Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 04, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | KKR Real Estate Finance Trust Inc. | |
Entity Central Index Key | 1,631,596 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 53,711,838 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and cash equivalents | $ 57,013 | $ 96,189 |
Restricted cash and cash equivalents | 900 | 157 |
Commercial mortgage loans, held-for-investment, net | 1,056,083 | 674,596 |
Commercial mortgage loans, held-for-sale, net | 0 | 26,230 |
Preferred interest in joint venture, held-to-maturity | 37,090 | 36,445 |
Equity method investments in unconsolidated subsidiaries, at fair value | 4,344 | 0 |
Accrued interest receivable | 5,266 | 2,974 |
Other assets | 2,582 | 2,728 |
Commercial mortgage loans held in variable interest entities, at fair value | 5,467,095 | 5,426,084 |
Total Assets | 6,630,373 | 6,265,403 |
Liabilities | ||
Secured financing agreements, net | 177,198 | 439,144 |
Accounts payable, accrued expenses and other liabilities | 7,121 | 2,297 |
Dividends payable | 13,505 | 0 |
Accrued interest payable | 333 | 593 |
Due to affiliates | 3,516 | 1,728 |
Variable interest entity liabilities, at fair value | 5,351,985 | 5,313,574 |
Total Liabilities | 5,553,658 | 5,757,336 |
Commitments and Contingencies | ||
Permanent Equity | ||
Preferred stock, 50,000,000 authorized (1 share with par value of $0.01 issued and outstanding as of June 30, 2017 and December 31, 2016, respectively, and 125 shares with stated value of $1,000.00 issued and outstanding as of December 31, 2016) | 0 | 125 |
Common stock, 300,000,000 authorized (53,711,838 and 24,158,392 shares with par value of $0.01 issued and outstanding as of June 30, 2017 and December 31, 2016, respectively) | 537 | 242 |
Additional paid-in capital | 1,053,045 | 479,417 |
Retained earnings | 11,644 | 17,914 |
Total KKR Real Estate Finance Trust Inc. stockholders’ equity | 1,065,226 | 497,698 |
Noncontrolling interests in equity of consolidated joint venture | 7,467 | 7,339 |
Total Permanent Equity | 1,072,693 | 505,037 |
Total Liabilities and Equity | 6,630,373 | 6,265,403 |
Consolidated Joint Venture One | ||
Temporary Equity | ||
Redeemable noncontrolling interests in equity of consolidated joint venture | 3,073 | 3,030 |
Consolidated Joint Venture Two | ||
Temporary Equity | ||
Redeemable noncontrolling interests in equity of consolidated joint venture | $ 949 | $ 0 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) Parenthetical - $ / shares | Jun. 30, 2017 | Dec. 31, 2016 |
Preferred stock authorized (shares) | 50,000,000 | 50,000,000 |
Preferred stock par or stated value (usd per share) | $ 0.01 | $ 0.01 |
Preferred stock issued (shares) | 1 | 1 |
Preferred stock outstanding (shares) | 1 | 1 |
Common stock authorized (shares) | 300,000,000 | 300,000,000 |
Common stock par value (usd per share) | $ 0.01 | $ 0.01 |
Common stock issued (shares) | 53,711,838 | 24,158,392 |
Common stock outstanding (shares) | 53,711,838 | 24,158,392 |
Cumulative Preferred Stock | ||
Preferred stock par or stated value (usd per share) | $ 0 | $ 1,000 |
Preferred stock issued (shares) | 0 | 125 |
Preferred stock outstanding (shares) | 0 | 125 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
Net Interest Income | ||||
Interest income | $ 17,446 | $ 6,719 | $ 30,352 | $ 12,988 |
Interest expense | 3,225 | 1,199 | 7,178 | 2,349 |
Total net interest income | 14,221 | 5,520 | 23,174 | 10,639 |
Other Income | ||||
Change in net assets related to consolidated variable interest entities | 4,175 | 5,824 | 8,785 | 3,740 |
Income from equity method investments in unconsolidated subsidiaries | 330 | 0 | 346 | 0 |
Other income | 275 | 18 | 439 | 79 |
Total other income (loss) | 4,780 | 5,842 | 9,570 | 3,819 |
Operating Expenses | ||||
General and administrative | 963 | 716 | 1,915 | 1,200 |
Management fees to affiliate | 3,488 | 1,329 | 5,524 | 2,467 |
Incentive compensation to affiliate | 0 | 88 | 0 | 365 |
Total operating expenses | 4,451 | 2,133 | 7,439 | 4,032 |
Income (Loss) Before Income Taxes, Noncontrolling Interests and Preferred Dividends | 14,550 | 9,229 | 25,305 | 10,426 |
Income tax expense | 146 | 72 | 268 | 143 |
Net Income (Loss) | 14,404 | 9,157 | 25,037 | 10,283 |
Redeemable Noncontrolling Interests in Income (Loss) of Consolidated Joint Venture | 34 | 80 | 80 | 161 |
Noncontrolling Interests in Income (Loss) of Consolidated Joint Venture | 214 | 207 | 424 | 391 |
Net Income (Loss) Attributable to KKR Real Estate Finance Trust Inc. and Subsidiaries | 14,156 | 8,870 | 24,533 | 9,731 |
Preferred Stock Dividends | 75 | 4 | 88 | 8 |
Net Income (Loss) Attributable to Common Stockholders | $ 14,081 | $ 8,866 | $ 24,445 | $ 9,723 |
Net Income (Loss) Per Share of Common Stock | ||||
Net Income (Loss) Per Share of Common Stock, Basic (usd per share) | $ 0.30 | $ 0.51 | $ 0.66 | $ 0.60 |
Net Income (Loss) Per Share of Common Stock, Diluted (usd per share) | $ 0.30 | $ 0.51 | $ 0.66 | $ 0.60 |
Weighted Average Number of Shares of Common Stock Outstanding | ||||
Weighted Average Number of Shares Outstanding, Basic (shares) | 46,632,975 | 17,248,539 | 36,810,769 | 16,079,840 |
Weighted Average Number of Shares Outstanding, Diluted (shares) | 46,633,248 | 17,248,539 | 36,811,042 | 16,079,840 |
Dividends Declared per Share of Common Stock (usd per share) | $ 0.53 | $ 0.34 | $ 0.88 | $ 0.7 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Changes In Equity (Unaudited) - USD ($) $ in Thousands | Total | Consolidated Joint Venture One | Consolidated Joint Venture Two | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Total KKR Real Estate Finance Trust Inc. Stockholders' Equity | Noncontrolling Interests in Equity of Consolidated Joint Venture |
Preferred stock, beginning balance (shares) at Dec. 31, 2015 | 125 | ||||||||
Common stock, beginning balance (shares) at Dec. 31, 2015 | 13,636,416 | ||||||||
Beginning balance at Dec. 31, 2015 | $ 286,374 | $ 125 | $ 136 | $ 272,518 | $ 8,681 | $ 281,460 | $ 4,914 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of stock (shares) | 5,021,976 | ||||||||
Issuance of stock | 100,004 | $ 51 | 99,953 | 100,004 | |||||
Offering costs | (2,874) | (2,874) | (2,874) | ||||||
Preferred dividends declared | (8) | (8) | (8) | ||||||
Common dividends declared | (10,941) | (10,941) | (10,941) | ||||||
Capital contributions | 2,048 | 2,048 | |||||||
Capital distributions | (145) | $ (173) | (145) | ||||||
Net income (loss) | 10,122 | 9,731 | 9,731 | 391 | |||||
Preferred stock, ending balance (shares) at Jun. 30, 2016 | 125 | ||||||||
Common stock, ending balance (shares) at Jun. 30, 2016 | 18,658,392 | ||||||||
Ending balance at Jun. 30, 2016 | 384,580 | $ 125 | $ 187 | 369,597 | 7,463 | 377,372 | 7,208 | ||
Beginning balance at Dec. 31, 2015 | 4,643 | $ 0 | |||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||
Preferred dividends declared | (8) | (8) | (8) | ||||||
Capital distributions | $ (145) | (173) | (145) | ||||||
Net income (loss) | 161 | ||||||||
Ending balance at Jun. 30, 2016 | 4,631 | 0 | |||||||
Preferred stock, beginning balance (shares) at Dec. 31, 2016 | 1 | 126 | |||||||
Common stock, beginning balance (shares) at Dec. 31, 2016 | 24,158,392 | 24,158,392 | |||||||
Beginning balance at Dec. 31, 2016 | $ 505,037 | $ 125 | $ 242 | 479,417 | 17,914 | 497,698 | 7,339 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Issuance of stock (shares) | 29,553,446 | ||||||||
Issuance of stock | 580,306 | $ 295 | 580,011 | 580,306 | |||||
Redemption of preferred stock (shares) | (125) | ||||||||
Redemption of preferred stock | (125) | $ (125) | (125) | ||||||
Offering costs | (6,398) | (6,398) | (6,398) | ||||||
Preferred dividends declared | (6) | (82) | (6) | (6) | |||||
Common dividends declared | (30,715) | (30,715) | (30,715) | ||||||
Capital distributions | (296) | (37) | (296) | ||||||
Equity compensation | 15 | 15 | 15 | ||||||
Net income (loss) | $ 24,875 | 24,451 | 24,451 | 424 | |||||
Preferred stock, ending balance (shares) at Jun. 30, 2017 | 1 | 1 | |||||||
Common stock, ending balance (shares) at Jun. 30, 2017 | 53,711,838 | 53,711,838 | |||||||
Ending balance at Jun. 30, 2017 | $ 1,072,693 | $ 0 | $ 537 | $ 1,053,045 | 11,644 | 1,065,226 | 7,467 | ||
Beginning balance at Dec. 31, 2016 | 3,030 | 0 | |||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||
Issuance of stock | 949 | ||||||||
Preferred dividends declared | (6) | (82) | $ (6) | $ (6) | |||||
Capital distributions | $ (296) | (37) | $ (296) | ||||||
Net income (loss) | 80 | 82 | |||||||
Ending balance at Jun. 30, 2017 | $ 3,073 | $ 949 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Cash Flows From Operating Activities | ||
Net income (loss) | $ 25,037 | $ 10,283 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Amortization of deferred debt issuance costs | 1,070 | 682 |
Accretion of net deferred loan fees and discounts | (1,302) | (278) |
Interest paid-in-kind | (644) | (1,155) |
Change in noncash net assets of consolidated variable interest entities | (2,566) | 2,112 |
(Income) from equity investment in unconsolidated subsidiary | (332) | 0 |
Equity compensation | 15 | 0 |
Changes in operating assets and liabilities: | ||
Accrued interest receivable, net | (2,292) | (438) |
Other assets | 2,107 | 3,373 |
Due to affiliates | 1,788 | (849) |
Accounts payable, accrued expenses and other liabilities | 4 | (3,006) |
Accrued interest payable | (260) | 41 |
Net cash provided by operating activities | 22,625 | 10,765 |
Cash Flows From Investing Activities | ||
Proceeds from principal repayments of commercial mortgage loans, held-for-investment | 1,685 | 2,376 |
Proceeds from sale of commercial mortgage loans | 60,991 | 0 |
Origination and purchase of commercial mortgage loans, held-for-investment | (416,631) | (64,583) |
Investment in commercial mortgage-backed securities, equity method investee | (23,600) | 0 |
Proceeds from commercial mortgage-backed securities, equity method investee | 19,588 | 0 |
Purchases of commercial mortgage-backed securities | 0 | (36,351) |
Investment in preferred interest in joint venture | 0 | (10,240) |
Purchases of other capitalized assets | 0 | (431) |
Net cash used in investing activities | (357,967) | (109,229) |
Cash Flows From Financing Activities | ||
Proceeds from borrowings under secured financing agreements | 198,000 | 39,000 |
Proceeds from issuances of common stock | 581,256 | 100,004 |
Redemption of preferred stock | (125) | 0 |
Proceeds from noncontrolling interest contributions | 0 | 2,048 |
Payments of common stock dividends | (17,287) | (10,941) |
Payments of preferred stock dividends | (11) | (8) |
Principal repayments on borrowings under secured financing agreements | (460,432) | 0 |
Payments of debt issuance costs | (2,549) | (1,010) |
Payments of stock issuance costs | (1,611) | (2,796) |
Net cash provided by financing activities | 296,909 | 126,075 |
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | (38,433) | 27,611 |
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 96,346 | 26,686 |
Cash, Cash Equivalents, and Restricted Cash at End of Period | 57,913 | 54,297 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid during the period for interest expense | 6,325 | 1,626 |
Cash paid during the period for income tax expense | 67 | 460 |
Supplemental Schedule of Non-Cash Investing and Financing Activities | ||
Consolidation of variable interest entities (incremental assets and liabilities) | 0 | 940,806 |
Dividend declared, not yet paid | 13,428 | 0 |
Redeemable Noncontrolling Interest | ||
Cash Flows From Financing Activities | ||
Payments of noncontrolling interest distributions | (37) | (222) |
Nonredeemable Noncontrolling Interest | ||
Cash Flows From Financing Activities | ||
Payments of noncontrolling interest distributions | $ (295) | $ 0 |
Business and Organization
Business and Organization | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Organization | KKR Real Estate Finance Trust Inc. (together with its subsidiaries, " KREF ") is a Maryland corporation that was formed and commenced operations on October 2, 2014 as a mortgage " real estate investment trust " (" REIT ") that focuses primarily on originating and acquiring senior loans secured by commercial real estate assets. KREF has elected and intends to maintain its qualification to be taxed as a REIT under the requirements of the Internal Revenue Code of 1986, as amended (the " Internal Revenue Code "), for U.S. federal income tax purposes. As such, KREF will generally not be subject to U.S. federal income tax on that portion of its income that it distributes to stockholders if it distributes at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. See Note 11 regarding taxes applicable to KREF . KREF is externally managed by KKR Real Estate Finance Manager LLC (" KKR Manager "), a subsidiary of KKR & Co. L.P. (together with its subsidiaries, " KKR "), through a management agreement (" Management Agreement ") pursuant to which the KKR Manager provides a management team and other professionals who are responsible for implementing KREF ’s business strategy, subject to the supervision of KREF ’s board of directors. For its services, the KKR Manager is entitled to management fees and incentive compensation, both defined in, and in accordance with the terms of, the Management Agreement (Note 9 ). As of June 30, 2017 , KKR beneficially owned 23,758,616 shares of KREF 's common stock, of which 3,758,616 shares were held by KKR on behalf of a third-party investor. As of June 30, 2017 , KREF 's principal business activities related to the origination and purchase of credit investments related to commercial real estate. Management assesses performance of KREF 's current portfolio of leveraged and unleveraged commercial mortgage loans and commercial mortgage-backed securities (" CMBS ") as a whole and makes operating decisions accordingly. As a result, management presents KREF 's operations within a single segment. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Basis of Presentation — The accompanying unaudited condensed consolidated financial statements and related notes of KREF are prepared in accordance with accounting principles generally accepted in the United States of America (" GAAP ") for interim financial information and instructions to Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Accordingly, certain information and footnote disclosures normally included in consolidated financial statements have been condensed or omitted. The condensed consolidated financial statements include the accounts of KREF and its consolidated subsidiaries, and all intercompany transactions and balances have been eliminated. In the opinion of management, all adjustments considered necessary for a fair presentation of KREF ’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with KREF ’s prospectus dated May 4, 2017, filed with the Securities and Exchange Commission (the “SEC”) on May 8, 2017 pursuant to Rule 424(b)(4) under the Securities Act (the “Prospectus”). Consolidation — KREF consolidates those entities for which (i) it controls significant operating, financial and investing decisions of the entity or (ii) management determines that KREF is the primary beneficiary of entities deemed to be variable interest entities (" VIE s"). Variable Interest Entities — VIE s are defined as entities in which equity investors do not have an interest with the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A VIE is required to be consolidated only by its primary beneficiary, which is defined as the party that has the power to direct the activities of the VIE that most significantly impact its economic performance and that has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could be potentially significant to the VIE (Note 6 ). To assess whether KREF has the power to direct the activities of a VIE that most significantly impact the VIE ’s economic performance, KREF considers all the facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes, first, identifying the activities that most significantly impact the VIE ’s economic performance; and second, identifying which party, if any, has power to direct those activities. To assess whether KREF has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE , KREF considers all of its economic interests and applies judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE . CMBS — KREF consolidates those trusts that issue beneficial ownership interests in mortgage loans secured by commercial real estate (commonly known as CMBS ) when KREF holds a variable interest in, and management considers KREF to be the primary beneficiary of, those trusts. Management believes the performance of the assets that underlie CMBS issuances most significantly impacts the economic performance of the trust, and the primary beneficiary is generally the entity that conducts activities that most significantly impact the performance of the underlying assets. In particular, the most subordinate tranches of CMBS expose the holder to the greater variability of economic performance when compared to more senior tranches since the subordinate tranches absorb a disproportionately higher amount of the credit risk related to the underlying assets. Generally, a trust designates the most junior subordinate tranche outstanding as the controlling class, which entitles the holder of the controlling class to unilaterally appoint and remove the special servicer for the trust. The special servicer is responsible for the servicing and administration of delinquent and nonperforming loans as well as real estate owned (" REO ") properties held as collateral delivered on foreclosed loans. While the special servicer cannot prevent losses, its services to the trust are designed to mitigate credit losses to holders of the CMBS . For the trusts that KREF consolidates, KREF holds non-investment grade rated and unrated CMBS that represent the most subordinate tranches of the CMBS issued by those trusts, which include the controlling class. As the holder of the most subordinate tranche, KREF is in a first loss position and has the right to receive benefits. As the holder of the controlling class, KREF has the ability to unilaterally appoint and remove the special servicer for the trust. In these cases, management considers KREF to be the primary beneficiary and consolidates the CMBS trusts. For VIE s in which management determines KREF is the primary beneficiary, all of the underlying assets, liabilities and equity of the trusts are recorded on KREF 's books, and the initial investment, along with any associated unrealized holding gains and losses, are eliminated in consolidation. Similarly, the interest income earned from these trusts is eliminated in consolidation. Management elected the fair value option for KREF 's initial and subsequent recognition of the assets and liabilities of KREF 's consolidated CMBS VIE s in order to provide users of the financial statements with better information regarding the effects of credit risk and other market factors on the CMBS beneficially held by KREF 's stockholders. Since the changes in fair value include the interest income and interest expense associated with these CMBS VIE s, management does not consider the separate presentation of the components of fair value changes to be relevant. Management has elected to present these items in aggregate as " Other Income — Change in net assets related to consolidated variable interest entities " in the accompanying Condensed Consolidated Statements of Operations; the residual difference represents KREF 's beneficial interest in the CMBS VIE s. Management separately presents the assets and liabilities of KREF 's consolidated VIE s as individual line items on KREF 's Condensed Consolidated Balance Sheets for entities in which the VIE s assets can only be used to settle the VIE ’s obligations. The liabilities of KREF 's consolidated VIE s consist solely of obligations to the CMBS holders of the consolidated trusts, excluding CMBS held by KREF as such interests are eliminated in consolidation, and the interest accrued thereon, presented as "Liabilities — Variable interest entity liabilities, at fair value ." The assets of KREF 's consolidated VIEs consist principally of commercial mortgage loans and the interest accrued thereon, and are likewise presented as a single line item entitled " Assets — Commercial mortgage loans held in variable interest entities, at fair value ." Assets of a CMBS trust, as a whole, can only be used to settle the obligations of the consolidated CMBS VIE . The assets of KREF 's CMBS VIE s are not individually accessible by, and obligations of the CMBS VIE s are not recourse to, the bondholders. REO assets generally represent a small percentage of the overall asset pool of a CMBS trust. In a new issue CMBS trust there are no REO assets, and no REO existed in KREF 's consolidated VIE assets as of June 30, 2017 . KREF derives the fair value of its Level 3 CMBS VIE assets from its Level 3 CMBS VIE liabilities, which management considers to possess more observable market value data than the CMBS VIE assets. See "— Fair Value — Valuation of Consolidated VIEs " for additional discussion regarding management's valuation of consolidated CMBS VIE s. Commercial Mezzanine Loan Joint Venture — KREF consolidates a joint venture that holds a portion of KREF 's investments in commercial mezzanine loans, and in which a third-party owns a 5.0% redeemable noncontrolling interest (Note 6 ). Management determined the joint venture to be a VIE as the third party owners of the redeemable noncontrolling interest do not have substantive participating or kick-out rights. KREF owns 95.0% of the equity interests in the joint venture and participates in the profits and losses. Management considers KREF to be the primary beneficiary of the joint venture as KREF holds decision-making power over the activities that most significantly impact the economic performance of the joint venture. Preferred Interest in Joint Venture — KREF consolidates a joint venture that holds a lending agreement with an entity engaged in the management of a multi-family tower, and in which a third-party owns a 20.0% noncontrolling interest (Note 4 ). Management determined the joint venture to be a VIE as the third-party owners of the noncontrolling interest do not have substantive participating or kick-out rights. KREF owns 80.0% of the equity interests in the joint venture and participates in the profits and losses. Management considers KREF to be the primary beneficiary of the joint venture as KREF holds decision-making power over the activities that most significantly impact the economic performance of the joint venture. Noncontrolling Interests — Noncontrolling interests represent the ownership interests in certain consolidated subsidiaries held by entities or persons other than KREF . Those noncontrolling interests that allow the holder to redeem before liquidation or termination of the entity that issued those interests are considered redeemable noncontrolling interests. The redeemable noncontrolling interests issued by subsidiaries of KREF are subject to certain restrictions and require KREF to transfer assets or issue equity to satisfy the redemption. As KREF does not control the circumstances under which the noncontrolling interests may redeem their interests, management considers these redeemable noncontrolling interests as temporary equity, presented as " Temporary Equity — Redeemable noncontrolling interests in equity of consolidated joint venture " in the accompanying Condensed Consolidated Balance Sheets and their share of " Net Income (Loss) " as " Redeemable Noncontrolling Interests in Income (Loss) of Consolidated Joint Venture " in the Condensed Consolidated Statements of Operations. KREF recorded the redeemable noncontrolling interests at fair value upon issuance by subsidiaries of KREF , and accretes to the redemption values at each subsequent reporting period date if KREF determines the noncontrolling interests are redeemable or probable to become redeemable. As of June 30, 2017 , KREF determined that the redeemable noncontrolling interests were not currently redeemable or probable to become redeemable, and as a result did not adjust the value of the redeemable noncontrolling interests. KREF reflects noncontrolling interests that are not redeemable as permanent equity that is not attributable to KREF 's stockholders. KREF presents these interests as " Permanent Equity — Noncontrolling interests in equity of consolidated joint venture " in the accompanying Condensed Consolidated Balance Sheets and their share of " Net Income (Loss) " as " Noncontrolling Interests in Income (Loss) of Consolidated Joint Venture " in the Condensed Consolidated Statements of Operations. Equity investments in unconsolidated subsidiaries — Investments are accounted for under the equity method when KREF has significant influence over the operations of an investee, but KREF does not consolidate that investment. Equity method investments, for which management has not elected a fair value option, are initially recorded at cost and subsequently adjusted for KREF 's share of net income or loss and cash contributions and distributions each period. Management determined that its investment in the KKR Manager is an interest in a VIE as KREF did not have substantive participating or kick-out rights. KREF does not have the power to direct activities and the obligation to absorb losses of the KKR Manager that could be significant to the KKR Manager . KREF accounts for its investment in the KKR Manager using the equity method since KREF is not the primary beneficiary of the KKR Manager (Note 6 ). Management determined that its investment in an aggregator vehicle alongside KKR Real Estate Credit Opportunity Partners L.P. (" RECOP ") is an interest in a VIE , however KREF is not the primary beneficiary and does not have substantive participating or kick-out rights. Management elected the fair value option for KREF 's investment in RECOP . KREF records its share of net asset value in RECOP as “Equity investments in unconsolidated subsidiaries, at fair value” in its Condensed Consolidated Balance Sheets and its share of unrealized gains or losses in "Income from equity investments in unconsolidated subsidiaries" in its Condensed Consolidated Statements of Operations (Note 6 ). Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Management makes subjective estimates to project cash flows KREF expects to receive on its investments in loans and securities as well as the related market discount rates, which significantly impacts the interest income, impairments, allowance for loan loss and fair values recorded or disclosed. Actual results could differ from those estimates. Fair Value — GAAP requires the categorization of the fair value of financial instruments into three broad levels that form a hierarchy based on the transparency of inputs to the valuation. Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 - Inputs are other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability. Level 3 - Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. KREF follows this hierarchy for its financial instruments. The classifications are based on the lowest level of input that is significant to the fair value measurement. Valuation Process — The KKR Manager reviews the valuation of Level 3 financial instruments as part of KKR 's quarterly process. As of June 30, 2017 , KKR’s valuation process for Level 3 measurements, as described below, subjected valuations to the review and oversight of various committees. KKR has a global valuation committee assisted by valuation subcommittees, including a real estate subcommittee that reviews and approves preliminary Level 3 valuations for certain real estate assets including the financial instruments held by KREF . The global valuation committee provides general oversight of the valuation subcommittees. The global valuation committee is responsible for coordinating and implementing KKR ’s valuation process to ensure consistency in the application of valuation principles across portfolio investments and between periods. All valuations are subject to approval by the global valuation committee. Valuation of Consolidated VIEs — Management categorizes the financial assets and liabilities of the CMBS trusts that KREF consolidates as Level 3 assets and liabilities in the fair value hierarchy and has elected the fair value option for financial assets and liabilities of each CMBS trust. Management has adopted the measurement alternative included in Accounting Standards Update (" ASU ") No. 2014-13, Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity (" ASU 2014-13"). Pursuant to ASU 2014-13, management measures both the financial assets and financial liabilities of the CMBS trusts consolidated by KREF using the fair value of the financial liabilities, which management considers more observable than the fair value of the financial assets. As a result, KREF presents the CMBS issued by the consolidated trust, but not beneficially owned by KREF 's stockholders, as financial liabilities in KREF 's condensed consolidated financial statements, measured at their estimated fair value; KREF measures the financial assets as the total estimated fair value of the CMBS issued by the consolidated trust, regardless of whether such CMBS represent interests beneficially owned by KREF 's stockholders. Under the measurement alternative prescribed by ASU 2014-13, KREF 's " Net Income (Loss) " reflects the economic interests in the consolidated CMBS beneficially owned by KREF 's stockholders, presented as " Change in net assets related to consolidated variable interest entities " in the Condensed Consolidated Statements of Operations, which includes applicable (i) changes in the fair value of CMBS beneficially owned by KREF , (ii) interest and servicing fees earned from the CMBS trust and (iii) other residual returns or losses of the CMBS trust, if any (Note 6 ). Management categorizes the preferred interest and commercial mezzanine loans held by separate joint ventures, VIE s consolidated by KREF as primary beneficiary, as Level 3 assets in the fair value hierarchy as such assets are illiquid, structured instruments that are specific to the properties and their corresponding operating performance (Note 10 ). Other Valuation Matters — For Level 3 financial assets originated, or otherwise acquired, and financial liabilities assumed during the calendar month immediately preceding a quarter end that were conducted in an orderly transaction with an unrelated party, management generally believes that the transaction price provides the most observable indication of fair value given the illiquid nature of these financial instruments, unless management is aware of any circumstances that may cause a material change in the fair value through the remainder of the reporting period. For instance, significant changes to the underlying property or its planned operations may cause material changes in the fair value of commercial mortgage loans acquired, or originated, by KREF . KREF ’s determination of fair value is based upon the best information available for a given circumstance and may incorporate assumptions that are management’s best estimates after consideration of a variety of internal and external factors. When an independent valuation firm expresses an opinion on the fair value of a financial instrument in the form of a range, management selects a value within the range provided by the independent valuation firm, generally the midpoint, to assess the reasonableness of management’s estimated fair value for that financial instrument. See Note 10 for additional information regarding the valuation of KREF 's financial assets and liabilities. Sales of Financial Assets and Financing Agreements — KREF will, from time to time, sell loans, securities and other assets as well as finance assets in the form of secured borrowings. In each case, management evaluates whether the transaction constitutes a sale through legal isolation of the transferred financial asset from KREF , the ability of the transferee to pledge or exchange the transferred asset without constraint and the transfer of control of the transferred asset. For transfers that constitute sales, KREF (i) recognizes the financial assets it retains and liabilities it has incurred, if any, (ii) derecognizes the financial assets it has sold, and derecognizes liabilities when extinguished and (iii) recognizes a realized gain, or loss, based upon the excess, or deficient, proceeds received over the carrying value of the transferred asset. KREF does not recognize a gain, or loss, on interests retained, if any, where management elected the fair value option prior to sale. Balance Sheet Measurement Cash, Cash Equivalents and Restricted Cash and Cash Equivalents — KREF considers cash equivalents as highly liquid short-term investments with maturities of 90 days or less when purchased. Substantially all amounts on deposit with major financial institutions exceed insured limits. As of June 30, 2017 and December 31, 2016 , KREF held $0.9 million and $0.2 million , respectively, of restricted cash related to good faith deposits and surety bond deposits. KREF receives good faith deposits from potential borrowers when originating or acquiring commercial mortgage loans, which KREF must return to the borrower in the event of a successful transaction or use to pay the costs it incurs in the event of a broken deal. Management considers these deposits restricted until the good faith deposit is returned to the borrower or management considers the deal broken. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows. June 30, 2017 December 31, 2016 Cash and cash equivalents $ 57,013 $ 96,189 Restricted cash and cash equivalents 900 157 Total cash, cash equivalents and restricted cash and cash equivalents shown in the Condensed Consolidated Statements of Cash Flows $ 57,913 $ 96,346 KREF must also maintain sufficient cash and cash equivalents to satisfy liquidity covenants related to its secured financing agreements. However, such amounts are not restricted from use in KREF 's current operations, and KREF does not present these cash and cash equivalents as restricted. As of June 30, 2017 and December 31, 2016 , KREF was required to maintain unrestricted cash and cash equivalents of at least $10.0 million and $11.1 million , respectively, to satisfy its liquidity covenants (Note 5 ). Commercial Mortgage Loans Held‑For‑Investment and Provision for Loan Losses — Loans that are held‑for‑investment are carried at their aggregate outstanding face amount, net of applicable (i) unamortized origination or acquisition premiums and discounts, (ii) unamortized deferred nonrefundable fees and other direct loan origination costs, (iii) allowance for loan losses and (iv) charge-offs or write-downs of impaired loans. If a loan is determined to be impaired, management writes down the loan through a charge to the provision for loan losses. See "— Expense Recognition — Loan Impairment " for additional discussion regarding management’s determination for loan losses. KREF applies the effective interest method to amortize origination or acquisition premiums and discounts and deferred nonrefundable fees or other direct loan origination costs. Loans for which management elects the fair value option at the time of origination, or acquisition, are carried at fair value on a recurring basis (Note 3 ). Commercial Mortgage Loans Held‑For‑Sale — Loans that KREF originates, or acquires, which KREF is unable to hold, or management intends to sell or otherwise dispose of, in the foreseeable future are classified as held‑for‑sale and are carried at the lower of amortized cost or fair value. As of June 30, 2017 , KREF did not classify any loans as held-for-sale (Note 3 ). Preferred Interest in Joint Venture Held-To-Maturity — KREF invests in preferred equity issued by a limited liability company engaged in commercial real estate activities that KREF accounts for as a debt security. Management intends, and believes KREF has the ability, to hold this investment until maturity. Accordingly, KREF presents this preferred interest in joint venture held‑to‑maturity for which management did not elect the fair value option, at cost, net of unamortized premiums and discounts; KREF applies the effective interest method to amortize applicable premiums and discounts through interest income. In the event that the fair value of the preferred interest in joint venture held‑to‑maturity is less than its amortized cost, management considers whether the unrealized holding loss represents an other-than-temporary impairment (" OTTI "). If management does not expect to recover the carrying value of the preferred interest in joint venture held-to-maturity based on future expected cash flows, an OTTI exists and KREF reduces the carrying value by the impairment amount, recognizes the portion of the impairment related to credit factors in earnings and the portion of the impairment related to other factors in accumulated other comprehensive income . For the six months ended June 30, 2017 and 2016, KREF had not recognized an OTTI related to its investment in preferred interest in joint venture held-to-maturity (Note 4 ). Secured Financing Agreements — KREF 's secured financing agreements are treated as collateralized financing transactions and consist of floating rate, uncommitted repurchase facilities carried at their contractual amounts, net of unamortized debt issuance costs (Note 5 ). Other Assets and Accounts Payable, Accrued Expenses and Other Liabilities — Other assets and liabilities are comprised of the following: Other Assets June 30, December 31, 2017 2016 Deferred debt issuance costs, net (A) $ 2,008 $ 448 Prepaid expenses, net 449 22 Other assets 70 30 Due from affiliates 55 360 Deferred stock issuance costs, net — 1,326 Accounts receivable — 542 $ 2,582 $ 2,728 Accounts Payable, Accrued Expenses And Other Liabilities June 30, December 31, 2017 2016 Accrued stock issuance costs $ 3,460 $ 60 Accounts payable 2,829 1,538 Accrued expenses 572 558 Income taxes payable 202 141 Deferred revenue 58 — $ 7,121 $ 2,297 (A) Deferred debt issuance costs related to undrawn repurchase facilities are presented net of accumulated amortization of $0.2 million and $0.0 million as of June 30, 2017 and December 31, 2016 , respectively. Special Non-Voting Preferred Stock (" SNVPS ") — Equity instruments that are redeemable for cash or other assets are classified as temporary equity if the instrument is redeemable, at the option of the holder, at a fixed or determinable price on a fixed or determinable date or upon the occurrence of an event that is not solely within the control of the issuer. Redeemable equity instruments are initially carried at the fair value of the equity instrument at the issuance date, which is subsequently adjusted at each balance sheet date if the instrument is currently redeemable. The fair value of the instrument is adjusted to reflect the instrument’s redemption amount at each balance sheet date if KREF determines the SNVPS is redeemable or it is probable that the SNVPS will become redeemable. KREF accounted for the SNVPS as redeemable preferred stock since a third party holds a redemption option, exercisable after May 5, 2018, and such redemption is not solely within KREF ’s control. As of June 30, 2017 , KREF determined that the SNVPS was not currently redeemable or it was not probable that the SNVPS would become redeemable, and did not adjust its value as a result. KREF presents the SNVPS as “ Temporary Equity — Redeemable preferred stock ” in the accompanying Condensed Consolidated Balance Sheets (Note 7 ). Income Recognition Interest Income — Loans where management expects to collect all contractually required principal and interest payments are considered performing loans. KREF accrues interest income on performing loans based on the outstanding principal amount and contractual terms of the loan. Interest income also includes origination fees and direct loan origination costs for loans that KREF originates, but where management did not elect the fair value option, as a yield adjustment using the effective interest method over the loan term. KREF expenses origination fees and direct loan origination costs for loans acquired, but not originated, by KREF as well as loans for which management elected the fair value option, as incurred. KREF also includes interest income arising from its preferred interest in joint venture held-to-maturity. Realized Gain (Loss) on Sale of Investments — KREF recognizes the excess, or deficiency, of net proceeds received, less the net carrying value of such investments, as realized gains or losses, respectively. KREF reverses cumulative, unrealized gains or losses previously reported in its Condensed Consolidated Statements of Operations with respect to the investment sold at the time of sale. Expense Recognition Loan Impairment — For each loan in KREF 's portfolio, management performs a quarterly evaluation of indicators of impairment of loans classified as held‑for‑investment using applicable loan, property, market and sponsor information obtained from borrowers, loan servicers and local market participants. Such indicators may include the net present value of the underlying collateral, property operating cash flows, the sponsor’s financial wherewithal and competency in managing the property, macroeconomic trends, and property submarket-specific economic factors. The evaluation of these indicators of impairment requires significant judgment by management to determine whether failure to collect contractual amounts is probable. If management deems that it is probable that KREF will be unable to collect all amounts owed according to the contractual terms of a loan, impairment of that loan is indicated. If management considers a loan to be impaired, management establishes an allowance for loan losses, through a valuation provision in earnings, which reduces the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. Significant judgment is required in determining impairment and in estimating the resulting loss allowance, and actual losses, if any, could materially differ from those estimates. Management considers loans to be past due when a monthly payment is due and unpaid for 60 days or more. Loans are placed on nonaccrual status and considered non-performing when full payment of principal and interest is in doubt, which generally occurs when principal or interest is 120 days or more past due unless the loan is both well secured and in the process of collection. Management may return a loan to accrual status when repayment of principal and interest is reasonably assured under the terms of the restructured loan. As of June 30, 2017 , KREF did not hold any loans that management placed on nonaccrual status or otherwise considered past due. In addition to reviewing for impairment, commercial mortgage loans held-for-investment, management evaluates KREF 's commercial mortgage loans to determine if an allowance for loan loss should be established. In conjunction with this review, management assesses the risk factors of each loan, and assigns a risk rating based on a variety of factors, including, without limitation, underlying real estate performance and asset value, values of comparable properties, durability and quality of property cash flows, sponsor experience and financial wherewithal, and the existence of a risk-mitigating loan structure. Additional key considerations include loan-to-value ratios, debt service coverage ratios, loan structure, real estate and credit market dynamics, and risk of default or principal loss. Based on a five-point scale, KREF 's loans are rated "1" through "5," from less risk to greater risk, which ratings are defined as follows: 1 – Very Low Risk 2 – Low Risk 3 – Average Risk 4 – High Risk/Potential for Loss: A loan that has a risk of realizing a principal loss. 5 – Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss. As of June 30, 2017 , the average risk rating of KREF 's portfolio was 2.9 (Average Risk) , weighted by investment carrying value, with 98.5% of commercial mortgage loans held-for-investment rated 3 (Average Risk) or better by the KKR Manager . As of June 30, 2017 and December 31, 2016 , no investments were rated 5 (Impaired/Loss Likely). As of June 30, 2017 and December 31, 2016 , ma |
Commercial Mortgage Loans
Commercial Mortgage Loans | 6 Months Ended |
Jun. 30, 2017 | |
Mortgage Loans on Real Estate [Abstract] | |
Commercial Mortgage Loans | Commercial Mortgage Loans KREF recognizes its investments in commercial mortgage loans based on management's intent, and KREF 's ability, to hold those investments through their contractual maturity. Management classifies those loans that management does not intend to sell in the foreseeable future, and KREF is able to hold until maturity, as held-for-investment. See Note 2 for additional information regarding KREF 's accounting for its investments in commercial mortgage loans. The following table summarizes KREF 's investments in commercial mortgage loans as of June 30, 2017 and December 31, 2016 : Weighted Average Loan Type Outstanding Face Amount Carrying Value Loan Count Floating Rate Loan % (A) Coupon (A) Yield (B) Life (Years) (B)(C) June 30, 2017 Loans held-for-investment Senior loans $ 968,374 $ 960,094 11 100.0 % 5.7 % 5.7 % 3.9 Mezzanine loans (D) 96,227 95,989 10 72.7 10.9 10.9 4.0 $ 1,064,601 $ 1,056,083 21 97.5 % 6.1 % 6.2 % 3.9 December 31, 2016 Loans held-for-investment Senior loans $ 625,638 $ 618,779 7 100.0 % 4.4 % 6.5 % 4.0 Mezzanine loans 55,932 55,817 3 100.0 9.5 11.5 2.9 681,570 674,596 10 100.0 4.8 6.9 3.9 Loans held-for-sale Mezzanine loans 26,230 26,230 6 — 10.6 11.3 6.5 26,230 26,230 6 — 10.6 11.3 6.5 $ 707,800 $ 700,826 16 96.3 % 5.0 % 7.1 % 4.0 (A) Average weighted by outstanding face amount of loan. Weighted average coupon assumes applicable floating benchmark rates as of June 30, 2017 . (B) Average weighted by carrying value of loan. Weighted average yield assumes applicable floating benchmark rates as of June 30, 2017 . (C) The weighted average life of each loan is based on the expected timing of the receipt of contractual cash flows. (D) A joint venture consolidated as a VIE in which a third-party owns a 5.0% redeemable noncontrolling interest (Note 6 ) holds (i) seven commercial mezzanine loans, held-for-investment, with a $61.2 million outstanding face amount and carrying value as of June 30, 2017 . Concentration of Credit Risk — The following tables present the geographies and property types of collateral underlying KREF 's commercial mortgage loans as a percentage of the loans' carrying values, net of noncontrolling interests: Loans Held-for-Investment June 30, 2017 December 31, 2016 June 30, 2017 December 31, 2016 Geography Collateral Property Type New York 26.3 % 25.9 % Office 51.4 % 39.2 % California 26.1 20.3 Retail 24.5 37.2 Oregon 11.3 17.6 Multifamily 13.9 8.8 Georgia 10.4 9.8 Industrial 6.3 9.8 Washington D.C. 7.2 10.6 Hospitality 3.9 5.0 Texas 5.9 — Total 100.0 % 100.0 % Tennessee 5.0 7.9 Florida 3.9 5.1 Illinois 1.7 2.4 Colorado 1.5 — South Carolina 0.1 0.2 Alabama — 0.2 Other U.S. 0.6 — Total 100.0 % 100.0 % Loans Held-for-Sale June 30, 2017 December 31, 2016 June 30, 2017 December 31, 2016 Geography Collateral Property Type Florida — % 30.5 % Multifamily — % 32.2 % California — 21.2 Hospitality — 30.5 Michigan — 16.3 Retail — 21.0 Texas — 11.1 Office — 16.3 Iowa — 8.9 Total — % 100.0 % Illinois — 5.9 Oklahoma — 3.9 Missouri — 2.2 Total — % 100.0 % Activities — Activities related to the carrying value of KREF ’s commercial mortgage loans were as follows: Held-for-Investment Held-for-Sale Total Balance at December 31, 2016 $ 674,596 $ 26,230 $ 700,826 Purchases and originations, net (A) 416,631 — 416,631 Transfer to held-for-investment (B) 26,230 (26,230 ) — Proceeds from principal repayments (1,685 ) — (1,685 ) Proceeds from principal repaid upon loan sale (60,991 ) — (60,991 ) Accretion of loan discount and other amortization, net (C) 1,302 — 1,302 Balance at June 30, 2017 $ 1,056,083 $ — $ 1,056,083 (A) Net of applicable premiums, discounts and deferred loan origination costs. (B) Non-cash transfer of commercial mortgage loans, as management no longer intends to sell, and has the ability to hold-to-maturity, the loans originally placed for sale. (C) Includes amortization and accretion of applicable premiums, discounts and deferred loan origination costs. |
Preferred Interest in Joint Ven
Preferred Interest in Joint Venture | 6 Months Ended |
Jun. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Preferred Interest in Joint Venture | Preferred Interest in Joint Venture During 2015, KREF invested in a joint venture that entered into a lending agreement with an entity engaged in the management of a multi-family tower. The consolidated joint venture classifies that lending agreement as a debt security held-to-maturity. See Note 2 for additional information regarding KREF 's accounting for the joint venture's investment treated as a debt security under GAAP . The following table summarizes the joint venture's investment as of June 30, 2017 and December 31, 2016 : June 30, 2017 December 31, 2016 Gross Unrealized Holding Investment Outstanding Face Amount Amortized Cost Basis Gains Losses Total OTTI Net Carrying Amount Fair Value Net Carrying Amount Preferred interest in joint venture, held-to-maturity (A) $ 37,090 $ 37,090 $ 259 $ — $ — $ 37,090 $ 37,349 $ 36,445 $ 37,090 $ 37,090 $ 259 $ — $ — $ 37,090 $ 37,349 $ 36,445 (A) The preferred interest has a preferred return between 3.5% fixed accrual rate and LIBOR plus 7.0% , subject to a LIBOR floor of 1.0% , and initially matures in February 2020. The borrower may extend the maturity to February 2022, subject to certain conditions and rate increases of fixed accrual rate of 4.0% and LIBOR plus 8.0% and LIBOR plus 9.0% in each extension year. |
Debt
