Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 05, 2018 | |
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 | Sep. 30, 2018 | |
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 | 58,022,276 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Small Business | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | [1] |
Assets | |||
Cash and cash equivalents | $ 192,771 | $ 103,120 | |
Restricted cash | 0 | 400 | |
Commercial mortgage loans, held-for-investment, net | 3,261,878 | 1,888,510 | |
Equity method investments, at fair value | 24,745 | 14,390 | |
Accrued interest receivable | 12,395 | 8,423 | |
Other assets | 20,046 | 7,239 | |
Commercial mortgage loans held in variable interest entities, at fair value | 1,100,089 | 5,372,811 | |
Total Assets | 4,611,924 | 7,394,893 | |
Liabilities | |||
Secured financing agreements, net | 2,115,954 | 964,800 | |
Convertible notes, net | 137,339 | 0 | |
Loan participations sold, net | 83,442 | 81,472 | |
Accounts payable, accrued expenses and other liabilities | 2,236 | 2,465 | |
Dividends payable | 25,235 | 19,981 | |
Accrued interest payable | 6,376 | 1,623 | |
Due to affiliates | 7,700 | 4,442 | |
Variable interest entity liabilities, at fair value | 1,086,939 | 5,256,926 | |
Total Liabilities | 3,465,221 | 6,331,709 | |
Commitments and Contingencies (Note 10) | |||
Temporary Equity | |||
Redeemable noncontrolling interests in equity of consolidated joint venture and redeemable preferred stock | 402 | ||
Permanent Equity | |||
Preferred stock, 50,000,000 authorized (1 share with par value of $0.01 issued and outstanding as of September 30, 2018 and December 31, 2017) | 0 | 0 | |
Common stock, 300,000,000 authorized (58,022,590 and 53,685,440 shares with par value of $0.01 issued and outstanding as of September 30, 2018 and December 31, 2017, respectively) | 580 | 537 | |
Additional paid-in capital | 1,154,113 | 1,052,851 | |
Retained earnings | 5,763 | 6,280 | |
Repurchased stock, 723,507 and 26,398 shares repurchased as of September 30, 2018 and December 31, 2017, respectively | (14,155) | (523) | |
Total KKR Real Estate Finance Trust Inc. stockholders’ equity | 1,146,301 | 1,059,145 | |
Total Permanent Equity | 1,146,301 | 1,059,145 | |
Total Liabilities and Equity | 4,611,924 | 7,394,893 | |
Consolidated Joint Venture One | |||
Temporary Equity | |||
Redeemable noncontrolling interests in equity of consolidated joint venture and redeemable preferred stock | 0 | 3,090 | |
Consolidated Joint Venture Two | |||
Temporary Equity | |||
Redeemable noncontrolling interests in equity of consolidated joint venture and redeemable preferred stock | $ 402 | $ 949 | |
[1] | Derived from the audited consolidated financial statements as of December 31, 2017 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) Parenthetical - $ / shares | Sep. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
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) | 58,022,590 | 53,685,440 |
Common stock outstanding (shares) | 58,022,590 | 53,685,440 |
Treasury stock, held (shares) | 723,507 | 26,398 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Net Interest Income | ||||
Interest income | $ 51,895 | $ 24,408 | $ 123,952 | $ 54,760 |
Interest expense | 23,337 | 5,414 | 52,825 | 12,592 |
Total net interest income | 28,558 | 18,994 | 71,127 | 42,168 |
Other Income | ||||
Realized gain on sale of investments | 0 | 0 | 13,000 | 0 |
Change in net assets related to consolidated variable interest entities | 379 | 4,025 | 2,460 | 12,810 |
Income from equity method investments | 747 | 115 | 2,084 | 461 |
Other income | 476 | 177 | 1,239 | 616 |
Total other income (loss) | 1,602 | 4,317 | 18,783 | 13,887 |
Operating Expenses | ||||
General and administrative | 1,653 | 1,339 | 6,002 | 3,254 |
Incentive compensation to affiliate | 3,286 | 0 | 3,286 | 0 |
Total operating expenses | 9,103 | 5,328 | 21,304 | 12,767 |
Income (Loss) Before Income Taxes, Noncontrolling Interests and Preferred Dividends | 21,057 | 17,983 | 68,606 | 43,288 |
Income tax expense (benefit) | 85 | 120 | 227 | 388 |
Net Income (Loss) | 20,972 | 17,863 | 68,379 | 42,900 |
Redeemable Noncontrolling Interests in Income (Loss) of Consolidated Joint Venture | 0 | 54 | 63 | 134 |
Noncontrolling Interests in Income (Loss) of Consolidated Joint Venture | 0 | 377 | 0 | 801 |
Net Income (Loss) Attributable to KKR Real Estate Finance Trust Inc. and Subsidiaries | 20,972 | 17,432 | 68,316 | 41,965 |
Preferred Stock Dividends and Redemption Value Adjustment | 151 | 93 | 395 | 181 |
Net Income (Loss) Attributable to Common Stockholders | $ 20,821 | $ 17,339 | $ 67,921 | $ 41,784 |
Net Income (Loss) Per Share of Common Stock | ||||
Net Income (Loss) Per Share of Common Stock, Basic (usd per share) | $ 0.37 | $ 0.32 | $ 1.26 | $ 0.98 |
Net Income (Loss) Per Share of Common Stock, Diluted (usd per share) | $ 0.37 | $ 0.32 | $ 1.25 | $ 0.98 |
Weighted Average Number of Shares of Common Stock Outstanding | ||||
Weighted Average Number of Shares of Common Stock Outstanding, Basic (shares) | 55,903,126 | 53,696,967 | 54,111,272 | 42,501,356 |
Weighted Average Number of Shares of Common Stock Outstanding, Diluted (shares) | 55,921,655 | 53,697,041 | 54,132,331 | 42,501,530 |
Dividend Declared per Share of Common Stock (usd per share) | $ 0.43 | $ 0.37 | $ 1.26 | $ 1.25 |
Asset Management | ||||
Operating Expenses | ||||
Management fees to affiliate | $ 4,164 | $ 3,989 | $ 12,016 | $ 9,513 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes In Equity - USD ($) $ in Thousands | Total | Consolidated Joint Venture One | Consolidated Joint Venture Two | Preferred Stock | Common Stock | Additional Paid-In Capital | Retained Earnings | Repurchased Stock | Total KKR Real Estate Finance Trust Inc. Stockholders' Equity | Noncontrolling Interests in Equity of Consolidated Joint Venture | ||
Preferred stock, ending balance (shares) at Dec. 31, 2016 | 126 | |||||||||||
Common stock, ending balance (shares) at Dec. 31, 2016 | 24,158,392 | |||||||||||
Ending balance at Dec. 31, 2016 | $ 505,037 | $ 125 | $ 242 | $ 479,417 | $ 17,914 | $ 0 | $ 497,698 | $ 7,339 | ||||
Ending balance at Dec. 31, 2016 | $ 3,030 | $ 0 | ||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Issuance of stock (shares) | 29,553,446 | |||||||||||
Issuance of stock | 580,306 | 949 | $ 295 | 580,011 | 580,306 | |||||||
Redemption of preferred stock (shares) | (125) | |||||||||||
Redemption of preferred stock | (125) | $ (125) | (125) | |||||||||
Repurchase of common stock (shares) | (26,398) | |||||||||||
Repurchase of common stock | (523) | (523) | (523) | |||||||||
Offering costs | (6,642) | (6,642) | (6,642) | |||||||||
Preferred dividends declared | (6) | (175) | (6) | (6) | ||||||||
Common dividends declared | (50,588) | (50,588) | (50,588) | |||||||||
Capital contributions | (8,140) | (111) | (8,140) | |||||||||
Stock-based compensation | 40 | |||||||||||
Net income (loss) | 42,591 | 134 | 175 | 41,790 | 41,790 | 801 | ||||||
Preferred stock, ending balance (shares) at Sep. 30, 2017 | 1 | |||||||||||
Common stock, ending balance (shares) at Sep. 30, 2017 | 53,685,440 | |||||||||||
Ending balance at Sep. 30, 2017 | 1,061,950 | $ 0 | $ 537 | 1,052,826 | 9,110 | (523) | 1,061,950 | 0 | ||||
Ending balance at Sep. 30, 2017 | 3,053 | 949 | ||||||||||
Preferred stock, beginning balance (shares) at Dec. 31, 2016 | 126 | |||||||||||
Common stock, beginning balance (shares) at Dec. 31, 2016 | 24,158,392 | |||||||||||
Beginning balance at Dec. 31, 2016 | $ 505,037 | $ 125 | $ 242 | 479,417 | 17,914 | 0 | 497,698 | 7,339 | ||||
Preferred stock, ending balance (shares) at Dec. 31, 2017 | 1 | 1 | ||||||||||
Common stock, ending balance (shares) at Dec. 31, 2017 | 53,685,440 | 53,685,440 | ||||||||||
Ending balance at Dec. 31, 2017 | $ 1,059,145 | [1] | $ 0 | $ 537 | 1,052,851 | 6,280 | (523) | 1,059,145 | 0 | |||
Beginning balance at Dec. 31, 2016 | 3,030 | 0 | ||||||||||
Ending balance at Dec. 31, 2017 | [1] | 3,090 | 949 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||
Issuance of stock (shares) | 5,000,000 | |||||||||||
Issuance of stock | 99,500 | $ 50 | 99,450 | 99,500 | ||||||||
Repurchase of common stock (shares) | (697,109) | |||||||||||
Repurchase of common stock | (13,639) | $ (7) | (13,632) | (13,639) | ||||||||
Offering costs | (1,174) | (1,174) | (1,174) | |||||||||
Preferred dividends declared | (395) | |||||||||||
Adjustment of redeemable preferred stock to redemption value | 547 | (547) | 547 | 547 | ||||||||
Common dividends declared | (68,985) | (68,985) | (68,985) | |||||||||
Equity component of convertible notes | 1,800 | 1,800 | 1,800 | |||||||||
Stock-based compensation, shares | 34,259 | |||||||||||
Stock-based compensation | 1,186 | 1,186 | 1,186 | |||||||||
Net income (loss) | $ 67,921 | 63 | 395 | 67,921 | 67,921 | |||||||
Preferred stock, ending balance (shares) at Sep. 30, 2018 | 1 | 1 | ||||||||||
Common stock, ending balance (shares) at Sep. 30, 2018 | 58,022,590 | 58,022,590 | ||||||||||
Ending balance at Sep. 30, 2018 | $ 1,146,301 | $ 0 | $ 580 | $ 1,154,113 | $ 5,763 | $ (14,155) | $ 1,146,301 | $ 0 | ||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||||
Capital distributions and redemptions | (400) | (3,153) | ||||||||||
Ending balance at Sep. 30, 2018 | $ 402 | $ 0 | $ 402 | |||||||||
[1] | Derived from the audited consolidated financial statements as of December 31, 2017 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash Flows From Operating Activities | ||
Net income (loss) | $ 68,379 | $ 42,900 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Amortization of deferred debt issuance costs and discounts | 4,338 | 1,731 |
Accretion of net deferred loan fees and discounts | (7,206) | (2,301) |
Interest paid-in-kind | 0 | (864) |
Change in noncash net assets of consolidated variable interest entities | 2,144 | (3,453) |
(Gain) on sale of investment securities | (13,000) | 0 |
(Income) from equity method investments | (2,084) | (461) |
Stock-based compensation expense | 1,190 | 40 |
Origination and purchase of commercial loans, held-for-sale | 0 | (91,475) |
Proceeds from sale of commercial mortgage loans | 0 | 10,000 |
Changes in operating assets and liabilities: | ||
Accrued interest receivable, net | (3,130) | (3,956) |
Other assets | (580) | 2,421 |
Due to affiliates | 1,758 | 2,308 |
Accounts payable, accrued expenses and other liabilities | 867 | (1,330) |
Accrued interest payable | 4,753 | 515 |
Net cash provided by (used in) operating activities | 57,429 | (43,925) |
Cash Flows From Investing Activities | ||
Proceeds from sales of commercial mortgage-backed securities | 112,747 | 0 |
Proceeds from sale of commercial mortgage loans | 0 | 60,991 |
Proceeds from principal repayments of commercial mortgage loans, held-for-investment | 318,996 | 18,568 |
Proceeds from principal repayments of preferred interest in joint venture, held-to-maturity | 0 | 37,310 |
Origination of commercial mortgage loans, held-for-investment | (1,695,188) | (920,358) |
Investment in commercial mortgage-backed securities, equity method investee | (9,770) | (27,588) |
Proceeds from commercial mortgage-backed securities, equity method investee | 1,157 | 19,588 |
Net cash provided by (used in) investing activities | (1,272,058) | (811,489) |
Cash Flows From Financing Activities | ||
Proceeds from borrowings under secured financing agreements | 1,607,725 | 776,447 |
Net proceeds from issuance of convertible notes | 139,438 | 0 |
Proceeds from issuances of common stock | 99,500 | 581,255 |
Redemption of preferred stock | 0 | (125) |
Payments of common stock dividends | (63,898) | (30,715) |
Payments of preferred stock dividends | (227) | (63) |
Payments of debt issuance costs | (9,702) | (3,051) |
Principal repayments on borrowings under secured financing agreements | (451,026) | (460,432) |
Payments of stock issuance costs | (1,137) | (4,898) |
Payments to reacquire common stock | (13,640) | (523) |
Net cash provided by (used in) financing activities | 1,303,880 | 849,644 |
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | 89,251 | (5,770) |
