KREF

Investors might want to bet on KKR Real Estate Finance (KREF), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook. Analysts' growing optimism on the earnings prospects of this real estate finance company is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- has this insight at its core. The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008. For KKR Real Estate Finance, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year. The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate: The company is expected to earn $0.05 per share for the current quarter, which represents a year-over-year change of +266.7%. Over the last 30 days, one estimate has moved higher for KKR Real Estate compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 104.71%. For the full year, the company is expected to earn $0.39 per share, representing a year-over-year change of 0.0%. There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, one estimate has moved up for KKR Real Estate versus no negative revisions. This has pushed the consensus estimate 117.18% higher. The promising estimate revisions have helped KKR Real Estate earn a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500. KKR Real Estate shares have added 5.4% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report KKR Real Estate Finance Trust (KREF) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. The Board initiated a review of strategic alternatives to enhance shareholder value, led by independent directors, with KKR evaluating potential participation as the largest shareholder. Management reported a significant book value decline of 13.7%, primarily driven by adjusting reserves and carrying values to reflect current monetization expectations for watch list and legacy office assets. Legacy office exposure was reduced to 18% of the portfolio, with a strategic target to bring this exposure below 10% by the end of 2026. The company is aggressively rotating the portfolio, with newer vintages (2024-2026) now representing 32% of the portfolio compared to 19% at the end of 2025. Repayment activity reached $800 million for the quarter, providing the necessary liquidity to fund new originations and execute share repurchases. Management believes the most significant book value impacts are now behind the company, positioning the firm for greater stability as watch list resolutions finalize. Life Science modifications increased to 39% of exposure, with management stating that the vast majority of expected reserves for this segment have now been recognized. Management expects distributable earnings to trough later in 2026 and remain at that level for several quarters before the benefits of portfolio repositioning emerge. The company targets reducing watch list exposure to zero by year-end 2026, with nearly half of these assets currently being marketed for sale. Total repayments for 2026 are projected to exceed $2 billion, representing over 35% of the portfolio's starting size for the year. Management anticipates total leverage will naturally return to the target range of 3.5x to 4.0x as elevated repayment activity continues through the second half of the year. Future capital allocation decisions, including share repurchases, will be integrated into the ongoing strategic review process. Reported a GAAP loss of $122 million, largely reflecting realized and unrealized losses associated with the accelerated monetization of legacy assets. Downgraded Chicago office and Carrollton Multifamily loans to risk rating 5, while a Dallas Multifamily asset was downgraded to risk rating 4 due to current market conditions. Transitioned a Boston Life Science loan into the REO portfolio, noting no material book value impact due to prior reserve positioning. Repurchased $38 million of common stock during the quarter at a weighted average price of $6.63, generating $0.32 per share of book value accretion. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management explained that recent book value declines reflect 'discovery' as they receive real-time market feedback from active asset liquidation processes. Stated that while final outcomes could vary, they believe the most significant book value impact is now behind them as they understand clearing values better. Confirmed that the remaining risk-rated 5 Life Science loan is in modification discussions and is believed to be fully reserved. Noted 'green shoots' in Life Science leasing, particularly in West Coast markets driven by AI and tech demand, though Boston-area markets remain further behind. Acknowledged pressure on multifamily values due to 'higher for longer' rates but characterized potential losses as non-material to overall book value. Expressed optimism for a tightening market in 2027 as the current supply wave is absorbed and high housing costs drive rental demand. Clarified that the strategic review does not technically preclude share buybacks, but future repurchases will be coordinated with the review committee. Indicated a near-term pause or adjustment in new originations to allow leverage ratios to move back toward the 3.5x-4.0x target range.

This article first appeared on GuruFocus. GAAP Loss: $122 million or negative $1.95 per share for Q2 2026. Book Value: $10.24 per share as of June 30, 2026. Distributable Loss: $36 million or negative $0.58 per share. Distributable Earnings Before Realized Losses: $6 million or $0.10 per share. Cash Dividend: $0.10 per share for the second quarter. Legacy Office Exposure: Declined to 18% of the portfolio as of June 30, 2026. Watch List: Represents 16% of the portfolio as of June 30, 2026. Life Science Exposure: Modified approximately 39% of exposure. New Originations: Loans from 2024-2026 represent 32% of the portfolio. Repayments: Over $800 million received during the quarter; expecting over $2 billion for 2026. Common Stock Repurchase: $38 million repurchased at $6.63 per share; additional $10 million at $7.24 per share post-quarter. Liquidity: Over $700 million, including $83 million cash on hand and $350 million undrawn capacity. Total Financing Availability: $7 billion, with $2.6 billion undrawn capacity. Debt-to-Equity Ratio: 2.6 times as of quarter end. Total Leverage: 4.3 times as of quarter end. Warning! GuruFocus has detected 4 Warning Signs with KREF. Is KREF fairly valued? Test your thesis with our free DCF calculator. Release Date: July 22, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. KKR Real Estate Finance Trust Inc (NYSE:KREF) reported distributable earnings before realized losses of $0.10 per share, covering their quarterly dividend. The company has made significant progress in reducing legacy office exposure, which declined to 18% of the portfolio from 21% at the end of 2025. KREF received over $800 million in repayments during the quarter, contributing to a strong liquidity position with over $700 million available. The company repurchased $38 million of common stock, generating approximately $0.32 per share of book value accretion. KREF originated three new loans totaling approximately $350 million, with a weighted average loan-to-value (LTV) of 58%, indicating disciplined capital deployment. KKR Real Estate Finance Trust Inc (NYSE:KREF) reported a GAAP loss of $122 million or negative $1.95 per share for the second quarter of 2026. Book value declined by 13.7% during the quarter, primarily due to actions taken to position watchlist assets and legacy office exposures for monetization. The watchlist represents 16% of the portfolio, with nearly half of the assets currently being marketed, indicating ongoing challenges in asset resolution. The company downgraded several loans, including the Chicago office and Carrollton multifamily loans, reflecting current market conditions. KREF's debt-to-equity ratio was 2.6 times, with total leverage at 4.3 times, slightly above their target leverage range of 3.5 to 4 times. Q: How was the loan loss review process and book value assessment different this quarter compared to the previous two quarters? A: The decline in book value this quarter reflects the current expectations for monetization of watchlist assets. The process involves discovering clearing values and market conditions. While there could be minor fluctuations, the most significant book value impact is believed to be behind us. (Matthew Salem, CEO) Q: How are capital allocation priorities ranked for the rest of the year, especially with the level of repayments? A: The focus will be on maintaining leverage ratios, with a temporary pause on new originations due to current leverage levels. Share buybacks have been accretive, but future decisions will involve the strategic review committee. Regular investing will continue, keeping leverage ratios in mind. (Matthew Salem, CEO) Q: Can you provide an update on the RISC-5 Boston Life Science loan? A: We are in modification discussions and believe we are fully reserved on that loan. It is not anticipated to have negative book value implications going forward. (Unidentified Respondent) Q: What are the broader credit trends in multifamily, given the current commercial real estate cycle? A: The higher rate environment has put pressure on values, but the impact on credit risk or loss content in multifamily is not expected to be material. There is optimism for tightening in rents and occupancy in the coming quarters, despite current softness. (Matthew Salem, CEO) Q: Is KREF able to buy back stock during the strategic review process? A: The strategic review does not preclude stock buybacks, but it will be a conversation with the committee as part of the overall capital use strategy. (Matthew Salem, CEO) Q: How are spreads on new loans compared to what is paying off, given the elevated repayments? A: Spreads on new loans are lower due to adjustments for the current rate environment. However, the return on equity remains consistent in the low double-digit range, around 12%. (Unidentified Respondent) Q: What is the expected duration for the remaining REO book, and is there a strategy to accelerate selling? A: The REO portfolio is categorized into near-term, medium-term, and longer-term resolutions. While some assets are expected to be resolved soon, others, like the Seattle and Boston Life Science assets, will take longer. The strategic review committee may explore options to accelerate sales. (Unidentified Respondent) Q: What are you seeing across the rest of the life science book, particularly in markets like Cambridge and San Carlos? A: There are early signs of recovery in life science markets, with some leasing activity. West Coast markets are seeing more office demand, which is beneficial. However, it is still early for a full recovery in life science. (Unidentified Respondent) For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in KKR Real Estate Finance Trust? Here are five stocks we like better. KKR Real Estate Finance Trust reported a Q2 GAAP loss of $122 million, or $1.95 per share, and book value fell to $10.24 per share as the company continued increasing reserves and repositioning troubled assets, especially legacy office and watchlist loans. The board has launched a strategic review of alternatives to enhance shareholder value, led by independent directors; management said it is too early to comment on outcomes and that KKR has not submitted any transaction proposal. KREF said repayments, asset resolutions and buybacks are helping liquidity and portfolio rotation, with more than $800 million returned in Q2, over $700 million in liquidity at quarter-end, and a continued goal of reducing legacy office exposure below 10% by year-end 2026. 