Paid in Capital & Offering Costs | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock | $ 40,000 | |||
May 2016 | Common Stock, Net | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock (shares) | 3,000,138 | |||
May 2016 | Common Stock Including Additional Paid in Capital & Offering Costs | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock | $ 57,130 | |||
June 2016 | Common Stock, Net | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock (shares) | 21,838 | |||
June 2016 | Common Stock Including Additional Paid in Capital & Offering Costs | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock | $ 0 | |||
August 2016 | Common Stock, Net | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock (shares) | 5,500,000 | |||
August 2016 | Common Stock Including Additional Paid in Capital & Offering Costs | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock | $ 109,875 | |||
February 2017 | Common Stock, Net | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock (shares) | 7,386,208 | |||
February 2017 | Common Stock Including Additional Paid in Capital & Offering Costs | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock | $ 147,662 | |||
April 2017 | Common Stock, Net | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock (shares) | 10,379,738 | |||
April 2017 | Common Stock Including Additional Paid in Capital & Offering Costs | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock | $ 207,595 | |||
May 2017- Initial Public Offering | Common Stock, Net | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock (shares) | 11,787,500 | |||
May 2017- Initial Public Offering | Common Stock Including Additional Paid in Capital & Offering Costs | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock | $ 219,356 | |||
August 2018 | Common Stock, Net | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock (shares) | 5,000,000 | |||
August 2018 | Common Stock Including Additional Paid in Capital & Offering Costs | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock | $ 98,326 | |||
November 2018 | Common Stock, Net | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock (shares) | 500,000 | |||
November 2018 | Common Stock Including Additional Paid in Capital & Offering Costs | ||||
Common Stock Issuance [Roll Forward] | ||||
Issuance of stock | $ 9,351 |
Equity - Schedule of Dividends
Equity - Schedule of Dividends Declared (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | |
Equity [Abstract] | |||
Dividends Declared per Share of Common Stock (usd per share) | $ 0.43 | $ 0.43 | $ 0.43 |
Dividends paid | $ 24,010 | $ 24,761 |
Equity - Earnings Per Share (De
Equity - Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Numerator | ||
Net income (loss) attributable to common stockholders | $ (35,164) | $ 24,705 |
Denominator | ||
Basic weighted average common shares outstanding (shares) | 57,346,726 | 57,387,386 |
Dilutive restricted stock units (shares) | 0 | 89,848 |
Diluted weighted average common shares outstanding (shares) | 57,346,726 | 57,477,234 |
Net income (loss) attributable to common stockholders, per: | ||
Basic common share (usd per share) | $ (0.61) | $ 0.43 |
Diluted common share (usd per share) | $ (0.61) | $ 0.43 |
Stock-based Compensation - Narr
Stock-based Compensation - Narrative (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2020USD ($)periodshares | Mar. 31, 2019USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Issuance ratio | 1 | |
Weighted average period | 1 year 2 months 12 days | |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of consecutive vesting periods | period | 3 | |
Vesting period | 1 year | |
Units granted (in shares) | shares | 0 | |
Common Stock | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Unrecognized stock based compensation expense | $ 9.7 | |
General and Administrative Expense | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based compensation expense | $ 1.6 | $ 1 |
Director | Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period | 1 year |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Stock Unit Activity (Details) - Restricted Stock Units | 3 Months Ended |
Mar. 31, 2020$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Unvested, beginning balance (in shares) | shares | 641,214 |
Units granted (in shares) | shares | 0 |
Units vested (in shares) | shares | 0 |
Units Forfeited/ cancelled (in shares) | shares | (739) |
Unvested, ending balance (in shares) | shares | 640,475 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Unvested, beginning balance, weighted average grant date fair value (usd per share) | $ / shares | $ 20.02 |
Units granted, weighted average grant date fair value (usd per share) | $ / shares | 0 |
Units vested, weighted average grant date fair value (usd per share) | $ / shares | 0 |
Units Forfeited/ cancelled, weighted average grant date fair value (usd per share) | $ / shares | 19.46 |