Debt | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt The following table summarizes KREF 's secured financing agreements and other consolidated debt obligations in place as of June 30, 2017 and December 31, 2016 : June 30, 2017 December 31, 2016 Facility Collateral Facility Weighted Average (B) Month Issued Outstanding Face Amount Carrying Value (A) Maximum Facility Size Final Stated Maturity Funding Cost Life (Years) Outstanding Face Amount Amortized Cost Basis Carrying Value Weighted Average Life (Years) (C) Carrying Value (A) Secured Financing Agreements (D) Master Repurchase Agreements Wells Fargo (E) Oct 2015 $ 143,150 $ 139,909 $ 750,000 Apr 2022 3.4 % 1.7 $ 612,568 $ 607,934 $ 607,934 4.2 $ 262,883 Morgan Stanley (F) Dec 2016 40,000 38,375 500,000 Dec 2020 3.8 2.4 355,806 352,160 352,160 4.4 177,764 JP Morgan (G) Oct 2015 — (1,086 ) 250,000 Oct 2018 0.4 0.0 n.a. n.a. n.a. n.a. (1,503 ) Goldman Sachs (H) Sep 2016 — — 250,000 Sep 2019 0.2 0.0 n.a. n.a. n.a. n.a. — Revolving Credit Agreement Barclays (I) May 2017 — — 75,000 May 2020 1.9 0.0 n.a. n.a. n.a. n.a. n.a. 183,150 177,198 1,825,000 3.5 % 2.1 439,144 VIE Liabilities CMBS (J) Various 5,024,443 5,351,985 n.a. Mar 2048 to Feb 2049 4.3 % 7.7 5,333,602 n.a. 5,467,095 7.7 5,313,574 5,024,443 5,351,985 n.a. 4.3 7.7 5,313,574 Total / Weighted Average $ 5,207,593 $ 5,529,183 $ 1,825,000 4.3 % 7.5 $ 5,752,718 (A) Net of $6.0 million and $6.4 million unamortized debt issuance costs as of June 30, 2017 and December 31, 2016 , respectively. (B) Average weighted by the outstanding face amount of borrowings. (C) Average based on the fully extended loan maturity, weighted by the outstanding face amount of the collateral. (D) Borrowings under these repurchase agreements are collateralized by senior loans, held-for-investment, and bear interest equal to the sum of (i) a floating rate index, subject to a floor of no less than zero, equal to one-month LIBOR, or an index approximating LIBOR, and (ii) a margin, based on the collateral. As of June 30, 2017 and December 31, 2016 , the percentage of the outstanding face amount of the collateral sold and not borrowed under these repurchase agreements, or average "haircut" weighted by outstanding face amount of collateral, was 81.1% and 28.8% , respectively (or 25.6% and 25.9% , respectively, if KREF had borrowed the maximum amount approved by its repurchase agreement counterparties as of such dates). (E) In April 2017, KREF and Wells Fargo Bank, National Association (" Wells Fargo ") amended the repurchase agreement to extend the facility maturity date and to increase the maximum facility size from $500.0 million to $750.0 million . The current stated maturity of the facility is April 2020 , which does not reflect two , twelve -month facility term extensions available to KREF , which is contingent upon certain covenants and thresholds. As of June 30, 2017 , the collateral-based margin was between 1.80% and 2.15% . (F) In December 2016, KREF entered into a $500.0 million repurchase facility with Morgan Stanley Bank, N.A. (" Morgan Stanley "). The current stated maturity of the facility is December 2019 , which does not reflect one , twelve -month facility term extension available to KREF , which is contingent upon certain covenants and thresholds and, even if such covenants and thresholds are satisfied, is at the sole discretion of Morgan Stanley . As of June 30, 2017 , the collateral-based margin was between 2.25% and 2.45% . (G) The current stated maturity of the facility is October 2018 , which does not reflect facility term extensions available to KREF at the discretion of JPMorgan Chase Bank, National Association (" JP Morgan "). In December 2016, KREF used the $500.0 million repurchase facility with Morgan Stanley to repurchase all of the senior loans financed by the master repurchase facility with JP Morgan. The negative carrying value reflects unamortized debt issuance costs presented in KREF's Condensed Consolidated Balance Sheets as a direct deduction from the carrying amount of the recognized debt liability in accordance with ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs . (H) In September 2016, KREF entered into a $250.0 million repurchase facility with Goldman Sachs Bank USA (" Goldman Sachs "). The facility has a revolving period of one year , and a three -year term on a per-asset basis as those assets are pledged to the facility. As of June 30, 2017 , the carrying value excluded $0.4 million unamortized debt issuance costs presented as " Assets — Other assets " in KREF 's Condensed Consolidated Balance Sheets. (I) In May 2017, KREF entered into a $75.0 million corporate secured revolving credit facility administered by Barclays Bank PLC (" Barclays "). The current stated maturity of the facility is May 2019 , which does not reflect one , twelve-month facility term extension available to KREF at the discretion of Barclays . Borrowings under the facility bear interest at a per annum rate equal to the sum of (i) a floating rate index and (ii) a fixed margin. Amounts borrowed under this facility are 100% recourse to KREF . As of June 30, 2017 , the carrying value excluded $1.4 million unamortized debt issuance costs presented as " Assets — Other assets " in KREF 's Condensed Consolidated Balance Sheets. (J) Facility amounts represent CMBS issued by five trusts that KREF consolidates, but that are not beneficially owned by KREF 's stockholders. The facility and collateral carrying amounts included $19.2 million accrued interest payable and $20.3 million accrued interest receivable as of June 30, 2017 . As of December 31, 2016 , the facility and collateral carrying amounts included $18.8 million accrued interest payable and $19.9 million accrued interest receivable. The final stated maturity date represents the rated final distribution date of CMBS issued by trusts that KREF consolidates, but that are not beneficially owned by KREF 's stockholders. As of June 30, 2017 and December 31, 2016 , KREF had outstanding repurchase agreements where the amount at risk with any individual counterparty, or group of related counterparties, exceeded 10.0% of KREF ’s stockholders' equity. The amount at risk under repurchase agreements is the net counterparty exposure, defined as the excess of the carrying amount (or market value, if higher than the carrying amount) of the assets sold under agreement to repurchase, including accrued interest plus any cash or other assets on deposit to secure the repurchase obligation, over the amount of the repurchase liability, adjusted for accrued interest. The following table summarizes certain characteristics of KREF 's repurchase agreements where the amount at risk with any individual counterparty, or group of related counterparties, exceeded 10.0% of KREF ’s stockholders' equity as of June 30, 2017 and December 31, 2016 : Outstanding Face Amount Net Counterparty Exposure Percent of Stockholders' Equity Weighted Average Life (Years) (A) June 30, 2017 Wells Fargo Bank, National Association $ 143,150 $ 472,063 44.3 % 1.7 Morgan Stanley Bank, N.A. 40,000 316,948 29.8 2.4 Total / Weighted Average $ 183,150 $ 789,011 74.1 % 2.1 December 31, 2016 Wells Fargo, National Association $ 265,650 $ 107,664 21.6 % 2.0 Morgan Stanley Bank, N.A. 179,932 65,533 13.2 3.0 Total / Weighted Average $ 445,582 $ 173,197 34.8 % 2.4 (A) Average weighted by the outstanding face amount of borrowings under the secured financing agreement. Debt obligations included in the tables above are obligations of KREF ’s consolidated subsidiaries, which own the related collateral, and such collateral is generally not available to other creditors of KREF . In particular, holders of CMBS , including KREF , are unable to directly own the mortgages, properties or other collateral held by the issuing trust that KREF presents as " Assets — Commercial mortgage loans held in variable interest entities, at fair value " in its Condensed Consolidated Balance Sheets. While KREF is generally not required to post margin under repurchase agreement terms for changes in general capital market conditions such as changes in credit spreads or interest rates, KREF may be required to post margin for changes in conditions specific to loans that serve as collateral for those repurchase agreements. Such changes may include declines in the appraised value of property that secures a loan or a negative change in the borrower's ability or willingness to repay a loan. To the extent that KREF is required to post margin, KREF 's liquidity could be significantly impacted. Both KREF and its lenders work cooperatively to monitor the performance of the properties and operations related to KREF 's loan investments to mitigate investment-specific credit risks. Additionally, KREF incorporates terms in the loans it originates to further mitigate risks related to loan nonperformance. Activities — Activities related to the carrying value of KREF ’s secured financing agreements and other consolidated debt obligations were as follows: Secured financing agreements, net Variable interest entity liabilities, at fair value Total Balance at December 31, 2016 $ 439,144 $ 5,313,574 $ 5,752,718 Principal borrowings 198,000 — 198,000 Principal repayments (460,432 ) (17,936 ) (478,368 ) Deferred debt issuance costs (923 ) — (923 ) Amortization of deferred debt issuance costs 866 — 866 Fair value adjustment — 56,399 56,399 Other (A) 543 (52 ) 491 Balance at June 30, 2017 $ 177,198 $ 5,351,985 $ 5,529,183 (A) Amounts principally consist of changes in accrued interest payable. Maturities — KREF ’s secured financing agreements and other consolidated debt obligations in place as of June 30, 2017 had current contractual maturities as follows: Year Nonrecourse (A) Recourse (B) Total 2017 $ 20,337 $ 10,000 $ 30,337 2018 49,610 58,900 108,510 2019 61,593 40,000 101,593 2020 455,101 74,250 529,351 2021 75,545 — 75,545 Thereafter 4,362,257 — 4,362,257 $ 5,024,443 $ 183,150 $ 5,207,593 (A) Amounts related to consolidated CMBS VIE liabilities that represent securities not beneficially owned by KREF 's stockholders. (B) Amounts borrowed subject to a maximum 25.0% recourse limit. Covenants — KREF is required to comply with customary loan covenants and event of default provisions related to its secured financing agreements, including, but not limited to, negative covenants relating to restrictions on operations with respect to KREF ’s status as a REIT , and financial covenants. Such financial covenants include an interest income to interest expense ratio covenant ( 1.5 to 1.0); a minimum consolidated tangible net worth covenant ( 75.0% of the aggregate cash proceeds of any equity issuances made and any capital contributions received by KREF and certain subsidiaries); a cash liquidity covenant (the greater of $10.0 million or 5.0% of KREF 's recourse indebtedness); a total indebtedness covenant ( 75.0% of KREF 's total assets, net of VIE liabilities); a minimum debt-to-equity ratio ( 3.5 to 1.0); and a minimum fixed charge coverage ratio ( 1.5 to 1.0). As of June 30, 2017 and December 31, 2016 , KREF was in compliance with its financial loan covenants. |
Variable Interest Entities
Variable Interest Entities | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | Variable Interest Entities CMBS — KREF 's stockholders beneficially owned CMBS with an unpaid principal balance and fair value of $309.2 million and $114.0 million , respectively, as of June 30, 2017 . KREF was required to consolidate each of the five trusts from the date of acquisition through June 30, 2017 since KREF retained the controlling class and management determined KREF was the primary beneficiary of those trusts. Further, management irrevocably elected the fair value option for each of the five trusts and carries the fair values of the trusts' assets and liabilities at fair value in its Condensed Consolidated Balance Sheets; recognizes changes in the trusts' net assets, including fair value adjustments, in its Condensed Consolidated Statements of Operations; and records cash interest received from the trusts, net of cash interest paid to CMBS not beneficially owned by KREF , as operating cash flows. As of June 30, 2017 , KREF recognized trust assets and liabilities of $5.5 billion , including $20.3 million of accrued interest receivable, and $5.4 billion , including $19.2 million of accrued interest payable but excluding amounts eliminated in consolidation, respectively, at their fair values. For the six months ended June 30, 2017 , the $8.8 million of " Other Income — Change in net assets related to consolidated variable interest entities " in the accompanying Condensed Consolidated Statements of Operations principally consists of $6.2 million of interest earned, net of amounts that KREF does not expect to collect, and $2.6 million of unrealized gain (loss) on KREF 's investments in CMBS in which KREF stockholders hold a beneficial interest. See Note 10 for additional information regarding the valuation of financial assets and liabilities held by KREF 's consolidated VIE s. Concentration of Credit Risk — The following tables present the geographies and property types of collateral underlying the CMBS trusts consolidated by KREF , as a percentage of the collateral unpaid principal balance and weighted by the fair value of the CMBS beneficially owned by KREF 's stockholders: June 30, 2017 December 31, 2016 June 30, 2017 December 31, 2016 Geography Collateral Property Type California 23.1 % 23.0 % Office 26.3 % 26.3 % Texas 12.7 12.7 Retail 25.2 25.2 New York 9.2 9.2 Hospitality 15.0 15.1 Illinois 7.1 7.1 Multifamily 10.6 10.6 Florida 5.5 5.5 Industrial 9.6 9.6 Missouri 4.6 4.6 Mixed Use 7.0 7.0 Pennsylvania 4.5 4.5 Self Storage 3.1 3.1 Georgia 2.9 3.0 Mobile Home 2.7 2.7 Michigan 2.7 2.7 Other 0.5 0.4 Ohio 2.5 2.5 Total 100.0 % 100.0 % Other U.S. 25.2 25.2 Total 100.0 % 100.0 % Commercial Mezzanine Loan Joint Venture — KREF holds a 95.0% interest, and is the primary beneficiary of, a joint venture consolidated as a VIE that invests in commercial mezzanine loans (Note 3 ). As of June 30, 2017 , the joint venture held seven loans with an amortized cost basis of $61.2 million , presented within " Assets — Commercial mortgage loans, held-for-investment, net " in the accompanying Condensed Consolidated Balance Sheets. As of June 30, 2017 , the joint venture did not have any liabilities. Preferred Interest in Joint Venture — KREF is the primary beneficiary of a consolidated VIE , a joint venture that entered into a lending agreement with an entity engaged in the management of a multi-family tower, in which KREF holds an 80.0% interest (Note 4 ). As of June 30, 2017 , the joint venture held the lending agreement with an amortized cost basis of $37.1 million , presented as " Assets — Preferred interest in joint venture, held-to-maturity " in the accompanying Condensed Consolidated Balance Sheets, and did not have any liabilities. Equity Investments in Unconsolidated Subsidiaries — KREF holds two investments in entities that it records using the equity method. As of June 30, 2017 , KREF holds an 8.0% interest in RECOP , an unconsolidated VIE of which KREF is not the primary beneficiary. The aggregator vehicle in which KREF invests is controlled and advised by affiliates of the KKR Manager . RECOP intends to primarily acquire junior tranches of commercial mortgage backed securities newly issued by third parties but may also make purchases on the secondary market. KREF will not pay any fees to RECOP , but KREF bears its pro rata share of RECOP 's expenses. KREF reported its share of the net asset value of RECOP in its Condensed Consolidated Balance Sheets, presented as “Equity investments in unconsolidated subsidiaries” and its share of net income, presented as “Income from equity investments in unconsolidated subsidiaries” in the Condensed Consolidated Statement of Operations. As of June 30, 2017 , the non-voting limited liability company interests issued by the KKR Manager , a VIE , and held by a taxable REIT subsidiary (" TRS ") of KREF for the benefit of the holder of the SNVPS represented 4.7% of the KKR Manager ’s outstanding limited liability company interests (Note 7 ). KREF reported its allocable percentage of the assets and liabilities of the KKR Manager in its Condensed Consolidated Balance Sheets, presented as “Equity investment in unconsolidated subsidiary” and its share of net income, presented as “Income from equity investment in unconsolidated subsidiary” in the Condensed Consolidated Statement of Operations. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Equity | Equity On October 2, 2014, KREF 's board of directors authorized KREF to issue up to 350,000,000 shares of stock, at $0.01 par value per share, consisting of 300,000,000 shares of common stock and 50,000,000 shares of preferred stock, subject to certain restrictions on transfer and ownership of shares. Restrictions placed on the transfer and ownership of shares relate to KREF 's REIT qualification requirements. Common Stock — In March 2016, KREF obtained $277.4 million of capital commitments in connection with the completion of a private placement priced at $20.00 per share. Of these capital commitments, $190.1 million consisted of approximately $178.4 million from third parties and approximately $11.8 million from certain current and former employees of, and consultants to, KKR . KKR committed $87.3 million in addition to its aggregate capital contributions of $312.7 million immediately prior to the completion of the private placement. In connection with the completion of the private placement, KREF formed an advisory board consisting of certain third-party investors. The advisory board possessed certain protective approval rights over KREF 's activities outside its ordinary course of business, including certain business combinations and equity issuances. The advisory board dissolved upon KREF 's public listing on May 5, 2017 (Note 12 ). In February 2017, KREF called a portion of capital from investors in the private placements closed during the year ended December 31, 2016 and issued 7,386,208 common shares, at $20.00 per share, for net proceeds of $147.7 million . In April 2017, KREF called the remaining capital from investors in the private placements completed during the year ended December 31, 2016 and issued 10,379,738 shares of its common stock at $20.00 per share for net proceeds of $207.6 million . In connection with the capital commitments described above, third-party investors and certain current and former employees of, and consultants to, KKR were allocated non-voting limited liability company interests of the KKR Manager . For each $100.0 million shares of KREF ’s common stock acquired by investors through the private placement, the investors were allocated non-voting limited liability company interests, representing 6.67% of the KKR Manager ’s then-outstanding total limited liability company interests. Each investor was allocated its pro rata share of the non-voting limited liability company interests of the KKR Manager based on the investor’s shares of KREF ’s common stock. In May 2017, KREF completed its initial public offering of 11,787,500 shares of its common stock at a price to the public of $20.50 per share, which included 1,537,500 shares of common stock issued in connection with the underwriters' exercise in full of their option to purchase additional shares. The offering generated net proceeds of approximately $225.9 million . As of June 30, 2017 , KKR beneficially owned 23,758,616 shares of KREF 's common stock, of which 3,758,616 shares were held by KKR on behalf of a third-party investor (Note 1 ). The value of KREF 's common stock prior to its listing on the New York Stock Exchange was based upon its equity value using a combination of net asset value (market) and discounted cash flow (income) approaches, as well as the pricing of third-party transactions involving KREF 's common stock. During the six months ended June 30, 2017 , KREF 's board of directors declared the following dividends on shares of its common stock: Amount Declaration Date Record Date Payment Date Per Share Total February 3, 2017 February 3, 2017 February 3, 2017 $ 0.35 $ 8,455 April 18, 2017 April 18, 2017 April 18, 2017 0.28 8,832 June 14, 2017 June 30, 2017 July 14, 2017 0.25 13,428 $ 30,715 Preferred Stock — On January 23, 2015, KREF issued 125 shares of Series A cumulative, non-voting preferred stock with a par value of $0.01 per share and a stated value of $1,000.00 per share ("Series A Preferred Stock ") that are senior to common stock. Holders of Series A Preferred Stock are entitled to cumulative distributions of 12.5% of the stated value per annum, payable semi-annually in arrears on or before June 30 and December 31 of each year, but are unable to convert Series A Preferred Stock into common stock or vote on matters brought to KREF 's stockholders. KREF may redeem Series A Preferred Stock at any time upon payment of the stated value and any unpaid distributions. In May 2017, KREF redeemed all 125 issued and outstanding shares of Series A Preferred Stock for $0.1 million , representing the sum of $1,000.00 per share and all accrued and unpaid dividends. Special Voting Preferred Stock — In March 2016, KREF issued a share of special voting preferred stock to KKR Fund Holdings for $20.00 per share, which KKR Fund Holdings transferred to its subsidiary, KKR REFT Asset Holdings. The holder of the special voting preferred stock has special voting rights related to the election of members to KREF 's board of directors until KKR and its affiliates cease to own at least 25.0% of KREF 's issued and outstanding common stock. Special Non-Voting Preferred Stock — In connection with KREF 's existing investors’ subscription for shares of KREF 's common stock in the private placements prior to the initial public offering of KREF 's equity on May 5, 2017 (Note 12 ), those investors were also allocated a class of non-voting limited liability company interest in the KKR Manager (" Non-Voting Manager Units "). In February 2017, KREF issued an investor one share of SNVPS , at $0.01 per share, in lieu of that investor receiving Non-Voting Manager Units to facilitate compliance by the investor with regulatory requirements applicable to it. The corresponding Non-Voting Manager Units are held by a TRS of KREF . All distributions received by that subsidiary from these Non-Voting Manager Units are passed through to the investor as preferred distributions on its SNVPS , less applicable taxes and withholdings. Except for the Non-Voting Manager Units , an indirect subsidiary of KKR owns and controls the limited liability company interests of the KKR Manager . Dividends on the SNVPS are payable quarterly, and will accrue whether or not KREF has earnings, there are assets legally available for the payment of those dividends or those dividends have been declared. Any dividend payment made on the SNVPS shall first be credited against the earliest accumulated but unpaid dividend due with respect to the SNVPS . Upon redemption of the SNVPS or liquidation of KREF , the holder of the SNVPS is entitled to payment of $0.01 per share, together with any accumulated but unpaid preferred distributions, before any holder of junior security interests, which includes KREF 's common stock. As KREF does not control the circumstances under which the holder of the SNVPS may redeem its interests, management considers the SNVPS as temporary equity (Note 2 ). KREF will redeem the SNVPS at the option of the holder. Upon redemption, KREF will pay a price in cash equal to $0.01 per share of the SNVPS , together with any accumulated but unpaid preferred distributions, and the SNVPS will be canceled automatically and cease to be outstanding. Noncontrolling Interests — Noncontrolling interests represent a 20.0% third-party interest in a consolidated entity that holds KREF ’s investment in preferred joint venture interests (Note 4 ). Redeemable noncontrolling interests represent a 5.0% third-party interest in a joint venture consolidated as a VIE that holds a portion of KREF ’s investments in certain commercial mezzanine loans (Note 3 ). The redeemable noncontrolling interests issued by the joint venture are subject to certain restrictions and require KREF to transfer assets or issue equity to satisfy the redemption. As KREF does not control the circumstances under which the noncontrolling interests may redeem their interests, management considers these redeemable noncontrolling interests as temporary equity (Note 2 ). Share Repurchase Program — KREF adopted a program to repurchase in the open market up to $100.0 million in shares of KREF 's common stock over the 12 month period commencing in June 2017. Earnings per Share — KREF presents basic and diluted earnings per share (" EPS "). Basic EPS, or Net Income (Loss) Per Share of Common Stock, Basic , is calculated by dividing Net Income (Loss) Attributable to Common Stockholders by the Weighted Average Number of Shares of Common Stock Outstanding, Basic for the period. Diluted EPS , or Net Income (Loss) Per Share of Common Stock, Diluted, is calculated by starting with Basic EPS and adding the weighted average dilutive shares issuable from restricted stock units, computed using the treasury stock method to the weighted average common stock outstanding in the denominator. KREF included 273 and 273 weighted average dilutive shares for the three and six months ended June 30, 2017 , respectively. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies As of June 30, 2017 , KREF was subject to the following commitments and contingencies: Litigation — From time to time, KREF may be involved in various claims and legal actions arising in the ordinary course of business. KREF establishes an accrued liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. No loss contingency is recorded for matters where such losses are either not probable or reasonably estimable (or both) at the time of determination. Such matters may be subject to many uncertainties, including among others (i) the proceedings may be in early stages; (ii) damages sought may be unspecified, unsupportable, unexplained or uncertain; (iii) discovery may not have been started or is incomplete; (iv) there may be uncertainty as to the outcome of pending appeals or motions; (v) there may be significant factual issues to be resolved; or (vi) there may be novel legal issues or unsettled legal theories to be presented or a large number of parties. In addition, loss contingencies may be, in part or in whole, subject to insurance or other payments such as contributions and/or indemnity, which may reduce any ultimate loss. As of June 30, 2017 , KREF was not involved in any material legal proceedings regarding claims or legal actions against KREF . Indemnifications — In the normal course of business, KREF enters into contracts that contain a variety of representations and warranties that provide general indemnifications and other indemnities relating to contractual performance. In addition, certain of KREF ’s subsidiaries have provided certain indemnities relating to environmental and other matters and has provided nonrecourse carve-out guarantees for fraud, willful misconduct and other customary wrongful acts, each in connection with the financing of certain real estate investments that KREF has made. KREF ’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against KREF that have not yet occurred. However, KREF expects the risk of material loss to be low. Capital Commitments — As of June 30, 2017 , KREF had future funding requirements of $256.7 million related to its investments in commercial mortgage loans. These future funding commitments primarily relate to construction projects, capital improvements, tenant improvements and leasing commissions. Generally, funding commitments are subject to certain conditions that must be met, such as customary construction draw certifications, minimum credit metrics or executions of new leases before advances are made to the borrower. In January 2017, KREF committed $40.0 million to invest in an aggregator vehicle alongside RECOP . As of June 30, 2017 , KREF had a remaining commitment of $36.0 million to RECOP . Debt Covenants — KREF ’s secured financing agreements contain various customary debt covenants. As of June 30, 2017 , KREF was in compliance with its financial loan covenants (Note 5 ). |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Management Agreement — The Management Agreement between KREF and the KKR Manager is a three -year agreement that provides for automatic one -year renewal periods starting October 8, 2017, subject to certain termination and nonrenewal rights, which in the case of KREF are exercisable by a two-thirds vote by the independent directors of KREF 's board of directors. If the independent directors of KREF 's board of directors declines to renew the Management Agreement other than for cause, KREF is required to pay the KKR Manager a termination fee equal to three times the total 24 -month trailing average annual management fee and incentive compensation earned by the KKR Manager through the most recently completed calendar quarter. Pursuant to the Management Agreement , the KKR Manager , as agent to KREF and under the supervision of KREF 's board of directors, manages the investments, subject to investment guidelines approved by KREF 's board of directors; financing activities; and day-to-day business and affairs of KREF and its subsidiaries. For its services to KREF , the KKR Manager is entitled to a quarterly management fee equal to the greater of $62,500 or 0.375% of a weighted average adjusted equity and quarterly incentive compensation equal to 20.0% of the excess of (a) the trailing 12 -month adjusted earnings over (b) 7.0% of the trailing 12 -month weighted average adjusted equity, less incentive compensation KREF already paid to the KKR Manager with respect to the first three calendar quarters of such trailing 12 -month period. Adjusted equity generally represents the proceeds received by KREF and its subsidiaries from equity issuances, without duplication and net of offering costs, and adjusted earnings, reduced by distributions, equity repurchases, and incentive compensation paid. Adjusted earnings generally represents the net income, or loss, attributable to equity interests in KREF and its subsidiaries, without duplication, as well as realized losses not otherwise included in such net income, or loss, excluding non-cash equity compensation expense, incentive compensation, depreciation and amortization and unrealized gains or losses. KREF 's board of directors, after majority approval by independent directors, may also exclude one-time events pursuant to changes in GAAP and certain material non-cash income or expense items from adjusted earnings. For purposes of calculating incentive compensation, both adjusted equity and adjusted earnings exclude the effects of equity issued by KREF and its subsidiaries that provides for fixed distributions or other debt characteristics. KREF is also required to reimburse the KKR Manager or its affiliates for documented costs and expenses incurred by it and its affiliates on behalf of KREF except those specifically required to be borne by the KKR Manager under the Management Agreement. The KKR Manager is responsible for, and KREF does not reimburse the KKR Manager or its affiliates for, the expenses related to investment personnel of the KKR Manager and its affiliates who provide services to KREF . However, KREF does reimburse the KKR Manager for KREF 's allocable share of compensation paid to certain of the KKR Manager ’s non-investment personnel, based on the percentage of time devoted by such personnel to KREF 's affairs. Incentive Plan — The KKR Real Estate Finance Trust Inc. 2016 Omnibus Incentive Plan was adopted on February 12, 2016 and amended and restated on November 17, 2016 (the “ Incentive Plan ”). KREF 's compensation committee or board of directors may administer the Incentive Plan , which provides for awards of stock options; stock appreciation rights (“ SARs ”); restricted stock; restricted stock units; limited partnership interests of KKR Real Estate Finance Holdings L.P. (the " Operating Partnership "), a wholly owned subsidiary of KREF , that are directly or indirectly convertible into or exchangeable or redeemable for shares of KREF 's common stock pursuant to the limited partnership agreement of the Operating Partnership (“OP Interests”); awards payable by (i) delivery of KREF 's common stock or other equity interests, or (ii) reference to the value of KREF 's common stock or other equity interests, including OP Interests; cash-based awards; or performance compensation awards. No more than 7.5% of the issued and outstanding shares of common stock on a fully diluted basis, assuming the exercise of all outstanding stock options granted under the Incentive Plan and the conversion of all warrants and convertible securities into shares of common stock, or a total of 4,028,387 shares of common stock, will be available for awards under the Incentive Plan . In addition, (i) the maximum number of shares of common stock subject to awards granted during a single fiscal year to any non-employee director (as defined in the Incentive Plan ), taken together with any cash fees paid to such non-employee director during the fiscal year, may not exceed $1.0 million and (ii) the maximum amount that can be paid to any participant for a single fiscal year during a performance period (or with respect to each single fiscal year if a performance period extends beyond a single fiscal year) pursuant to a performance compensation award denominated in cash will be $10.0 million . No awards may be granted under the Incentive Plan on and after February 12, 2026. The Incentive Plan will continue to apply to awards granted prior to such date. During the three months ended June 30, 2017 , KREF granted 4,878 restricted stock units. As of June 30, 2017 , 4,023,509 shares of common stock remained available for awards under the Incentive Plan . Due to Affiliates — The following table contains the amounts presented in KREF 's Condensed Consolidated Balance Sheets that it owes to affiliates: June 30, December 31, 2017 2016 Management fees $ 3,256 $ 1,616 Expense reimbursements and other 260 112 $ 3,516 $ 1,728 Affiliates Expenses — The following table contains the amounts included in KREF 's Condensed Consolidated Statements of Operations that arise from transactions with affiliates: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Management fees $ 3,488 $ 1,329 $ 5,524 $ 2,467 Incentive compensation — 88 — 365 Expense reimbursements and other (A) 218 106 565 265 $ 3,706 $ 1,523 $ 6,089 $ 3,097 (A) KREF presents these amounts in " Operating Expenses — General and administrative " in its Condensed Consolidated Statements of Operations. Affiliate expense reimbursements presented in the table above exclude the out-of-pocket costs paid by the KKR Manager to parties unaffiliated with the KKR Manager on behalf of KREF , and for which KREF reimburses the KKR Manager in cash. For each of the three and six months ended June 30, 2017 , these cash reimbursements were $0.2 million . For the three and six months ended June 30, 2016 these cash reimbursements were $0.6 million and $2.0 million , respectively. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying values and fair values of KREF ’s financial assets and liabilities recorded at fair value on a recurring basis, as well as other financial instruments not carried at fair value, as of June 30, 2017 were as follows: Fair Value Principal Balance (A) Carrying Value (B) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 57,013 $ 57,013 $ 57,013 $ — $ — $ 57,013 Restricted cash and cash equivalents 900 900 900 — — 900 Commercial mortgage loans, held-for-investment, net 1,064,601 1,056,083 — — 1,065,027 1,065,027 Preferred interest in joint venture, held-to-maturity 37,090 37,090 — — 37,349 37,349 Equity method investments in unconsolidated subsidiaries, at fair value 4,344 4,344 — — 4,344 4,344 Commercial mortgage loans held in variable interest entities, at fair value 5,333,602 5,467,095 — — 5,467,095 5,467,095 $ 6,497,550 $ 6,622,525 $ 57,913 $ — $ 6,573,815 $ 6,631,728 Liabilities Secured financing agreements, net $ 183,150 $ 177,198 $ — $ — $ 183,150 $ 183,150 Variable interest entity liabilities, at fair value 5,024,443 5,351,985 — — 5,351,985 5,351,985 $ 5,207,593 $ 5,529,183 $ — $ — $ 5,535,135 $ 5,535,135 (A) The principal balance of commercial mortgage loans excludes premiums and unamortized discounts. (B) The carrying value of commercial mortgage loans is presented net of $8.5 million unamortized origination discounts and deferred nonrefundable fees. The carrying value of secured financing agreements is presented net of $6.0 million unamortized debt issuance costs. The carrying values and fair values of KREF ’s financial assets recorded at fair value on a recurring basis, as well as other financial instruments for which fair value is disclosed, as of December 31, 2016 were as follows: Fair Value Principal Balance (A) Carrying Value (B) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 96,189 $ 96,189 $ 96,189 $ — $ — $ 96,189 Restricted cash and cash equivalents 157 157 157 — — 157 Commercial mortgage loans, held-for-investment, net 681,570 674,596 — — 676,169 676,169 Commercial mortgage loans, held-for-sale, net 26,230 26,230 — — 26,495 26,495 Preferred interest in joint venture, held-to-maturity 36,445 36,445 — — 36,482 36,482 Commercial mortgage loans held in variable interest entities, at fair value 5,351,539 5,426,084 — — 5,426,084 5,426,084 $ 6,192,130 $ 6,259,701 $ 96,346 $ — $ 6,165,230 $ 6,261,576 Liabilities Secured financing agreements, net $ 445,600 $ 439,144 $ — $ — $ 445,600 $ 445,600 Variable interest entity liabilities, at fair value 5,042,380 5,313,574 — — 5,313,574 5,313,574 $ 5,487,980 $ 5,752,718 $ — $ — $ 5,759,174 $ 5,759,174 (A) The principal balance of commercial mortgage loans excludes premiums and discounts. (B) The carrying value of commercial mortgage loans is presented net of $9.2 million origination discounts and deferred nonrefundable fees. The carrying value of secured financing agreements is presented net of $6.4 million unamortized debt issuance costs. KREF reported the following financial assets and liabilities at fair value on a recurring basis using Level 3 inputs as of June 30, 2017 . Assets Liabilities Commercial mortgage loans held in variable interest entities, at fair value Variable interest entity liabilities, at fair value Net Balance at December 31, 2016 $ 5,426,084 $ 5,313,574 $ 112,510 Gains (losses) included in net income Included in change in net assets related to consolidated variable interest entities 58,965 56,399 2,566 Purchases and repayments Purchases — — — Repayments (17,936 ) (17,936 ) — Other (A) (18 ) (52 ) 34 Balance at June 30, 2017 $ 5,467,095 $ 5,351,985 $ 115,110 (A) Amounts principally consist of changes in accrued interest. The following table contains the Level 3 inputs used to value assets and liabilities on a recurring and nonrecurring basis or where KREF discloses fair value as of June 30, 2017 : Fair Value Valuation Methodologies Unobservable Inputs (A) Weighted Average (B) Range Assets Commercial mortgage loans, held-for-investment, net $ 1,065,027 Discounted cash flow Loan-to-value ratio 65.3% 34.2% - 91.2% Discount rate 6.5% 2.4% - 14.8% Preferred interest in joint venture, held-to-maturity 37,349 Discounted cash flow Discount rate 13.9% 13.7% - 14.2% Commercial mortgage loans held in variable interest entities, at fair value (C) 5,467,095 Discounted cash flow Yield 7.4% 1.9% - 30.9% $ 6,569,471 Liabilities Secured financing agreements, net $ 183,150 Market comparable Credit spread 2.0% 1.8% - 2.5% Variable interest entity liabilities, at fair value 5,351,985 Discounted cash flow Yield 5.4% 1.9% - 27.1% $ 5,535,135 (A) An increase (decrease) in the valuation input results in a decrease (increase) in value. (B) Represents the average of the input value, weighted by the unpaid principal balance of the financial instrument. (C) Management measures the fair value of " Commercial mortgage loans held in variable interest entities, at fair value " using the fair value of the CMBS trust liabilities. The Level 3 inputs presented in the table above reflect the inputs used to value the CMBS trust liabilities, including the CMBS beneficially owned by KREF stockholders eliminated in consolidation of the CMBS trusts. Valuation Methodologies Commercial Mortgage-Backed Securities — As of June 30, 2017 , management categorized CMBS investments as Level 3 assets and liabilities in the fair value hierarchy and obtained prices from an independent valuation firm, which uses a discounted cash flow model, to value each CMBS . The key input is the expected yield of each CMBS using both observable and unobservable factors, which may include recently offered or completed trades and published yields of similar securities, security-specific characteristics (e.g. securities ratings issued by nationally recognized statistical rating organizations, credit support by other subordinate securities issued by the CMBS and coupon type) and other characteristics. Management performs quarterly reviews of the inputs received from the independent valuation firm based on consideration given to a number of observable market data points including, but not limited to, trading activity in the marketplace of like-kind securities, benchmark security evaluations and bid list results from various sources. If prices received from the independent valuation firm are inconsistent with values determined in connection with management's independent review, management makes inquiries to the independent valuation firm about the prices received and related methods. In the event management determines the price obtained from an independent valuation firm to be unreliable or an inadequate representation of the fair value of the CMBS (based on consideration given to the observable market data points detailed above), management then compiles evidence independently and presents the independent valuation firm with such evidence supporting a different value. As a result, the independent valuation firm may revise their price. However, if management continues to disagree with the price from the independent valuation firm, in light of evidence presented that management compiled independently and believes to be compelling, management considers the quotation unreliable or an inadequate representation of the fair value of the CMBS . In the event that the quotation from the independent valuation firm is not available or determined to be unreliable or an inadequate representation of the fair value of the CMBS (based on the procedures detailed above), valuations are prepared using inputs based on non-binding broker quotes obtained from independent, well-known, major financial brokers that make markets in CMBS. In validating any non-binding broker quote used in this circumstance, management compares the non-binding quote to the observable market data points at such time and used to validate prices received from the independent valuation firm in addition to understanding the valuation methodologies used by the market makers. These market participants utilize a similar methodology as the independent valuation firm to value each CMBS , with the key input of expected yield determined independently based on both observable and unobservable factors (as described above). To avoid reliance on any single broker-dealer, management receives a minimum of two non-binding quotes, of which the average is used. The fair values of the CMBS not beneficially owned by KREF stockholders neither impact the net assets of KREF nor the net income attributable to KREF 's stockholders. Commercial Mortgage Loans — Management generally considers KREF 's commercial mortgage loans Level 3 assets in the fair value hierarchy as such assets are illiquid, structured investments that are specific to the property and its operating performance. These loans are valued using a discounted cash flow model using discount rates derived from observable market data applied to the capital structure of the respective sponsor and estimated property value. On a quarterly basis, management engages an independent valuation firm to express an opinion on the fair value of each loan categorized as a Level 3 asset in the form of a range. Management selects a value within the range provided by the independent valuation firm to assess the reasonableness of the fair value as determined by management. In the event that management's estimate of fair value differs from the opinion of fair value provided by the independent valuation firm, KREF ultimately relies solely upon the valuation prepared by the investment personnel of KKR Manager . Preferred Interest in Joint Venture — Management categorizes KREF 's preferred interest in joint venture as Level 3 assets in the fair value hierarchy. On a quarterly basis, management engages an independent valuation firm to express an opinion on the fair value of its preferred interest in joint venture based upon a range of values. Management selects a value within the range provided by the independent valuation firm to assess the reasonableness of management's estimated fair value for that security. The independent valuation firm employs a discounted cash flow model using discount rates derived from observable market data applied to the internal rate of return implied by the expected contractual cash flows. In the event that management's estimate of fair value differs from the opinion of fair value provided by the independent valuation firm, KREF ultimately relies solely upon the valuation prepared by the investment personnel of KKR Manager . Secured Financing Agreements — Management considers KREF 's repurchase facilities Level 3 liabilities in the fair value hierarchy as such liabilities represent borrowings on illiquid collateral with terms specific to each borrower. Given the short-to-moderate term of the floating rate facilities, management generally expects the fair value of KREF 's repurchase facilities to approximate their outstanding principal balances. On a quarterly basis, management engages an independent valuation firm to express an opinion on the fair value of KREF 's repurchase facilities. The independent valuation firm employs a market-based methodology to compare the pricing of KREF 's financing agreements with other similar financing agreements entered into by other mortgage REIT and recent financing transactions. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis Certain assets not measured at fair value on an ongoing basis but subject to fair value adjustments only in certain circumstances, such as when there is evidence of impairment, are measured at fair value on a nonrecurring basis. For commercial mortgage loans held-for-sale, KREF applies the lower of cost or fair value accounting and may be required, from time to time, to record a nonrecurring fair value adjustment. For commercial mortgage loans held-for-investment and preferred interest in joint venture held-to-maturity, KREF applies the amortized cost method of accounting, but may be required, from time to time, to record a nonrecurring fair value adjustment in the form of a valuation provision or impairment. KREF did not report any significant financial assets or liabilities at fair value on a nonrecurring basis as of June 30, 2017 or December 31, 2016 . Assets and Liabilities for Which Fair Value is Only Disclosed KREF does not carry its secured financing agreements at fair value as management did not elect the fair value option for these liabilities. As of June 30, 2017 , the fair value of KREF 's floating rate repurchase facilities approximated the outstanding principal balance. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes KREF has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with its taxable year ended December 31, 2014. A REIT is generally not subject to U.S. federal and state income tax on that portion of its income that is distributed to stockholders if it distributes at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. A REIT will also be subject to a nondeductible excise tax to the extent certain percentages of its taxable income are not distributed within specified dates. KREF expects to distribute 100% of its net taxable income for the foreseeable future, while retaining sufficient capital to support its ongoing needs. KREF consolidates subsidiaries that incur U.S. federal, state and local income taxes, based on the tax jurisdiction in which each subsidiary operates. During each of the six months ended June 30, 2017 and 2016, KREF recorded a current income tax provision of $0.3 million and $0.1 million , respectively, related to operations of its taxable REIT subsidiaries and various other state and local taxes. There were no deferred tax assets or liabilities as of June 30, 2017 and December 31, 2016 . As of June 30, 2017 , tax years 2014 through 2016 remain subject to examination by taxing authorities. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events These condensed consolidated financial statements include a discussion of certain events that have occurred subsequent to June 30, 2017 (referred to as "subsequent events") through the issuance of these Condensed Consolidated Financial Statements. Events subsequent to the date of issuance have not been considered in these condensed consolidated financial statements. Investing Activities KREF originated the following senior loans subsequent to June 30, 2017 : Description/ Location Property Type Month Originated Maximum Face Amount Initial Face Amount Funded Interest Rate (A) Maturity Date (B) LTV Senior Loan, Queens, NY Industrial July 2017 $ 75,100 $ 61,300 L + 3.7% August 2022 72% Senior Loan, Denver, CO (C) Multifamily August 2017 91,000 91,000 L + 4.4 August 2022 73 Senior Loan, New York, NY (D) Condo(Residential) August 2017 239,200 239,200 L + 4.8 September 2020 69 Total/Weighted Average $ 405,300 $ 391,500 L + 4.5% 71% (A) Floating rate based on one-month USD LIBOR. (B) Maturity date assumes all extension options are exercised, if applicable. (C) LTV is based on the senior mortgage amount of $81.0 million at closing divided by the as-is appraised value of $111.4 million . LTV excludes a $10.0 million mezzanine loan intended for sale which equates to an 82% LTV through the mezzanine position. (D) LTV is based on the total loan amount of $239.2 million divided by the appraised net sell-out value of $345.4 million . Funding of Previously Closed Loans The Company funded approximately $5.0 million for previously closed loans subsequent to June 30, 2017 . Financing Activities In July and August 2017, KREF received $342.1 million in proceeds from borrowings under the Wells Fargo master repurchase facility. In July 2017, KREF received $71.1 million in proceeds from borrowings under the Morgan Stanley master repurchase facility. Corporate Activities Dividends In July 2017, KREF paid the $13.4 million dividend on its common stock, or $0.25 per share, with respect to the second quarter of 2017, to stockholders of record on June 30, 2017. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation — The accompanying unaudited condensed consolidated financial statements and related notes of KREF are prepared in accordance with accounting principles generally accepted in the United States of America (" GAAP ") for interim financial information and instructions to Form 10-Q. The condensed consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Accordingly, certain information and footnote disclosures normally included in consolidated financial statements have been condensed or omitted. The condensed consolidated financial statements include the accounts of KREF and its consolidated subsidiaries, and all intercompany transactions and balances have been eliminated. In the opinion of management, all adjustments considered necessary for a fair presentation of KREF ’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with KREF ’s prospectus dated May 4, 2017, filed with the Securities and Exchange Commission (the “SEC”) on May 8, 2017 pursuant to Rule 424(b)(4) under the Securities Act (the “Prospectus”). |
