KKR Real Estate Finance Trust Inc.

Good morning and welcome to the KKR Real Estate Finance Trust Inc. first quarter 2026 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 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note, this event has been recorded. I would now like to turn the conference over to Jack Svitala. Please go ahead.

Great. Thanks, operator. And welcome to the KKR Real Estate Finance Trust earnings call for the first quarter of 2026. 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 gap 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 go through our results. For the first quarter of 2026, we reported a gap net loss of $62 million or negative 96 cents per share. Book value as of March 31st, 2026 is $11.87 per share. We reported a distributable loss of $4 million or negative 6 cents per share. Distributable earnings before realized losses was $13 million, or 20 cents per share. Finally, we paid a 25-cent cash dividend in April with respect to the first quarter. With that, I'd now like to turn the call over to Matt. Thanks, Jack.

Good morning, everyone, and thank you for joining us. As we outlined last quarter, 2026 represents a transition year for the company. With the goal of narrowing the gap between share price and book value per share, our focus is on two key priorities. First, executing an aggressive resolution strategy across our watch list assets and certain legacy office exposures. And second, positioning a portion of our REO portfolio for liquidity. We have significant liquidity. sitting at $653 million today, and extensive capabilities across KKR to execute both our asset management and REO strategies. Today, I want to provide additional detail on our progress against those objectives and what you should expect over the course of the year. This quarter, book value declined by 9% as we positioned our watch list loans for resolutions. Our action plan is designed to reposition the portfolio to optimize medium and long-term performance. However, as we execute, we may choose to incur book value declines as we seek liquidity on legacy assets to create a higher quality portfolio. As we complete this transition, we see a clear path to redeploy capital in the newer vintage, higher quality investments. which we believe will support a return to book value per share stability, and over time, drive earnings and book value accretion. Overall, our specific goals for 2026, as outlined on page eight of the supplemental, are to reduce our watch list and legacy office exposure, rotate the portfolio into newer vintage, higher quality assets, and reduce our REO footprint. With that, I want to walk through our action plan for 2026 in further detail. First, reduce legacy office exposure from 21% to under 10%. We expect over half of this reduction to come from par repayments, with the remaining driven by resolution of our watch list loans. We've already begun to action both prongs. Our largest office loan, a $225 million loan in Bellevue, was refinanced in the first quarter at par with a CMBS single asset, single borrower transaction. And the property securing our largest watch list office loan is currently being marketed for sale. Second, we plan to resolve all of our current watch list loans by year end. by positioning these assets for sale or modification and accelerating their resolution. Third, address our life science exposure. Our goal is to have 100% of this exposure modified. We already have made progress here, having modified 19%. And when including our Cambridge asset this quarter, we have modified 30% of our life science exposure. We also took a material increase in reserves for our Seaport loan in anticipation of a potential modification. Finally, we are continuing to originate new investments as we reposition the portfolio. As a result of this activity, loans originated between 2024 and 2026 are expected to represent approximately 50% of the portfolio by year end. This highlights the significant turnover into newer vintage assets, which we believe will have improved earnings potential. Let me turn to liquidity and capital allocation, which is another priority for us as a management team for 2026. We announced a dividend reduction to 10 cents per share per quarter, payable on July 15th. This decision is not driven by liquidity constraints. In fact, as we look ahead through the year, we expect to have over $500 million of capital to invest, largely driven by over $2 billion of expected repayments in 2026. Rather, the dividend decision reflects a disciplined approach to capital allocation. At this stage, we see more attractive opportunities, including repurchasing our stock and funding new originations. we have ample liquidity to pay dividends at the current level the new dividend level has the added benefit of being aligned with our expectations for distributable earnings per share before realized losses as we work through repositioning our portfolio while we expect 40 cents per year of dividends to be covered by earnings excluding losses quarterly results may vary in the near term with earnings expected to trough in the second half of 2026 into the first half of 2027. Once we get through this period, we expect distributable earnings per share to increase. Regarding capital allocation, given our current trading levels relative to book value, we believe share repurchases represent an attractive opportunity to drive accretion to book value per share while also providing greater strategic flexibility. We were largely inactive with respect to share buybacks this past quarter due to trading restrictions while we were actively evaluating our dividend policy. With that process now complete and our dividend framework established, those constraints have been lifted. On April 14th, our board authorized a new $75 million share repurchase program, providing us with meaningful flexibility to deploy capital. As a management team together with our board of directors, we have not taken this dividend decision lightly. But given where the stock is trading, we believe the dividend cut and meaningful share buybacks are in the best interest of shareholder value creation. With that, I will turn the call over to Patrick.