6 Mortgage REITS: How Badly Could Rising Rates Hurt Them? KKR Real Estate Finance Trust (NYSE:KREF) reported a second-quarter loss and a lower book value as management said the commercial mortgage REIT continued to reposition its portfolio, increase reserves against troubled assets and evaluate strategic alternatives. On the company’s second-quarter 2026 earnings call, Jack Switala said KREF reported a GAAP loss of $122 million, or $1.95 per share, for the quarter. Book value was $10.24 per share as of June 30. The company reported a distributable loss of $36 million, or $0.58 per share, while distributable earnings before realized losses were $6 million, or $0.10 per share. KREF paid a $0.10 cash dividend for the quarter. → Buyback Boom: These 3 Companies Are Betting Billions on Their Own Stocks Chief Executive Officer Matt Salem said the quarter marked a “significant step” in the company’s effort to stabilize book value and improve longer-term performance, though he acknowledged that work remains. “We have adjusted reserves and carrying values to our current expectations for monetization of these assets,” Salem said, referring to watchlist and legacy office exposures. “While we are still executing these resolutions and final outcomes could affect ultimate recovery levels, we believe the most significant book value impact is now behind us.” → 3 Photonics Companies Making Quantum Tech Possible Salem opened his remarks by addressing KREF’s announcement that its board has initiated a review of strategic alternatives intended to enhance shareholder value. The process will be led by a strategic review committee made up solely of independent directors. Salem said management would not comment further on the process because it is in an early stage. He also said KKR has not submitted a proposal for any transaction to date. → AI Data Centers Need Power, and These 2 Industrials Are Cashing In “As the committee does its work, KKR will evaluate its potential participation in any KREF transaction, but there’s no guarantee that KKR would make any proposal in the future,” Salem said. He added that KKR, as manager and largest shareholder, is aligned with the committee’s mandate to enhance shareholder value. KREF’s book value declined 13.7% during the quarter, which Salem attributed primarily to actions taken to position watchlist assets and legacy office exposures for monetization. The company has been working through an action plan laid out earlier in the year. Salem said legacy office exposure fell to 18% of the portfolio at June 30, down from 21% at the end of 2025. KREF continues to target a reduction of that exposure to below 10% by year-end 2026. The watchlist represented 16% of the portfolio at quarter-end, with nearly half of those assets being marketed. Salem said KREF continues to target a complete reduction of the watchlist by year-end. In life sciences, Salem said KREF had modified approximately 39% of its exposure, up from 19% at the end of the prior year. He said the company believes the “vast majority” of expected reserves have now been recognized and remains on track to address substantially all of its life science exposure through modifications or other resolutions by year-end. Loans originated between 2024 and 2026 represented about 32% of the portfolio, up from 19% at year-end 2025. Salem said KREF is targeting an increase in newer-vintage investments to more than half of the portfolio by year-end. Management said repayment activity has helped create liquidity to support the portfolio rotation. KREF received more than $800 million of repayments during the quarter and about $1.2 billion during the first six months of the year. The company continues to expect more than $2 billion of repayments in 2026. Salem said that level of repayment activity represents more than 35% of the portfolio size at the beginning of the year and exceeds the roughly $1.5 billion of repayments in each of 2024 and 2025. KREF also repurchased $38 million of common stock during the quarter at a weighted average price of $6.63 per share, which Salem said generated approximately $0.32 per share of book value accretion. After quarter-end, the company repurchased an additional $10 million of common stock at a weighted average price of $7.24 per share. Salem said future capital allocation decisions related to share repurchases will be part of the strategic review process. In response to a question from Raymond James analyst Gabe Pocci, Salem said the strategic review does not necessarily preclude additional buybacks, but that repurchases would be discussed with the strategic review committee. President and Chief Operating Officer Patrick Mattson said KREF ended the quarter with more than $700 million of liquidity, including $83 million of cash and $350 million of undrawn capacity on its corporate revolver. Total financing availability was $7 billion, including $2.6 billion of undrawn capacity. Mattson said 79% of KREF’s financing remains non-mark-to-market. KREF’s debt-to-equity ratio was 2.6 times, and total leverage was 4.3 times at quarter-end. Mattson said continued repayments should move total leverage back toward the company’s target range of 3.5 times to 4 times. Mattson said two watchlist loans were resolved during the quarter: a repayment on the Georgetown multifamily loan, previously risk-rated 4, and the Boston life science loan, which moved into the REO portfolio with no material impact to book value because of prior reserves. KREF downgraded its Chicago office and Carrollton multifamily loans from risk-rated 4 to risk-rated 5. It also downgraded a $42 million Dallas multifamily asset from risk-rated 3 to risk-rated 4. Within the REO portfolio, Mattson said KREF expects to complete the entitlement process this month for a mixed-use redevelopment project in Portland, Oregon. In Mountain View, California, the company executed a full-building lease with OpenAI earlier this year and expects the tenant to occupy a portion of the space this quarter. KREF currently expects to bring the property to market within the next year. In West Hollywood, Mattson said KREF closed on its first condo sale this month and is in active discussions with prospective buyers for additional units. KREF originated three loans during the quarter totaling approximately $350 million, with a weighted average loan-to-value ratio of 58%. The loans included a multifamily portfolio loan in Spain, a multifamily loan in Los Angeles and a California office portfolio loan. During the question-and-answer session, analysts pressed management on whether KREF has reached book value stability. Salem said the company gained more insight into market clearing values as it advanced asset sales and other resolutions. “We certainly feel like the most significant impact to book value is behind us,” Salem said, while noting that some outcomes have not been finalized and could still produce “some small up and down.” On life science assets, Salem said KREF is seeing “green shoots” in the market, though conditions remain early. He said Boston-area markets, including Cambridge, Seaport and South Boston, are further behind some West Coast markets, where tech and AI-related office demand is helping tighten conditions. Asked about multifamily credit trends, Salem said higher rates have put pressure on values, but he does not believe the multifamily component of KREF’s portfolio poses a material risk to book value. He said there may be “some noise” and losses, but management remains relatively optimistic as supply is absorbed in several markets. “We’re not going to wait and kick the can down the road,” Salem said, adding that KREF is focused on resolving problem assets and reducing portfolio noise. KKR Real Estate Finance Trust, Inc (NYSE: KREF) is a mortgage real estate investment trust sponsored by KKR & Co Inc The company focuses on originating, acquiring, financing and managing a diversified portfolio of commercial real estate debt and real estate-related assets across the United States and select European markets. The trust's investment strategy is centered on lending to high-quality office, industrial, retail, multifamily and hotel properties. Its portfolio primarily consists of senior mortgage loans, mezzanine loans, floating-rate debt securities and preferred equity positions. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "KKR Real Estate Finance Trust Q2 Earnings Call Highlights" was originally published by MarketBeat. 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Image source: The Motley Fool. Thursday, April 23, 2026 at 9 a.m. ET Chief Executive Officer — Matthew Salem President & Chief Operating Officer — Patrick Mattson Chief Financial Officer — Kendra Decious Head of Investor Relations — Jack Switala Jack Switala: 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 Decious. 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 will go through our results. For the first quarter of 2026, we reported a GAAP net loss of $62 million or negative $0.96 per share. Book value as of March 31, 2026, is $11.87 per share. We reported a distributable loss of $4 million or negative $0.06 per share. Distributable earnings before realized losses was $13 million or $0.20 per share. Finally, we paid a $0.25 cash dividend in April with respect to the first quarter. With that, I'd now like to turn the call over to Matt. Matthew Salem: 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 2 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 position our watch list loans for resolution. 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 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 8 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 have already begun to action both prongs. Our largest office loan and $225 million loan in Bellevue was refinanced in the first quarter at par with the 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 $0.10 per share per quarter payable on July 15. 