Consolidation | Consolidation — KREF consolidates those entities for which (i) it controls significant operating, financial and investing decisions of the entity or (ii) management determines that KREF is the primary beneficiary of entities deemed to be variable interest entities (" VIE s"). Variable Interest Entities — VIE s are defined as entities in which equity investors do not have an interest with the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. A VIE is required to be consolidated only by its primary beneficiary, which is defined as the party that has the power to direct the activities of the VIE that most significantly impact its economic performance and that has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could be potentially significant to the VIE (Note 6 ). To assess whether KREF has the power to direct the activities of a VIE that most significantly impact the VIE ’s economic performance, KREF considers all the facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes, first, identifying the activities that most significantly impact the VIE ’s economic performance; and second, identifying which party, if any, has power to direct those activities. To assess whether KREF has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE , KREF considers all of its economic interests and applies judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE . CMBS — KREF consolidates those trusts that issue beneficial ownership interests in mortgage loans secured by commercial real estate (commonly known as CMBS ) when KREF holds a variable interest in, and management considers KREF to be the primary beneficiary of, those trusts. Management believes the performance of the assets that underlie CMBS issuances most significantly impacts the economic performance of the trust, and the primary beneficiary is generally the entity that conducts activities that most significantly impact the performance of the underlying assets. In particular, the most subordinate tranches of CMBS expose the holder to the greater variability of economic performance when compared to more senior tranches since the subordinate tranches absorb a disproportionately higher amount of the credit risk related to the underlying assets. Generally, a trust designates the most junior subordinate tranche outstanding as the controlling class, which entitles the holder of the controlling class to unilaterally appoint and remove the special servicer for the trust. The special servicer is responsible for the servicing and administration of delinquent and nonperforming loans as well as real estate owned (" REO ") properties held as collateral delivered on foreclosed loans. While the special servicer cannot prevent losses, its services to the trust are designed to mitigate credit losses to holders of the CMBS . For the trusts that KREF consolidates, KREF holds non-investment grade rated and unrated CMBS that represent the most subordinate tranches of the CMBS issued by those trusts, which include the controlling class. As the holder of the most subordinate tranche, KREF is in a first loss position and has the right to receive benefits. As the holder of the controlling class, KREF has the ability to unilaterally appoint and remove the special servicer for the trust. In these cases, management considers KREF to be the primary beneficiary and consolidates the CMBS trusts. For VIE s in which management determines KREF is the primary beneficiary, all of the underlying assets, liabilities and equity of the trusts are recorded on KREF 's books, and the initial investment, along with any associated unrealized holding gains and losses, are eliminated in consolidation. Similarly, the interest income earned from these trusts is eliminated in consolidation. Management elected the fair value option for KREF 's initial and subsequent recognition of the assets and liabilities of KREF 's consolidated CMBS VIE s in order to provide users of the financial statements with better information regarding the effects of credit risk and other market factors on the CMBS beneficially held by KREF 's stockholders. Since the changes in fair value include the interest income and interest expense associated with these CMBS VIE s, management does not consider the separate presentation of the components of fair value changes to be relevant. Management has elected to present these items in aggregate as " Other Income — Change in net assets related to consolidated variable interest entities " in the accompanying Condensed Consolidated Statements of Operations; the residual difference represents KREF 's beneficial interest in the CMBS VIE s. Management separately presents the assets and liabilities of KREF 's consolidated VIE s as individual line items on KREF 's Condensed Consolidated Balance Sheets for entities in which the VIE s assets can only be used to settle the VIE ’s obligations. The liabilities of KREF 's consolidated VIE s consist solely of obligations to the CMBS holders of the consolidated trusts, excluding CMBS held by KREF as such interests are eliminated in consolidation, and the interest accrued thereon, presented as "Liabilities — Variable interest entity liabilities, at fair value ." The assets of KREF 's consolidated VIEs consist principally of commercial mortgage loans and the interest accrued thereon, and are likewise presented as a single line item entitled " Assets — Commercial mortgage loans held in variable interest entities, at fair value ." Assets of a CMBS trust, as a whole, can only be used to settle the obligations of the consolidated CMBS VIE . The assets of KREF 's CMBS VIE s are not individually accessible by, and obligations of the CMBS VIE s are not recourse to, the bondholders. REO assets generally represent a small percentage of the overall asset pool of a CMBS trust. In a new issue CMBS trust there are no REO assets, and no REO existed in KREF 's consolidated VIE assets as of June 30, 2017 . KREF derives the fair value of its Level 3 CMBS VIE assets from its Level 3 CMBS VIE liabilities, which management considers to possess more observable market value data than the CMBS VIE assets. See "— Fair Value — Valuation of Consolidated VIEs " for additional discussion regarding management's valuation of consolidated CMBS VIE s. Commercial Mezzanine Loan Joint Venture — KREF consolidates a joint venture that holds a portion of KREF 's investments in commercial mezzanine loans, and in which a third-party owns a 5.0% redeemable noncontrolling interest (Note 6 ). Management determined the joint venture to be a VIE as the third party owners of the redeemable noncontrolling interest do not have substantive participating or kick-out rights. KREF owns 95.0% of the equity interests in the joint venture and participates in the profits and losses. Management considers KREF to be the primary beneficiary of the joint venture as KREF holds decision-making power over the activities that most significantly impact the economic performance of the joint venture. Preferred Interest in Joint Venture — KREF consolidates a joint venture that holds a lending agreement with an entity engaged in the management of a multi-family tower, and in which a third-party owns a 20.0% noncontrolling interest (Note 4 ). Management determined the joint venture to be a VIE as the third-party owners of the noncontrolling interest do not have substantive participating or kick-out rights. KREF owns 80.0% of the equity interests in the joint venture and participates in the profits and losses. Management considers KREF to be the primary beneficiary of the joint venture as KREF holds decision-making power over the activities that most significantly impact the economic performance of the joint venture. Noncontrolling Interests — Noncontrolling interests represent the ownership interests in certain consolidated subsidiaries held by entities or persons other than KREF . Those noncontrolling interests that allow the holder to redeem before liquidation or termination of the entity that issued those interests are considered redeemable noncontrolling interests. The redeemable noncontrolling interests issued by subsidiaries of KREF are subject to certain restrictions and require KREF to transfer assets or issue equity to satisfy the redemption. As KREF does not control the circumstances under which the noncontrolling interests may redeem their interests, management considers these redeemable noncontrolling interests as temporary equity, presented as " Temporary Equity — Redeemable noncontrolling interests in equity of consolidated joint venture " in the accompanying Condensed Consolidated Balance Sheets and their share of " Net Income (Loss) " as " Redeemable Noncontrolling Interests in Income (Loss) of Consolidated Joint Venture " in the Condensed Consolidated Statements of Operations. KREF recorded the redeemable noncontrolling interests at fair value upon issuance by subsidiaries of KREF , and accretes to the redemption values at each subsequent reporting period date if KREF determines the noncontrolling interests are redeemable or probable to become redeemable. As of June 30, 2017 , KREF determined that the redeemable noncontrolling interests were not currently redeemable or probable to become redeemable, and as a result did not adjust the value of the redeemable noncontrolling interests. KREF reflects noncontrolling interests that are not redeemable as permanent equity that is not attributable to KREF 's stockholders. KREF presents these interests as " Permanent Equity — Noncontrolling interests in equity of consolidated joint venture " in the accompanying Condensed Consolidated Balance Sheets and their share of " Net Income (Loss) " as " Noncontrolling Interests in Income (Loss) of Consolidated Joint Venture " in the Condensed Consolidated Statements of Operations. Equity investments in unconsolidated subsidiaries — Investments are accounted for under the equity method when KREF has significant influence over the operations of an investee, but KREF does not consolidate that investment. Equity method investments, for which management has not elected a fair value option, are initially recorded at cost and subsequently adjusted for KREF 's share of net income or loss and cash contributions and distributions each period. Management determined that its investment in the KKR Manager is an interest in a VIE as KREF did not have substantive participating or kick-out rights. KREF does not have the power to direct activities and the obligation to absorb losses of the KKR Manager that could be significant to the KKR Manager . KREF accounts for its investment in the KKR Manager using the equity method since KREF is not the primary beneficiary of the KKR Manager (Note 6 ). Management determined that its investment in an aggregator vehicle alongside KKR Real Estate Credit Opportunity Partners L.P. (" RECOP ") is an interest in a VIE , however KREF is not the primary beneficiary and does not have substantive participating or kick-out rights. Management elected the fair value option for KREF 's investment in RECOP . KREF records its share of net asset value in RECOP as “Equity investments in unconsolidated subsidiaries, at fair value” in its Condensed Consolidated Balance Sheets and its share of unrealized gains or losses in "Income from equity investments in unconsolidated subsidiaries" in its Condensed Consolidated Statements of Operations (Note 6 ). |
Use of Estimates | Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Management makes subjective estimates to project cash flows KREF expects to receive on its investments in loans and securities as well as the related market discount rates, which significantly impacts the interest income, impairments, allowance for loan loss and fair values recorded or disclosed. Actual results could differ from those estimates. |
Fair Value | Fair Value — GAAP requires the categorization of the fair value of financial instruments into three broad levels that form a hierarchy based on the transparency of inputs to the valuation. Level 1 - Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 - Inputs are other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability. Level 3 - Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. KREF follows this hierarchy for its financial instruments. The classifications are based on the lowest level of input that is significant to the fair value measurement. Valuation Process — The KKR Manager reviews the valuation of Level 3 financial instruments as part of KKR 's quarterly process. As of June 30, 2017 , KKR’s valuation process for Level 3 measurements, as described below, subjected valuations to the review and oversight of various committees. KKR has a global valuation committee assisted by valuation subcommittees, including a real estate subcommittee that reviews and approves preliminary Level 3 valuations for certain real estate assets including the financial instruments held by KREF . The global valuation committee provides general oversight of the valuation subcommittees. The global valuation committee is responsible for coordinating and implementing KKR ’s valuation process to ensure consistency in the application of valuation principles across portfolio investments and between periods. All valuations are subject to approval by the global valuation committee. Valuation of Consolidated VIEs — Management categorizes the financial assets and liabilities of the CMBS trusts that KREF consolidates as Level 3 assets and liabilities in the fair value hierarchy and has elected the fair value option for financial assets and liabilities of each CMBS trust. Management has adopted the measurement alternative included in Accounting Standards Update (" ASU ") No. 2014-13, Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity (" ASU 2014-13"). Pursuant to ASU 2014-13, management measures both the financial assets and financial liabilities of the CMBS trusts consolidated by KREF using the fair value of the financial liabilities, which management considers more observable than the fair value of the financial assets. As a result, KREF presents the CMBS issued by the consolidated trust, but not beneficially owned by KREF 's stockholders, as financial liabilities in KREF 's condensed consolidated financial statements, measured at their estimated fair value; KREF measures the financial assets as the total estimated fair value of the CMBS issued by the consolidated trust, regardless of whether such CMBS represent interests beneficially owned by KREF 's stockholders. Under the measurement alternative prescribed by ASU 2014-13, KREF 's " Net Income (Loss) " reflects the economic interests in the consolidated CMBS beneficially owned by KREF 's stockholders, presented as " Change in net assets related to consolidated variable interest entities " in the Condensed Consolidated Statements of Operations, which includes applicable (i) changes in the fair value of CMBS beneficially owned by KREF , (ii) interest and servicing fees earned from the CMBS trust and (iii) other residual returns or losses of the CMBS trust, if any (Note 6 ). Management categorizes the preferred interest and commercial mezzanine loans held by separate joint ventures, VIE s consolidated by KREF as primary beneficiary, as Level 3 assets in the fair value hierarchy as such assets are illiquid, structured instruments that are specific to the properties and their corresponding operating performance (Note 10 ). Other Valuation Matters — For Level 3 financial assets originated, or otherwise acquired, and financial liabilities assumed during the calendar month immediately preceding a quarter end that were conducted in an orderly transaction with an unrelated party, management generally believes that the transaction price provides the most observable indication of fair value given the illiquid nature of these financial instruments, unless management is aware of any circumstances that may cause a material change in the fair value through the remainder of the reporting period. For instance, significant changes to the underlying property or its planned operations may cause material changes in the fair value of commercial mortgage loans acquired, or originated, by KREF . KREF ’s determination of fair value is based upon the best information available for a given circumstance and may incorporate assumptions that are management’s best estimates after consideration of a variety of internal and external factors. When an independent valuation firm expresses an opinion on the fair value of a financial instrument in the form of a range, management selects a value within the range provided by the independent valuation firm, generally the midpoint, to assess the reasonableness of management’s estimated fair value for that financial instrument. Valuation Methodologies Commercial Mortgage-Backed Securities — As of June 30, 2017 , management categorized CMBS investments as Level 3 assets and liabilities in the fair value hierarchy and obtained prices from an independent valuation firm, which uses a discounted cash flow model, to value each CMBS . The key input is the expected yield of each CMBS using both observable and unobservable factors, which may include recently offered or completed trades and published yields of similar securities, security-specific characteristics (e.g. securities ratings issued by nationally recognized statistical rating organizations, credit support by other subordinate securities issued by the CMBS and coupon type) and other characteristics. Management performs quarterly reviews of the inputs received from the independent valuation firm based on consideration given to a number of observable market data points including, but not limited to, trading activity in the marketplace of like-kind securities, benchmark security evaluations and bid list results from various sources. If prices received from the independent valuation firm are inconsistent with values determined in connection with management's independent review, management makes inquiries to the independent valuation firm about the prices received and related methods. In the event management determines the price obtained from an independent valuation firm to be unreliable or an inadequate representation of the fair value of the CMBS (based on consideration given to the observable market data points detailed above), management then compiles evidence independently and presents the independent valuation firm with such evidence supporting a different value. As a result, the independent valuation firm may revise their price. However, if management continues to disagree with the price from the independent valuation firm, in light of evidence presented that management compiled independently and believes to be compelling, management considers the quotation unreliable or an inadequate representation of the fair value of the CMBS . In the event that the quotation from the independent valuation firm is not available or determined to be unreliable or an inadequate representation of the fair value of the CMBS (based on the procedures detailed above), valuations are prepared using inputs based on non-binding broker quotes obtained from independent, well-known, major financial brokers that make markets in CMBS. In validating any non-binding broker quote used in this circumstance, management compares the non-binding quote to the observable market data points at such time and used to validate prices received from the independent valuation firm in addition to understanding the valuation methodologies used by the market makers. These market participants utilize a similar methodology as the independent valuation firm to value each CMBS , with the key input of expected yield determined independently based on both observable and unobservable factors (as described above). To avoid reliance on any single broker-dealer, management receives a minimum of two non-binding quotes, of which the average is used. The fair values of the CMBS not beneficially owned by KREF stockholders neither impact the net assets of KREF nor the net income attributable to KREF 's stockholders. Commercial Mortgage Loans — Management generally considers KREF 's commercial mortgage loans Level 3 assets in the fair value hierarchy as such assets are illiquid, structured investments that are specific to the property and its operating performance. These loans are valued using a discounted cash flow model using discount rates derived from observable market data applied to the capital structure of the respective sponsor and estimated property value. On a quarterly basis, management engages an independent valuation firm to express an opinion on the fair value of each loan categorized as a Level 3 asset in the form of a range. Management selects a value within the range provided by the independent valuation firm to assess the reasonableness of the fair value as determined by management. In the event that management's estimate of fair value differs from the opinion of fair value provided by the independent valuation firm, KREF ultimately relies solely upon the valuation prepared by the investment personnel of KKR Manager . Preferred Interest in Joint Venture — Management categorizes KREF 's preferred interest in joint venture as Level 3 assets in the fair value hierarchy. On a quarterly basis, management engages an independent valuation firm to express an opinion on the fair value of its preferred interest in joint venture based upon a range of values. Management selects a value within the range provided by the independent valuation firm to assess the reasonableness of management's estimated fair value for that security. The independent valuation firm employs a discounted cash flow model using discount rates derived from observable market data applied to the internal rate of return implied by the expected contractual cash flows. In the event that management's estimate of fair value differs from the opinion of fair value provided by the independent valuation firm, KREF ultimately relies solely upon the valuation prepared by the investment personnel of KKR Manager . Secured Financing Agreements — Management considers KREF 's repurchase facilities Level 3 liabilities in the fair value hierarchy as such liabilities represent borrowings on illiquid collateral with terms specific to each borrower. Given the short-to-moderate term of the floating rate facilities, management generally expects the fair value of KREF 's repurchase facilities to approximate their outstanding principal balances. On a quarterly basis, management engages an independent valuation firm to express an opinion on the fair value of KREF 's repurchase facilities. The independent valuation firm employs a market-based methodology to compare the pricing of KREF 's financing agreements with other similar financing agreements entered into by other mortgage REIT and recent financing transactions. |
Sale of Financial Assets and Financing Agreements | Sales of Financial Assets and Financing Agreements — KREF will, from time to time, sell loans, securities and other assets as well as finance assets in the form of secured borrowings. In each case, management evaluates whether the transaction constitutes a sale through legal isolation of the transferred financial asset from KREF , the ability of the transferee to pledge or exchange the transferred asset without constraint and the transfer of control of the transferred asset. For transfers that constitute sales, KREF (i) recognizes the financial assets it retains and liabilities it has incurred, if any, (ii) derecognizes the financial assets it has sold, and derecognizes liabilities when extinguished and (iii) recognizes a realized gain, or loss, based upon the excess, or deficient, proceeds received over the carrying value of the transferred asset. KREF does not recognize a gain, or loss, on interests retained, if any, where management elected the fair value option prior to sale. |
Cash, Cash Equivalents and Restricted Cash and Cash Equivalents | Cash, Cash Equivalents and Restricted Cash and Cash Equivalents — KREF considers cash equivalents as highly liquid short-term investments with maturities of 90 days or less when purchased. Substantially all amounts on deposit with major financial institutions exceed insured limits. |
Special Non-Voting Preferred Stock | Special Non-Voting Preferred Stock (" SNVPS ") — Equity instruments that are redeemable for cash or other assets are classified as temporary equity if the instrument is redeemable, at the option of the holder, at a fixed or determinable price on a fixed or determinable date or upon the occurrence of an event that is not solely within the control of the issuer. Redeemable equity instruments are initially carried at the fair value of the equity instrument at the issuance date, which is subsequently adjusted at each balance sheet date if the instrument is currently redeemable. The fair value of the instrument is adjusted to reflect the instrument’s redemption amount at each balance sheet date if KREF determines the SNVPS is redeemable or it is probable that the SNVPS will become redeemable. KREF accounted for the SNVPS as redeemable preferred stock since a third party holds a redemption option, exercisable after May 5, 2018, and such redemption is not solely within KREF ’s control. As of June 30, 2017 , KREF determined that the SNVPS was not currently redeemable or it was not probable that the SNVPS would become redeemable, and did not adjust its value as a result. KREF presents the SNVPS as “ Temporary Equity — Redeemable preferred stock ” in the accompanying Condensed Consolidated Balance Sheets (Note 7 ). |
Income Recognition | Income Recognition Interest Income — Loans where management expects to collect all contractually required principal and interest payments are considered performing loans. KREF accrues interest income on performing loans based on the outstanding principal amount and contractual terms of the loan. Interest income also includes origination fees and direct loan origination costs for loans that KREF originates, but where management did not elect the fair value option, as a yield adjustment using the effective interest method over the loan term. KREF expenses origination fees and direct loan origination costs for loans acquired, but not originated, by KREF as well as loans for which management elected the fair value option, as incurred. KREF also includes interest income arising from its preferred interest in joint venture held-to-maturity. Realized Gain (Loss) on Sale of Investments — KREF recognizes the excess, or deficiency, of net proceeds received, less the net carrying value of such investments, as realized gains or losses, respectively. KREF reverses cumulative, unrealized gains or losses previously reported in its Condensed Consolidated Statements of Operations with respect to the investment sold at the time of sale. |
Loan Impairment | Loan Impairment — For each loan in KREF 's portfolio, management performs a quarterly evaluation of indicators of impairment of loans classified as held‑for‑investment using applicable loan, property, market and sponsor information obtained from borrowers, loan servicers and local market participants. Such indicators may include the net present value of the underlying collateral, property operating cash flows, the sponsor’s financial wherewithal and competency in managing the property, macroeconomic trends, and property submarket-specific economic factors. The evaluation of these indicators of impairment requires significant judgment by management to determine whether failure to collect contractual amounts is probable. If management deems that it is probable that KREF will be unable to collect all amounts owed according to the contractual terms of a loan, impairment of that loan is indicated. If management considers a loan to be impaired, management establishes an allowance for loan losses, through a valuation provision in earnings, which reduces the carrying value of the loan to the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. Significant judgment is required in determining impairment and in estimating the resulting loss allowance, and actual losses, if any, could materially differ from those estimates. Management considers loans to be past due when a monthly payment is due and unpaid for 60 days or more. Loans are placed on nonaccrual status and considered non-performing when full payment of principal and interest is in doubt, which generally occurs when principal or interest is 120 days or more past due unless the loan is both well secured and in the process of collection. Management may return a loan to accrual status when repayment of principal and interest is reasonably assured under the terms of the restructured loan. As of June 30, 2017 , KREF did not hold any loans that management placed on nonaccrual status or otherwise considered past due. In addition to reviewing for impairment, commercial mortgage loans held-for-investment, management evaluates KREF 's commercial mortgage loans to determine if an allowance for loan loss should be established. In conjunction with this review, management assesses the risk factors of each loan, and assigns a risk rating based on a variety of factors, including, without limitation, underlying real estate performance and asset value, values of comparable properties, durability and quality of property cash flows, sponsor experience and financial wherewithal, and the existence of a risk-mitigating loan structure. Additional key considerations include loan-to-value ratios, debt service coverage ratios, loan structure, real estate and credit market dynamics, and risk of default or principal loss. Based on a five-point scale, KREF 's loans are rated "1" through "5," from less risk to greater risk, which ratings are defined as follows: 1 – Very Low Risk 2 – Low Risk 3 – Average Risk 4 – High Risk/Potential for Loss: A loan that has a risk of realizing a principal loss. 5 – Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss. |