Unvested. ending balance, weighted average grant date fair value (usd per share) | $ / shares | $ 20.02 |
Stock-based Compensation - RSU
Stock-based Compensation - RSU Vesting (Details) - Restricted Stock Units - shares | Mar. 31, 2020 | Dec. 31, 2019 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
2020 | 291,676 | |
2021 | 232,133 | |
2022 | 116,666 | |
Total | 640,475 | 641,214 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended |
Jan. 31, 2017 | Mar. 31, 2020 | |
Future Funding Commitment Related to Commercial Mortgage Loan Investments | ||
Long-term Purchase Commitment [Line Items] | ||
Capital commitment | $ 592.8 | |
Nonconsolidated | RECOP I | Commitment to Invest in Aggregator Vehicle | ||
Long-term Purchase Commitment [Line Items] | ||
Long-term purchase commitment period | 2 years | |
Capital commitment | $ 40 | $ 4.3 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) | 1 Months Ended | 3 Months Ended | ||
May 31, 2018USD ($) | Mar. 31, 2020USD ($)quartershares | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Related Party Transaction [Line Items] | ||||
Affiliate fee | $ 6,204,000 | $ 5,605,000 | ||
Management Incentive Plan | ||||
Related Party Transaction [Line Items] | ||||
Percent of issued and outstanding shares of common stock available for awards (no more than) | 7.50% | |||
Number of shares available for awards (shares) | shares | 4,028,387 | |||
Non-Employee Director | Management Incentive Plan | ||||
Related Party Transaction [Line Items] | ||||
Maximum number of shares subject to award grants together with cash fees paid | $ 1,000,000 | |||
Maximum amount that can be paid to any participant pursuant to a performance compensation award | $ 10,000,000 | |||
Management Agreement | ||||
Related Party Transaction [Line Items] | ||||
Minimum voting percentage for renewal of agreement term | 66.67% | |||
Management agreement term | 3 years | |||
Period of automatic renewal under management agreement | 1 year | |||
Termination fee | 3 | |||
Trailing average period applied to termination fee multiple under management agreement | 24 months | |||
Quarterly Management Fee | ||||
Related Party Transaction [Line Items] | ||||
Affiliate fee | $ 62,500 | |||
Management fee as a percent of weighted average adjusted equity (greater of) | 0.375% | |||
Quarterly Incentive Compensation | ||||
Related Party Transaction [Line Items] | ||||
Incentive compensation fee percent | 20.00% | |||
Period of adjusted earnings | 12 months | |||
Percent of trailing 12 month weighted average adjusted equity | 7.00% | |||
Period of weighted average adjusted equity | 12 months | |||
Number of quarters worth of compensation already paid | quarter | 3 | |||
KCM | Structuring Fees in Connection with Revolver | ||||
Related Party Transaction [Line Items] | ||||
Affiliate fee | $ 600,000 | 300,000 | ||
Structuring fee, percent | 0.75% | |||
Convertible Debt | KCM | ||||
Related Party Transaction [Line Items] | ||||
Affiliate fee | $ 800,000 | |||
Maximum commissions to be paid to sales agent as a percentage of gross sales price | 2.00% | |||
Term Loan Facility | ||||
Related Party Transaction [Line Items] | ||||
Affiliate fee | $ 0 | 1,500,000 | ||
Term Loan Facility | KCM | ||||
Related Party Transaction [Line Items] | ||||
Structuring fee, percent | 0.75% | |||
HSBC Facility | KCM | ||||
Related Party Transaction [Line Items] | ||||
Affiliate fee | $ 100,000 | |||
Structuring fee, percent | 0.25% | |||
BMO | ||||
Related Party Transaction [Line Items] | ||||
Affiliate fee | $ 0 | $ 200,000 | ||
Structuring fee, percent | 0.35% | |||
Collateralized Loan Obligations | ||||
Related Party Transaction [Line Items] | ||||
Placement agent fee | $ 900,000 | |||
Placement agent fee, percent | 0.105% | |||
Common Stock | Management Incentive Plan | ||||
Related Party Transaction [Line Items] | ||||
Number of shares available for awards (shares) | shares | 3,250,478 |
Related Party Transactions - Ex
Related Party Transactions - Expenses Incurred and Amounts Owed to Affiliates (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Related Party Transaction [Line Items] | |||
Due to affiliate | $ 5,022 | $ 5,917 | |
Affiliate expenses | 6,204 | $ 5,605 | |
Management fees | |||
Related Party Transaction [Line Items] | |||
Due to affiliate | 4,299 | 4,280 | |
Affiliate expenses | 4,299 | 4,287 | |
Incentive compensation | |||
Related Party Transaction [Line Items] | |||
Affiliate expenses | 953 | ||
Expense reimbursements and other | |||
Related Party Transaction [Line Items] | |||
Due to affiliate | 723 | $ 1,637 | |
Affiliate expenses | 299 | 365 | |
Out-of-pocket costs reimbursed | |||
Related Party Transaction [Line Items] | |||
Affiliate expenses | $ 1,500 | $ 500 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Assets and Liabilities Recorded at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Jan. 01, 2020 | Dec. 31, 2019 | Oct. 31, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents | $ 369,867 | $ 67,619 | ||