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. While 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 $0.40 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 14, 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. W. Mattson: Thanks, Matt. Good morning, everyone. Let me start with a few changes to the watch list. This quarter, we downgraded our Philadelphia office assets with 2 smaller Texas multifamily loans from risk rated 3 to 4. As previously previewed on last quarter's earnings call, we also downgraded our Boston Life Science asset from risk rated 3 to 5. We upgraded our Cambridge Life Science from risk rated 5 to 3 following the loan restructuring that includes new sponsor equity commitment and a loan paydown. As a result, we recorded CECL provisions of $74 million, bringing our total allowance to $260 million. These actions are part of our broader action plan to proactively reposition the portfolio. Turning next to our REO portfolio. We are actively managing these assets with a clear focus on monetization and value realization. To help frame it, we grouped these assets into near, medium and longer-term monetization buckets. Starting with the near-term bucket, West Hollywood, condos, where units are currently listed and actively being marketed with proceeds returning equity as closings occur. Raleigh, North Carolina, multifamily, where we're completing targeted upgrades to common areas and expect to list the asset for sale by year-end. Philadelphia office, where our business plan is largely complete, the asset is now approximately 85% leased, and we plan to sell the property this year. In the medium-term bucket, we have Mountain View, California office, where our platform, market positioning and patience have driven meaningful value creation. As we announced in March, we signed a long-term full property lease with OpenAI. We expect to bring this asset to market within the next 12 to 16 months as we complete the remaining work and the tenant takes occupancy. Portland redevelopment, where we've executed on our plan and are near final entitlement on over 4 million square feet of mixed-use space and expect to begin our monetization strategy over the course of the year. And finally, in the longer-term bucket, Seattle, life science, where our focus is on leasing and stabilizing the asset, and we expect to hold it longer given current market conditions. Boston Life Science, currently a risk-rated 5 loan, which we expect to transition to REO in the second quarter. This is expected to result in a realized loss of approximately $37 million, though we are adequately reserved as of the first quarter. Similar to Seattle, we plan to stabilize the asset and hold the property until market conditions improve. As we monetize these assets and redeploy the capital into new investments, we estimate the potential to generate more than $0.15 per share of incremental quarterly earnings over time, nearly half of that being driven by our Mountain View REO asset. This reinforces our focus to convert these assets into liquidity and redeploy that capital into higher earning opportunities. Turning to financing and liquidity. At quarter end, we had $653 million of liquidity, including $135 million of cash on hand and $500 million of undrawn capacity on our corporate revolver. Additionally, we had over $500 million of unencumbered assets on the balance sheet. Total financing availability was $7.2 billion, including $2.6 billion of undrawn capacity. Originations totaled $184 million for the first quarter, while repayments were $415 million, with approximately 75% of the repayments driven by legacy office. Looking ahead, in the first 3 weeks of the second quarter, we've already closed or circled over $400 million of new loans. We continue to benefit from our connectivity with KKR Capital Markets and 77% of our financing remains non-mark-to-market, providing stability across market environments. We believe we remain well capitalized and positioned to manage the portfolio. Importantly, we have no final facility maturities until 2027 and no corporate debt due until 2030. Our debt-to-equity ratio was 2.2x, and our total leverage was 4x, consistent with our target range. As we move through this transition year, we believe we are well positioned. Our focus remains on executing our resolution strategy and redeploying capital into high-quality opportunities, including share repurchases. With a clear path to improving and rebuilding earnings power. We believe the actions we're taking today position the company for long-term value creation. With that, we're happy to take your questions. Operator: [Operator Instructions] First question is from Tom Catherwood, BTIG. William Catherwood: Maybe starting with the portfolio target of 50% newer vintage loans by year-end. By our math, that implies something in the neighborhood of $1 billion to $1.2 billion of origination activity over the coming quarters. Are we in the ballpark with that? Matthew Salem: Tom, thanks for the question. It's Matt. I can take that, and thanks for joining the call. That's certainly in the ballpark of what we're looking at. Obviously, certainly it will depend a little bit on the share buyback amount, but that's a good projection for now. William Catherwood: Perfect. Perfect. And actually, you did fair point on the share buyback, and it's kind of the use of liquidity is something we're thinking of with leverage ticking up to kind of the top end of the range in Q1, will those originations and the $75 million allocation for buybacks, will those be tied to REO asset sales? Or are you comfortable using liquidity on your balance sheet and then just kind of back funding that as you sell assets? Matthew Salem: Yes, I can start. It's Matt again. Let me start off a little bit. I think most of that liquidity, as we commented on the prepared remarks, is really coming from just natural loan repayments. So over the course of the year, we think we're going to have $2 billion of repayments. We got about $400 million or so in the first quarter. Second quarter -- and to be clear, it's always a little bit hard to predict these things quarter-to-quarter. But we look at the second quarter right now and from what we can see, it could be close to half of that total repayment for the year could come through the second quarter. So I'd say most of this liquidity that we're looking at, which translates into like $500 million of investable capital, if you will. And then we can talk about the sources to your point, is really going to come from that -- from the just loan repayments and natural velocity within the loan portfolio. William Catherwood: Okay. So you don't need to line up the timing of REO sales in order to achieve that 50% new loan target? Matthew Salem: No. William Catherwood: Got it. Perfect. And then last one for me on the watch list, roughly 6 assets on there when you account for the Boston life science loan in 2Q or that it's going to go REO. You obviously mentioned Minneapolis office is on the market. For the remaining 6, what are your expectations as far as the amount that are repaid versus those you expect to modify or bring on balance sheet? Matthew Salem: Yes. Let me jump in again. Maybe just looking on Page 12 here, the goal is to try to monetize the vast majority of these. I think on the life science piece of it, we mentioned we will be taking title to one of those over the course of time here. But outside of that, I think a lot of this will be some combination of modifications, note sales as well. But I think the goal really is to clear all this up by the end of the year. And things like the multifamily component here, I'm sure we'll get questions on this later, so I could just address it now. These are just coming up on maturity, and these are in the process of getting sold. So sponsors are out selling these assets. We downgraded these just because the sales price is going to be close to the debt, and we may take small losses or not on those loans. We want to make sure we identify those. We don't think that's really indicative of the rest of multifamily. We've always been on these calls saying there can be noise in multifamily, but we don't think there's like material losses in that -- in the loan portfolio on the multifamily side. And this is probably a good example of what we're looking at of like there's going to be a little bit of noise here. We do take small losses as they sell these assets into the market and it trades right around the debt. But some of these will just be sales from sponsors, if you will. Operator: Next question is from Chris Muller, Citizens Capital Markets. Christopher Muller: So I just wanted to start with the dividend and just make sure I heard you guys right. So the new $0.10 dividend is well below the $0.20 ex loss that you guys put up in the quarter. I also heard the comments on both the new buybacks and also near-term pressure as you guys get more aggressive on resolutions. So I guess the question is, do you guys expect earnings ex losses to be around that $0.10 level? Or does that just give you some optionality? I think I just missed that what you guys said in the prepared remarks. Matthew Salem: Yes, it's Matt. Let me jump in. We think earnings are going to trough towards back half of this year into next year. And a lot of that, we start to come out of it as we think about liquidating more of the REO portfolio, especially as you think about Mountain View, where we've obviously signed the lease there and that will be positioned for liquidity over the next, call it, 12 to 18 months. So that's -- when you think about the light at the end of the tunnel, that's a little bit of a timing as if we can build back up earnings. When we mentioned the $0.10 here, part of this is just capital allocation, right? Like look at -- think about where the stock trades today, we've got pretty good uses of capital right now in terms of just share repurchases. So obviously, it ties into some just overall capital allocation discussions. But when we think about it just versus earnings, we expect to cover that on kind of an annualized intermediate basis, but there certainly could be a little bit of noise in certain quarters where we're not fully covering that as we continue to push through and reposition the portfolio. Christopher Muller: Got it. And then I guess on the $42 million CMBS investment, was that a more attractive investment than deploying into bridge loans? Or was it more just a place to park some cash until it can be redeployed? And should we expect to see more of this going forward? Matthew Salem: Yes. So we've been -- that number sounds fine. Let me double check the amount for the quarter. We've been evaluating different options for portfolio diversification, whether that's expanding into Europe and leveraging the platform that KKR has built in that market or just duration as well and just access to like different investing markets like CMBS. So from a relative value perspective, we thought that was a particularly unique opportunity for us. And I think you're right in terms of the $42 million. I just want to double check that. But yes, I mean, we're evaluating everything on a relative value basis. The CMBS is providing a little bit duration. I think in this case, it was a little bit more single asset, single borrower, so solving more of the relative value component of it. Operator: Next question is from Jade Rahmani, KBW. Jade