Interest Expense | Interest Expense — Management expenses contractual interest due in accordance with KREF 's financing agreements as incurred. |
Deferred Debt Issuance Costs | Deferred Debt Issuance Costs — Management capitalizes and amortizes deferred debt facility costs incurred when entering repurchase agreements on a straight-line basis over the expected term of the facility and incremental costs incurred when KREF draws on those facilities using the effective interest method over the expected term of the draw. KREF presents such expensed amounts, as well as deferred amounts written off, as additional interest expense in its Condensed Consolidated Statements of Operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (" FASB ") issued ASU No. 2014-09, Revenues from Contracts with Customers (Topic 606) . The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The ASU is effective for KREF in the first quarter of 2018. Early adoption is permitted. Entities have the option of using either a full retrospective or a modified approach to adopt the guidance in the ASU . KREF does not expect the adoption of this new guidance to have a material impact on its condensed consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities . The standard: (i) requires that certain equity investments be measured at fair value, and modifies the assessment of impairment for certain other equity investments, (ii) changes certain disclosure requirements related to the fair value of financial instruments measured at amortized cost, (iii) changes certain disclosure requirements related to liabilities measured at fair value, (iv) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset, and (v) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. ASU No. 2016-01 is effective for KREF in the first quarter of 2018. Early adoption is permitted subject to certain application guidance. An entity should apply ASU No. 2016-01 by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. KREF is currently evaluating the new guidance to determine the impact it may have on its condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses . The standard amends the existing credit loss model to reflect a reporting entity's current estimate of all expected credit losses and requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at a net amount expected to be collected through deduction of an allowance for credit losses from the amortized cost basis of the financial asset(s). ASU No. 2016-13 is effective for KREF in the first quarter of 2020. Early adoption is permitted beginning in the first quarter of 2019. KREF is currently evaluating the new guidance to determine the impact it may have on its condensed consolidated financial statements. The FASB has recently issued or discussed a number of proposed standards on such topics as consolidation, financial statement presentation, financial instruments, restricted cash and hedging. Some of the proposed changes are significant and could have a material impact on KREF ’s reporting. KREF has not yet fully evaluated the potential impact of these proposals, but will make such an evaluation as the standards are finalized. |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Restricted Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows. June 30, 2017 December 31, 2016 Cash and cash equivalents $ 57,013 $ 96,189 Restricted cash and cash equivalents 900 157 Total cash, cash equivalents and restricted cash and cash equivalents shown in the Condensed Consolidated Statements of Cash Flows $ 57,913 $ 96,346 |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows. June 30, 2017 December 31, 2016 Cash and cash equivalents $ 57,013 $ 96,189 Restricted cash and cash equivalents 900 157 Total cash, cash equivalents and restricted cash and cash equivalents shown in the Condensed Consolidated Statements of Cash Flows $ 57,913 $ 96,346 |
Schedule of Other Assets and Other Liabilities | Other Assets and Accounts Payable, Accrued Expenses and Other Liabilities — Other assets and liabilities are comprised of the following: Other Assets June 30, December 31, 2017 2016 Deferred debt issuance costs, net (A) $ 2,008 $ 448 Prepaid expenses, net 449 22 Other assets 70 30 Due from affiliates 55 360 Deferred stock issuance costs, net — 1,326 Accounts receivable — 542 $ 2,582 $ 2,728 Accounts Payable, Accrued Expenses And Other Liabilities June 30, December 31, 2017 2016 Accrued stock issuance costs $ 3,460 $ 60 Accounts payable 2,829 1,538 Accrued expenses 572 558 Income taxes payable 202 141 Deferred revenue 58 — $ 7,121 $ 2,297 (A) Deferred debt issuance costs related to undrawn repurchase facilities are presented net of accumulated amortization of $0.2 million and $0.0 million as of June 30, 2017 and December 31, 2016 , respectively. |
Commercial Mortgage Loans (Tabl
Commercial Mortgage Loans (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Mortgage Loans on Real Estate [Abstract] | |
Summary and Activity of Loans Held-for-investment and Held-for-sale | The following table summarizes KREF 's investments in commercial mortgage loans as of June 30, 2017 and December 31, 2016 : Weighted Average Loan Type Outstanding Face Amount Carrying Value Loan Count Floating Rate Loan % (A) Coupon (A) Yield (B) Life (Years) (B)(C) June 30, 2017 Loans held-for-investment Senior loans $ 968,374 $ 960,094 11 100.0 % 5.7 % 5.7 % 3.9 Mezzanine loans (D) 96,227 95,989 10 72.7 10.9 10.9 4.0 $ 1,064,601 $ 1,056,083 21 97.5 % 6.1 % 6.2 % 3.9 December 31, 2016 Loans held-for-investment Senior loans $ 625,638 $ 618,779 7 100.0 % 4.4 % 6.5 % 4.0 Mezzanine loans 55,932 55,817 3 100.0 9.5 11.5 2.9 681,570 674,596 10 100.0 4.8 6.9 3.9 Loans held-for-sale Mezzanine loans 26,230 26,230 6 — 10.6 11.3 6.5 26,230 26,230 6 — 10.6 11.3 6.5 $ 707,800 $ 700,826 16 96.3 % 5.0 % 7.1 % 4.0 (A) Average weighted by outstanding face amount of loan. Weighted average coupon assumes applicable floating benchmark rates as of June 30, 2017 . (B) Average weighted by carrying value of loan. Weighted average yield assumes applicable floating benchmark rates as of June 30, 2017 . (C) The weighted average life of each loan is based on the expected timing of the receipt of contractual cash flows. (D) A joint venture consolidated as a VIE in which a third-party owns a 5.0% redeemable noncontrolling interest (Note 6 ) holds (i) seven commercial mezzanine loans, held-for-investment, with a $61.2 million outstanding face amount and carrying value as of June 30, 2017 . Activities related to the carrying value of KREF ’s commercial mortgage loans were as follows: Held-for-Investment Held-for-Sale Total Balance at December 31, 2016 $ 674,596 $ 26,230 $ 700,826 Purchases and originations, net (A) 416,631 — 416,631 Transfer to held-for-investment (B) 26,230 (26,230 ) — Proceeds from principal repayments (1,685 ) — (1,685 ) Proceeds from principal repaid upon loan sale (60,991 ) — (60,991 ) Accretion of loan discount and other amortization, net (C) 1,302 — 1,302 Balance at June 30, 2017 $ 1,056,083 $ — $ 1,056,083 (A) Net of applicable premiums, discounts and deferred loan origination costs. (B) Non-cash transfer of commercial mortgage loans, as management no longer intends to sell, and has the ability to hold-to-maturity, the loans originally placed for sale. (C) Includes amortization and accretion of applicable premiums, discounts and deferred loan origination costs. |
Concentration of Risk, by Risk Factor | The following tables present the geographies and property types of collateral underlying KREF 's commercial mortgage loans as a percentage of the loans' carrying values, net of noncontrolling interests: Loans Held-for-Investment June 30, 2017 December 31, 2016 June 30, 2017 December 31, 2016 Geography Collateral Property Type New York 26.3 % 25.9 % Office 51.4 % 39.2 % California 26.1 20.3 Retail 24.5 37.2 Oregon 11.3 17.6 Multifamily 13.9 8.8 Georgia 10.4 9.8 Industrial 6.3 9.8 Washington D.C. 7.2 10.6 Hospitality 3.9 5.0 Texas 5.9 — Total 100.0 % 100.0 % Tennessee 5.0 7.9 Florida 3.9 5.1 Illinois 1.7 2.4 Colorado 1.5 — South Carolina 0.1 0.2 Alabama — 0.2 Other U.S. 0.6 — Total 100.0 % 100.0 % Loans Held-for-Sale June 30, 2017 December 31, 2016 June 30, 2017 December 31, 2016 Geography Collateral Property Type Florida — % 30.5 % Multifamily — % 32.2 % California — 21.2 Hospitality — 30.5 Michigan — 16.3 Retail — 21.0 Texas — 11.1 Office — 16.3 Iowa — 8.9 Total — % 100.0 % Illinois — 5.9 Oklahoma — 3.9 Missouri — 2.2 Total — % 100.0 % |
Preferred Interest in Joint V22
Preferred Interest in Joint Venture (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Debt Security Held-to-maturity | The following table summarizes the joint venture's investment as of June 30, 2017 and December 31, 2016 : June 30, 2017 December 31, 2016 Gross Unrealized Holding Investment Outstanding Face Amount Amortized Cost Basis Gains Losses Total OTTI Net Carrying Amount Fair Value Net Carrying Amount Preferred interest in joint venture, held-to-maturity (A) $ 37,090 $ 37,090 $ 259 $ — $ — $ 37,090 $ 37,349 $ 36,445 $ 37,090 $ 37,090 $ 259 $ — $ — $ 37,090 $ 37,349 $ 36,445 (A) The preferred interest has a preferred return between 3.5% fixed accrual rate and LIBOR plus 7.0% , subject to a LIBOR floor of 1.0% , and initially matures in February 2020. The borrower may extend the maturity to February 2022, subject to certain conditions and rate increases of fixed accrual rate of 4.0% and LIBOR plus 8.0% and LIBOR plus 9.0% in each extension year. |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Instruments | The following table summarizes KREF 's secured financing agreements and other consolidated debt obligations in place as of June 30, 2017 and December 31, 2016 : June 30, 2017 December 31, 2016 Facility Collateral Facility Weighted Average (B) Month Issued Outstanding Face Amount Carrying Value (A) Maximum Facility Size Final Stated Maturity Funding Cost Life (Years) Outstanding Face Amount Amortized Cost Basis Carrying Value Weighted Average Life (Years) (C) Carrying Value (A) Secured Financing Agreements (D) Master Repurchase Agreements Wells Fargo (E) Oct 2015 $ 143,150 $ 139,909 $ 750,000 Apr 2022 3.4 % 1.7 $ 612,568 $ 607,934 $ 607,934 4.2 $ 262,883 Morgan Stanley (F) Dec 2016 40,000 38,375 500,000 Dec 2020 3.8 2.4 355,806 352,160 352,160 4.4 177,764 JP Morgan (G) Oct 2015 — (1,086 ) 250,000 Oct 2018 0.4 0.0 n.a. n.a. n.a. n.a. (1,503 ) Goldman Sachs (H) Sep 2016 — — 250,000 Sep 2019 0.2 0.0 n.a. n.a. n.a. n.a. — Revolving Credit Agreement Barclays (I) May 2017 — — 75,000 May 2020 1.9 0.0 n.a. n.a. n.a. n.a. n.a. 183,150 177,198 1,825,000 3.5 % 2.1 439,144 VIE Liabilities CMBS (J) Various 5,024,443 5,351,985 n.a. Mar 2048 to Feb 2049 4.3 % 7.7 5,333,602 n.a. 5,467,095 7.7 5,313,574 5,024,443 5,351,985 n.a. 4.3 7.7 5,313,574 Total / Weighted Average $ 5,207,593 $ 5,529,183 $ 1,825,000 4.3 % 7.5 $ 5,752,718 (A) Net of $6.0 million and $6.4 million unamortized debt issuance costs as of June 30, 2017 and December 31, 2016 , respectively. (B) Average weighted by the outstanding face amount of borrowings. (C) Average based on the fully extended loan maturity, weighted by the outstanding face amount of the collateral. (D) Borrowings under these repurchase agreements are collateralized by senior loans, held-for-investment, and bear interest equal to the sum of (i) a floating rate index, subject to a floor of no less than zero, equal to one-month LIBOR, or an index approximating LIBOR, and (ii) a margin, based on the collateral. As of June 30, 2017 and December 31, 2016 , the percentage of the outstanding face amount of the collateral sold and not borrowed under these repurchase agreements, or average "haircut" weighted by outstanding face amount of collateral, was 81.1% and 28.8% , respectively (or 25.6% and 25.9% , respectively, if KREF had borrowed the maximum amount approved by its repurchase agreement counterparties as of such dates). (E) In April 2017, KREF and Wells Fargo Bank, National Association (" Wells Fargo ") amended the repurchase agreement to extend the facility maturity date and to increase the maximum facility size from $500.0 million to $750.0 million . The current stated maturity of the facility is April 2020 , which does not reflect two , twelve -month facility term extensions available to KREF , which is contingent upon certain covenants and thresholds. As of June 30, 2017 , the collateral-based margin was between 1.80% and 2.15% . (F) In December 2016, KREF entered into a $500.0 million repurchase facility with Morgan Stanley Bank, N.A. (" Morgan Stanley "). The current stated maturity of the facility is December 2019 , which does not reflect one , twelve -month facility term extension available to KREF , which is contingent upon certain covenants and thresholds and, even if such covenants and thresholds are satisfied, is at the sole discretion of Morgan Stanley . As of June 30, 2017 , the collateral-based margin was between 2.25% and 2.45% . (G) The current stated maturity of the facility is October 2018 , which does not reflect facility term extensions available to KREF at the discretion of JPMorgan Chase Bank, National Association (" JP Morgan "). In December 2016, KREF used the $500.0 million repurchase facility with Morgan Stanley to repurchase all of the senior loans financed by the master repurchase facility with JP Morgan. The negative carrying value reflects unamortized debt issuance costs presented in KREF's Condensed Consolidated Balance Sheets as a direct deduction from the carrying amount of the recognized debt liability in accordance with ASU 2015-03, Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs . (H) In September 2016, KREF entered into a $250.0 million repurchase facility with Goldman Sachs Bank USA (" Goldman Sachs "). The facility has a revolving period of one year , and a three -year term on a per-asset basis as those assets are pledged to the facility. As of June 30, 2017 , the carrying value excluded $0.4 million unamortized debt issuance costs presented as " Assets — Other assets " in KREF 's Condensed Consolidated Balance Sheets. (I) In May 2017, KREF entered into a $75.0 million corporate secured revolving credit facility administered by Barclays Bank PLC (" Barclays "). The current stated maturity of the facility is May 2019 , which does not reflect one , twelve-month facility term extension available to KREF at the discretion of Barclays . Borrowings under the facility bear interest at a per annum rate equal to the sum of (i) a floating rate index and (ii) a fixed margin. Amounts borrowed under this facility are 100% recourse to KREF . As of June 30, 2017 , the carrying value excluded $1.4 million unamortized debt issuance costs presented as " Assets — Other assets " in KREF 's Condensed Consolidated Balance Sheets. (J) Facility amounts represent CMBS issued by five trusts that KREF consolidates, but that are not beneficially owned by KREF 's stockholders. The facility and collateral carrying amounts included $19.2 million accrued interest payable and $20.3 million accrued interest receivable as of June 30, 2017 . As of December 31, 2016 , the facility and collateral carrying amounts included $18.8 million accrued interest payable and $19.9 million accrued interest receivable. The final stated maturity date represents the rated final distribution date of CMBS issued by trusts that KREF consolidates, but that are not beneficially owned by KREF 's stockholders. Activities related to the carrying value of KREF ’s secured financing agreements and other consolidated debt obligations were as follows: Secured financing agreements, net Variable interest entity liabilities, at fair value Total Balance at December 31, 2016 $ 439,144 $ 5,313,574 $ 5,752,718 Principal borrowings 198,000 — 198,000 Principal repayments (460,432 ) (17,936 ) (478,368 ) Deferred debt issuance costs (923 ) — (923 ) Amortization of deferred debt issuance costs 866 — 866 Fair value adjustment — 56,399 56,399 Other (A) 543 (52 ) 491 Balance at June 30, 2017 $ 177,198 $ 5,351,985 $ 5,529,183 (A) Amounts principally consist of changes in accrued interest payable. |
Schedule of Repurchase Agreements | The following table summarizes certain characteristics of KREF 's repurchase agreements where the amount at risk with any individual counterparty, or group of related counterparties, exceeded 10.0% of KREF ’s stockholders' equity as of June 30, 2017 and December 31, 2016 : Outstanding Face Amount Net Counterparty Exposure Percent of Stockholders' Equity Weighted Average Life (Years) (A) June 30, 2017 Wells Fargo Bank, National Association $ 143,150 $ 472,063 44.3 % 1.7 Morgan Stanley Bank, N.A. 40,000 316,948 29.8 2.4 Total / Weighted Average $ 183,150 $ 789,011 74.1 % 2.1 December 31, 2016 Wells Fargo, National Association $ 265,650 $ 107,664 21.6 % 2.0 Morgan Stanley Bank, N.A. 179,932 65,533 13.2 3.0 Total / Weighted Average $ 445,582 $ 173,197 34.8 % 2.4 (A) Average weighted by the outstanding face amount of borrowings under the secured financing agreement. |
Schedule of Maturities of Debt Obligations | KREF ’s secured financing agreements and other consolidated debt obligations in place as of June 30, 2017 had current contractual maturities as follows: Year Nonrecourse (A) Recourse (B) Total 2017 $ 20,337 $ 10,000 $ 30,337 2018 49,610 58,900 108,510 2019 61,593 40,000 101,593 2020 455,101 74,250 529,351 2021 75,545 — 75,545 Thereafter 4,362,257 — 4,362,257 $ 5,024,443 $ 183,150 $ 5,207,593 (A) Amounts related to consolidated CMBS VIE liabilities that represent securities not beneficially owned by KREF 's stockholders. (B) Amounts borrowed subject to a maximum 25.0% recourse limit. |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Variable Interest Entities | The following tables present the geographies and property types of collateral underlying the CMBS trusts consolidated by KREF , as a percentage of the collateral unpaid principal balance and weighted by the fair value of the CMBS beneficially owned by KREF 's stockholders: June 30, 2017 December 31, 2016 June 30, 2017 December 31, 2016 Geography Collateral Property Type California 23.1 % 23.0 % Office 26.3 % 26.3 % Texas 12.7 12.7 Retail 25.2 25.2 New York 9.2 9.2 Hospitality 15.0 15.1 Illinois 7.1 7.1 Multifamily 10.6 10.6 Florida 5.5 5.5 Industrial 9.6 9.6 Missouri 4.6 4.6 Mixed Use 7.0 7.0 Pennsylvania 4.5 4.5 Self Storage 3.1 3.1 Georgia 2.9 3.0 Mobile Home 2.7 2.7 Michigan 2.7 2.7 Other 0.5 0.4 Ohio 2.5 2.5 Total 100.0 % 100.0 % Other U.S. 25.2 25.2 Total 100.0 % 100.0 % |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Equity [Abstract] | |
Dividends Declared | KREF 's board of directors declared the following dividends on shares of its common stock: Amount Declaration Date Record Date Payment Date Per Share Total February 3, 2017 February 3, 2017 February 3, 2017 $ 0.35 $ 8,455 April 18, 2017 April 18, 2017 April 18, 2017 0.28 8,832 June 14, 2017 June 30, 2017 July 14, 2017 0.25 13,428 $ 30,715 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Related Party Transactions [Abstract] | |
Amounts Due to Affiliates | Due to Affiliates — The following table contains the amounts presented in KREF 's Condensed Consolidated Balance Sheets that it owes to affiliates: June 30, December 31, 2017 2016 Management fees $ 3,256 $ 1,616 Expense reimbursements and other 260 112 $ 3,516 $ 1,728 Affiliates Expenses — The following table contains the amounts included in KREF 's Condensed Consolidated Statements of Operations that arise from transactions with affiliates: Three Months Ended June 30, Six Months Ended June 30, 2017 2016 2017 2016 Management fees $ 3,488 $ 1,329 $ 5,524 $ 2,467 Incentive compensation — 88 — 365 Expense reimbursements and other (A) 218 106 565 265 $ 3,706 $ 1,523 $ 6,089 $ 3,097 (A) KREF presents these amounts in " Operating Expenses — General and administrative " in its Condensed Consolidated Statements of Operations. Affiliate expense reimbursements presented in the table above exclude the out-of-pocket costs paid by the KKR Manager to parties unaffiliated with the KKR Manager on behalf of KREF , and for which KREF reimburses the KKR Manager in cash. For each of the three and six months ended June 30, 2017 , these cash reimbursements were $0.2 million . For the three and six months ended June 30, 2016 these cash reimbursements were $0.6 million and $2.0 million , respectively. |
Fair Value of Financial Instr27
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value, by Balance Sheet Grouping | The carrying values and fair values of KREF ’s financial assets and liabilities recorded at fair value on a recurring basis, as well as other financial instruments not carried at fair value, as of June 30, 2017 were as follows: Fair Value Principal Balance (A) Carrying Value (B) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 57,013 $ 57,013 $ 57,013 $ — $ — $ 57,013 Restricted cash and cash equivalents 900 900 900 — — 900 Commercial mortgage loans, held-for-investment, net 1,064,601 1,056,083 — — 1,065,027 1,065,027 Preferred interest in joint venture, held-to-maturity 37,090 37,090 — — 37,349 37,349 Equity method investments in unconsolidated subsidiaries, at fair value 4,344 4,344 — — 4,344 4,344 Commercial mortgage loans held in variable interest entities, at fair value 5,333,602 5,467,095 — — 5,467,095 5,467,095 $ 6,497,550 $ 6,622,525 $ 57,913 $ — $ 6,573,815 $ 6,631,728 Liabilities Secured financing agreements, net $ 183,150 $ 177,198 $ — $ — $ 183,150 $ 183,150 Variable interest entity liabilities, at fair value 5,024,443 5,351,985 — — 5,351,985 5,351,985 $ 5,207,593 $ 5,529,183 $ — $ — $ 5,535,135 $ 5,535,135 (A) The principal balance of commercial mortgage loans excludes premiums and unamortized discounts. (B) The carrying value of commercial mortgage loans is presented net of $8.5 million unamortized origination discounts and deferred nonrefundable fees. The carrying value of secured financing agreements is presented net of $6.0 million unamortized debt issuance costs. The carrying values and fair values of KREF ’s financial assets recorded at fair value on a recurring basis, as well as other financial instruments for which fair value is disclosed, as of December 31, 2016 were as follows: Fair Value Principal Balance (A) Carrying Value (B) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 96,189 $ 96,189 $ 96,189 $ — $ — $ 96,189 Restricted cash and cash equivalents 157 157 157 — — 157 Commercial mortgage loans, held-for-investment, net 681,570 674,596 — — 676,169 676,169 Commercial mortgage loans, held-for-sale, net 26,230 26,230 — — 26,495 26,495 Preferred interest in joint venture, held-to-maturity 36,445 36,445 — — 36,482 36,482 Commercial mortgage loans held in variable interest entities, at fair value 5,351,539 5,426,084 — — 5,426,084 5,426,084 $ 6,192,130 $ 6,259,701 $ 96,346 $ — $ 6,165,230 $ 6,261,576 Liabilities Secured financing agreements, net $ 445,600 $ 439,144 $ — $ — $ 445,600 $ 445,600 Variable interest entity liabilities, at fair value 5,042,380 5,313,574 — — 5,313,574 5,313,574 $ 5,487,980 $ 5,752,718 $ — $ — $ 5,759,174 $ 5,759,174 (A) The principal balance of commercial mortgage loans excludes premiums and discounts. (B) The carrying value of commercial mortgage loans is presented net of $9.2 million origination discounts and deferred nonrefundable fees. The carrying value of secured financing agreements is presented net of $6.4 million unamortized debt issuance costs. |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | KREF reported the following financial assets and liabilities at fair value on a recurring basis using Level 3 inputs as of June 30, 2017 . Assets Liabilities Commercial mortgage loans held in variable interest entities, at fair value Variable interest entity liabilities, at fair value Net Balance at December 31, 2016 $ 5,426,084 $ 5,313,574 $ 112,510 Gains (losses) included in net income Included in change in net assets related to consolidated variable interest entities 58,965 56,399 2,566 Purchases and repayments Purchases — — — Repayments (17,936 ) (17,936 ) — Other (A) (18 ) (52 ) 34 Balance at June 30, 2017 $ 5,467,095 $ 5,351,985 $ 115,110 (A) Amounts principally consist of changes in accrued interest. |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | KREF reported the following financial assets and liabilities at fair value on a recurring basis using Level 3 inputs as of June 30, 2017 . Assets Liabilities Commercial mortgage loans held in variable interest entities, at fair value Variable interest entity liabilities, at fair value Net Balance at December 31, 2016 $ 5,426,084 $ 5,313,574 $ 112,510 Gains (losses) included in net income Included in change in net assets related to consolidated variable interest entities 58,965 56,399 2,566 Purchases and repayments Purchases — — — Repayments (17,936 ) (17,936 ) — Other (A) (18 ) (52 ) 34 Balance at June 30, 2017 $ 5,467,095 $ 5,351,985 $ 115,110 (A) Amounts principally consist of changes in accrued interest. |