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period | 103,520 | 96,346 |
Cash, Cash Equivalents, and Restricted Cash at End of Period | 192,771 | 90,576 |
Supplemental Disclosure of Cash Flow Information | ||
Cash paid during the period for interest | 41,161 | 10,116 |
Cash paid during the period for income taxes | 754 | 252 |
Supplemental Schedule of Non-Cash Investing and Financing Activities | ||
Dividend declared, not yet paid | 25,235 | 19,992 |
Loan Principal Payments Held by Servicer | 16,500 | 0 |
Loan Participations Sold, Net (Note 6) | 1,886 | 0 |
Funding of commercial loans, held for investment | (1,886) | 0 |
Redeemable Noncontrolling Interest | ||
Cash Flows From Financing Activities | ||
Payments of noncontrolling interest distributions | (3,153) | (111) |
Nonredeemable Noncontrolling Interest | ||
Cash Flows From Financing Activities | ||
Payments of noncontrolling interest distributions | $ 0 | $ (8,140) |
Business and Organization
Business and Organization | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Organization | KKR Real Estate Finance Trust Inc. (together with its consolidated subsidiaries, referred to throughout this report as the "Company", " KREF ", "we", "us" and "our") 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 13 regarding taxes applicable to KREF . KREF is externally managed by KKR Real Estate Finance Manager LLC (" Manager "), an indirect subsidiary of KKR & Co. Inc. (together with its subsidiaries, " KKR "), through a management agreement (" Management Agreement ") pursuant to which the 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 Manager is entitled to management fees and incentive compensation, both defined in, and in accordance with the terms of, the Management Agreement (Note 11 ). As of September 30, 2018 , 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 September 30, 2018 , 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 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
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 the 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 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 7 ). 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 tranches that represent the most subordinated 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 Income; the residual difference between the fair value of the trusts' assets and liabilities 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 September 30, 2018 . 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 consolidated a joint venture that held a portion of KREF 's investments in commercial mezzanine loans (“Mezzanine JV”), and in which a third-party owned a 5.0% redeemable noncontrolling interest ("Mezzanine JV Redeemable Noncontrolling Interest”) (Note 7 ). Management determined the joint venture to be a VIE as the owners of the redeemable noncontrolling interest did not have substantive participating or kick-out rights. KREF owned 95.0% of the equity interests in the joint venture and participated in the profits and losses. Management considered KREF to be the primary beneficiary of the joint venture as KREF held decision-making power over the activities that most significantly impact the economic performance of the joint venture. In June 2018, KREF acquired the 5.0% Mezzanine JV Redeemable Noncontrolling Interest for its carrying value of $1.3 million . 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 Income. KREF recorded the redeemable noncontrolling interests at fair value upon issuance by subsidiaries of KREF , and adjusts the carrying value of such interests to equal their respective redemption values at each subsequent reporting period date if KREF determines the noncontrolling interests are redeemable or probable to become redeemable. As noted above, in June 2018, KREF acquired the 5.0% Mezzanine JV Redeemable Noncontrolling Interest for its carrying value of $1.3 million . KREF determined that the Special Non-Voting Preferred Stock (“SNVPS”) became redeemable during the second quarter of 2018; accordingly, KREF adjusted the carrying value of the SNVPS to its redemption value of $0.4 million as of the balance sheet date. Equity method investments, at fair value — 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 KREF 's investment in the 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 Manager that could be significant to the Manager . KREF accounts for its investment in the Manager using the equity method since KREF is not the primary beneficiary of the Manager (Note 7 ). 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 method investments, at fair value ” in its Condensed Consolidated Balance Sheets and its share of unrealized gains or losses in " Income from equity method investments " in its Condensed Consolidated Statements of Income (Note 7 ). 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. Estimates of fair value for cash and cash equivalents, restricted cash, and convertible notes are measured using observable, quoted market prices, or Level 1 inputs. Valuation Process — The Manager reviews the valuation of Level 3 financial instruments as part of KKR 's quarterly process. As of September 30, 2018 , 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 the asset class-specific valuation committees, including a real estate valuation committee that reviews and approves all preliminary Level 3 valuations for real estate assets, including the financial instruments held by KREF . 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 Level 3 valuations are also 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 Income, 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 7 ). Management categorizes the 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 12 ). 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 12 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. 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 September 30, 2018 and December 31, 2017 , KREF was required to maintain unrestricted cash and cash equivalents of at least $19.3 million and $12.1 million , respectively, to satisfy its liquidity covenants (Note 4 ). Commercial Mortgage Loans Held‑For‑Investment and Provision for Loan Losses — 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. 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 — Commercial Mortgage Loans, Held-For-Investment " for additional discussion regarding management’s determination for loan losses. KREF applies the interest method to amortize origination or acquisition premiums and discounts and deferred nonrefundable fees or other direct loan origination costs, or on a straight line basis when it approximates the interest method. 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. Secured Financing Agreements — KREF 's secured financing agreements, including Term Loan Financings, are treated as collateralized financing transactions and consist of floating rate, uncommitted repurchase facilities and Term Loan Financing arrangements carried at their contractual amounts, net of unamortized debt issuance costs (Note 4 ). Convertible Notes, Net — KREF accounts for its convertible debt with a cash conversion feature in accordance with ASC 470-20 “Debt with Conversion and Other Options” which requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. The initial proceeds from the sale of convertible notes are allocated between a liability component and an equity component in a manner that reflects interest expense at the rate of similar nonconvertible debt that could have been issued at such time. The equity component represents the excess initial proceeds received over the fair value of the liability component of the notes as of the date of issuance. KREF measured the estimated fair value of the debt component of the convertible notes due May 15, 2023 (“Convertible Notes”) as of the issuance date based on KREF ’s nonconvertible debt borrowing rate. The equity component of the Convertible Notes is reflected within additional paid-in capital on our condensed consolidated balance sheet, and the resulting debt discount is amortized over the period during which such Convertible Notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense using the interest method, or on a straight line basis when it approximates the interest method. The additional non-cash interest expense attributable to such convertible notes will increase in subsequent periods through the maturity date as the notes accrete to their par value over the same period (Note 5 ). Loan Participations Sold, Net — In connection with its investments in senior loans, KREF finances certain investments through the syndication of non-recourse, or limited-recourse, loan participation to unaffiliated third parties. KREF ’s presentation of the senior loan and related financing involved in the syndication depends upon whether GAAP recognized the transaction as a sale, though such differences in presentation do not generally impact KREF ’s net stockholders’ equity or net income aside from timing differences in the recognition of certain transaction costs. To the extent that GAAP recognizes a sale resulting from the syndication, KREF derecognizes the participation in the senior loan that KREF sold and continue to carry the retained portion of the loan as an investment. While KREF does not generally expect to recognize a material gain or loss on these sales, KREF would realize a gain or loss in an amount equal to the difference between the net proceeds received from the third party purchaser and its carrying value of the loan participation that KREF sold at time of sale. Furthermore, KREF recognizes interest income only on the portion of the senior loan that it retains as a result of the sale. To the extent that GAAP does not recognize a sale resulting from the syndication, KREF does not derecognize the participation in the senior loan that it sold. Instead, KREF recognizes a loan participation sold liability in an amount equal to the principal of the loan participation syndicated less any unamortized discounts or financing costs resulting from the syndication. KREF continues to recognize interest income on the entire senior loan, including the interest attributable to the loan participation sold, as well as interest expense on the loan participation sold liability (Note 6 ). Other Assets and Accounts Payable, Accrued Expenses and Other Liabilities — As of September 30, 2018 , other assets included a $16.5 million loan principal payment receivable from a third-party servicer and $2.4 million of deferred debt issuance costs related to credit facilities, net of $0.8 million accumulated amortization. As of December 31, 2017 , other assets included a $4.6 million loan principal payment receivable from a third-party servicer and $2.1 million of deferred debt issuance costs related to credit facilities, net of $0.5 million accumulated amortization. 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 or probable of becoming 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. Accordingly, the Company adjusted the carrying value of the SNVPS to its redemption value of $0.4 million as of September 30, 2018 . KREF presents the SNVPS as “ Temporary Equity — Redeemable preferred stock ” in the accompanying Condensed Consolidated Balance Sheets (Note 8 ). 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 interest method over the loan term, or on a straight line basis when it approximates the interest method. 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. 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 Income with respect to the investment sold at the time of sale. Expense Recognition Loan Impairment — KREF holds commercial mortgage loans for both investment and sale, which management periodically evaluates for impairment. Commercial Mortgage Loans, Held-For-Investment — For each loan in KREF 's portfolio, management performs a quarterly evaluation of impairment indicators 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 September 30, 2018 , KREF did not hold any loans that management placed on nonaccrual status or otherwise considered past due. In addition to reviewing commercial mortgage loans held-for-investment for impairment, the Manager evaluates KREF 's commercial mortgage loans to determine if an allowance for loan loss should be established. In conjunction with this review, the Manager 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—The underlying property performance has surpassed underwritten expectations, and the sponsor’s business plan is generally complete. The property demonstrates stabilized occupancy and/or rental rates resulting in strong current cash flow and/or a very low loan-to-value ratio (<65%). At the level of performance, it is very likely that th |