Rahmani: Yes. Have you seen any green shoots in leasing in life science? Matthew Salem: Jade, thank you for joining today. We are. I think it's a little bit market dependent. They're all in a little bit different stages of recovery. I think in South San Francisco, you're seeing 2 things happening. One, you're seeing a revitalization of office, particularly as it relates to AI tenants and growth, which is creating tension in the overall market. And as you well know, some of these assets, including some that we have, can be leased as office. So there's some pretty tight pockets of office there. And then we're also starting to see life science companies turn back on as well. When we think about our other exposure, our larger exposures in Boston, and I'd say there, it's probably a little bit behind what we're seeing in South San Francisco, but we are seeing tenants in the market. Most of the assets that we have there are oriented to big pharma, and there are tenants in the market today like actively engaged trying to lease space, including one of the assets that we have. So we are seeing tenants starting to come back, but it still feels early and -- but at least you're having some sense of recovery starting. Jade Rahmani: And in terms of your REO expectations, from your standpoint today, is it your view that there will be just one additional life science REO? Matthew Salem: That's the current expectation, yes. Jade Rahmani: And then can you discuss some of your approach to credit risk management because I have seen migration from risk-free loans to 5 as maturity approaches. And usually, what we see is a risk 3 to a risk 4 then to a risk 5. So the skipping ahead makes me a little worried about the risk 3 loans in the portfolio. I know it's multifamily and you don't expect material losses there. But just generally speaking, how are you thinking about that? Matthew Salem: Yes. That's a great question. I would say the normal progression for us and obviously, the peers as well is you go 3, 4, 5. And I'd say the vast majority of cases, that's what's happened. And by the way, we do analysis every quarter evaluating, okay, what's happened with our 4 loans. And that's obviously a dynamic number. But up to this point, roughly half have gone to 5 and half have gone to 3, which is I think what a 4 is supposed to be, right? It's not just an indicator that it goes to 5. Obviously, depending on the property type, it may be more heavily weighted to that over time. But in terms of -- I think we've had a couple go from 3 to 5. The only one we had this quarter was really the life science deal, which we flagged last quarter as going to get downgraded depending on what these modification discussions look like. It would be a 4 or 5. We weren't exactly sure at the time, and we had moved over to a 5. So I'd say it's unusual. The multifamily we put into the 4 buckets just because, one, it's not material, we don't think. And two, we're not exactly sure what's going to happen now as these sales processes play out. But I think you're right in the sense that vast majority of time, you're going to have these natural linear progressions. But sometimes there's jump risk around a maturity date or around a modification discussion, and we obviously need to just reflect our best case scenario at the time or best guess at the time. Jade Rahmani: And then on the Minneapolis office, it's a risk 5 loan. So I believe there should be something around 23% loss assumption there, reserve that you currently have. And I think that your slides show that the price per square foot at your basis is $182, but that's before CECL. So if we stress that for a 25% severity assumption, I'm just curious if you think that is where the market is or if based on the sale process, there might be some further loss? W. Mattson: Jade, it's Patrick. I'll take that one. So yes, I think the number you're kind of backing into is a blend, is an average. Obviously, as we've seen in the office segment, some of those loss numbers have been higher than average, right? If you think about what's also in that bucket, we've got multifamily as an example. So it's just a proxy. Clearly, that's an asset that we've been working for some time here, and we think it's appropriately reserved for, but the number that you're quoting is just an average. Operator: [Operator Instructions] Next question is from Gabe Poggi, Raymond James. Gabriel Poggi: I've got a couple of questions. On capital allocation, capital management, as you guys think about the buyback versus making new loans to kind of keep a DE run rate going, how do you manage that relative to leverage, right? If your total capital right now to equity is around 4x and your leverage to common is 5x plus, how much of that buyback? How do you think about leverage relative to that buyback? That's question one. Matthew Salem: It's Matt. Let me start out and try to answer that. I would say we're not changing our leverage targets. I think that's the first thing we're kind of solving for, right? We want to kind of stay in that 3.5 to 4x range. So I think we ended this quarter around 4 at the higher end of our range. If we didn't originate any loans, we could bring that leverage way down because we have so many repayments coming in. So we have a lot of flexibility on that, but that's probably the first thing we're solving for, which is like, okay, let's make sure we stay kind of leverage neutral, if you will. And then we're looking at excess capital beyond that. And then we're trying to think about, okay, what's the appropriate amount of share buybacks first. I would say, just given where the stock price trades, how much should we be buying back. The Board authorized $75 million. you put that in context, that's a lot of firepower, right? We have a lot of. We have $500 million of liquidity. So what are we going to do with it? $75 million we authorized for buybacks. I mean that's roughly 25% of the public float, right? So it's a lot of buyback. So that's probably what we're looking at next. And then we have excess capital, right? And that's like, okay, what else should we be doing and thinking about? And that's why we obviously want to think about the ongoing business supporting a dividend and not shrinking the company too much. And that's where the final piece of it, I think, comes in, which is the loan origination side. So hopefully, that gives you some context and kind of how we're from a decision tree perspective going through it. Gabriel Poggi: Yes. No, that's helpful. Second question is, is there any contemplation from KKR, the manager during this transition period regarding a fee cut, fee waiver, just as you guys get from point A to point B, call it, mid-2027? Matthew Salem: Yes. Thanks. Listen, I think we're evaluating everything, all options, I think, are on the table at the KKR level as manager, at the KKR level as the largest shareholder in this company. And then obviously, the KREF level and the Board. So I wouldn't -- we're looking at a number of different -- obviously, a number of different options. Gabriel Poggi: Yes. And I've asked that just in the context of obviously getting from point A to point B, knowing KKR is a large shareholder and thinking about just kind of getting more to the bottom line during the transition. There was nothing pointed in that question, just so you guys know. Last question is, is there any more detail you can provide around the Mountain View lease? Just any term details, things of that nature to give folks some granularity on how you're thinking about the potential value there as you think about monetization over the next 12 to 18 months? Matthew Salem: Yes. We're subject to a pretty tight NDA. So we'd love to provide more, but obviously, we have a contractual agreement with our tenant. What I can say is that it's a long-term lease that we think will trade like a net lease, so we can effectively sell it to net lease type of buyers, right, on a long-term lease basis. So that's really what we're looking at. We think that -- let's just take a step back, right? I mean where the stock is trading today, there's a lot of uncertainty in the world, clearly. And so it's hard to like project -- kind of project forward what happens, whether it's in -- with the war around in the oil prices and inflation, whether it's AI and impact on jobs or growth or GDP. So there's just a lot out there, I would say, right now. But when we look at book value, and we're willing to -- I think you saw it this quarter, unfortunately, and we're willing to pay some bid offer to find liquidity, to clean up the portfolio. It is putting pressure on book value. And like we said, we're going to -- we've got a little bit of ways to go here. We're going to choose to do that going forward to get to a spot where we can feel good about it and have a portfolio that's earning well and give the all clear. But like when we're -- it's not like we're sitting here and like looking at this portfolio and our book value and saying, oh, this is going to -- we can get down to like a single-digit type of book value per share. So like -- we're not exactly sure what the market is pricing, and that doesn't include like back to this discussion around 350 Ellis, where we think we've got a big gain in that asset, right? We marked that down significantly. Now we have a tenant. We've got a good lease. It's a long-term lease. We feel like we can sell that and liquidate that asset over time, and that will be accretive to book value. So we can actually start building this back up a little bit. And then, of course, with share buybacks, we can do the same. So that's a little bit of how we're thinking about it. And I know we've been pressed on this a number of times on Mountain View is timing. Listen, we'll sell this as soon as we feel like we can optimize value. But we're giving the 12 to 18 months because that's kind of the stabilized moment. And if we have options before that, of course, we'll look at those very, very carefully. But we want to be, I think, conservative and judicious as we think about the timing and what's realistic. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Jack Switala for any closing remarks. Jack Switala: Well, great. Thanks, operator, and thanks, everyone, for joining today. Please reach out to me or the team here if you have any more questions. Take care. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. Before you buy stock in Kkr Real Estate Finance Trust, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Kkr Real Estate Finance Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $502,837!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,241,433!* Now, it’s worth noting Stock Advisor’s total average return is 977% — a market-crushing outperformance compared to 200% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of April 23, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. KREF Q1 2026 Earnings Call Transcript was originally published by The Motley Fool