Fair Value Inputs, Assets, Quantitative Information | The following table contains the Level 3 inputs used to value assets and liabilities on a recurring and nonrecurring basis or where KREF discloses fair value as of June 30, 2017 : Fair Value Valuation Methodologies Unobservable Inputs (A) Weighted Average (B) Range Assets Commercial mortgage loans, held-for-investment, net $ 1,065,027 Discounted cash flow Loan-to-value ratio 65.3% 34.2% - 91.2% Discount rate 6.5% 2.4% - 14.8% Preferred interest in joint venture, held-to-maturity 37,349 Discounted cash flow Discount rate 13.9% 13.7% - 14.2% Commercial mortgage loans held in variable interest entities, at fair value (C) 5,467,095 Discounted cash flow Yield 7.4% 1.9% - 30.9% $ 6,569,471 Liabilities Secured financing agreements, net $ 183,150 Market comparable Credit spread 2.0% 1.8% - 2.5% Variable interest entity liabilities, at fair value 5,351,985 Discounted cash flow Yield 5.4% 1.9% - 27.1% $ 5,535,135 (A) An increase (decrease) in the valuation input results in a decrease (increase) in value. (B) Represents the average of the input value, weighted by the unpaid principal balance of the financial instrument. (C) Management measures the fair value of " Commercial mortgage loans held in variable interest entities, at fair value " using the fair value of the CMBS trust liabilities. The Level 3 inputs presented in the table above reflect the inputs used to value the CMBS trust liabilities, including the CMBS beneficially owned by KREF stockholders eliminated in consolidation of the CMBS trusts. |
Fair Value Inputs, Liabilities, Quantitative Information | The following table contains the Level 3 inputs used to value assets and liabilities on a recurring and nonrecurring basis or where KREF discloses fair value as of June 30, 2017 : Fair Value Valuation Methodologies Unobservable Inputs (A) Weighted Average (B) Range Assets Commercial mortgage loans, held-for-investment, net $ 1,065,027 Discounted cash flow Loan-to-value ratio 65.3% 34.2% - 91.2% Discount rate 6.5% 2.4% - 14.8% Preferred interest in joint venture, held-to-maturity 37,349 Discounted cash flow Discount rate 13.9% 13.7% - 14.2% Commercial mortgage loans held in variable interest entities, at fair value (C) 5,467,095 Discounted cash flow Yield 7.4% 1.9% - 30.9% $ 6,569,471 Liabilities Secured financing agreements, net $ 183,150 Market comparable Credit spread 2.0% 1.8% - 2.5% Variable interest entity liabilities, at fair value 5,351,985 Discounted cash flow Yield 5.4% 1.9% - 27.1% $ 5,535,135 (A) An increase (decrease) in the valuation input results in a decrease (increase) in value. (B) Represents the average of the input value, weighted by the unpaid principal balance of the financial instrument. (C) Management measures the fair value of " Commercial mortgage loans held in variable interest entities, at fair value " using the fair value of the CMBS trust liabilities. The Level 3 inputs presented in the table above reflect the inputs used to value the CMBS trust liabilities, including the CMBS beneficially owned by KREF stockholders eliminated in consolidation of the CMBS trusts. |
Subsequent Events (Tables)
Subsequent Events (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent event investing activities | KREF originated the following senior loans subsequent to June 30, 2017 : Description/ Location Property Type Month Originated Maximum Face Amount Initial Face Amount Funded Interest Rate (A) Maturity Date (B) LTV Senior Loan, Queens, NY Industrial July 2017 $ 75,100 $ 61,300 L + 3.7% August 2022 72% Senior Loan, Denver, CO (C) Multifamily August 2017 91,000 91,000 L + 4.4 August 2022 73 Senior Loan, New York, NY (D) Condo(Residential) August 2017 239,200 239,200 L + 4.8 September 2020 69 Total/Weighted Average $ 405,300 $ 391,500 L + 4.5% 71% (A) Floating rate based on one-month USD LIBOR. (B) Maturity date assumes all extension options are exercised, if applicable. (C) LTV is based on the senior mortgage amount of $81.0 million at closing divided by the as-is appraised value of $111.4 million . LTV excludes a $10.0 million mezzanine loan intended for sale which equates to an 82% LTV through the mezzanine position. (D) LTV is based on the total loan amount of $239.2 million divided by the appraised net sell-out value of $345.4 million . |
Business and Organization (Deta
Business and Organization (Details) - KKR | Jun. 30, 2017shares |
KREF | |
Related Party Transaction [Line Items] | |
Common stock (shares) | 23,758,616 |
KKR Real Estate FInance Trust Inc. on Behalf of Third Party | |
Related Party Transaction [Line Items] | |
Common stock (shares) | 3,758,616 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | ||
Restricted cash and cash equivalents | $ 900 | $ 157 |
Unrestricted cash and cash equivalents balance to satisfy liquidity covenants | $ 10,000 | $ 11,100 |
Credit Concentration Risk | Loans held-for-investment | ||
Related Party Transaction [Line Items] | ||
Concentration of credit risk | 98.50% | |
Consolidated Joint Venture One | ||
Related Party Transaction [Line Items] | ||
Noncontrolling interest ownership percentage | 95.00% | |
Consolidated Joint Venture One | Third-Parties | ||
Related Party Transaction [Line Items] | ||
Noncontrolling interest ownership percentage | 5.00% | |
Consolidated Joint Venture Two | ||
Related Party Transaction [Line Items] | ||
Noncontrolling interest ownership percentage | 80.00% | |
Consolidated Joint Venture Two | Third-Parties | ||
Related Party Transaction [Line Items] | ||
Noncontrolling interest ownership percentage | 20.00% |
Summary of Significant Accoun31
Summary of Significant Accounting Policies - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2015 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 57,013 | $ 96,189 | ||
Restricted cash and cash equivalents | 900 | 157 | ||
Total cash, cash equivalents and restricted cash and cash equivalents shown in the Condensed Consolidated Statements of Cash Flows | $ 57,913 | $ 96,346 | $ 54,297 | $ 26,686 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies - Schedule of Other Assets and Other Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Other Assets | ||
Deferred debt issuance costs, net | $ 2,008 | $ 448 |
Prepaid expenses, net | 449 | 22 |
Other assets | 70 | 30 |
Due from affiliates | 55 | 360 |
Deferred stock issuance costs | 0 | 1,326 |
Accounts receivable | 0 | 542 |
Other Assets | 2,582 | 2,728 |
Accounts Payable, Accrued Expenses And Other Liabilities | ||
Accrued stock issuance costs | 3,460 | 60 |
Accounts payable | 2,829 | 1,538 |
Accrued expenses | 572 | 558 |
Income taxes payable | 202 | 141 |
Deferred revenue | 58 | 0 |
Accounts Payable, Accrued Expenses And Other Liabilities | 7,121 | 2,297 |
Secured Financing Agreements | ||
Line of Credit Facility [Line Items] | ||
Accumulated amortization | $ 200 | $ 0 |
Commercial Mortgage Loans - Loa
Commercial Mortgage Loans - Loans Held-for-investment and Loans Held-for-sale (Details) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017USD ($)loan | Dec. 31, 2016USD ($)loan | |
Investment Holdings [Line Items] | ||
Outstanding Face Amount | $ 1,064,601 | $ 707,800 |
Carrying Value | $ 1,056,083 | $ 700,826 |
Loan Count | loan | 21 | 16 |
Floating Rate Loan | 97.50% | 96.30% |
Coupon | 6.10% | 5.00% |
Yield | 6.20% | 7.10% |
Life (Years) | 3 years 11 months 8 days | 4 years 3 days |
Loans held-for-investment | ||
Investment Holdings [Line Items] | ||
Outstanding Face Amount | $ 681,570 | |
Carrying Value | $ 674,596 | |
Loan Count | loan | 10 | |
Floating Rate Loan | 100.00% | |
Coupon | 4.80% | |
Yield | 6.90% | |
Life (Years) | 3 years 10 months 27 days | |
Loans held-for-investment | Senior loans | ||
Investment Holdings [Line Items] | ||
Outstanding Face Amount | $ 968,374 | $ 625,638 |
Carrying Value | $ 960,094 | $ 618,779 |
Loan Count | loan | 11 | 7 |
Floating Rate Loan | 100.00% | 100.00% |
Coupon | 5.70% | 4.40% |
Yield | 5.70% | 6.50% |
Life (Years) | 3 years 11 months 6 days | 4 years |
Loans held-for-investment | Mezzanine loans | ||
Investment Holdings [Line Items] | ||
Outstanding Face Amount | $ 96,227 | $ 55,932 |
Carrying Value | $ 95,989 | $ 55,817 |
Loan Count | loan | 10 | 3 |
Floating Rate Loan | 72.70% | 100.00% |
Coupon | 10.90% | 9.50% |
Yield | 10.90% | 11.50% |
Life (Years) | 3 years 11 months 15 days | 2 years 10 months 9 days |
Loans held-for-investment | Mezzanine loans | Variable Interest Entity, Primary Beneficiary | ||
Investment Holdings [Line Items] | ||
Carrying Value | $ 61,200 | |
Loans held-for-sale | ||
Investment Holdings [Line Items] | ||
Outstanding Face Amount | $ 26,230 | |
Carrying Value | $ 26,230 | |
Loan Count | loan | 6 | |
Floating Rate Loan | 0.00% | |
Coupon | 10.60% | |
Yield | 11.30% | |
Life (Years) | 6 years 5 months 26 days | |
Loans held-for-sale | Mezzanine loans | ||
Investment Holdings [Line Items] | ||
Outstanding Face Amount | $ 26,230 | |
Carrying Value | $ 26,230 | |
Loan Count | loan | 6 | |
Floating Rate Loan | 0.00% | |
Coupon | 10.60% | |
Yield | 11.30% | |
Life (Years) | 6 years 5 months 26 days | |
Consolidated Joint Venture One | Redeemable Noncontrolling Interest | ||
Investment Holdings [Line Items] | ||
Noncontrolling interest ownership percentage | 5.00% | |
Consolidated Joint Venture One | Loans held-for-investment | Variable Interest Entity, Primary Beneficiary | ||
Investment Holdings [Line Items] | ||
Loan Count | loan | 7 | |
Consolidated Joint Venture One | Loans held-for-investment | Mezzanine loans | Variable Interest Entity, Primary Beneficiary | ||
Investment Holdings [Line Items] | ||
Outstanding Face Amount | $ 61,200 |
Commercial Mortgage Loans - Con
Commercial Mortgage Loans - Concentration of Credit Risk (Details) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Loans held-for-investment | Geography | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 100.00% | 100.00% |
Loans held-for-investment | Geography | New York | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 26.30% | 25.90% |
Loans held-for-investment | Geography | California | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 26.10% | 20.30% |
Loans held-for-investment | Geography | Oregon | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 11.30% | 17.60% |
Loans held-for-investment | Geography | Georgia | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 10.40% | 9.80% |
Loans held-for-investment | Geography | Washington D.C. | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 7.20% | 10.60% |
Loans held-for-investment | Geography | Texas | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 5.90% | 0.00% |
Loans held-for-investment | Geography | Tennessee | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 5.00% | 7.90% |
Loans held-for-investment | Geography | Florida | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 3.90% | 5.10% |
Loans held-for-investment | Geography | Illinois | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 1.70% | 2.40% |
Loans held-for-investment | Geography | Colorado | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 1.50% | 0.00% |
Loans held-for-investment | Geography | South Carolina | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.10% | 0.20% |
Loans held-for-investment | Geography | Alabama | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 0.20% |
Loans held-for-investment | Geography | Other U.S. | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.60% | 0.00% |
Loans held-for-investment | Collateral Property Type | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 100.00% | 100.00% |
Loans held-for-investment | Collateral Property Type | Office | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 51.40% | 39.20% |
Loans held-for-investment | Collateral Property Type | Retail | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 24.50% | 37.20% |
Loans held-for-investment | Collateral Property Type | Multifamily | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 13.90% | 8.80% |
Loans held-for-investment | Collateral Property Type | Industrial | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 6.30% | 9.80% |
Loans held-for-investment | Collateral Property Type | Hospitality | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 3.90% | 5.00% |
Loans held-for-sale | Geography | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 100.00% |
Loans held-for-sale | Geography | California | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 21.20% |
Loans held-for-sale | Geography | Michigan | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 16.30% |
Loans held-for-sale | Geography | Texas | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 11.10% |
Loans held-for-sale | Geography | Iowa | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 8.90% |
Loans held-for-sale | Geography | Florida | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 30.50% |
Loans held-for-sale | Geography | Illinois | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 5.90% |
Loans held-for-sale | Geography | Oklahoma | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 3.90% |
Loans held-for-sale | Geography | Missouri | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 2.20% |
Loans held-for-sale | Collateral Property Type | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 100.00% |
Loans held-for-sale | Collateral Property Type | Office | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 16.30% |
Loans held-for-sale | Collateral Property Type | Retail | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 21.00% |
Loans held-for-sale | Collateral Property Type | Multifamily | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 32.20% |
Loans held-for-sale | Collateral Property Type | Hospitality | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.00% | 30.50% |
Commercial Mortgage Loans - Act
Commercial Mortgage Loans - Activities Related to Carrying Value of Mortgage Loans (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Movement in Mortgage Loans on Real Estate [Roll Forward] | |
Beginning balance | $ 700,826 |
Purchases and originations, net | 416,631 |
Transfer to held-for-investment | 0 |
Proceeds from principal repayments | (1,685) |
Proceeds from principal repaid upon loan sale | (60,991) |
Accretion of loan discount and other amortization, net | 1,302 |
Ending balance | 1,056,083 |
Loans held-for-investment | |
Movement in Mortgage Loans on Real Estate [Roll Forward] | |
Beginning balance | 674,596 |
Purchases and originations, net | 416,631 |
Transfer to held-for-investment | 26,230 |
Proceeds from principal repayments | (1,685) |
Proceeds from principal repaid upon loan sale | (60,991) |
Accretion of loan discount and other amortization, net | 1,302 |
Ending balance | 1,056,083 |
Loans held-for-sale | |
Movement in Mortgage Loans on Real Estate [Roll Forward] | |
Beginning balance | 26,230 |
Purchases and originations, net | 0 |
Transfer to held-for-investment | (26,230) |
Proceeds from principal repayments | 0 |
Proceeds from principal repaid upon loan sale | 0 |
Accretion of loan discount and other amortization, net | 0 |
Ending balance | $ 0 |
Preferred Interest in Joint V36
Preferred Interest in Joint Venture (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Dec. 31, 2016 | |
Schedule of Held-to-maturity Securities [Line Items] | ||
Outstanding Face Amount | $ 37,090 | |
Amortized Cost Basis | 37,090 | |
Gross Unrealized Holding Gains | 259 | |
Gross Unrealized Holding Losses | 0 | |
Net Carrying Amount | 37,090 | $ 36,445 |
Fair Value | $ 37,349 | |
Preferred return rate | 3.50% | |
Preferred LIBOR floor rate | 1.00% | |
Preferred return rate if extended maturity | 4.00% | |
LIBOR | Minimum | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Preferred variable return rate if extended maturity | 8.00% | |
LIBOR | Maximum | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Preferred variable return rate | 7.00% | |
Preferred variable return rate if extended maturity | 9.00% | |
Held-to-maturity | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Total OTTI | $ 0 |
Debt - Summary of Debt (Details
Debt - Summary of Debt (Details) | 1 Months Ended | 6 Months Ended | 12 Months Ended | ||||
May 31, 2017USD ($)extension | Dec. 31, 2016USD ($)extension | Sep. 30, 2016USD ($) | Jun. 30, 2017USD ($)trustextension | Dec. 31, 2016USD ($) | May 01, 2017USD ($) | Apr. 30, 2017USD ($) | |
Debt Instrument [Line Items] | |||||||
Outstanding Face Amount | $ 5,207,593,000 | ||||||
Carrying Value | $ 5,752,718,000 | 5,529,183,000 | $ 5,752,718,000 | ||||
Maximum Facility Size | $ 1,825,000,000 | ||||||
Weighted Average Funding Cost | 4.30% | ||||||
Weighted Average Life (Years) | 7 years 6 months | ||||||
Outstanding Face Amount | 707,800,000 | $ 1,064,601,000 | 707,800,000 | ||||
Carrying Value | 700,826,000 | $ 1,056,083,000 | $ 700,826,000 | ||||
Weighted Average Life (Years) | 3 years 11 months 8 days | 4 years 3 days | |||||
Unamortized debt issuance costs | $ 6,400,000 | $ 6,000,000 | $ 6,400,000 | ||||
Average haircut weighted by outstanding face amount of collateral | 28.80% | 81.10% | 28.80% | ||||
Average haircut weighted by outstanding face amount of collateral is maximum amount is borrowed | 25.90% | 25.60% | 25.90% | ||||
Deferred debt issuance costs, net | $ 448,000 | $ 2,008,000 | $ 448,000 | ||||
Accrued interest payable | 593,000 | 333,000 | 593,000 | ||||
Accrued interest receivable | 2,974,000 | $ 5,266,000 | 2,974,000 | ||||
Variable Interest Entity, Primary Beneficiary | |||||||
Debt Instrument [Line Items] | |||||||
Number of trusts | trust | 5 | ||||||
Accrued interest payable | $ 19,200,000 | ||||||
Accrued interest receivable | 20,300,000 | ||||||
CMBS | |||||||
Debt Instrument [Line Items] | |||||||
Carrying Value | 5,313,574,000 | 5,351,985,000 | 5,313,574,000 | ||||
CMBS | Variable Interest Entity, Primary Beneficiary | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding Face Amount | 5,024,443,000 | ||||||
Carrying Value | 5,313,574,000 | $ 5,351,985,000 | 5,313,574,000 | ||||
Weighted Average Funding Cost | 4.30% | ||||||
Weighted Average Life (Years) | 7 years 8 months 12 days | ||||||
Outstanding Face Amount | $ 5,333,602,000 | ||||||
Carrying Value | $ 5,467,095,000 | ||||||
Weighted Average Life (Years) | 7 years 8 months 12 days | ||||||
Accrued interest payable | 18,800,000 | 18,800,000 | |||||
Accrued interest receivable | 19,900,000 | $ 20,300,000 | 19,900,000 | ||||
Secured Financing Agreements | Facility | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding Face Amount | 183,150,000 | ||||||
Carrying Value | 439,144,000 | 177,198,000 | 439,144,000 | ||||
Maximum Facility Size | $ 1,825,000,000 | ||||||
Weighted Average Funding Cost | 3.50% | ||||||
Weighted Average Life (Years) | 2 years 1 month 3 days | ||||||
Secured Financing Agreements | Wells Fargo | Facility | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding Face Amount | $ 143,150,000 | ||||||
Carrying Value | 262,883,000 | 139,909,000 | 262,883,000 | ||||
Maximum Facility Size | $ 750,000,000 | $ 750,000,000 | $ 500,000,000 | ||||
Weighted Average Funding Cost | 3.40% | ||||||
Weighted Average Life (Years) | 1 year 8 months 13 days | ||||||
Outstanding Face Amount | $ 612,568,000 | ||||||
Carrying Value | $ 607,934,000 | ||||||
Weighted Average Life (Years) | 4 years 2 months 7 days | ||||||
Number of extensions | extension | 2 | ||||||
Secured Financing Agreements | Wells Fargo | Facility | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Collateral based margin | 1.80% | ||||||
Secured Financing Agreements | Wells Fargo | Facility | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Collateral based margin | 2.15% | ||||||
Secured Financing Agreements | Morgan Stanley | Facility | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding Face Amount | $ 40,000,000 | ||||||
Carrying Value | 177,764,000 | 38,375,000 | 177,764,000 | ||||
Maximum Facility Size | $ 500,000,000 | $ 500,000,000 | 500,000,000 | ||||
Weighted Average Funding Cost | 3.80% | ||||||
Weighted Average Life (Years) | 2 years 4 months 19 days | ||||||
Outstanding Face Amount | $ 355,806,000 | ||||||
Carrying Value | $ 352,160,000 | ||||||
Weighted Average Life (Years) | 4 years 5 months 1 day | ||||||
Number of extensions | extension | 1 | 1 | |||||
Extension term | 12 months | ||||||
Secured Financing Agreements | Morgan Stanley | Facility | Minimum | |||||||
Debt Instrument [Line Items] | |||||||
Collateral based margin | 2.25% | ||||||
Secured Financing Agreements | Morgan Stanley | Facility | Maximum | |||||||
Debt Instrument [Line Items] | |||||||
Collateral based margin | 2.45% | ||||||
Secured Financing Agreements | JPMorgan | Facility | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding Face Amount | $ 0 | ||||||
Carrying Value | $ (1,503,000) | (1,086,000) | (1,503,000) | ||||
Maximum Facility Size | $ 250,000,000 | ||||||
Weighted Average Funding Cost | 0.40% | ||||||
Weighted Average Life (Years) | 0 years | ||||||
Secured Financing Agreements | Goldman Sachs | Facility | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding Face Amount | $ 0 | ||||||
Carrying Value | $ 0 | 0 | $ 0 | ||||
Maximum Facility Size | $ 250,000,000 | $ 250,000,000 | |||||
Weighted Average Funding Cost | 0.20% | ||||||
Weighted Average Life (Years) | 3 years | 0 years | |||||
Deferred debt issuance costs, net | $ 400,000 | ||||||
Secured Financing Agreements | Barclays Bank PLC. | Facility | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding Face Amount | 0 | ||||||
Carrying Value | 0 | ||||||
Maximum Facility Size | $ 75,000,000 | $ 75,000,000 | |||||
Weighted Average Funding Cost | 1.90% | ||||||
Weighted Average Life (Years) | 0 years | ||||||
Deferred debt issuance costs, net | $ 1,400,000 | ||||||
Revolving Credit Facility | Goldman Sachs | Facility | |||||||
Debt Instrument [Line Items] | |||||||
Weighted Average Life (Years) | 1 year |
Debt - Repurchase Agreement (De
Debt - Repurchase Agreement (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Repurchase Agreement Counterparty [Line Items] | ||
Outstanding Face Amount | $ 5,207,593 | |
Wells Fargo | ||
Repurchase Agreement Counterparty [Line Items] | ||
Outstanding Face Amount | 143,150 | $ 265,650 |
Net Counterparty Exposure | $ 472,063 | $ 107,664 |
Percent of Stockholders' Equity | 44.30% | 21.60% |
Weighted Average Years to Maturity | 1 year 8 months 13 days | 2 years |
Morgan Stanley | ||
Repurchase Agreement Counterparty [Line Items] | ||
Outstanding Face Amount | $ 40,000 | $ 179,932 |
Net Counterparty Exposure | $ 316,948 | $ 65,533 |
Percent of Stockholders' Equity | 29.80% | 13.20% |
Weighted Average Years to Maturity | 2 years 4 months 19 days | 3 years |
Wells Fargo, National Association and Morgan Stanley, N.A. | ||
Repurchase Agreement Counterparty [Line Items] | ||
Outstanding Face Amount | $ 183,150 | $ 445,582 |
Net Counterparty Exposure | $ 789,011 | $ 173,197 |
Percent of Stockholders' Equity | 74.10% | 34.80% |
Weighted Average Years to Maturity | 2 years 1 month 3 days | 2 years 4 months 8 days |
Debt - Debt Activity (Details)
Debt - Debt Activity (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
Debt Instrument, Increase (Decrease), Net [Roll Forward] | ||
Beginning balance | $ 5,752,718 | |
Deferred debt issuance costs | (2,549) | $ (1,010) |
Amortization of deferred debt issuance costs | 1,070 | $ 682 |
Ending balance | 5,529,183 | |
All Debt Instruments, Excluding Instruments Treated as Lines of Credit [Member] | ||
Debt Instrument, Increase (Decrease), Net [Roll Forward] | ||
Beginning balance | 5,752,718 | |
Principal borrowings | 198,000 | |
Principal repayments | (478,368) | |
Deferred debt issuance costs | (923) | |
Amortization of deferred debt issuance costs | 866 | |
Fair value adjustment | 56,399 | |
Other | 491 | |
Ending balance | 5,529,183 | |
Facility | Secured financing agreements, net | ||
Debt Instrument, Increase (Decrease), Net [Roll Forward] | ||
Beginning balance | 439,144 | |
Principal borrowings | 198,000 | |
Principal repayments | (460,432) | |
Deferred debt issuance costs | (923) | |
Amortization of deferred debt issuance costs | 866 | |
Fair value adjustment | 0 | |
Other | 543 | |
Ending balance | 177,198 | |
CMBS | ||
Debt Instrument, Increase (Decrease), Net [Roll Forward] | ||
Beginning balance | 5,313,574 | |
Principal borrowings | 0 | |
Principal repayments | (17,936) | |
Deferred debt issuance costs | 0 | |
Amortization of deferred debt issuance costs | 0 | |
Fair value adjustment | 56,399 | |
Other | (52) | |
Ending balance | $ 5,351,985 |
Debt - Maturities (Details)
Debt - Maturities (Details) $ in Thousands | Jun. 30, 2017USD ($) |
Debt Instrument [Line Items] | |
2,017 | $ 30,337 |
2,018 | 108,510 |
2,019 | 101,593 |
2,020 | 529,351 |
2,021 | 75,545 |
Thereafter | 4,362,257 |
Total Long Term Debt | $ 5,207,593 |
Recourse limit | 25.00% |
Nonrecourse | |
Debt Instrument [Line Items] | |
2,017 | $ 20,337 |
2,018 | 49,610 |
2,019 | 61,593 |
2,020 | 455,101 |
2,021 | 75,545 |
Thereafter | 4,362,257 |
Total Long Term Debt | 5,024,443 |
Recourse | |
Debt Instrument [Line Items] | |
2,017 | 10,000 |
2,018 | 58,900 |
2,019 | 40,000 |
2,020 | 74,250 |
2,021 | 0 |
Thereafter | 0 |
Total Long Term Debt | $ 183,150 |
Debt - Covenants (Details)
Debt - Covenants (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Debt Disclosure [Abstract] | |
Interest income to interest expense ratio | 1.5 |
Percent of aggregate cash proceeds and any capital contributions | 75.00% |
Cash liquidity covenant amount (greater of) | $ 10 |
Cash liquidity covenant, percent of recourse indebtedness (greater of) | 5.00% |
Total indebtedness covenant, percent of total assets, net of VIE liabilities | 75.00% |
Debt to equity ratio, minimum | 3.5 |
Fixed charge interest ratio, minimum | 1.5 |
Variable Interest Entities - Na
Variable Interest Entities - Narrative (Details) $ in Thousands | Jun. 30, 2017USD ($) | Jan. 31, 2017USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)trustloaninvestment | Jun. 30, 2016USD ($) | Dec. 31, 2016USD ($)loan |
Variable Interest Entity [Line Items] | |||||||