Commercial Mortgage Loans
Commercial Mortgage Loans | 9 Months Ended |
Sep. 30, 2018 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract] | |
Commercial Mortgage Loans | Commercial Mortgage Loans The following table summarizes KREF 's investments in commercial mortgage loans as of September 30, 2018 and December 31, 2017 : Weighted Average Loan Type Outstanding Face Amount Carrying Value Loan Count Floating Rate Loan % (A) Coupon (A) Life (Years) (B) September 30, 2018 Loans held-for-investment Senior loans (C) $ 3,226,649 $ 3,206,484 27 100.0 % 5.8 % 3.8 Mezzanine loans (D) 55,535 55,394 8 52.8 11.8 4.3 $ 3,282,184 $ 3,261,878 35 99.2 % 5.9 % 3.9 December 31, 2017 Loans held-for-investment Senior loans (C) $ 1,794,963 $ 1,782,054 18 100.0 % 5.8 % 3.7 Mezzanine loans (D) 106,730 106,456 10 75.4 11.3 3.7 $ 1,901,693 $ 1,888,510 28 98.6 % 6.1 % 3.7 (A) Average weighted by outstanding face amount of loan. Weighted average coupon assumes applicable one-month LIBOR rates of 2.26% and 1.56% as of September 30, 2018 and December 31, 2017 , respectively. (B) The weighted average life of each loan is based on the expected timing of the receipt of contractual cash flows assuming all extension options are exercised by the borrower. (C) Senior loans may include accommodation mezzanine loans in connection with the senior mortgage financing. Includes loan participations sold with a face amount of $83.9 million and $82.0 million , and a carrying value of $83.5 million and $81.5 million as of September 30, 2018 and December 31, 2017 , respectively. (D) In June 2018, KREF acquired the 5.0% redeemable noncontrolling interest in the Mezzanine JV that held six commercial mezzanine loans, held-for-investment, with a $26.2 million outstanding face amount and carrying value as of September 30, 2018 . The Mezzanine JV held seven commercial mezzanine loans, held-for-investment, with a $61.2 million outstanding face amount and carrying value as of December 31, 2017 . Activity — For the nine months ended September 30, 2018 , the loan portfolio activity was as follows: Held-for-Investment Held-for-Sale Total Balance at December 31, 2017 $ 1,888,510 $ — $ 1,888,510 Purchases and originations, net (A) 1,697,074 — 1,697,074 Proceeds from principal repayments (330,939 ) — (330,939 ) Accretion of loan discount and other amortization, net (B) 7,233 — 7,233 Balance at September 30, 2018 $ 3,261,878 $ — $ 3,261,878 (A) Net of applicable premiums, discounts and deferred loan origination costs. (B) Includes accretion of applicable discounts and deferred loan origination costs. As of September 30, 2018 and December 31, 2017 , there was $20.3 million and $13.2 million , respectively, of unamortized deferred loan fees and discounts included in commercial mortgage loans, held-for-investment, net on the Condensed Consolidated Balance Sheets. Loan Risk Ratings — As further described in Note 2 , our Manager evaluates KREF 's commercial mortgage loan portfolio on a quarterly basis. In conjunction with the quarterly commercial mortgage loan portfolio review, KREF 's Manager assesses the risk factors of each loan, and assigns a risk rating based on a variety of factors. Loans are rated “1” (very low risk) through “5” Impaired/Loss Likely), which ratings are defined in Note 2 . The following table allocates the principal balance and net book value of the loan portfolio based on KREF 's internal risk ratings: September 30, 2018 December 31, 2017 Risk Rating Number of Loans Net Book Value Total Loan Exposure (A) Risk Rating Number of Loans Net Book Value Total Loan Exposure (A) 1 — $ — $ — 1 — $ — $ — 2 8 446,525 448,821 2 4 155,092 156,123 3 27 2,815,353 2,899,972 3 23 1,717,000 1,792,022 4 — — — 4 1 16,418 16,500 5 — — — 5 — — — 35 $ 3,261,878 $ 3,348,793 28 $ 1,888,510 $ 1,964,645 (A) In certain instances, we finance our loans through the non-recourse sale of a senior interest that is not included in our consolidated financial statements. Total loan exposure includes the entire loan we originated and financed, including $66.6 million and $63.0 million of such non-consolidated interests as of September 30, 2018 and December 31, 2017 , respectively. As of September 30, 2018 , the average risk rating of KREF 's portfolio was 2.9 (Average Risk) , weighted by investment carrying value, with 100.0% of commercial mortgage loans held-for-investment, rated 3 (Average Risk) or better by KREF 's Manager as compared to 2.9 (Average Risk) as of December 31, 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: September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 Geography Collateral Property Type New York 25.4 % 29.3 % Office 53.0 % 41.7 % Georgia 13.3 11.0 Multifamily 33.3 24.7 Washington 10.2 — Condo (Residential) 5.6 10.8 California 9.2 14.9 Industrial 4.0 6.8 Minnesota 6.8 7.0 Retail 3.9 13.8 Florida 5.9 2.2 Hospitality 0.2 2.2 Massachusetts 5.9 — Total 100.0 % 100.0 % New Jersey 4.4 7.1 Pennsylvania 4.3 — Oregon 3.7 6.3 Hawaii 3.1 5.3 Colorado 2.9 5.1 Washington D.C. 2.8 4.2 Tennessee 1.6 2.8 Other U.S. 0.5 4.8 Total 100.0 % 100.0 % |
Debt Obligations
Debt Obligations | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations The following table summarizes KREF 's secured master repurchase agreements and other consolidated debt obligations in place as of September 30, 2018 and December 31, 2017 : September 30, 2018 December 31, 2017 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) Master Repurchase Agreements (D) Wells Fargo (E) Oct 2015 $ 791,297 $ 787,487 $ 1,000,000 Apr 2022 4.4 % 1.8 $ 1,096,789 $ 1,090,273 $ 1,090,273 3.9 $ 482,146 Morgan Stanley (F) Dec 2016 483,558 482,064 600,000 Dec 2021 4.6 1.5 709,123 705,658 705,658 3.2 421,904 Goldman Sachs (G) Sep 2016 268,709 268,709 400,000 Oct 2020 4.4 1.4 362,191 359,960 359,960 4.3 60,750 Asset Specific Financing BMO Facility (H) Aug 2018 — (316 ) 200,000 n.a 0.2 0.0 — — — 0.0 — Revolving Credit Agreement Barclays (I) May 2017 — — 75,000 May 2020 1.1 0.0 n.a. n.a. n.a. n.a. — 1,543,564 1,537,944 2,275,000 4.4 % 1.6 2,168,103 2,155,891 2,155,891 964,800 VIE Liabilities CMBS (J) Various 1,095,731 1,086,939 n.a. May 2048 to Feb 2049 4.4 % 6.3 1,130,672 n.a. 1,100,089 6.3 5,256,926 1,095,731 1,086,939 n.a. 4.4 6.3 5,256,926 Total / Weighted Average $ 2,639,295 $ 2,624,883 $ 2,275,000 4.4 % 3.6 $ 6,221,726 (A) Net of $5.6 million and $4.5 million unamortized debt issuance costs as of September 30, 2018 and December 31, 2017 , 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, equal to one-month LIBOR, subject to certain floors of not less than zero, or an index approximating LIBOR, and (ii) a margin, based on the collateral. As of September 30, 2018 and December 31, 2017 , 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 28.8% and 32.9% , respectively (or 25.6% and 27.3% , respectively, if KREF had borrowed the maximum amount approved by its repurchase agreement counterparties as of such dates). (E) 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. In September 2018, KREF and Wells Fargo Bank, National Association (" Wells Fargo ") amended the master repurchase agreement to increase the maximum facility size from $750.0 million to $1,000.0 million . As of September 30, 2018 , the collateral-based margin was between 1.50% and 2.15% . (F) In November 2017, KREF and Morgan Stanley Bank, N.A. (" Morgan Stanley ") amended and restated the master repurchase agreement to extend the facility maturity date and to increase the maximum facility size from $500.0 million to $600.0 million and, subject to customary conditions, permits KREF to request the facility be further increased to $750.0 million . The current stated maturity of the facility is December 2020 , 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 September 30, 2018 , the collateral-based margin was between 2.00% and 2.45% . (G) In July 2018, KREF and Goldman Sachs Bank USA (" Goldman Sachs ") amended the November 2017 restated master purchase agreement to modify certain terms and provisions. The amended and restated facility includes a $350.0 million term facility with a maturity date of October 2020 and a $50.0 million swingline facility with 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 September 30, 2018 , the carrying value excluded $1.5 million unamortized debt issuance costs presented as " — Other assets " in KREF 's Condensed Consolidated Balance Sheets. As of September 30, 2018 , the collateral-based margin was between 1.70% and 2.00% . (H) In August 2018, KREF entered into a $200.0 million loan financing facility with BMO Harris Bank ("BMO Facility") with a third party lender. The facility provides asset-based financing on a non-mark to market basis with matched-term up to five years with partial recourse to KREF . There were no amounts outstanding on this facility as of September 30, 2018 . (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 September 30, 2018 , the carrying value excluded $0.8 million unamortized debt issuance costs presented as " — Other assets " in KREF 's Condensed Consolidated Balance Sheets. (J) Facility amounts represent consolidated CMBS trust(s) that are not beneficially owned by KREF 's stockholders. The facility and collateral carrying amounts included $3.8 million accrued interest payable and $4.0 million accrued interest receivable as of September 30, 2018 . As of December 31, 2017 , the facility and collateral carrying amounts included $18.7 million accrued interest payable and $19.7 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. Refer to Note 7 for additional discussion of KREF 's VIE assets and liabilities. The preceding table excludes loan participations sold (Note 6 ). As of September 30, 2018 and December 31, 2017 , 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 September 30, 2018 and December 31, 2017 : Outstanding Face Amount Net Counterparty Exposure Percent of Stockholders' Equity Weighted Average Life (Years) (A) September 30, 2018 Wells Fargo $ 791,297 $ 304,871 26.6 % 1.8 Morgan Stanley 483,558 224,557 19.6 1.5 Total / Weighted Average $ 1,274,855 $ 529,428 46.2 % 1.7 December 31, 2017 Wells Fargo $ 485,250 $ 203,303 19.2 % 1.6 Morgan Stanley 423,347 251,463 23.7 2.0 Total / Weighted Average $ 908,597 $ 454,766 42.9 % 1.8 (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 trusts that KREF present 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. Term Loan Financing In April 2018, KREF , through its consolidated subsidiaries, entered into a term loan financing agreement (“Term Loan Facility”) with third party lenders for an initial borrowing capacity of $200.0 million that was subsequently increased to $600.0 million as of September 30, 2018 . The facility provides asset-based financing on a non-mark to market basis with matched term up to five years and is non-recourse to KREF . Borrowings under the facility are collateralized by senior loans, held-for-investment, and bear interest equal to one-month LIBOR plus a margin. As of September 30, 2018 , the weighted average margin and interest rate on the facility were 1.4% and 3.7% , respectively. The following table summarizes our borrowings under the Term Loan Facility: September 30, 2018 Term Loan Facility Count Outstanding Face Amount Carrying Value Wtd. Avg. Yield/Cost (A) Guarantee (B) Wtd. Avg. Term (C) Collateral assets 6 $ 717,500 $ 711,982 L + 3.0% n.a. May 2023 Financing provided n.a 582,483 578,010 L + 1.7% n.a. May 2023 (A) Floating rate loans and related liabilities are indexed to one-month LIBOR. KREF's net interest rate exposure is in direct proportion to its interest in the net assets indexed to that rate. In addition to cash coupon, yield/cost includes the amortization of deferred origination/financing costs. (B) Financing under the Term Loan Facility is non-recourse to KREF. (C) The weighted-average term is determined using the maximum maturity date of the corresponding loans, assuming all extension options are exercised by the borrower. Activity — For the nine months ended September 30, 2018 , the activity related to the carrying value of KREF ’s secured financing agreements, term loan financing and other consolidated debt obligations were as follows: Secured Financing Agreements, Net (A) Variable Interest Entity Liabilities, at Fair Value Total Balance as of December 31, 2017 $ 964,800 $ 5,256,926 $ 6,221,726 Principal borrowings 1,607,725 — 1,607,725 Principal repayments/ sales/ deconsolidation (451,026 ) (4,062,624 ) (4,513,650 ) Deferred debt issuance costs (8,562 ) — (8,562 ) Amortization of deferred debt issuance costs 3,017 — 3,017 Fair value adjustment — (92,499 ) (92,499 ) Other (B) — (14,864 ) (14,864 ) Balance as of September 30, 2018 $ 2,115,954 $ 1,086,939 $ 3,202,893 (A) Includes Term Loan Financing Facility and Asset Specific Financing Facility. (B) Amounts principally consist of changes in accrued interest payable and cost adjustments. Maturities — KREF ’s secured financing agreements, term loan financing and other consolidated debt obligations in place as of September 30, 2018 had current contractual maturities as follows: Year Nonrecourse (A) Recourse (B) Total 2018 $ 2,779 $ — $ 2,779 2019 13,098 505,432 518,530 2020 179,359 985,632 1,164,991 2021 484,634 — 484,634 2022 18,565 52,500 71,065 Thereafter 979,779 — 979,779 $ 1,678,214 $ 1,543,564 $ 3,221,778 (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 or $800.0 million dependent upon the facility); 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 maximum debt-to-equity ratio ( 3.5 to 1.0); and a minimum fixed charge coverage ratio ( 1.5 to 1.0). As of September 30, 2018 and December 31, 2017 , KREF |
Convertible Notes, Net
Convertible Notes, Net | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Notes, Net | Convertible Notes, Net In May 2018, the Company issued $143.75 million of 6.125% convertible senior notes due on May 15, 2023. The Convertible Notes bear interest at a rate of 6.125% per year, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2018. The Convertible Notes mature on May 15, 2023, unless earlier repurchased or converted. The Convertible Notes’ issuance costs of $5.1 million are amortized through interest expense over the life of the Convertible Notes. The initial conversion rate for the Convertible Notes is 43.9386 shares of KREF’s common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $22.76 per share of KREF’s common stock, which represents a 10% conversion premium over the last reported sale price of $20.69 per share of KREF’s common stock on The New York Stock Exchange on May 15, 2018. The conversion rate is subject to adjustment under certain circumstances. In addition, upon a make-whole fundamental change as defined within the indenture governing the Convertible Notes, the Company will, under certain circumstances, increase the applicable conversion rate for a holder that elects to convert its Notes in connection with such make-whole fundamental change. Prior to February 15, 2023, the Notes will be convertible only upon satisfaction of certain conditions and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. KREF will satisfy any conversion elections by paying or delivering, as the case may be, cash, shares of KREF’s common stock or a combination of cash and shares of KREF’s common stock, at its election. KREF has the intent and ability to settle the Convertible Notes in cash and, as a result, the Convertible Notes did not have an impact on our diluted earnings per share. Upon the issuance of the Convertible Notes, the Company recorded a $1.8 million discount based on the implied value of the conversion option and an assumed effective interest rate of 6.50% , as well as $5.1 million of initial issuance costs, inclusive of the $0.8 million paid to an affiliate of KREF (Note 11 ) . Inclusive of the amortization of this discount and the issuance costs, KREF’s total cost of the May 2018 Convertible Notes issuance is 6.92% per annum. The following table details our interest expense related to the Convertible Notes: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Cash coupon $ 2,201 $ — $ 3,253 $ — Discount and issuance cost amortization 349 — 512 — Total interest expense $ 2,550 — $ 3,765 — The following table details the net book value of our Convertible Notes on our Condensed Consolidated Balance Sheets: September 30, 2018 December 31, 2017 Face value $ 143,750 $ — Deferred financing costs (4,745 ) — Unamortized discount (1,666 ) — Net book value $ 137,339 $ — Accrued interest payable for the Convertible Notes was $3.3 million and $0.0 million as of September 30, 2018 and December 31, 2017 , respectively. Refer to Note 2 |
Loan Participations Sold
Loan Participations Sold | 9 Months Ended |
Sep. 30, 2018 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract] | |
Loan Participations Sold | Note 6 . Loan Participations Sold KREF finances certain investments through the syndication of a non-recourse, or limited-recourse, loan participation to unaffiliated third parties. The following table summarizes the loan participation sold liabilities that KREF recognized since the corresponding syndications of the participations in the senior loans were not treated as sales: September 30, 2018 Loan Participations Sold Count Principal Balance Carrying Value Yield/Cost (A) Guarantee (B) Term Total loan 1 $ 97,440 $ 97,024 L + 3.0% n.a. September 2022 Senior participation (C) 1 83,886 83,442 L + 1.8% n.a. September 2022 (A) Floating rate loans and related liabilities are indexed to one-month LIBOR. KREF 's net interest rate exposure is in direct proportion to its interest in the net assets of the senior loan. (B) As of September 30, 2018 , the loan participation sold was subject to partial recourse of $10.0 million , which amount may be reduced to zero upon achievement of certain property performance metrics. (C) During the nine months ended September 30, 2018 , KREF recorded $ 2.3 million of interest income and $2.4 million of interest expense related to the loan participation KREF |
Variable Interest Entities
Variable Interest Entities | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entities | CMBS — KREF 's stockholders beneficially owned CMBS with an unpaid principal balance and fair value of $34.9 million and $13.0 million , respectively, as of September 30, 2018 . KREF 's stockholders beneficially owned CMBS with an unpaid principal balance and fair value of $309.2 million and $114.9 million , respectively, as of December 31, 2017 . In April 2018, KREF sold its controlling beneficial interest in four of the five CMBS trusts held for $112.7 million for a gain of $13.0 million during the nine months ended September 30, 2018 , which is included in " Other Income — Realized gain on sale of investments " in the accompanying Condensed Consolidated Statements of Income. The initial cost basis of the CMBS trusts sold was $94.4 million and the fair value as of December 31, 2017 was $99.7 million . KREF was required to consolidate each of the CMBS trusts acquired from the date of acquisition through the date of sale 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 trusts and carries the fair values of the trust's(s') assets and liabilities at fair value in its Condensed Consolidated Balance Sheets; recognizes changes in the trust's(s') net assets, including fair value adjustments and net interest earned, in its Condensed Consolidated Statements of Income; and records cash interest received from the trusts, net of cash interest paid to CMBS not beneficially owned by KREF , as operating cash flows. The following table presents the KREF recognized Trust's(s') Assets and Liabilities: September 30, 2018 December 31, 2017 Trusts' Assets Commercial mortgage loans held in variable interest entities, at fair value (A) $ 1,100,089 $ 5,372,811 Accrued interest receivable 4,015 19,740 Trusts' Liabilities Variable interest entity liabilities, at fair value (B) 1,086,939 5,256,926 Accrued interest payable 3,828 18,661 (A) Includes accrued interest receivable. (B) Includes accrued interest payable. The following table presents " Other Income — Change in net assets related to consolidated variable interest entities ": Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Net interest earned $ 584 $ 3,138 $ 4,604 $ 9,357 Unrealized gain (loss) (205 ) 887 (2,144 ) 3,453 Change in net assets related to consolidated variable interest entities $ 379 $ 4,025 $ 2,460 $ 12,810 See Note 12 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 tranches beneficially owned by KREF 's stockholders: September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 Geography Collateral Property Type California 33.3 % 23.2 % Retail 28.4 % 25.2 % Texas 11.1 12.7 Office 27.4 26.4 New York 8.3 9.1 Hospitality 13.0 15.0 Missouri 5.3 4.6 Multifamily 9.9 10.6 Pennsylvania 5.2 4.5 Industrial/ Flex 9.6 9.6 Florida 4.2 5.5 Self Storage 5.9 3.0 Massachusetts* 3.6 1.7 Mixed Use 3.8 6.9 Illinois 2.7 7.1 Mobile Home 1.8 2.7 Georgia 2.6 2.9 Other 0.2 0.6 New Hampshire* 2.4 1.0 100.0 % 100.0 % Delaware* 2.0 1.3 Virginia* 1.7 1.2 Other U.S. 17.6 25.2 Total 100.0 % 100.0 % * Presented within Other U.S. as of December 31, 2017 Commercial Mezzanine Loan Joint Venture — KREF held a 95.0% interest, and was the primary beneficiary of, a joint venture consolidated as a VIE that invested in commercial mezzanine loans (Note 3 ). Management considered KREF to be the primary beneficiary of the joint venture as KREF held decision-making power over the activities that most significantly impact the economic performance of the joint venture. In June 2018, KREF acquired the Mezzanine JV Redeemable Noncontrolling Interest for its carrying value of $1.3 million . As of September 30, 2018 , the joint venture is no longer a VIE. Equity method investments, at fair value — KREF holds two investments in entities that it records using the equity method. As of September 30, 2018 , KREF held a 3.5% 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 Manager . RECOP intends to primarily acquire junior tranches of CMBS 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 method investments, at fair value ” and its share of net income, presented as “ Income from equity method investments ” in the Condensed Consolidated Statement of Income. As of September 30, 2018 , the non-voting limited liability company interests issued by the 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 Manager ’s outstanding limited liability company interests (Note 8 ). KREF reported its allocable percentage of the assets and liabilities of the Manager in its Condensed Consolidated Balance Sheets, presented as “ Equity method investments, at fair value ” and its share of net income, presented as “ Income from equity method investments ” in the Condensed Consolidated |
Equity
Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Equity | Authorized Capital — 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 — As further described below, since December 2015, KREF issued the following shares of common stock: Pricing Date Shares Issued Net Proceeds As of December 31, 2015 13,636,416 $ 272,728 February 2016 2,000,000 40,000 May 2016 3,000,138 57,130 June 2016 (A) 21,838 — August 2016 5,500,000 109,875 As of December 31, 2016 24,158,392 479,733 February 2017 7,386,208 147,662 April 2017 10,379,738 207,595 May 2017- Initial Public Offering 11,787,500 219,356 As of December 31, 2017 53,711,838 1,054,346 August 2018 5,000,000 98,326 As of September 30, 2018 58,711,838 $ 1,152,672 (A) KREF did not receive any proceeds with respect to 21,838 shares of common stock issued to certain current and former employees of, and non-employee consultants to, KKR and third-party investors in the private placement completed in March 2016, in accordance with KREF 's Stockholders Agreement dated as of March 29, 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 non-employee consultants to, KKR . KKR committed a total of $400.0 million and third parties committed a total of $248.0 million subsequent to the private placement completion. 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. In February 2017 and April 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 and 10,379,738 common shares, at $20.00 per share, for net proceeds of $147.7 million and $207.6 million , respectively. In connection with the capital commitments described above, third-party investors and certain current and former employees of, and non-employee consultants to, KKR were allocated non-voting limited liability company interests of the 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 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 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 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. In August 2018, KREF completed an underwritten public offering of 5,000,000 shares of its common stock at $19.90 per share, less applicable transaction costs, resulting in $98.3 million in net proceeds. As of September 30, 2018 , 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 ). During the nine months ended September 30, 2018 , 34,259 shares of common stock were issued related to the vesting of restricted stock units. Upon any payment of shares as a result of restricted stock unit vesting, the related tax withholding obligation will generally be satisfied by the Company, reducing the number of shares to be delivered by a number of shares necessary to satisfy the related applicable tax withholding obligation. Refer to Note 9 for further detail. 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. Of this amount, a total of $50.0 million was covered by a pre-set trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act (the "10b5-1 Plan"), which provided for repurchases of KREF 's common stock when the market price per share of common stock was below book value per share (calculated in accordance with GAAP), with the remaining $50.0 million available at any time during the repurchase period. This program expired on June 12, 2018. In May 2018, KREF 's board of directors approved a new share repurchase program, effective following the expiration of the above-described share repurchase program. The new share repurchase program permits KREF to repurchase up to $100.0 million of KREF 's common stock during the period from June 13, 2018 through June 30, 2019. Of this total authorized amount, $50.0 million will be covered by a pre-set trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act and provide for repurchases of our common stock when the market price per share of our common stock is below book value per share (calculated in accordance with GAAP as of the end of the most recent quarterly period for which financial statements are available), and the remaining $50.0 million may be used for repurchases in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act, in privately negotiated transactions or otherwise. During the nine months ended September 30, 2018 , KREF repurchased 697,109 shares of common stock under the 10b5-1 Plans at an average price per share of $19.54 for a total of $13.6 million . As of September 30, 2018 , $49.3 million remained available for repurchases under this 10b5-1 Plan. Of the 58,711,838 common shares KREF issued, there were 58,022,590 common shares outstanding as of September 30, 2018 , net of 723,507 common shares repurchased and the delivery of 34,259 shares of common stock in connection with vested restricted stock units. Dividends — During the nine months ended September 30, 2018 , KREF 's board of directors declared the following dividends on shares of its common stock and special voting preferred stock: Amount Declaration Date Record Date Payment Date Per Share Total March 12, 2018 March 29, 2018 April 13, 2018 $ 0.40 $ 21,230 May 7, 2018 June 29, 2018 July 13, 2018 0.43 22,804 September 11, 2018 September 28, 2018 October 12, 2018 0.43 24,951 $ 68,985 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 were senior to common stock. Holders of Series A Preferred Stock were 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 were unable to convert Series A Preferred Stock into common stock or vote on matters brought to KREF 's stockholders. 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 one share of special voting preferred stock to KKR Fund Holdings L.P. (" KKR Fund Holdings ") for $20.00 per share, which KKR Fund Holdings transferred to its subsidiary, KKR REFT Asset Holdings LLC. 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. As of September 30, 2018 , KKR and its affiliates beneficially owned 23,758,616 shares of KREF's common stock representing 41% 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, those investors were also allocated a class of non-voting limited liability company interest in the 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 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, including respective call or put amounts (as defined), 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, including respective call or put amounts (as defined), and the SNVPS will be canceled automatically and cease to be outstanding. Earnings per Share — The following table illustrates the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2018 and 2017 : Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Numerator Net income (loss) attributable to common stockholders $ 20,821 $ 17,339 $ 67,921 $ 41,784 Denominator Basic weighted average common shares outstanding 55,903,126 53,696,967 54,111,272 42,501,356 Dilutive restricted stock units 18,529 74 21,059 174 Diluted weighted average common shares outstanding 55,921,655 53,697,041 54,132,331 42,501,530 Net income (loss) attributable to common stockholders, per: Basic common share $ 0.37 $ 0.32 $ 1.26 $ 0.98 Diluted common share $ 0.37 $ 0.32 $ 1.25 $ 0.98 |
Stock-based Compensation
Stock-based Compensation | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-based compensation | KREF is externally managed by the Manager and does not currently have any employees. However, as of September 30, 2018 , the Manager, certain individuals employed by the Manager and affiliates of the Manager, and certain members of KREF 's board of directors were compensated, in part, through the issuance of stock-based awards. As of September 30, 2018 , KREF had restricted stock unit (“RSU”) awards outstanding under the KKR Real Estate Finance Trust Inc. 2016 Omnibus Incentive Plan that was adopted on February 12, 2016 and amended and restated on November 17, 2016 (the " Incentive Plan ") to certain members of KREF ’s board of directors and employees of the Manager or its affiliates, none of whom are KREF employees. RSUs awarded to employees of the Manager or its affiliates, generally vest over three consecutive one -year periods and awards to certain members of KREF 's board of directors vest over a one-year period, pursuant to the terms of the respective award agreements and the terms of the Incentive Plan. RSU awards are not entitled to dividends until KREF issues shares of its common stock, which are issuable on a one-to-one basis upon the RSU award vesting. The following table summarizes the activity in KREF ’s outstanding RSUs and the weighted-average grant date fair value per RSU: Restricted Stock Units Weighted Average Grant Date Fair Value Per RSU (A) Unvested as of December 31, 2017 154,878 $ 18.61 Granted 11,878 20.70 Vested (54,037 ) 20.47 Forfeited/ cancelled (2,740 ) 20.47 Unvested as of September 30, 2018 109,979 $ 20.49 (A) The grant-date fair value is based upon the last sale price of KREF’s common stock at the date of grant. These RSUs began to vest on April 1, 2018 for certain individuals employed by the Manager and affiliates of the Manager and each year thereafter. RSUs awarded to KREF ’s board of directors generally vest annually. KREF expects the unvested RSUs outstanding to vest during the following years: Year Restricted Stock Units 2018 — 2019 60,927 2020 49,052 Total 109,979 Upon adoption of ASU No. 2018-07 in June 2018, KREF recognizes the compensation cost of RSUs awarded to employees of the Manager, or one or more of its affiliates, on a straight-line basis over the awards’ term at their grant date fair value, consistent with the RSUs awarded to certain members of KREF 's board of directors. During the three and nine months ended September 30, 2018 , KREF recognized $0.3 million and $1.6 million , respectively, of stock-based compensation expense included in “General and administrative” expense in the Condensed Consolidated Statements of Income. During the three and nine months ended September 30, 2017 , KREF recognized $0.0 million and $0.0 million , respectively, of stock-based compensation expense. As of September 30, 2018 , there was $1.7 million of total unrecognized stock-based compensation expense related to unvested share-based compensation arrangements based on the closing price of our common stock of $20.47 on June 21, 2018, the date of the adoption of ASU No. 2018-07. This cost is expected to be recognized over a weighted average period of 2 years. During the nine months ended September 30, 2018 , KREF delivered 34,259 shares of common stock for 54,037 vested RSUs. Upon any payment of shares as a result of restricted stock unit vesting, the related tax withholding obligation will generally be satisfied by KREF , reducing the number of shares to be delivered by a number of shares necessary to satisfy the related applicable tax withholding obligation. The amount, results in a cash payment related to this tax liability and a corresponding adjustment to additional paid in capital on the Condensed Consolidated Statement of Changes in Stockholders' Equity. The adjustment was $0.4 million for the nine months ended September 30, 2018 , and is included as a reduction of capital related to the Company's equity incentive plan in the Condensed Consolidated Statement of Changes in Stockholders' Equity. Refer to Note 11 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | As of September 30, 2018 , 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. As of September 30, 2018 , 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 September 30, 2018 , KREF had future funding requirements of $369.9 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 September 30, 2018 , KREF had a remaining commitment of $16.2 million to RECOP |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Management Agreement — The Management Agreement between KREF and the 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 Manager a termination fee equal to three times the total 24 -month trailing average annual management fee and incentive compensation earned by the Manager through the most recently completed calendar quarter. Pursuant to the Management Agreement , the 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 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 (“Hurdle Rate”), less incentive compensation KREF already paid to the Manager with respect to the first three calendar quarters of such trailing 12 -month period. The quarterly incentive compensation is calculated and paid in arrears with a three months lag. During the three and nine months ended September 30, 2018 , KREF incurred 3.3 million of incentive fees payable to the Manager, of which $2.4 million was attributed to the gain recognized as a result of the April 2018 CMBS sale (Note 7 ). 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, from and after the effective date to the end of the most recently completed calendar quarter. 