"Transition year": Management says 2026 is a transition year focused on resolving watchlist loans, reducing legacy office exposure from 21% to under 10%, and rotating the portfolio into newer‑vintage originations (targeting ~50% from 2024–2026 by year‑end). Results and capital actions: KREF reported a GAAP net loss of $62 million (‑$0.96/share) and cut the quarterly dividend to $0.10 while authorizing a new $75 million buyback; management says the cut is a capital‑allocation move, not liquidity‑driven, citing $653 million of liquidity and expected >$2 billion of repayments in 2026. REO monetization roadmap: A long‑term lease in Mountain View (tenant disclosed as OpenAI under NDA) should allow marketing the asset in 12–16 months and could be accretive to book value, with management estimating REO monetization could add more than $0.15 per share of incremental quarterly earnings over time; a Boston life‑science loan moving to REO is expected to produce an approximate $37 million realized loss but is adequately reserved. Interested in KKR Real Estate Finance Trust? Here are five stocks we like better. 6 Mortgage REITS: How Badly Could Rising Rates Hurt Them? KKR Real Estate Finance Trust (NYSE:KREF) reported a GAAP net loss of $62 million, or negative $0.96 per share, for the first quarter of 2026, as management emphasized that the year is expected to be a “transition year” focused on resolving watchlist assets, reducing certain legacy exposures, and positioning parts of its real estate owned (REO) portfolio for liquidity. Director Jack Switala said book value was $11.87 per share as of March 31, 2026. The company posted a distributable loss of $4 million, or negative $0.06 per share, while distributable earnings before realized losses totaled $13 million, or $0.20 per share. The company paid a $0.25 cash dividend in April with respect to the first quarter. → GE Vernova Beats Earnings by 790% as Data Center Demand Explodes CEO Matt Salem said management is focused on narrowing the gap between the company’s share price and book value per share through two main priorities: “executing an aggressive resolution strategy across our watchlist assets and certain legacy office exposures” and “positioning a portion of our REO portfolio for liquidity.” Salem said book value declined 9% during the quarter as the company positions watchlist loans for resolution, adding that management “may choose to incur book value declines as we seek liquidity on legacy assets to create a higher-quality portfolio.” He said the company sees a path to redeploy capital into “newer vintage, higher-quality investments,” with the aim of returning to book value stability over time. → Amazon Stock Up 30%: Is AMZN Still a Buy Before Earnings? Among the 2026 objectives Salem outlined: Reduce legacy office exposure from 21% to under 10%, with more than half expected to come from par repayments and the remainder from watchlist resolutions. Resolve all current watchlist loans by year-end through sale positioning, modifications, and other accelerated resolutions. Modify 100% of life science exposure; Salem said 19% had been modified, rising to 30% when including the company’s Cambridge asset this quarter. He also noted a “material increase in reserves” for the Seaport loan “in anticipation of a potential modification.” Rotate the portfolio into newer-vintage originations, with 2024-2026 originations expected to represent about 50% of the portfolio by year-end. Salem highlighted one early step in lowering office exposure: the company’s largest office loan, a $225 million loan in Bellevue, was refinanced at par in the first quarter using a CMBS single-asset, single-borrower transaction. He also said the property securing the company’s largest watchlist office loan is being marketed for sale. → 3M Stock Pulls Back, But Catalysts Point to New Highs Salem said the company reduced its dividend to $0.10 per share per quarter, payable July 15. He emphasized the decision “is not driven by liquidity constraints,” noting the company had $653 million of liquidity and expected more than $2 billion of repayments in 2026, which management expects to translate into more than $500 million of capital to invest. Instead, Salem framed the cut as capital allocation. “At this stage, we see more attractive opportunities, including repurchasing our stock and funding new originations,” he said, adding that the new dividend level aligns with expectations for distributable earnings per share before realized losses while the portfolio is being repositioned. Salem said 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,” followed by an expected increase in distributable earnings per share once the company moves through that period. On April 14, the board authorized a new $75 million share repurchase program. Salem said the company had been “largely inactive” on buybacks during the quarter due to trading restrictions while evaluating dividend policy, but those constraints have been lifted following the decision. President and COO Patrick Mattson said the company downgraded its Philadelphia office assets and two smaller Texas multifamily loans from risk-rated 3 to 4. He also said the company downgraded a Boston life science asset from risk-rated 3 to 5, while upgrading its Cambridge life science exposure from risk-rated 5 to 3 following a restructuring that included new sponsor equity and a loan paydown. Mattson said the company recorded CECL provisions of $74 million in the quarter, bringing its total allowance to $260 million. During the Q&A, Salem said the company’s goal is to “monetize the vast majority” of watchlist assets, using a mix of modifications and note sales, and reiterated a goal to clear the watchlist by year-end. On the two Texas multifamily loans, Salem said they were downgraded because sale prices could be close to the debt as the sponsors sell the properties, potentially leading to small losses. He added the company does not view those loans as indicative of broader multifamily credit issues, saying KREF does not expect “material losses” across its multifamily loan portfolio. KBW analyst Jade Rahmani asked about risk migration, and Salem said the typical progression is from risk 3 to 4 to 5, noting that “in the vast majority of cases, that’s what’s happened,” while acknowledging there can be “jump risk” around maturities or modification discussions. Mattson said the REO portfolio is being managed with a focus on monetization and grouped into near-, medium-, and longer-term buckets. Near-term: West Hollywood condos (units listed and closings returning equity), Raleigh, North Carolina multifamily (upgrades underway with a sale listing expected by year-end), and a Philadelphia office asset (about 85% leased, with plans to sell this year). Medium-term: Mountain View, California office (a long-term lease was signed with OpenAI, and the company expects to bring the asset to market within 12 to 16 months), and a Portland redevelopment (near final entitlement on over 4 million square feet of mixed-use space, with monetization expected to begin over the course of the year). Longer-term: Seattle life science (focus on leasing and stabilization), and Boston life science (currently a risk-rated 5 loan expected to transition to REO in the second quarter). On the Boston life science loan expected to move to REO, Mattson said it is expected to result in a realized loss of approximately $37 million, though he said the company is “adequately reserved as of the first quarter.” Mattson estimated that monetizing REO assets and redeploying capital into new investments could generate “more than $0.15 per share of incremental quarterly earnings over time,” with nearly half attributed to the Mountain View REO asset. Asked for more detail on the Mountain View lease, Salem said the company is under a “pretty tight NDA,” but described it as a long-term lease the company believes “will trade like a net lease,” potentially broadening the buyer base to net lease investors. Salem also said the company views the asset as potentially accretive to book value following the lease, noting it had been “marked down significantly” prior to having a tenant. Mattson said KREF ended the quarter with $653 million of liquidity, including $135 million in cash and $500 million of undrawn capacity on its corporate revolver, plus over $500 million of unencumbered assets. Total financing availability was $7.2 billion, including $2.6 billion of undrawn capacity, and 77% of financing was non-mark-to-market, he said. Originations totaled $184 million in the quarter, while repayments were $415 million, with about 75% of repayments driven by legacy office, according to Mattson. He added that in the first three weeks of the second quarter, the company had “already closed or circled over $400 million of new loans.” Mattson said the company has no final facility maturities until 2027 and no corporate debt due until 2030. He reported a 2.2x debt-to-equity ratio and total leverage of 4x, which he said was consistent with the company’s target range. In response to BTIG’s Tom Catherwood on the company’s goal for newer-vintage loans to reach about 50% of the portfolio by year-end, Salem said an estimate of roughly $1 billion to $1.2 billion of originations is “certainly in the ballpark,” though he noted it will depend partly on the level of share repurchases. Salem also said the company does not need to time REO sales to hit that newer-vintage target, pointing to expected loan repayments as the primary source of investable capital. Raymond James’ Gabe Poggi asked about leverage considerations in balancing buybacks and new loans. Salem said the company is “not changing our leverage targets” and wants to remain in its 3.5x to 4x range, adding that repayments provide flexibility. Poggi also asked about potential fee relief from the manager during the transition; Salem said the company is “evaluating everything” and that “all options…are on the table.” On life science leasing conditions, Salem said the outlook is market dependent. He said South San Francisco has shown improved conditions tied to office demand from AI-related tenants and some early signs of life science companies returning, while Boston is “a little bit behind” San Francisco, though he said tenants are “actively engaged” in the market. KKR Real Estate Finance Trust, Inc (NYSE: KREF) is a mortgage real estate investment trust sponsored by KKR & Co Inc The company focuses on originating, acquiring, financing and managing a diversified portfolio of commercial real estate debt and real estate-related assets across the United States and select European markets. The trust's investment strategy is centered on lending to high-quality office, industrial, retail, multifamily and hotel properties. Its portfolio primarily consists of senior mortgage loans, mezzanine loans, floating-rate debt securities and preferred equity positions. The article "KKR Real Estate Finance Trust Q1 Earnings Call Highlights" was originally published by MarketBeat.