Commercial mortgage loans, held-for-investment | 5,089,968 | $ 4,931,042 | 4,931,042 | |
Financing receivable, after allowance for credit loss | 5,023,989 | 4,931,042 | 4,931,042 | |
Equity method investments, fair value | 34,441 | 37,469 | ||
Total Assets | 5,455,681 | 5,057,018 | ||
Secured financing agreements, net, principal balance | 3,379,857 | |||
Secured financing agreements, net, carrying value | 3,368,329 | 2,884,887 | ||
Collateralized loan obligation, net, carrying value | 805,008 | 803,376 | ||
Convertible notes, net | 139,420 | 139,075 | ||
Loan participations sold, net, carrying value | 64,972 | 64,966 | ||
Total Liabilities | 4,423,375 | 3,933,306 | ||
Liabilities, fair value | 770,497 | |||
Unamortized origination discounts and deferred nonrefundable fees | 28,200 | 29,700 | ||
Unamortized debt issuance costs | 8,000 | 9,500 | ||
Carrying amount | 65,979 | $ 0 | 0 | |
Fair Value, Measurements, Recurring | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents | 369,867 | 67,619 | ||
Cash and cash equivalents, fair value | 369,867 | 67,619 | ||
Commercial mortgage loans, held-for-investment | 5,118,199 | 4,960,698 | ||
Commercial mortgage loans, held-for-investment | 5,089,968 | 4,931,042 | ||
Financing receivable, after allowance for credit loss | 5,023,989 | 4,931,042 | ||
Commercial mortgage loans, held-for-investment, net, fair value | 4,956,766 | 4,937,808 | ||
Equity method investments | 34,441 | 37,469 | ||
Equity method investments, fair value | 34,441 | 37,469 | ||
Assets, principal balance | 5,522,507 | 5,065,786 | ||
Net Assets | 5,494,276 | 5,036,130 | ||
Total Assets | 5,428,297 | 5,036,130 | ||
Assets, fair value | 5,361,074 | 5,042,896 | ||
Secured financing agreements, net, principal balance | 3,379,857 | 2,898,716 | ||
Secured financing agreements, net, carrying value | 3,368,329 | 2,884,887 | ||
Secured financing agreements, net, fair value | 3,379,857 | 2,898,716 | ||
Collateralized loan obligation, net, principal balance | 810,000 | 810,000 | ||
Collateralized loan obligation, net, carrying value | 805,008 | 803,376 | ||
Collateralized loan obligation, net, fair value | 770,497 | 810,867 | ||
Convertible notes, principal balance | 143,750 | 143,750 | ||
Convertible notes, net | 139,420 | 139,075 | ||
Convertible notes, net, fair value | 121,956 | 150,719 | ||
Loan participations sold, net, principal balance | 65,000 | 65,000 | ||
Loan participations sold, net, carrying value | 64,972 | 64,966 | ||
Loan participations sold, net, fair value | 64,972 | 64,966 | ||
Liabilities, principal balance | 4,398,607 | 3,917,466 | ||
Total Liabilities | 4,377,729 | 3,892,304 | ||
Liabilities, fair value | 4,337,282 | 3,925,268 | ||
Fair Value, Measurements, Recurring | Level 1 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents, fair value | 369,867 | 67,619 | ||
Commercial mortgage loans, held-for-investment, net, fair value | 0 | 0 | ||
Equity method investments, fair value | 0 | 0 | ||
Assets, fair value | 369,867 | 67,619 | ||
Secured financing agreements, net, fair value | 0 | 0 | ||
Collateralized loan obligation, net, fair value | 0 | 0 | ||
Convertible notes, net, fair value | 121,956 | 150,719 | ||
Loan participations sold, net, fair value | 0 | 0 | ||
Liabilities, fair value | 121,956 | 150,719 | ||
Fair Value, Measurements, Recurring | Level 2 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents, fair value | 0 | 0 | ||
Commercial mortgage loans, held-for-investment, net, fair value | 0 | 0 | ||
Equity method investments, fair value | 0 | 0 | ||
Assets, fair value | 0 | 0 | ||
Secured financing agreements, net, fair value | 0 | 0 | ||
Collateralized loan obligation, net, fair value | 0 | 0 | ||
Convertible notes, net, fair value | 0 | 0 | ||
Loan participations sold, net, fair value | 0 | 0 | ||
Liabilities, fair value | 0 | 0 | ||
Fair Value, Measurements, Recurring | Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents, fair value | 0 | 0 | ||
Commercial mortgage loans, held-for-investment, net, fair value | 4,956,766 | 4,937,808 | ||
Equity method investments, fair value | 34,441 | 37,469 | ||
Assets, fair value | 4,991,207 | 4,975,277 | ||
Secured financing agreements, net, fair value | 3,379,857 | 2,898,716 | ||
Collateralized loan obligation, net, fair value | 770,497 | 810,867 | ||
Convertible notes, net, fair value | 0 | 0 | ||
Loan participations sold, net, fair value | 64,972 | 64,966 | ||
Liabilities, fair value | 4,215,326 | 3,774,549 | ||
Commercial Mortgage Loans | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Unamortized debt issuance costs | 11,500 | 13,800 | ||
Collateralized Loan Obligations | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Unamortized debt issuance costs | 5,000 | 6,600 | ||
Commercial mortgage loans, held-for-investment, net, carrying value | 1,000,000 | 1,000,000 | ||
Vertical Loan Participation | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Commercial mortgage loans, held-for-investment, net, carrying value | 65,000 | |||