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 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 Manager under the Management Agreement. The Manager is responsible for, and KREF does not reimburse the Manager or its affiliates for, the expenses related to investment personnel of the Manager and its affiliates who provide services to KREF . However, KREF does reimburse the Manager for KREF 's allocable share of compensation paid to certain of the Manager ’s non-investment personnel, based on the percentage of time devoted by such personnel to KREF 's affairs. 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 ; restricted stock; RSUs; 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 4,403,387 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 nine months ended ended September 30, 2018 , KREF granted 11,878 RSUs to newly appointed directors of KREF 's board. During the year ended December 31, 2017, KREF granted 154,878 RSUs. As of September 30, 2018 , 4,259,149 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: September 30, December 31, 2018 2017 Management fees $ 4,164 $ 3,748 Incentive compensation 3,286 — Expense reimbursements and other 250 694 $ 7,700 $ 4,442 Affiliates Expenses — The following table contains the amounts included in KREF 's Condensed Consolidated Statements of Income that arose from transactions with the Manager: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Management fees $ 4,164 $ 3,989 $ 12,016 $ 9,513 Incentive compensation 3,286 — 3,286 — Expense reimbursements and other (A) 37 366 767 931 $ 7,487 $ 4,355 $ 16,069 $ 10,444 (A) KREF presents these amounts in " Operating Expenses — General and administrative " in its Condensed Consolidated Statements of Income. Affiliate expense reimbursements presented in the table above exclude the out-of-pocket costs paid by the Manager to parties unaffiliated with the Manager on behalf of KREF , and for which KREF reimburses the Manager in cash. For the three and nine months ended September 30, 2018 , these cash reimbursements were $0.3 million and $2.5 million , respectively. For the three and nine months ended September 30, 2017 , these cash reimbursements were $0.9 million and $1.1 million , respectively. In connection with the Term Loan Facility (Note 4 ), KREF is obligated to pay KKR Capital Markets ("KCM"), an affiliate of the Manager, a structuring fee equal to 0.75% of the respective committed loan advances, as defined. During the nine months ended September 30, 2018 , KREF incurred $4.5 million structuring fee in connection with the facility. Such amount was capitalized as deferred financing cost and amortized to interest expense over the life of the facility. In connection with the BMO Facility, and in consideration for structuring and sourcing this arrangement, KREF will pay KCM, a structuring fee equal to 0.35% of the respective committed loan advances under the agreement. During the nine months ended September 30, 2018 , KREF paid KCM $0.8 million in commissions in connection with the issuance of the Convertible Notes. Such amount is included in the $5.1 million |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Disclosures [Abstract] | |
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 September 30, 2018 were as follows: Fair Value Principal Balance (A) Carrying Value (B) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 192,771 $ 192,771 $ 192,771 $ — $ — $ 192,771 Commercial mortgage loans, held-for-investment, net (C) 3,282,184 3,261,878 — — 3,266,234 3,266,234 Equity method investments, at fair value 24,745 24,745 — — 24,745 24,745 Commercial mortgage loans held in variable interest entities, at fair value 1,130,672 1,100,089 — — 1,100,089 1,100,089 $ 4,630,372 $ 4,579,483 $ 192,771 $ — $ 4,391,068 $ 4,583,839 Liabilities Secured financing agreements, net $ 2,126,047 $ 2,115,954 $ — $ — $ 2,126,047 $ 2,126,047 Convertible notes, net 143,750 137,339 146,208 — — 146,208 Loan participations sold, net 83,886 83,442 — — 83,257 83,257 Variable interest entity liabilities, at fair value 1,095,731 1,086,939 — — 1,086,939 1,086,939 $ 3,449,414 $ 3,423,674 $ 146,208 $ — $ 3,296,243 $ 3,442,451 (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 $20.3 million unamortized origination discounts and deferred nonrefundable fees. The carrying value of secured financing agreements is presented net of $10.1 million unamortized debt issuance costs. (C) Includes senior loans for which KREF sold a loan participation that was not treated as a sale under GAAP, with a carrying value of $83.4 million and a fair value of $83.3 million as of September 30, 2018 . 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, 2017 were as follows: Fair Value Principal Balance (A) Carrying Value (B) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 103,120 $ 103,120 $ 103,120 $ — $ — $ 103,120 Restricted cash 400 400 400 — — 400 Commercial mortgage loans, held-for-investment, net (C) 1,901,693 1,888,510 — — 1,894,870 1,894,870 Equity method investments, at fair value 14,390 14,390 — — 14,390 14,390 Commercial mortgage loans held in variable interest entities, at fair value 5,305,976 5,372,811 — — 5,372,811 5,372,811 $ 7,325,579 $ 7,379,231 $ 103,520 $ — $ 7,282,071 $ 7,385,591 Liabilities Secured financing agreements, net $ 969,347 $ 964,800 $ — $ — $ 969,347 $ 969,347 Loan participations sold, net 82,000 81,472 — — 81,836 81,836 Variable interest entity liabilities, at fair value 4,996,817 5,256,926 — — 5,256,926 5,256,926 $ 6,048,164 $ 6,303,198 $ — $ — $ 6,308,109 $ 6,308,109 (A) The principal balance of commercial mortgage loans excludes premiums and discounts. (B) The carrying value of commercial mortgage loans is presented net of $13.2 million origination discounts and deferred nonrefundable fees. The carrying value of secured financing agreements is presented net of $4.5 million unamortized debt issuance costs. (C) Includes senior loans for which KREF sold a loan participation that was not treated as a sale under GAAP, with a carrying value of $81.5 million and a fair value of $81.8 million as of December 31, 2017 . KREF reported the following financial assets and liabilities at fair value on a recurring basis using Level 3 inputs as of September 30, 2018 . Assets Liabilities Commercial Mortgage Loans Held in Variable Interest Entities, at Fair Value Variable Interest Entity Liabilities, at Fair Value Net Balance as of December 31, 2017 $ 5,372,811 $ 5,256,926 $ 115,885 Gains (losses) included in net income Realized gain (loss) 13,000 — 13,000 Unrealized gain (loss) included in change in net assets related to consolidated variable interest entities (94,643 ) (92,499 ) (2,144 ) Purchases and sales/repayments Purchases — — — Sales/Repayments/Deconsolidation (4,175,371 ) (4,062,624 ) (112,747 ) Other (A) (15,708 ) (14,864 ) (844 ) Balance as of September 30, 2018 $ 1,100,089 $ 1,086,939 $ 13,150 (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 September 30, 2018 : Fair Value Valuation Methodologies Unobservable Inputs (A) Weighted Average (B) Range Assets (C) Commercial mortgage loans, held-for-investment, net $ 3,266,234 Discounted cash flow Loan-to-value ratio 67.8% 49.4% - 80.3% Discount rate 6.7% 2.6% - 13.9% Commercial mortgage loans held in variable interest entities, at fair value (D) 1,100,089 Discounted cash flow Yield 8.3% 2.4% - 37.1% $ 4,366,323 Liabilities Secured financing agreements, net $ 2,126,047 Market comparable Credit spread 1.8% 1.4% - 2.5% Loan participations sold, net 83,257 Discounted cash flow Loan-to-value ratio 52.9% 52.9% - 52.9% Discount rate 3.6% 2.6% - 4.6% Variable interest entity liabilities, at fair value 1,086,939 Discounted cash flow Yield 6.4% 2.4% - 16.5% $ 3,296,243 (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) KREF carries a $24.4 million investment in an aggregator vehicle alongside RECOP (Note 7 ) at its pro rata share of the aggregator's net asset value, which management believes approximates fair value. (D) 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 Loans and Participation Sold - 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 the Manager. Commercial Mortgage-Backed Securities — As of September 30, 2018 , 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 accordingly. 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 are CMBS market makers. 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. 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 September 30, 2018 or December 31, 2017 . 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 September 30, 2018 , the fair value of KREF |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
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 nine months ended September 30, 2018 and 2017 , KREF recorded a current income tax provision of $0.2 million and $0.4 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 September 30, 2018 and December 31, 2017 . As of September 30, 2018 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | The following events occurred subsequent to September 30, 2018 : Investing Activities KREF originated the following senior loan subsequent to September 30, 2018 : Description/ Location Property Type Month Originated Maximum Face Amount Initial Face Amount Funded Interest Rate (A) Maturity Date (B) LTV Senior Loan, Queens, NY Multifamily October 2018 $ 45,000 $ 42,000 L + 2.8% November 2023 70% Senior Loan, Philadelphia, NY Multifamily October 2018 $ 77,000 $ 77,000 L + 2.7 November 2023 73% Total/Weighted Average $ 122,000 $ 119,000 L + 2.7% 72% (A) Floating rate based on one-month USD LIBOR. (B) Maturity date assumes all extension options are exercised, if applicable. Funding of Previously Closed Loans KREF funded approximately $19.2 million for previously closed loans subsequent to September 30, 2018 . Loan Repayments In October 2018, KREF received approximately $8.4 million from loan repayments. Financing Activities In October 2018, increased borrowing capacity on the Term Loan Facility, which provides financing on a matched-term, non-mark to market and non-recourse basis by $400.0 million to $1.0 billion . In November 2018, KREF borrowed $65.5 million under the Term Loan Facility. In October 2018, KREF borrowed $55.0 million under the BMO Facility. In October and November 2018, KREF net borrowed $15.5 million under its master repurchase facilities. Corporate Activities Dividends In October 2018 , KREF paid $25.0 million in dividends on its common and special voting preferred stock, or $0.43 per share, with respect to the third quarter of 2018 , to stockholders of record on September 28, 2018 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
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 the 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the Securities and Exchange Commission on February 28, 2018 (the "Form 10-K"). |