Image source: The Motley Fool. Thursday, April 24, 2025 at 10 a.m. ET Chief Executive Officer — Matt Salem President and Chief Operating Officer — Patrick Mattson Chief Financial Officer — Kendra Decius Head of Investor Relations — Jack Switala Jack Switala: Great thanks, operator, and welcome to the KKR Real Estate Finance Trust earnings call for the first 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 Decius, 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 first quarter of 2025 we reported a gap net loss of $10.6 million or 15 cents per share. Book value as of March 31 is $14.44 per share. Distributable earnings this quarter was $17 million or 25 cents per share, which is in line with our 25 cent per share dividend. With that, I'd now like to turn the call over to Matt. Matt Salem: Thank you, Jack. Good morning, and thanks for joining our call today. Since our last earnings call and tariff implementations, market volatility and recession expectations have increased significantly, creating uncertainty for both businesses and households, the early recovery of real estate has likely been put on hold until we have more clarity on the scale and impact of the tariff regime. That said, we do believe real estate is better positioned for this environment compared to past cycles and other asset classes, given the reset and values over the last three years in times like this, the first thing we think about is defense. It's a get your house in order mentality. And to that end, we are in a very good position. We have no corporate maturities until 2030 having just upsized and extended our corporate revolver for new five year term and refinanced our Term Loan B, with a new seven year facility, we have ample liquidity with over 700 million today. Given this secure position, we will remain on offense, actively looking to reinvest repayments into new originations. In terms of what we are seeing in the real estate credit market, it is still functioning, and all market participants remain active, including the banking sector, warehouse financing and senior loan spreads are approximately 10 to 15 basis points wider, while the transitional loan sector spreads are approximately 15 to 20 basis points wider. BMBF spreads have been more volatile and are currently 50 to 75 basis points wider. Many owners are now coming to us for a balance sheet solution to avoid the capital markets volatility. From an opportunity perspective, it's significant. Our pipeline is the largest it's ever been, totaling over 30 billion, and it's very high quality. I expect this market will lead our sponsors to seek out more short term bridge loans instead of testing the investment sales market, interestingly, our repayment expectations have increased since our last call. As we articulated last quarter, repayments are expected to exceed $1 billion this year, and we are tracking well above that. We had an active quarter and closed four loans for a total of 376,000,080% 80% of which were secured by Class A, multi-family properties. It had a weighted average LTV of 69% and a coupon of SOFR plus 277 basis points repayments in the. Quarter, we're 180, 4 million, and along with future funding from existing loans, our net fundings totaled 220, 2 million. We are actively looking at opportunities to diversify our portfolio and add duration. To that end, we are focused on the European lending market. We have built a strong team over the last few years, we are also looking at new issue, CMBS, conduit V pieces, where we can leverage our position as one of the largest market participants, as well as k star, which is our rated special servicer. Turning next to risk ratings, we downgraded two loans this quarter. First, a Raleigh, North Carolina multifamily loan, from a four rated loan to a five rated loan. We are still evaluating numerous scenarios for this loan, and are engaged in workout discussions which could lead to an ownership position. Second, Boston life science, from a three rated to a four rated loan due to current occupancy trends with the two downgrades in the quarter and therefore increased CECL provisions book value per share is $14.44 down approximately 2% compared to the prior quarter. We will continue to be transparent and proactive in managing the KREF portfolio, and will provide updates on those two loans in the coming quarters, before turning it over to Patrick. I will touch on our life science exposure. This is a sector that we believe has long term positive fundamentals, but faces cyclical headwinds, which could be exacerbated by an economic downturn or NIH funding costs, funding cuts. As a reminder, 12% of our loan portfolio is Life Science, and we have one REO property. We thought it'd be helpful to provide additional details in our supplemental which is on page 10 of the presentation. At a high level, 100% of our loan exposure is located in the top two Life Science markets, Boston and South San Francisco, and we provided construction financing for over half of our exposure. So these are very high quality and purpose built for Life Science. We've seen some green shoots as well. In March, we executed a 32,000 square foot lease in our Seattle Life Science REO property to the Institute for protein Design at the University of Washington. The tenant has created AI technologies and computationally designed protein medicines, and is led by a recent Nobel Prize winner for chemistry. With that, I'll turn it over to Patrick. Patrick Mattson: Thanks, Matt. Good morning. Everyone. This quarter, we work closely with our KKR Capital Markets team to maintain our best in class financing. In March, we closed on a new $550 million term loan B, upsizing from the prior loan of 340 million and resetting the term for seven years. Proceeds were used to repay indebtedness, including our existing term loan B, and for general corporate purposes, the new term loan B priced at 99 spot 870 5% and bears interest at SOFR plus 325 basis points. This loan further bolsters our liquidity position and enables us to continue to focus on offense in the quarter, we also upsized our corporate revolver to 660 million and extended the maturity for a new five year term to March 2030 eliminating corporate liability maturities Over the next several years. Additionally, we added a new non mark to market secured loan facility this quarter, with an initial funded size of 122 million and the ability to grow as new loans are included. Further diversifying our financing capacity, our financing availability now sits at 8.3 billion, including 3.1 billion of undrawn capacity. At quarter end, we had 720 million of liquidity available, including 106 million of cash on hand and 570 million of undrawn corporate revolver capacity, 78% of our four financing is non mark to market, and KREF has no final facility maturities until 2026 and no corporate debt due until 2030 In addition to originations, this quarter, we also invested capital and share. Purchases. In the first quarter, we repurchased 10 million of KREF stock, representing a weighted average price of $11.03 this raises our total shares repurchased in the past two quarters to 20 million at a weighted average price of $11.33 our Cecil reserve increased to 144 million with two rating downgrades. Matt mentioned our loan portfolio remains relatively stable, with 90% of the portfolio risk rated three or better. As an update on our West Hollywood multifamily loan risk rate at five as of quarter end, we took title to the asset earlier this month and are proceeding on our condo execution strategy with unit closings anticipated for late summer as a result of the assignment. In lieu of foreclosure, we expect to realize the loss tied to this investment of approximately 21 million to distribute our earnings in 2q which is consistent with our CECL reserve as of 1q As a reminder, our REO assets could generate an additional 12 cents per share per quarter on our distributor earnings as we effectuate our business plans, repatriate capital and reinvest into performing loans as of the first quarter. K ref debt to equity ratio is 1.9 times, and our leverage ratio is 3.9 times, following two repayments totaling 283 million early in the second quarter on a spot basis, the current leverage ratio is 3.7 times, which is The midpoint of our target range. In closing, we're positioned well for this market environment, given steps that we've taken over the years to manage our liabilities, including our most recent activity, in the first quarter, to increase and extend our corporate facilities, we're continuing to make progress on our REO assets, and are supported by a deep, inexperienced credit team of over 110 Associates, and who, together with k star, manage 37 billion of CRE loans and are named special servicer on over 46 billion of CMBS. Origination activity is picking up speed, and we're expanding our investment opportunity into the into the European loan market and the US CMBS market. Finally, the portfolio grew 4% quarter over quarter, and we expect to recycle capital into new opportunities throughout the balance of this year, thank you for joining us, and now we're happy to take your questions. Operator: [Operator Instructions]. The first question comes from Rick Shane with JP Morgan. Please go ahead. Rick Shane: Good morning. Thanks for taking my question today. Look, you know, I think there are two things that are going on here. You're working through some of the portfolio issues that you've identified previously. You've raised concerns related to the macro environment. Two things. One, when you think about the macro issues, are you looking at this from a big picture perspective and just saying, hey, risk and uncertainty is increasing, or are there specific properties within the portfolio that you identify is, for whatever reason, being at greater risk. And then the second part of the question is, given the return on capital that you're it appears that you're going to generate in '25. How do you think about the dividend policy as we move through the year. Matt Salem: Well, good morning, Rick. It's Matt. Thank you for the question and for joining us. I think I could start off and take both those pieces as it relates to the economic environment, I'd say it. Probably think about both sides of it from a macro perspective, just trying to think through, what are, what is the impact to really jobs, right? How much is it going to slow the economy, and then what's the flow through into the job market? And, you know, will it be significant? Will there be a significant impact there? And obviously, if so, that could be felt through the broader through the broader economy, and have a little bit bigger impact on the real estate sector. That's probably not our base case. Certainly here at KKR, we're not calling for a recession. We think growth will slow down to go somewhere between zero and 1% from a GP perspective. So we are kind of watching the broader macro and unemployment pretty, pretty carefully. I don't expect that to have a very big impact on real estate, because values have obviously declined a lot already. And it from a supply perspective, we're getting through the big supply wave. We all know construction starts are down across every property type, somewhere between 60 and 70% I think that's why in our opening remarks, we make the comment about real estate's a little bit different position than other than other asset classes. But if we certainly, if we're going to enter a recession and we see that unemployment rate go up, you're going to have impacts, you know, kind of broadly. But again, we're pretty well positioned for that, but more concerned about what you're talking about and how will impact individual