Senior Participation Loan | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Carrying amount | 66,000 | |||
Vertical Loan Participation | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Loan participations sold, net, carrying value | $ 64,972 | 64,966 | $ 65,000 | |
Mortgage loans on real estate, fair value | $ 65,000 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Schedule of Equity Method Investments [Line Items] | ||
Income (loss) from equity method investments | $ 1,901 | $ (1,125) |
RECOP I | ||
Schedule of Equity Method Investments [Line Items] | ||
Distribution from equity method investments | 900 | |
Income (loss) from equity method investments | (2,200) | |
Unrealized mark-to-market loss | $ 3,000 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Unobservable Inputs (Details) $ in Thousands | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) |
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||
Liabilities, fair value | $ 770,497 | |
Equity method investments | 34,441 | $ 37,469 |
Carrying Value | 64,972 | $ 64,966 |
CMBS | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||
Assets, fair value | 4,956,766 | |
CMBS | Loans held-for-investment | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||
Commercial mortgage loans, held-for-investment, net | $ 4,956,766 | |
CMBS | Discount Rate | Level 3 | Minimum | Discounted Cash Flow | Loans held-for-investment | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||
Weighted average, measurement | 0.037 | |
CMBS | Discount Rate | Level 3 | Maximum | Discounted Cash Flow | Loans held-for-investment | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||
Weighted average, measurement | 0.127 | |
CMBS | Discount Rate | Level 3 | Weighted Average | Discounted Cash Flow | Loans held-for-investment | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||
Weighted average, measurement | 0.048 | |
Collateralized Loan Obligation, Net | Long-term Debt | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||
Collateralized loan obligation, net, fair value | $ 770,497 | |
Collateralized Loan Obligation, Net | Yield | Level 3 | Minimum | Discounted Cash Flow | Long-term Debt | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||
Weighted average, measurement | 0.028 | |
Collateralized Loan Obligation, Net | Yield | Level 3 | Maximum | Discounted Cash Flow | Long-term Debt | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||
Weighted average, measurement | 0.090 | |
Collateralized Loan Obligation, Net | Yield | Level 3 | Weighted Average | Discounted Cash Flow | Long-term Debt | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||
Weighted average, measurement | 0.037 | |
Vertical Loan Syndication | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||
Carrying Value | $ 65,000 | |
RECOP I | Level 3 | Discounted Cash Flow | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | ||
Equity method investments | $ 34,200 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Income Tax Disclosure [Abstract] | |||
Income tax expense | $ 82,000 | $ 9,000 | |
Deferred tax assets, net | $ 0 | $ 0 |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 4 Months Ended | 12 Months Ended | |
Apr. 28, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Apr. 28, 2020 | Dec. 31, 2019 | |
Subsequent Event [Line Items] | |||||
Funding for loans | $ 334,146 | $ 323,539 | |||
Proceeds from loan paydowns | $ 179,553 | 561,815 | |||
Repurchase of common stock (shares) | 1,648,551 | 212,809 | |||
Treasury stock acquired, average cost per share (dollars per share) | $ 11.64 | $ 19.25 | |||
Repurchase of common stock | $ 23,252 | 4,106 | |||
Dividends paid | $ 24,010 | $ 24,761 | |||
Date of record | Mar. 31, 2020 | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Proceeds from loan paydowns | $ 42,000 | ||||
Repayments of debt | $ 25,400 | ||||
Repurchase of common stock (shares) | 389,086 | 2,037,637 | |||
Treasury stock acquired, average cost per share (dollars per share) | $ 14.92 | $ 12.27 | |||
Repurchase of common stock | $ 5,800 | $ 25,000 | |||
Shares acquired, previously settled | 262,492 | ||||
Dividends paid | $ 24,000 | ||||
Dividend paid (usd per share) | $ 0.43 | ||||
Senior loans | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Funding for loans | $ 27,000 | ||||
Revolving Credit Facility | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Repayments of debt | 100,000 | ||||
Secured Financing Agreements | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Repayments of debt | $ 60,000 |
Uncategorized Items - a202003-k
Label | Element | Value |
Accounting Standards Update 2016-13 [Member] | Parent [Member] | ||
Cumulative Effect Period Of Adoption | kref_CumulativeEffectPeriodOfAdoption | $ (15,009,000) |
Accounting Standards Update 2016-13 [Member] | Retained Earnings [Member] | ||
Cumulative Effect Period Of Adoption | kref_CumulativeEffectPeriodOfAdoption | $ (15,009,000) |