KKR Real Estate Finance Trust Inc.

Good morning and welcome to the KKR Real Estate Finance Trust third quarter 2021 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal conference specialists by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jack Switala. Please go ahead.

Great. Thanks, operator. Welcome to the KKR Real Estate Finance Trust earnings call for the third quarter of 2021. We hope that all of you and your families are safe and healthy. As the operator mentioned, this is Jack Switala. Today, I'm joined on the call by our CEO, Matt Salem, our President and COO, Patrick Mattson, and our CFO, Mustafa Nagati. I would like to remind everyone that we will refer to certain non-GAAP financial measures on the call, which are reconciled to GAAP figures in our earnings release and in the supplementary presentation, both of which are available on the investor relations portion of our website. This call will also contain certain forward-looking statements which do not guarantee future events or performance. Please refer to our most recently filed 10-Q for cautionary factors related to these statements. Before I turn the call over to Matt, I will provide a brief recap of our results. For the third quarter 2021, we had gap net income of $32 million or 57 cents per share. Distributable earnings this quarter were $34.5 million, or $0.62 per share, which is a record quarter for us driven by net portfolio growth, benefits from in-place rate floors, prepayment income, and continued strong asset performance. Book value per share as of September 30, 2021, increased to $19.09, which includes the cumulative CECL impact of $1.07 per share as compared to $18.91 per share as of June 30th. This will be the sixth consecutive quarter in which we have grown book value per share. Finally, in mid-October, we paid a cash dividend of $0.43 per common share with respect to the third quarter. Based on yesterday's closing price, the dividend reflects an annualized yield of 7.6%. With that, I would now like to turn the call over to Matt.

Thank you, Jack. Good morning, everyone, and thank you for joining the call today. KREF delivered exceptionally strong results in the third quarter, with record distributable earnings of $0.62 per share. We also had a strong investing quarter, originating eight senior loans totaling $1.5 billion, bringing our funded portfolio to a record $5.8 billion, up 16% on a year-over-year basis. Our robust origination volumes are driven by a real estate credit team which has doubled in size over the last two years and is comprised of over 50 investment professionals today. We've expanded KKR real estate credit capital sources as well due in large part to KKR's acquisition of Global Atlantic. Our real estate credit franchise expects to originate over $13.5 billion in loans in 2021. while with KREF serving as the flagship senior transitional loan strategy. In short, we have become a one-stop solution for our institutional clients and KREF benefits from this increased market activity. In addition, we continue to benefit from our real estate equity franchise as it expands. with our latest U.S. opportunistic fund closing on a $4.3 billion of committed capital. This scaled platform across the real estate spectrum of debt and equity provides differentiated access to information and market connectivity. In the third quarter, the eight loans we originated, totaling over $1.5 billion, included three multifamily loans, two office loans, and one loan in each of the life science, industrial, and hospitality sectors. Seven of our eight loans were to repeat sponsors, which demonstrates the value of our franchise and the strength of our relationships. Similar to the second quarter, these loans were underwritten at an attractive, low double-digit weighted average IRR. which is comparable with target returns pre-COVID. We believe these returns offer strong relative value given the risk profile. Senior loans secured by institutional real estate owned by high quality sponsors. One loan I'd like to highlight this quarter is a $520 million construction loan on a Class A LEED Gold office property to an experienced Seattle-based developer who has developed or acquired over 10 million square feet. This large loan size created a favorable competitive dynamic, and we used multiple pockets of capital to secure the transaction. KREF, using its first in the waterfall position, invested in 50% for approximately $260 million. The property is 100% pre-leased on a 16-year term to an investment grade tenant and we were able to underwrite this to a projected IRR in the mid to high teens. We continue to see robust activity and have approximately $1.1 billion of loans either closed or under exclusivity subsequent to quarter end. We expect to be active in our historical segments of multifamily and select Class A office along with certain newer growth segments, such as life science and industrial, which now represent 7% and 5% of our funded portfolio as of the third quarter, respectively. Our portfolio composition remains consistent with previous quarters and is comprised predominantly of lighter transitional floating rate senior loans. 71% of the portfolio is comprised of loans secured by multifamily and office properties, And with respect to office, I'd highlight 89% of our office portfolio is comprised of Class A office properties, the majority of which is LEED certified. From a reporting perspective, we are now breaking out our exposure to life science, which was formerly included within the office property type segment and now represents 7% of the portfolio. Overall, performance remains strong with interest collected on over 97% of the portfolio as of the third quarter. In summary, we achieved another strong quarter across the portfolio performance, earnings, and portfolio growth, despite the active repayment environment. With that, I will turn the call over to Patrick.