properties, the two things that come to mind are some of the port markets for industrial especially on the West Coast, obviously, if you think about the slowdown in trade from China. So we're clearly watching that sector more. I don't think there's any one asset in our portfolio that we're like particularly concerned about, but we have heightened just awareness of the potential market impact there. The second is just around decision making. In this kind of uncertain market, I think you could see decision making slowdown, which could impact capex. It could impact leasing decisions, and so some of our assets are still in lease up mode, and you're looking for larger, larger tenants, and just a little bit concerned that there's going to be a kind of a pause in that decision making around some of these leasing so those are the, really the two things I would say, we're focused on. Rick Shane: Got it, and I really appreciate That answer there. It's very thoughtful. And I realize it's, there's, there's no easy answer to that. Do you mind circling back on the dividend policy? And I do want to acknowledge having asked the question about buying back stock for probably every quarter, for ages that you guys were in the market this quarter. And I think that's constructive for shareholders. But can you talk a little bit about dividend policy in light of the roe characteristics right now? Matt Salem: Yeah, happy to so I think on the dividend, when we initially cut it, we had a number of different scenarios in mind, and a big part of that, clearly, was thinking through the REO and giving us time to just effectuate those business plans. There's been a lot of change since we initially, you know, set that dividend. But I think when we kind of net, net it all together, we still feel pretty comfortable where, you know where we you know where we set it. Of course, it's a board decision, and we'll evaluate it every quarter. But I don't think we feel a lot of pressure right now to do anything, anything different. And from where we sit, we have all that upside in the REO as well, and we know at some point in time we're going to sell those assets, repatriate that capital. And Patrick mentioned in his section that if we did all that, we could reinvest that into new loans and have a drive earnings by 12 cents a share per quarter. So even though our current earnings rate is right around that dividend level, we know there's like this embedded earnings power within the within the company that will unlock at some point in time. And keep in mind that we calculate those numbers on our existing cost basis, and we think we're going to do better than that as we implement these business plans. So that's a little bit how we're thinking about the dividend. Now you ask about the share buybacks, similar to last quarter, we're back. I think we need to be balanced. The stock where it trades right now, it's very attractive. So you saw us buying it back, and we've got a long track record of buying back stock when, you know, when we thought it was trading at attractive prices. It's very accretive to our book for per share. So I think we'll have to continue to evaluate that as an option for capital, especially kind of given, given where it is today, but the same time, and similar to like you saw us in the first quarter, we need to, we need to invest in our portfolio as well. We need to make loans. We need, we need to continue to diversify the portfolio. You know, from a vintage perspective, he's talked, we talked about, you know, potentially adding Europe and CMBS the portfolio. And I think it's important for the market to see us front footed and active. And we think the market's pretty attractive from an investing perspective. So I think we need to continue to be kind of balanced as we think about allocation of capital across investing and share repurchases, Operator: We have our next question from Tom Catherwood with BTIG. Tom Catherwood: Matt, or Patrick, you both mentioned Europe in your paired remarks, and I know this has been the target market for quite some time. What has to be done to start originating there, and do you expect to be active broadly across Europe, or would it be more targeted to start? Matt Salem: Yeah, I can take that. It's, we're we've been actively originating there for a couple years now, and so I'd expect to close deals in the next quarter to, I mean, we're quoting stuff. It's just a it's just a timing it's just a timing game at this point. But our focus there is really Western, Western Europe and the UK. So I think that's really where we're kind of, we've been targeting opportunity. So again, the near term, we would expect to add to the portfolio in Europe. Tom Catherwood: Got appreciate that Matt, and then, obviously, it was an active quarter in one queue for originations. And you mentioned the pipeline being strong as ever, but with debt now up to 3.9 times. Do you see originations primarily being tied to repayments? And you mentioned, obviously repayment activity tracking ahead of expectations, or how much kind of more do you think you can push that leverage level with originations? Patrick Mattson: Good morning. Tom, I'll take that question. It's Patrick, yes, we were three times, 3.9 times into the quarter. But as I said, we had, you know, pretty sizable repayments early in April. So on a spot basis, we're actually at 3.7 so we're at the midpoint, and part of that is trying to get a little bit ahead of some of these repayments, as Matt mentioned, feels like we're tracking ahead of schedule. Some of the repayments that we got in this quarter were deals that we were really forecasting to get repaid in 2026 and we saw an acceleration of those of those repayments, so we'll be within the range, and sometimes we'll get it. We're going to be toward the high end, as we anticipate some of those repayments. But our target is still, is still the same, but knowing that we've got a pretty good pipeline of repayments, we're going to be focused on, you know, the origination side, and making sure that we're staying deployed and that we're maximizing earnings. Tom Catherwood: Got it and just to follow up Patrick on those repayments, has your expectation or the pace of those been impacted at all by the tariffs, or is it just too early to tell whether there's any link between kind of market dislocation and repayment activity? Patrick Mattson: I think it's a little early to tell Matt Salem: That said, you know, there are a number of deals that you know, we're aware of that are in the market, you know, seeking refinancing. As you recall, you know, a lot of these loans when we initially originated them, there was typically some lease up strategy involved. Many of those assets have now effectively, you know, stabilized. And so despite the fact that you've seen this volatility in the broader market, in the CRE market, we see a lot of liquidity. And so while spreads may have backed up 1020 basis points, if you think about what those spreads were when we initially had those loans as a lease up, they're still down, and sponsors still have an opportunity to improve their cost of capital in this environment. So we very much see kind of a functioning market here. And early to tell whether a deal or two gets sort of pushed off because of this. But as of right now, at least in our near term projections, we. We're not seeing a lot of impact. Operator: The next question is from Jade Rahmani with KBW. Jason Sabshon: This is actually Jason Sabshon on for Jade. Thanks for taking my questions today. So first, it would be helpful to discuss, what about the Raleigh multifamily that drove the downgrade? Is it a matter of basis, Lisa, operating cost, location, or all these factors? It would just be helpful to get some more trouble. Thanks. Matt Salem: I can jump in. I think the downgrade, you know, it's been on our watch list for a while, and now we're coming up on a maturity date. So that was really the, I think the reason for the downgrade from the four to the five, and the reason it's been on the watch list for a while, is because we just haven't seen the ability to drive rents in this particular stock market. And you know, this is a loan we made sort of at the peak, peak of the market, right? This is a, I think, a late first quarter, early second quarter, 22 loan. So there's been, obviously big value declines, but in most of our portfolio on the multifamily side, when we've given these numbers in the past, we just saw a tremendous amount of rental growth, and in this particular pocket, we just haven't seen the same, the same amount of that in terms of just being able to drive, excuse me, to be able to drive NOI higher. So it's really a function of that. I mean, it's a good property. It's performing well. It's just hasn't had that same, you know, push in the rental rate, as we've seen in most in most other markets, and then we've got a near term maturity here, so we'll have to figure out exactly the go forward from here. And as we mentioned on the call, could be a modification. We could go to title and, you know, kind of run the property ourselves. But we'll have to, you know, we'll have to negotiate that with our borrower. Jason Sabshon: Great. Thank you. And just on life science, you know, over what time period Do you think the capital was patient to wait, patient enough to wait for a pickup and leasing and you know, due to softness in the sector, would you be able to discuss the outlook for the risk series. Matt Salem: Yeah, and we, you know, this is why we tried to give a little bit more information, both in our prepared remarks and as well, as, you know, added some detail in our in our presentation. You know, most of our, excuse me, most of our exposure is kind of in these newer built, purpose built assets that are really targeting larger tenants, or Big Pharma, which we don't think is as susceptible as some of the cyclical issues that the sector is facing, certainly a part of it, but, but maybe not as acceptable some of the, you know, the smaller kind of earlier stage, stage companies. So we'd expect that to come back earlier. I think it's anybody's guess in terms of just, you know, at what point you really start to see a pickup in overall life science leasing, and a lot of that, I think, will depend on, you know, what happens with the tariff regime, and what happens, therefore, to the, you know, the overall economic environment that'll certainly weigh on, on the overall all sectors as well. And, yeah, that's generally speaking how we're kind of thinking about it, you know, in terms of the three rated loans that you asked. You know, we've, we've modified a couple of those already, and so kind of, I've dealt with our sponsors and getting them to a better spot. And then, as I, as I just mentioned, about half of the three rating loans, we have three assets that were construction loans. And so we still feel pretty good about those. Are built now, and are mostly built, and then, you know, just in the lease up period, but just given that they were new, quality there is very high. And so we think it's just a matter of time before, you know, it attracts the right tenants. Great. Thank you. Operator: The next question is from Steve Delaney with Citizens JMP Steve Delaney: So look, applaud the buyback activity, of course, and it would seem it's even better today, after the 15% or so decline, you know, after tariffs. But what I'm really intrigued by is, if we're going to be on a lot of these calls the next two weeks, and I don't think we're going to hear a lot of commercial mortgage treats, talking enthusiastically about new lending opportunities, it feels like we're still in more of a defensive mode. Just in a broad