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 7 ). 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 tranches that represent the most subordinated 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 Income; the residual difference between the fair value of the trusts' assets and liabilities 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 September 30, 2018 . 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 consolidated a joint venture that held a portion of KREF 's investments in commercial mezzanine loans (“Mezzanine JV”), and in which a third-party owned a 5.0% redeemable noncontrolling interest ("Mezzanine JV Redeemable Noncontrolling Interest”) (Note 7 ). Management determined the joint venture to be a VIE as the owners of the redeemable noncontrolling interest did not have substantive participating or kick-out rights. KREF owned 95.0% of the equity interests in the joint venture and participated in the profits and losses. Management considered KREF to be the primary beneficiary of the joint venture as KREF held decision-making power over the activities that most significantly impact the economic performance of the joint venture. In June 2018, KREF acquired the 5.0% Mezzanine JV Redeemable Noncontrolling Interest for its carrying value of $1.3 million . 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 Income. KREF recorded the redeemable noncontrolling interests at fair value upon issuance by subsidiaries of KREF , and adjusts the carrying value of such interests to equal their respective redemption values at each subsequent reporting period date if KREF determines the noncontrolling interests are redeemable or probable to become redeemable. As noted above, in June 2018, KREF acquired the 5.0% Mezzanine JV Redeemable Noncontrolling Interest for its carrying value of $1.3 million . KREF determined that the Special Non-Voting Preferred Stock (“SNVPS”) became redeemable during the second quarter of 2018; accordingly, KREF adjusted the carrying value of the SNVPS to its redemption value of $0.4 million as of the balance sheet date. Equity method investments, at fair value — 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 KREF 's investment in the 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 Manager that could be significant to the Manager . KREF accounts for its investment in the Manager using the equity method since KREF is not the primary beneficiary of the Manager (Note 7 ). 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 method investments, at fair value ” in its Condensed Consolidated Balance Sheets and its share of unrealized gains or losses in " Income from equity method investments " in its Condensed Consolidated Statements of Income (Note 7 |
Equity method investments, at fair value | Equity method investments, at fair value — 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 KREF 's investment in the 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 Manager that could be significant to the Manager . KREF accounts for its investment in the Manager using the equity method since KREF is not the primary beneficiary of the Manager (Note 7 ). 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 method investments, at fair value ” in its Condensed Consolidated Balance Sheets and its share of unrealized gains or losses in " Income from equity method investments " in its Condensed Consolidated Statements of Income (Note 7 |
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 |
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. Estimates of fair value for cash and cash equivalents, restricted cash, and convertible notes are measured using observable, quoted market prices, or Level 1 inputs. Valuation Process — The Manager reviews the valuation of Level 3 financial instruments as part of KKR 's quarterly process. As of September 30, 2018 , 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 the asset class-specific valuation committees, including a real estate valuation committee that reviews and approves all preliminary Level 3 valuations for real estate assets, including the financial instruments held by KREF . 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 Level 3 valuations are also 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 Income, 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 7 ). Management categorizes the 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 12 ). 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. Commercial Mortgage Loans and Participation Sold - 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 the Manager. Commercial Mortgage-Backed Securities — As of September 30, 2018 , 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 accordingly. 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 are CMBS market makers. 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. 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 |
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 |
Cash, Cash Equivalents and Restricted Cash and Cash Equivalents | Cash, Cash Equivalents and Restricted Cash and Cash Equivalents — KREF |
Commercial Mortgage Loans Held-For-Investment and Provision for Loan Losses | Commercial Mortgage Loans Held‑For‑Investment and Provision for Loan Losses — 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. 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 — Commercial Mortgage Loans, Held-For-Investment " for additional discussion regarding management’s determination for loan losses. KREF applies the interest method to amortize origination or acquisition premiums and discounts and deferred nonrefundable fees or other direct loan origination costs, or on a straight line basis when it approximates the interest method. 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 | Commercial Mortgage Loans Held‑For‑Sale — Loans that KREF originates, or acquires, which KREF |
Preferred Interest in Joint Venture Held-To-Maturity | Secured Financing Agreements — KREF 's secured financing agreements, including Term Loan Financings, are treated as collateralized financing transactions and consist of floating rate, uncommitted repurchase facilities and Term Loan Financing arrangements carried at their contractual amounts, net of unamortized debt issuance costs (Note 4 ). Convertible Notes, Net — KREF accounts for its convertible debt with a cash conversion feature in accordance with ASC 470-20 “Debt with Conversion and Other Options” which requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. The initial proceeds from the sale of convertible notes are allocated between a liability component and an equity component in a manner that reflects interest expense at the rate of similar nonconvertible debt that could have been issued at such time. The equity component represents the excess initial proceeds received over the fair value of the liability component of the notes as of the date of issuance. KREF measured the estimated fair value of the debt component of the convertible notes due May 15, 2023 (“Convertible Notes”) as of the issuance date based on KREF ’s nonconvertible debt borrowing rate. The equity component of the Convertible Notes is reflected within additional paid-in capital on our condensed consolidated balance sheet, and the resulting debt discount is amortized over the period during which such Convertible Notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense using the interest method, or on a straight line basis when it approximates the interest method. The additional non-cash interest expense attributable to such convertible notes will increase in subsequent periods through the maturity date as the notes accrete to their par value over the same period (Note 5 ). Loan Participations Sold, Net — In connection with its investments in senior loans, KREF finances certain investments through the syndication of non-recourse, or limited-recourse, loan participation to unaffiliated third parties. KREF ’s presentation of the senior loan and related financing involved in the syndication depends upon whether GAAP recognized the transaction as a sale, though such differences in presentation do not generally impact KREF ’s net stockholders’ equity or net income aside from timing differences in the recognition of certain transaction costs. To the extent that GAAP recognizes a sale resulting from the syndication, KREF derecognizes the participation in the senior loan that KREF sold and continue to carry the retained portion of the loan as an investment. While KREF does not generally expect to recognize a material gain or loss on these sales, KREF would realize a gain or loss in an amount equal to the difference between the net proceeds received from the third party purchaser and its carrying value of the loan participation that KREF sold at time of sale. Furthermore, KREF recognizes interest income only on the portion of the senior loan that it retains as a result of the sale. To the extent that GAAP does not recognize a sale resulting from the syndication, KREF does not derecognize the participation in the senior loan that it sold. Instead, KREF recognizes a loan participation sold liability in an amount equal to the principal of the loan participation syndicated less any unamortized discounts or financing costs resulting from the syndication. KREF continues to recognize interest income on the entire senior loan, including the interest attributable to the loan participation sold, as well as interest expense on the loan participation sold liability (Note 6 |
Convertible Notes | Convertible Notes, Net — KREF accounts for its convertible debt with a cash conversion feature in accordance with ASC 470-20 “Debt with Conversion and Other Options” which requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. The initial proceeds from the sale of convertible notes are allocated between a liability component and an equity component in a manner that reflects interest expense at the rate of similar nonconvertible debt that could have been issued at such time. The equity component represents the excess initial proceeds received over the fair value of the liability component of the notes as of the date of issuance. KREF measured the estimated fair value of the debt component of the convertible notes due May 15, 2023 (“Convertible Notes”) as of the issuance date based on KREF ’s nonconvertible debt borrowing rate. The equity component of the Convertible Notes is reflected within additional paid-in capital on our condensed consolidated balance sheet, and the resulting debt discount is amortized over the period during which such Convertible Notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense using the interest method, or on a straight line basis when it approximates the interest method. The additional non-cash interest expense attributable to such convertible notes will increase in subsequent periods through the maturity date as the notes accrete to their par value over the same period (Note 5 |
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 or probable of becoming 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. Accordingly, the Company adjusted the carrying value of the SNVPS to its redemption value of $0.4 million as of September 30, 2018 . KREF presents the SNVPS as “ Temporary Equity — Redeemable preferred stock ” in the accompanying Condensed Consolidated Balance Sheets (Note 8 |
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 interest method over the loan term, or on a straight line basis when it approximates the interest method. 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. 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 |
