KKR Real Estate Finance Trust Inc.

Good morning and welcome to the KKR Real Estate Finance Trust Incorporated Second Quarter 2025 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist 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, and welcome to the KKR Real Estate Finance Trust earnings call for the second quarter of 2025. As the Operator mentioned, this is Jack Switala. This morning, I'm joined on the call by our CEO, Matt Salem, our President and COO, Patrick Mattson, and our CFO, Kendra Deschis. I'd 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'll go through our results. For the second quarter of 2025, we reported a gap net loss of $35 million, or negative 53 cents per share. Book value per share as of June 30, 2025, is $13.84. We reported a distributable loss of $3 million due primarily to taking ownership of our West Hollywood property. Prior to realized losses, Distributable earnings was $16 million, or 24 cents per share. We paid a 25-cent cash dividend with respect to the second quarter. With that, I'd now like to turn the call over to Matt.

Thank you, Jack. Good morning, everyone, and thanks for joining our call today. Let's begin with an update on the real estate credit market. Transaction activity and loan demand has recovered from the volatility of the initial tariff announcement. and we are seeing significant opportunities within our loan pipeline, which continues to run near record levels. Competition has returned, and most lenders are active in the market. Despite the competitive environment, we believe the lending opportunity remains highly attractive, offering both absolute and relative value. Most of that is driven by the ability to lend on reset values well below replacement cost. Fundamentals remain healthy across most property types, and construction starts have decreased meaningfully, likely leading to stronger rental growth over the next few years. Commercial banks are increasing their participation while shifting some of their lending to loan-on-loan or other back-leveraged facilities, allowing KREF to borrow at attractive rates on a non-mark-to-market and match-term basis. Now turning to second quarter results, Originations in the quarter totaled $211 million, comprised of two loans secured by industrial and multifamily properties. We had two full repayments and six partial repayments, which totaled $450 million. We will continue to reinvest repayments and are projecting nearly $1 billion of incremental repayments over the second half of the year. Now that we have turned the investment pipeline on, We are focused on two newer areas. First, diversifying our portfolio geographically into Europe. And second, creating some more duration through CMBS investments. We have an active pipeline in the European loan market and anticipate new originations in the region by the end of this year. In addition, this quarter, we closed on a BP's investment where returns are very attractive. The pool consists of 34 low-leverage, fixed-rate first mortgage loans diversified across property types and geographies. We have a best-in-class team and a long track record of CMBS investing, including the ability to leverage our KSTAR platform, which is a rated special servicer. Turning to risk ratings, we downgraded a Boston Life Science asset from a four-rated loan to a five-rated loan and expect to extend the loan through February of 2026. We also downgraded our Chicago office loan from a three rated loan to a four rated loan due to continued market deterioration. As a reminder, this loan has already been modified twice with a reduction of loan balance by approximately 35% through 35 million of equity repayments and a $50 million hope note. Turning to our life science exposure, Our life science sector is 12% as of the second quarter, comprised of six assets located in the top two life science MSAs of Boston and South San Francisco. 60% is comprised of newly constructed and purpose-built properties that are targeting larger pharmaceutical tenants, which are less susceptible to some of the cyclical issues the sector is experiencing. As a reminder, we've added additional detail in our supplemental, which can be found on page 10. With that, I'll turn it over to Patrick.