sense, I'm just. Curious, Matt, as you guys look at sort of the menu of new opportunities, I guess first question is, you know what is different in the either the quality or the pricing, the return profile, if you look at today's opportunity set, versus what you've maybe seen on average over the last couple years. I'd love you to compare and contrast that you know, if you would, in terms of the new opportunities on the lending side. Thanks. Matt Salem: I think you have to start with basis. I think the biggest change right now is just the opportunity to lend at these much lower valuations, and you still have real estate values somewhere around or below replacement cost. And when we're lending at some discount to that, it just feels like this vintage should be very, very safe from just an overall basis perspective. Of course, that translates into cash flow and debt service coverage and other things. But the first thing I think about this vintage is really basis, and that'll translate into this vintage, and the safety of it could be quite strong. So that's probably the first thing. The second thing we're seeing is there's less there's more opportunity in less transitional assets. And let me explain that. I think I mentioned this on maybe our last earnings call. If you think about what we were doing in 2122 a lot of it was like lending on brand new assets that had just been delivered and when their initial in, their initial lease up period, and a lot of that was multi family, and we'd be lending at a 10% occupancy or 20% occupancy, and providing that bridge To, you know, occupancy stabilization and burning off of concessions. Fast forward to today, and we're lending on what I call we went from kind of a transitional lender to like an almost stabilized lender. We're lending on assets that are 90% leased, and maybe there's a little bit of concession in there, but the vast majority of the cash flows are in place today, and all we're doing is providing our sponsors a bridge to a better capital markets environment and maybe a little bit lower interest rate environment. And as we all know, just with values down so much, I think many institutional owners just they don't want to sell right now. They just, they hold out another year or two or three, they're going to get into this supply dynamic where they're back in the market, raising rents pretty substantially, and they can kind of dig themselves out of, you know, a basis and 21 that is just not very favorable today. So that's, that's probably part of the big change in terms of the business plan that we're lending on locally here. And I don't know how long this will last, there's a big opportunity in sizable transactions, as we mentioned in the prepared remarks. With the CMDs market having widened much more than the loan market, we're seeing a lot of sponsors coming to us and, you know, $500 million loan, a billion dollar loan, which should have been SASB, or should be SASB issuance, coming to us and saying, Can, can you guys, you know, help with this? Because we don't want to, you know, we don't know what's going to happen tomorrow, and the market's volatile, and in the CMBS market, so that's kind of a local opportunity that we're focused on right now, but I don't again. I think that market will heal and be more effective as we kind of progress through the year. And then lastly, I would just comment that one of the big changes in my mind from like pre rate hike inflation pressures to today will be how the banks participate in the market. They've always been kind of loan on loan providers, but it is much more pronounced now in terms of just their willingness and their focus on putting some of their capital into these loan on loan facilities, just given how much more capital efficient is for them, how much safer it is for them to lend to other lenders than it is to make a direct mortgage loan, and I don't want to make it sound like they're not going to continue to lend on properties, but we are seeing that allocation shift more towards loan on loan facilities, So I think that'll be another on the financing side. I think that'll be another we are seeing that as a kind of a meaningful shift from what we saw before. Steve Delaney: That's really helpful. Color and Are you, are you seeing? You know, obviously you have development type borrowers who are out there getting. Projects, developing new projects, and you make them, you know, initial there's either construction loans and maybe then you flip it into a bridge. But are you seeing new equity coming in from institutional buyers, where they're seeing projects, where they, you know, are the potential values much greater than where the rents are today and where the basis is. So I'm just curious how much of your new financing is going in side by side with new equity into a project, rather than you just refinancing the original developer. Matt Salem: Yes, our pipeline, and our activity is still heavily weighted towards refinance. It gets right now it's around, if you look at our pipeline, it's around 70% refinance, like 30-ish percent acquisitions, and it'll slow down a little bit, just given the market volatility here, you know, since the since the tariff increases, but historically, that may have been 50% acquisitions and 40% refinance. So it's a little bit turned, you know, upside down there, as it relates, like the construction side. And I know you didn't ask this question directly, but it's probably somewhat relevant here. There's debt capital available. You can go get a construction loan, but we were making one, you know, right now, and in the fourth quarter, we did a big data center loan like you can get it, you can you can definitely access the financing markets for construction. And the challenge is the equity, I just don't think it pencils out very well right now. And now you've got a scenario where costs are increasing with tariffs that's going to be even more, you know, difficult. So anything when you talk about, like the 60, 70% decline, and in some of this construction, maybe early on, it was driven by debt and lack of availability, but now it's just the equity math, you know, doesn't work from a yield on cost perspective. Steve Delaney: Got it. Okay. And just the final thing for me, you know, obviously the tariff kind of discussions kind of through a wrinkle, wrinkle into stock market broadly, and certainly that hurt mortgage treats, you know, in the last in the month of April, for sure. You know, given that the stock at last night's closed 928, down about 15% you know, as a result, I think largely of tariffs. I mean, should we assume that if the buyback was attractive in first quarter, it's even more attractive to you and your board as you sit, you know, looking at as a stock with, you know, with this, with a non-handle or so, Matt Salem: Yeah, I mean, similar to the question asked earlier, I don't think our view has, has really changed that much. The stocks come down a little bit, so it's, it's certainly more attractive from a from a buyback perspective, but we need to be balanced. And as we approach the market, we need to invest capital. We need diversify the portfolio. But we certainly feel like we have ample liquidity right now, and so we'll take a balanced approach to that balance, excuse me, balanced approach to allocating that capital across the buybacks and the no originations got Operator: [Operator Instructions]. Our next question comes from Don Fandetti with Wells Fargo. Don Fandetti: Yeah, with repayments coming in a little bit higher, how are you feeling about net portfolio growth? I know you're sort of more on offense. Now, do you think that you're in a situation where every quarter through '25 you're seeing a little bit of portfolio growth? Patrick Mattson: Don, it's Patrick. I can take that. I think that, you know, as we think about the rest of the year, there's probably some incremental growth that we can have, but we're getting pretty close to, I think, what's our target size, when you factor in our leverage targets the capital that we have here. I think just what you'll see, though, is us looking to, as we've said, kind of match those repayments. So if those repayments start to kick up even more, you know, we'll accelerate on the origination front. But I don't think there's a lot of a lot more incremental sizes. We're kind of approaching our, you know, upper limit of our target leverage. Don Fandetti: Got it and then on some of the originations the multi-family this quarter look like the spreads were in this 230 basis range. Are those sort of, you know, what are the leverage returns on those loans? And are those examples of that? That more stabilized type lending you're seeing, Matt Salem: Yeah, it's Matt. I can jump in. I think our weighted average spread is a little bit more than that. Like 277 the market got as tight as that, probably that number you're mentioning, like 232 40 area again, on those mostly stabilized leased multifamily assets and those at that level, the back, our back leverage had declined. Spreads have declined there as well. You know, pre tariffs, but we were on the tightest in probably like 11 to 12% type of IRS there on a gross basis, most of the stuff we're doing is kind of north of there, but you're always, is always a range right as you kind of portfolio construct and to deal with different risk profiles in the market, but I'd say most of what we're getting right now is centered around that 12 to kind of 13% IRR, when you start to think about embedding the fees and things like that, Don Fandetti: Got it. And then I just wanted to go back on life science a bit, you know, appreciate the disclosure. I guess is this a situation where you could see, like a significant amount of these loans migrate from three to four. And how do you think about values on these assets? They're probably a little more unique than a multi-family or industrial I mean, do you expect is it harder to kind of triangulate value on these types of assets? Matt Salem: Yeah. I mean, just given the lease profile, isn't as granular, right on the multifamily side, you know, certainly there's, there's more of a timing element to, you know, thinking about thinking about value. And you know, it's not our expectation right now that these would migrate from three to a four, because either one is already been kind of modified and kind of adjusted, or, like I said, like the just the quality of the assets are there. The most part our sponsorship is, is very strong. And if you look at these locations, you know, we're, we're kind of like Maine and Maine in terms of where do you want to be in some of these markets, and we're in Cambridge, we're in seaport and South San Francisco. So, you know, it's not, certainly not our expectation right now that we, we go from a three to four or put this on the watch list, but you know, they still need to get leased up. So there's, there's risk there, and there's, you know, some a level of uncertainty, especially when you kind of sprinkle in this type of economic environment that we're in. Operator: Thank you. This concludes our question and answer session, I would like to turn the conference back over to Jack Switala for closing remarks. Jack Switala: Great thanks, operator, and thanks everyone for joining today. Please reach out to me or the team here if you have any questions. Take care. Operator: The conference has now concluded. Thank you for attending today's presentation you may now disconnect you. Before you buy stock in Kkr Real Estate Finance Trust, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Kkr Real Estate Finance Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. 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