Commercial mortgage loans held in variable interest entities, at fair value | $ 5,467,095 | $ 5,467,095 | $ 5,467,095 | $ 5,426,084 | |||
Accrued interest receivable | 5,266 | 5,266 | 5,266 | 2,974 | |||
Variable interest entity liabilities, at fair value | 5,351,985 | 5,351,985 | 5,351,985 | 5,313,574 | |||
Accrued interest payable | 333 | 333 | 333 | $ 593 | |||
Change in net assets related to consolidated variable interest entities | 4,175 | $ 5,824 | 8,785 | $ 3,740 | |||
Interest income | 14,221 | $ 5,520 | $ 23,174 | $ 10,639 | |||
Number of loans | loan | 21 | 16 | |||||
Commercial mortgage loans, held-for-investment, net | 1,056,083 | 1,056,083 | $ 1,056,083 | $ 674,596 | |||
Commercial mortgage loans, held-for-sale, net | 0 | 0 | 0 | $ 26,230 | |||
Lending agreement amortized cost basis | 37,090 | 37,090 | $ 37,090 | ||||
Number of equity method investments | investment | 2 | ||||||
Loans held-for-investment | |||||||
Variable Interest Entity [Line Items] | |||||||
Number of loans | loan | 10 | ||||||
Loans held-for-sale | |||||||
Variable Interest Entity [Line Items] | |||||||
Number of loans | loan | 6 | ||||||
Variable Interest Entity, Primary Beneficiary | |||||||
Variable Interest Entity [Line Items] | |||||||
Number of trusts | trust | 5 | ||||||
Accrued interest receivable | 20,300 | 20,300 | $ 20,300 | ||||
Accrued interest payable | 19,200 | 19,200 | 19,200 | ||||
Interest income | 6,200 | ||||||
Unrealized gain (loss) on investments | $ 2,600 | ||||||
Variable Interest Entity, Primary Beneficiary | Consolidated Joint Venture One | Loans held-for-investment | |||||||
Variable Interest Entity [Line Items] | |||||||
Ownership percentage in VIE | 95.00% | ||||||
Number of loans | loan | 7 | ||||||
Commercial mortgage loans, held-for-investment, net | 61,200 | 61,200 | $ 61,200 | ||||
Variable Interest Entity, Primary Beneficiary | Consolidated Joint Venture Two | |||||||
Variable Interest Entity [Line Items] | |||||||
Ownership percentage in VIE | 80.00% | ||||||
Lending agreement amortized cost basis | 37,100 | 37,100 | $ 37,100 | ||||
CMBS | Variable Interest Entity, Primary Beneficiary | |||||||
Variable Interest Entity [Line Items] | |||||||
Unpaid principal balance | 309,200 | 309,200 | 309,200 | ||||
Fair value | 114,000 | $ 114,000 | $ 114,000 | ||||
Commitment to Invest in Aggregator Vehicle | Variable Interest Entity, Not Primary Beneficiary | |||||||
Variable Interest Entity [Line Items] | |||||||
Capital commitment | $ 36,000 | $ 40,000 | |||||
RECOP | Variable Interest Entity, Not Primary Beneficiary | |||||||
Variable Interest Entity [Line Items] | |||||||
Ownership percentage in VIE | 8.00% | ||||||
KKR Manager | Variable Interest Entity, Not Primary Beneficiary | |||||||
Variable Interest Entity [Line Items] | |||||||
Ownership percentage in VIE | 4.70% |
Variable Interest Entities - Co
Variable Interest Entities - Concentration of Credit Risk (Details) - Variable Interest Entities, CMBS | 6 Months Ended | 12 Months Ended |
Jun. 30, 2017 | Dec. 31, 2016 | |
Geography | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 100.00% | 100.00% |
Geography | California | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 23.10% | 23.00% |
Geography | Texas | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 12.70% | 12.70% |
Geography | New York | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 9.20% | 9.20% |
Geography | Illinois | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 7.10% | 7.10% |
Geography | Florida | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 5.50% | 5.50% |
Geography | Missouri | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 4.60% | 4.60% |
Geography | Pennsylvania | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 4.50% | 4.50% |
Geography | Georgia | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 2.90% | 3.00% |
Geography | Michigan | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 2.70% | 2.70% |
Geography | Ohio | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 2.50% | 2.50% |
Geography | Other U.S. | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 25.20% | 25.20% |
Collateral Property Type | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 100.00% | 100.00% |
Collateral Property Type | Office | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 26.30% | 26.30% |
Collateral Property Type | Retail | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 25.20% | 25.20% |
Collateral Property Type | Hospitality | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 15.00% | 15.10% |
Collateral Property Type | Multifamily | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 10.60% | 10.60% |
Collateral Property Type | Industrial | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 9.60% | 9.60% |
Collateral Property Type | Mixed Use | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 7.00% | 7.00% |
Collateral Property Type | Self Storage | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 3.10% | 3.10% |
Collateral Property Type | Mobile Home | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 2.70% | 2.70% |
Collateral Property Type | Other | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.50% | 0.40% |
Equity (Details)
Equity (Details) - USD ($) | Jan. 23, 2015 | May 31, 2017 | Apr. 30, 2017 | Feb. 28, 2017 | Mar. 31, 2016 | Jun. 30, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | Oct. 02, 2014 |
Subsidiary, Sale of Stock [Line Items] | |||||||||
Total shares authorized (shares) | 350,000,000 | ||||||||
Common stock par value (usd per share) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 | |||||
Common stock authorized (shares) | 300,000,000 | 300,000,000 | 300,000,000 | 300,000,000 | |||||
Preferred stock authorized (shares) | 50,000,000 | 50,000,000 | 50,000,000 | 50,000,000 | |||||
Value of stock acquired per transaction for LLC interest allocation | $ 100,000,000 | $ 100,000,000 | |||||||
Preferred stock par or stated value (usd per share) | $ 0.01 | $ 0.01 | $ 0.01 | ||||||
Value of stock redeemed | $ 125,000 | ||||||||
Stock repurchase program, authorized amount (up to) | $ 100,000,000 | $ 100,000,000 | |||||||
Weighted Average Number of Shares Outstanding, Diluted (shares) | 273 | 273 | |||||||
Cumulative Preferred Stock | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Issuance of stock (shares) | 125 | ||||||||
Preferred stock par or stated value (usd per share) | $ 1,000 | $ 1,000 | $ 0 | $ 0 | $ 1,000 | ||||
Stock redeemed (shares) | 125 | ||||||||
Dividend rate | 12.50% | ||||||||
Value of stock redeemed | $ 100,000 | ||||||||
Voting Preferred Stock | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Preferred stock share price (usd per share) | $ 20 | ||||||||
Ownership percentage to retain voting rights | 25.00% | ||||||||
Redeemable Preferred Stock | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Issuance of stock (shares) | 1 | ||||||||
Preferred stock par or stated value (usd per share) | $ 0.01 | ||||||||
Preferred stock share price (usd per share) | $ 0.01 | ||||||||
Liquidation preference (usd per share) | 0.01 | 0.01 | |||||||
Redemption price (usd per share) | $ 0.01 | $ 0.01 | |||||||
KKR Manager | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Percent of total limited liability company interests | 6.67% | ||||||||
KREF | KKR | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Common stock (shares) | 23,758,616 | 23,758,616 | |||||||
KKR Real Estate FInance Trust Inc. on Behalf of Third Party | KKR | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Common stock (shares) | 3,758,616 | 3,758,616 | |||||||
Private Placement | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Capital commitment | $ 277,400,000 | ||||||||
Share price (usd per share) | $ 20 | ||||||||
Private Placement | Common Stock | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Share price (usd per share) | $ 20 | $ 20 | |||||||
Number of shares issued (shares) | 10,379,738 | 7,386,208 | |||||||
Consideration from sale of stock | $ 207,600,000 | $ 147,700,000 | |||||||
Private Placement, Third-parties and Current and Former Employees of, and Consultants to, KKR | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Capital commitment | $ 190,100,000 | ||||||||
Private Placement, Third-parties | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Capital commitment | 178,400,000 | ||||||||
Private Placement, Current and Former Employees of, and Consultants to, KKR | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Capital commitment | 11,800,000 | ||||||||
Private Placement. KKR Fund Holdings | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Capital commitment | 87,300,000 | ||||||||
Prior to Private Placement | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Capital commitment | $ 312,700,000 | ||||||||
IPO | Common Stock | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Share price (usd per share) | $ 20.50 | ||||||||
Number of shares issued (shares) | 11,787,500 | ||||||||
Consideration from sale of stock | $ 225,900,000 | ||||||||
Underwritten Offer | Common Stock | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Number of shares issued (shares) | 1,537,500 | ||||||||
Consolidated Joint Venture Two | Third-Parties | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Noncontrolling interest ownership percentage | 20.00% | 20.00% | |||||||
Consolidated Joint Venture One | Third-Parties | |||||||||
Subsidiary, Sale of Stock [Line Items] | |||||||||
Noncontrolling interest ownership percentage | 5.00% | 5.00% |
Equity - Schedule of Dividends
Equity - Schedule of Dividends Declared (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 14, 2017 | Apr. 18, 2017 | Feb. 03, 2017 | Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 |
Equity [Abstract] | |||||||
Dividend declared (usd per share) | $ 0.25 | $ 0.28 | $ 0.35 | $ 0.53 | $ 0.34 | $ 0.88 | $ 0.7 |
Dividends declared | $ 13,428 | $ 8,832 | $ 8,455 | $ 30,715 | $ 10,941 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Future Funding Commitment Related to Commercial Mortgage Loan Investments | |
Long-term Purchase Commitment [Line Items] | |
Capital commitment | $ 256.7 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) | Nov. 17, 2016USD ($)shares | Jun. 30, 2017USD ($)shares | Jun. 30, 2016USD ($) | Jun. 30, 2017USD ($)quartershares | Jun. 30, 2016USD ($) |
Related Party Transaction [Line Items] | |||||
Management fee (greater of) | $ 3,706,000 | $ 1,523,000 | $ 6,089,000 | $ 3,097,000 | |
Management Incentive Plan | |||||
Related Party Transaction [Line Items] | |||||
Percent of issued and outstanding shares of common stock available for awards (no more than) | 7.50% | ||||
Number of shares available for awards (shares) | shares | 4,028,387 | 4,023,509 | 4,023,509 | ||
Management Incentive Plan | Non-Employee Director | |||||
Related Party Transaction [Line Items] | |||||
Maximum number of shares subject to award grants together with cash fees paid | $ 1,000,000 | ||||
Maximum amount that can be paid to any participant pursuant to a performance compensation award | $ 10,000,000 | ||||
Management Agreement | |||||
Related Party Transaction [Line Items] | |||||
Management Agreement term | 3 years | ||||
Period of automatic renewal under Management Agreement | 1 year | ||||
Termination fee multiple under Management Agreement | 3 | ||||
Trailing average period applied to termination fee multiple under Management Agreement | 24 months | ||||
Quarterly Management Fee | |||||
Related Party Transaction [Line Items] | |||||
Management fee (greater of) | $ 62,500 | ||||
Management fee as a percent of weighted average adjusted equity (greater of) | 0.375% | ||||
Quarterly Incentive Compensation | |||||
Related Party Transaction [Line Items] | |||||
Incentive compensation fee percent | 20.00% | ||||
Period of adjusted earnings | 12 months | ||||
Percent of trailing 12 month weighted average adjusted equity | 7.00% | ||||
Period of weighted average adjusted equity | 12 months | ||||
Number of quarters worth of compensation already paid | quarter | 3 | ||||
Restricted Stock Units | Management Incentive Plan | |||||
Related Party Transaction [Line Items] | |||||
Units granted (in shares) | shares | 4,878 |
Related Party Transactions - Ex
Related Party Transactions - Expenses Incurred and Amounts Owed to Affiliates (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | |||||
Due to affiliates | $ 3,516 | $ 3,516 | $ 1,728 | ||
Affiliate expenses | 3,706 | $ 1,523 | 6,089 | $ 3,097 | |
Management fees | |||||
Related Party Transaction [Line Items] | |||||
Due to affiliates | 3,256 | 3,256 | 1,616 | ||
Affiliate expenses | 3,488 | 1,329 | 5,524 | 2,467 | |
Incentive compensation | |||||
Related Party Transaction [Line Items] | |||||
Affiliate expenses | 0 | 88 | 0 | 365 | |
Expense reimbursements and other | |||||
Related Party Transaction [Line Items] | |||||
Due to affiliates | 260 | 260 | $ 112 | ||
Affiliate expenses | 218 | 106 | 565 | 265 | |
Out-of-pocket costs reimbursed to KKR Manager | |||||
Related Party Transaction [Line Items] | |||||
Affiliate expenses | $ 200 | $ 600 | $ 200 | $ 2,000 |
Fair Value of Financial Instr49
Fair Value of Financial Instruments - Assets and Liabilities Recorded at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2017 | Dec. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | $ 57,013 | $ 96,189 |
Restricted cash and cash equivalents | 900 | 157 |
Commercial mortgage loans, held-for-investment, net | 1,056,083 | 674,596 |
Commercial mortgage loans, held-for-sale, net | 0 | 26,230 |
Preferred interest in joint venture, held-to-maturity | 37,090 | 36,445 |
Preferred interest in joint venture, held-to-maturity, fair value | 37,349 | |
Equity method investments in unconsolidated subsidiaries, at fair value | 4,344 | 0 |
Commercial mortgage loans held in variable interest entities, net | 5,467,095 | 5,426,084 |
Assets | 6,630,373 | 6,265,403 |
Secured financing agreements, gross | 5,207,593 | |
Secured financing agreements, net | 177,198 | 439,144 |
Variable interest entity liabilities | 5,351,985 | 5,313,574 |
Liabilities | 5,553,658 | 5,757,336 |
Unamortized origination discounts and deferred nonrefundable fees | 8,500 | 9,200 |
Unamortized debt issuance costs | 6,000 | 6,400 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Commercial mortgage loans, held-for-investment, net, fair value | 1,065,027 | |
Preferred interest in joint venture, held-to-maturity, fair value | 37,349 | |
Equity method investments in unconsolidated subsidiaries, at fair value | 4,344 | |
Commercial mortgage loans held in variable interest entities, at fair value | 5,467,095 | |
Assets, fair value | 6,569,471 | |
Secured financing agreements, net, fair value disclosure | 183,150 | |
Variable interest entity liabilities, at fair value | 5,351,985 | |
Liabilities, fair value | 5,535,135 | |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | 57,013 | 96,189 |
Cash and cash equivalents, fair value | 57,013 | 96,189 |
Restricted cash and cash equivalents | 900 | 157 |
Restricted cash and cash equivalents, fair value | 900 | 157 |
Commercial mortgage loans, held-for-investment, gross | 1,064,601 | 681,570 |
Commercial mortgage loans, held-for-investment, net | 1,056,083 | 674,596 |
Commercial mortgage loans, held-for-investment, net, fair value | 1,065,027 | 676,169 |
Commercial mortgage loans, held-for-sale, gross | 26,230 | |
Commercial mortgage loans, held-for-sale, net | 26,230 | |
Commercial mortgage loans, held-for-sale, net, fair value | 26,495 | |
Preferred interest in joint venture, held-to-maturity | 37,090 | 36,445 |
Preferred interest in joint venture, held-to-maturity, fair value | 37,349 | 36,482 |
Equity method investments in unconsolidated subsidiaries, at fair value | 4,344 | |
Commercial mortgage loans held in variable interest entities, gross | 5,333,602 | 5,351,539 |
Commercial mortgage loans held in variable interest entities, net | 5,467,095 | 5,426,084 |
Commercial mortgage loans held in variable interest entities, at fair value | 5,467,095 | 5,426,084 |
Assets gross | 6,497,550 | 6,192,130 |
Assets | 6,622,525 | 6,259,701 |
Assets, fair value | 6,631,728 | 6,261,576 |
Secured financing agreements, gross | 183,150 | 445,600 |
Secured financing agreements, net | 177,198 | 439,144 |
Secured financing agreements, net, fair value disclosure | 183,150 | 445,600 |
Variable interest entity liabilities, gross | 5,024,443 | 5,042,380 |
Variable interest entity liabilities | 5,351,985 | 5,313,574 |
Variable interest entity liabilities, at fair value | 5,351,985 | 5,313,574 |
Liabilities gross | 5,207,593 | 5,487,980 |
Liabilities | 5,529,183 | 5,752,718 |
Liabilities, fair value | 5,535,135 | 5,759,174 |
Fair Value, Measurements, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents, fair value | 57,013 | 96,189 |
Restricted cash and cash equivalents, fair value | 900 | 157 |
Commercial mortgage loans, held-for-investment, net, fair value | 0 | 0 |
Commercial mortgage loans, held-for-sale, net, fair value | 0 | |
Preferred interest in joint venture, held-to-maturity, fair value | 0 | 0 |
Equity method investments in unconsolidated subsidiaries, at fair value | 0 | |
Commercial mortgage loans held in variable interest entities, at fair value | 0 | 0 |
Assets, fair value | 57,913 | 96,346 |
Secured financing agreements, net, fair value disclosure | 0 | 0 |
Variable interest entity liabilities, at fair value | 0 | 0 |
Liabilities, fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents, fair value | 0 | 0 |
Restricted cash and cash equivalents, fair value | 0 | 0 |
Commercial mortgage loans, held-for-investment, net, fair value | 0 | 0 |
Commercial mortgage loans, held-for-sale, net, fair value | 0 | |
Preferred interest in joint venture, held-to-maturity, fair value | 0 | 0 |
Equity method investments in unconsolidated subsidiaries, at fair value | 0 | |
Commercial mortgage loans held in variable interest entities, at fair value | 0 | 0 |
Assets, fair value | 0 | 0 |
Secured financing agreements, net, fair value disclosure | 0 | 0 |
Variable interest entity liabilities, at fair value | 0 | 0 |
Liabilities, fair value | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents, fair value | 0 | 0 |
Restricted cash and cash equivalents, fair value | 0 | 0 |
Commercial mortgage loans, held-for-investment, net, fair value | 676,169 | |
Commercial mortgage loans, held-for-sale, net, fair value | 26,495 | |
Preferred interest in joint venture, held-to-maturity, fair value | 36,482 | |
Commercial mortgage loans held in variable interest entities, at fair value | 5,426,084 | |
Assets, fair value | 6,573,815 | 6,165,230 |
Secured financing agreements, net, fair value disclosure | 445,600 | |
Variable interest entity liabilities, at fair value | 5,313,574 | |
Liabilities, fair value | $ 5,535,135 | $ 5,759,174 |
Fair Value of Financial Instr50
Fair Value of Financial Instruments - Unobservable Input Reconciliation (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Fair Value, Assets (Liabilities), Net, Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 112,510 |
Gains (losses) included in net income included in change in net assets related to consolidated variable interest entities | 2,566 |
Purchases | 0 |
Repayments | 0 |
Other | 34 |
Ending balance | 115,110 |
Variable Interest Entity, Primary Beneficiary | |
Liabilities | |
Beginning balance | 5,313,574 |
Gains (losses) included in net income included in change in net assets related to consolidated variable interest entities | 56,399 |
Purchases | 0 |
Repayments | (17,936) |
Other | (52) |
Ending balance | 5,351,985 |
Variable Interest Entity, Primary Beneficiary | Commercial mortgage loans held in variable interest entities, at fair value | |
Assets | |
Beginning balance | 5,426,084 |
Gains (losses) included in net income included in change in net assets related to consolidated variable interest entities | 58,965 |
Purchases | 0 |
Repayments | (17,936) |
Other | (18) |
Ending balance | $ 5,467,095 |
Fair Value of Financial Instr51
Fair Value of Financial Instruments - Unobservable Inputs (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2017USD ($) | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Preferred interest in joint venture, held-to-maturity | $ 37,349 |
Level 3 | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Commercial mortgage loans, held-for-investment, net | 1,065,027 |
Preferred interest in joint venture, held-to-maturity | 37,349 |
Commercial mortgage loans held in variable interest entities, at fair value | 5,467,095 |
Assets | 6,569,471 |
Secured financing agreements, net | 183,150 |
Variable interest entity liabilities, at fair value | 5,351,985 |
Liabilities | 5,535,135 |
Level 3 | Discounted cash flow | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Commercial mortgage loans, held-for-investment, net | 1,065,027 |
Preferred interest in joint venture, held-to-maturity | 37,349 |
Commercial mortgage loans held in variable interest entities, at fair value | 5,467,095 |
Variable interest entity liabilities, at fair value | 5,351,985 |
Level 3 | Market comparable | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Secured financing agreements, net | $ 183,150 |
Level 3 | Weighted Average | Discounted cash flow | Variable Interest Entities, Liabilities | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Yield | 5.40% |
Level 3 | Weighted Average | Discounted cash flow | Loans held-for-investment | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Loan-to-value ratio | 65.30% |
Discount rate | 6.50% |
Level 3 | Weighted Average | Discounted cash flow | Held-to-maturity | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Discount rate | 13.90% |
Level 3 | Weighted Average | Discounted cash flow | Variable Interest Entities, CMBS | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Yield | 7.40% |
Level 3 | Weighted Average | Market comparable | Long-term Debt | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Credit spread | 2.00% |
Level 3 | Minimum | Discounted cash flow | Variable Interest Entities, Liabilities | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Yield | 1.90% |
Level 3 | Minimum | Discounted cash flow | Loans held-for-investment | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Loan-to-value ratio | 34.20% |
Discount rate | 2.40% |
Level 3 | Minimum | Discounted cash flow | Held-to-maturity | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Discount rate | 13.70% |
Level 3 | Minimum | Discounted cash flow | Variable Interest Entities, CMBS | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Yield | 1.90% |
Level 3 | Minimum | Market comparable | Long-term Debt | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Credit spread | 1.80% |
Level 3 | Maximum | Discounted cash flow | Variable Interest Entities, Liabilities | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Yield | 27.10% |
Level 3 | Maximum | Discounted cash flow | Loans held-for-investment | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Loan-to-value ratio | 91.20% |
Discount rate | 14.80% |
Level 3 | Maximum | Discounted cash flow | Held-to-maturity | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Discount rate | 14.20% |
Level 3 | Maximum | Discounted cash flow | Variable Interest Entities, CMBS | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Yield | 30.90% |
Level 3 | Maximum | Market comparable | Long-term Debt | |
Fair Value Inputs, Assets, Quantitative Information [Line Items] | |
Credit spread | 2.50% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Current state and local tax expense (benefit) | $ 300,000 | $ 100,000 | |
Deferred tax assets, net | 0 | $ 0 | |
Deferred tax liabilities, net | $ 0 | $ 0 |
Subsequent Events - Schedule of
Subsequent Events - Schedule of Senior Notes (Details) - USD ($) $ in Thousands | Aug. 08, 2017 | Jul. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 |
Subsequent Event [Line Items] | ||||
Maximum Face Amount | $ 1,064,601 | $ 707,800 | ||
Initial Face Amount Funded | $ 1,056,083 | $ 700,826 | ||
Senior loans | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Maximum Face Amount | $ 405,300 | |||
Initial Face Amount Funded | $ 391,500 | |||
LTV | 71.00% | |||
Senior loans | Subsequent Event | LIBOR | ||||
Subsequent Event [Line Items] | ||||
Interest Rate | 4.50% | |||
Senior Loan, Queens, NY | Senior loans | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Maximum Face Amount | $ 75,100 | |||
Initial Face Amount Funded | $ 61,300 | |||
LTV | 72.00% | |||
Senior Loan, Queens, NY | Senior loans | Subsequent Event | LIBOR | ||||
Subsequent Event [Line Items] | ||||
Interest Rate | 3.65% | |||
Senior Loan, Denver, CO | Senior loans | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Initial Face Amount Funded | $ 91,000 | |||
LTV | 73.00% | |||
LTV calculation, face amount of loan held for investment | $ 81,000 | |||
Appraised value | 111,400 | |||
LTV calculation, face amount of loan held for sale | $ 10,000 | |||
LTV of loans held for sale | 82.00% | |||
Senior Loan, Denver, CO | Senior loans | Subsequent Event | LIBOR | ||||
Subsequent Event [Line Items] | ||||
Interest Rate | 4.40% | |||
Senior Loan, Denver, CO | Mortgage | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Maximum Face Amount | $ 91,000 | |||
Senior Loan, New York, NY | Senior loans | Subsequent Event | ||||
Subsequent Event [Line Items] | ||||
Maximum Face Amount | 239,200 | |||
Initial Face Amount Funded | $ 239,200 | |||
LTV | 69.00% | |||
Appraised value | $ 345,400 | |||
Senior Loan, New York, NY | Senior loans | Subsequent Event | LIBOR | ||||
Subsequent Event [Line Items] | ||||
Interest Rate | 4.80% |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 08, 2017 | Aug. 08, 2017 | Jul. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2016 |
Subsequent Event [Line Items] | |||||
Funding for loans | $ 416,631 | $ 64,583 | |||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Dividend on common stock | $ 13,400 | ||||
Dividend paid (usd per share) | $ 0.25 | ||||
Wells Fargo | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Principal borrowings | $ 342,100 | ||||
Morgan Stanley | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Principal borrowings | $ 71,100 | ||||
Senior loans | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Funding for loans | $ 5,000 |