Loan Impairment | 80%), and the loan covenants are unlikely to fully mitigate some risks. Interest payments may come from an interest reserve or sponsor equity. 5—Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss. The underlying property performance is significantly behind underwritten expectations, the sponsor has failed to execute its business plan and/or the sponsor has missed interest payments. The market fundamentals have deteriorated, or property performance has unexpectedly declined or valuations for comparable properties have declined meaningfully since loan origination. Current cash flow does not support debt service payments. With the current capital structure, the sponsor might not be incentivized to protect its equity without a restructuring of the loan. The loan exhibits a very high loan-to-value ratio (>90%), and default may be imminent." id="sjs-B17">Loan Impairment — KREF holds commercial mortgage loans for both investment and sale, which management periodically evaluates for impairment. Commercial Mortgage Loans, Held-For-Investment — For each loan in KREF 's portfolio, management performs a quarterly evaluation of impairment indicators 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 September 30, 2018 , KREF did not hold any loans that management placed on nonaccrual status or otherwise considered past due. In addition to reviewing commercial mortgage loans held-for-investment for impairment, the Manager evaluates KREF 's commercial mortgage loans to determine if an allowance for loan loss should be established. In conjunction with this review, the Manager 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—The underlying property performance has surpassed underwritten expectations, and the sponsor’s business plan is generally complete. The property demonstrates stabilized occupancy and/or rental rates resulting in strong current cash flow and/or a very low loan-to-value ratio (<65%). At the level of performance, it is very likely that the underlying loan can be refinanced easily in the period’s prevailing capital market conditions. 2—Low Risk—The underlying property performance has matched or exceeded underwritten expectations, and the sponsor’s business plan may be ahead of schedule or has achieved some or many of the major milestones from a risk mitigation perspective. The property has achieved improving occupancy at market rents, resulting in sufficient current cash flow and/or a low loan-to-value ratio (65%-70%). Operating trends are favorable, and the underlying loan can be refinanced in today’s prevailing capital market conditions. The sponsor/manager is well capitalized or has demonstrated a history of success in owning or operating similar real estate. 3—Average Risk—The underlying property performance is in-line with underwritten expectations, or the sponsor may be in the early stages of executing its business plan. Current cash flow supports debt service payments, or there is an ample interest reserve or loan structure in place to provide the sponsor time to execute the value-improvement plan. The property exhibits a moderate loan-to-value ratio (<75%). Loan structure appropriately mitigates additional risks. The sponsor/manager has a stable credit history and experience owning or operating similar real estate. 4—High Risk/Potential for Loss: A loan that has a risk of realizing a principal loss. The underlying property performance is behind underwritten expectations, or the sponsor is behind schedule in executing its business plan. The underlying market fundamentals may have deteriorated, comparable property valuations may be declining or property occupancy has been volatile, resulting in current cash flow that may not support debt service payments. The loan exhibits a high loan-to-value ratio (>80%), and the loan covenants are unlikely to fully mitigate some risks. Interest payments may come from an interest reserve or sponsor equity. 5—Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss. The underlying property performance is significantly behind underwritten expectations, the sponsor has failed to execute its business plan and/or the sponsor has missed interest payments. The market fundamentals have deteriorated, or property performance has unexpectedly declined or valuations for comparable properties have declined meaningfully since loan origination. Current cash flow does not support debt service payments. With the current capital structure, the sponsor might not be incentivized to protect its equity without a restructuring of the loan. The loan exhibits a very high loan-to-value ratio (>90%), and default may be imminent. |
Interest Expense | Interest Expense — Management expenses contractual interest due in accordance with KREF |
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 interest method over the expected term of the draw, or on a straight line basis when it approximates the interest method. KREF presents such expensed amounts, as well as deferred amounts written off, as additional interest expense in its Condensed Consolidated |
General and Administrative Expenses | General and Administrative Expenses |
Management and Incentive Compensation to Affiliate | Management and Incentive Compensation to Affiliate — Management expenses compensation earned by the Manager on a quarterly basis in accordance with the Management Agreement (Note 11 |
Income Taxes | Income Taxes — Certain activities of KREF are conducted through joint ventures formed as limited liability companies, taxed as partnerships, and consolidated by KREF . Some of these joint ventures are subject to state and local income taxes (Note 13 |
Share-based Compensation | Stock-Based Compensation KREF 's stock-based compensation consists of awards issued to employees of the Manager or its affiliates that vest over the life of the awards, as well as restricted stock units issued to certain members of KREF 's board of directors. The Company early adopted ASU No. 2018-07, Improvement to Nonemployee Share-based Payment Accounting upon its issuance in June 2018. Accordingly, the Company recognizes the compensation cost of stock-based awards to employees of the Manager or its affiliates on a straight-line basis over the awards’ term at their grant date fair value. Upon the adoption of ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (Topic 718), KREF elected to account for forfeitures as they occur. Refer to Note 9 |
Earnings per Share | Earnings per Share Diluted earnings per share, or Diluted EPS, is determined using the treasury stock method, and is based on the net earnings attributable to common stockholders, including restricted stock units, divided by the weighted-average number of shares of common stock, including restricted stock units. Refer to Note 8 for additional discussion of 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 Basic Weighted Average Number of Shares of Common Stock Outstanding, for the period. Diluted EPS , or Net Income (Loss) Per Share of Common Stock, Diluted, is calculated by starting with Basic EPS |
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. In adopting ASU 2014-09, entities have the option of using either a full retrospective or a modified approach to adopt the guidance in the ASU . KREF has adopted the modified approach. The adoption of this ASU beginning in the first quarter of 2018 did not have a material impact on the Company's 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. 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. The adoption of ASU No. 2016-01 beginning in the first quarter of 2018 did not have a material impact on the Company's 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. While KREF is currently evaluating the impact that ASU 2016-13 will have on KREF 's condensed consolidated financial statements, we expect that the adoption will result in an increased amount of provisions for potential loan losses as well as the recognition of such provisions earlier in the credit cycle. KREF currently does not have any provision for loan losses recorded on the condensed consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, Improvements to Nonemployee Share-Based Payment Accounting . The standard aligns the measurement and classification guidance for share-based payments to nonemployees with the guidance for share-based payments to employees, with certain exceptions. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date. ASU No. 2018-07 is effective for public companies in the first quarter of 2019 with early adoption permitted. KREF early adopted this ASU upon its issuance to simplify its accounting for share-based payments to employees of the Manager or its affiliates. The adoption of this ASU did not have a material impact on the Company's condensed consolidated |
Commercial Mortgage Loans (Tabl
Commercial Mortgage Loans (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract] | |
Summary and Activity of Loans Held-for-investment and Held-for-sale | For the nine months ended September 30, 2018 , the loan portfolio activity was as follows: Held-for-Investment Held-for-Sale Total Balance at December 31, 2017 $ 1,888,510 $ — $ 1,888,510 Purchases and originations, net (A) 1,697,074 — 1,697,074 Proceeds from principal repayments (330,939 ) — (330,939 ) Accretion of loan discount and other amortization, net (B) 7,233 — 7,233 Balance at September 30, 2018 $ 3,261,878 $ — $ 3,261,878 (A) Net of applicable premiums, discounts and deferred loan origination costs. (B) KREF 's internal risk ratings: September 30, 2018 December 31, 2017 Risk Rating Number of Loans Net Book Value Total Loan Exposure (A) Risk Rating Number of Loans Net Book Value Total Loan Exposure (A) 1 — $ — $ — 1 — $ — $ — 2 8 446,525 448,821 2 4 155,092 156,123 3 27 2,815,353 2,899,972 3 23 1,717,000 1,792,022 4 — — — 4 1 16,418 16,500 5 — — — 5 — — — 35 $ 3,261,878 $ 3,348,793 28 $ 1,888,510 $ 1,964,645 (A) In certain instances, we finance our loans through the non-recourse sale of a senior interest that is not included in our consolidated financial statements. Total loan exposure includes the entire loan we originated and financed, including $66.6 million and $63.0 million of such non-consolidated interests as of September 30, 2018 and December 31, 2017 KREF 's investments in commercial mortgage loans as of September 30, 2018 and December 31, 2017 : Weighted Average Loan Type Outstanding Face Amount Carrying Value Loan Count Floating Rate Loan % (A) Coupon (A) Life (Years) (B) September 30, 2018 Loans held-for-investment Senior loans (C) $ 3,226,649 $ 3,206,484 27 100.0 % 5.8 % 3.8 Mezzanine loans (D) 55,535 55,394 8 52.8 11.8 4.3 $ 3,282,184 $ 3,261,878 35 99.2 % 5.9 % 3.9 December 31, 2017 Loans held-for-investment Senior loans (C) $ 1,794,963 $ 1,782,054 18 100.0 % 5.8 % 3.7 Mezzanine loans (D) 106,730 106,456 10 75.4 11.3 3.7 $ 1,901,693 $ 1,888,510 28 98.6 % 6.1 % 3.7 (A) Average weighted by outstanding face amount of loan. Weighted average coupon assumes applicable one-month LIBOR rates of 2.26% and 1.56% as of September 30, 2018 and December 31, 2017 , respectively. (B) The weighted average life of each loan is based on the expected timing of the receipt of contractual cash flows assuming all extension options are exercised by the borrower. (C) Senior loans may include accommodation mezzanine loans in connection with the senior mortgage financing. Includes loan participations sold with a face amount of $83.9 million and $82.0 million , and a carrying value of $83.5 million and $81.5 million as of September 30, 2018 and December 31, 2017 , respectively. (D) |
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: September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 Geography Collateral Property Type New York 25.4 % 29.3 % Office 53.0 % 41.7 % Georgia 13.3 11.0 Multifamily 33.3 24.7 Washington 10.2 — Condo (Residential) 5.6 10.8 California 9.2 14.9 Industrial 4.0 6.8 Minnesota 6.8 7.0 Retail 3.9 13.8 Florida 5.9 2.2 Hospitality 0.2 2.2 Massachusetts 5.9 — Total 100.0 % 100.0 % New Jersey 4.4 7.1 Pennsylvania 4.3 — Oregon 3.7 6.3 Hawaii 3.1 5.3 Colorado 2.9 5.1 Washington D.C. 2.8 4.2 Tennessee 1.6 2.8 Other U.S. 0.5 4.8 Total 100.0 % 100.0 % |
Debt Obligations (Tables)
Debt Obligations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Instruments | The following table summarizes KREF 's secured master repurchase agreements and other consolidated debt obligations in place as of September 30, 2018 and December 31, 2017 : September 30, 2018 December 31, 2017 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) Master Repurchase Agreements (D) Wells Fargo (E) Oct 2015 $ 791,297 $ 787,487 $ 1,000,000 Apr 2022 4.4 % 1.8 $ 1,096,789 $ 1,090,273 $ 1,090,273 3.9 $ 482,146 Morgan Stanley (F) Dec 2016 483,558 482,064 600,000 Dec 2021 4.6 1.5 709,123 705,658 705,658 3.2 421,904 Goldman Sachs (G) Sep 2016 268,709 268,709 400,000 Oct 2020 4.4 1.4 362,191 359,960 359,960 4.3 60,750 Asset Specific Financing BMO Facility (H) Aug 2018 — (316 ) 200,000 n.a 0.2 0.0 — — — 0.0 — Revolving Credit Agreement Barclays (I) May 2017 — — 75,000 May 2020 1.1 0.0 n.a. n.a. n.a. n.a. — 1,543,564 1,537,944 2,275,000 4.4 % 1.6 2,168,103 2,155,891 2,155,891 964,800 VIE Liabilities CMBS (J) Various 1,095,731 1,086,939 n.a. May 2048 to Feb 2049 4.4 % 6.3 1,130,672 n.a. 1,100,089 6.3 5,256,926 1,095,731 1,086,939 n.a. 4.4 6.3 5,256,926 Total / Weighted Average $ 2,639,295 $ 2,624,883 $ 2,275,000 4.4 % 3.6 $ 6,221,726 (A) Net of $5.6 million and $4.5 million unamortized debt issuance costs as of September 30, 2018 and December 31, 2017 , 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, equal to one-month LIBOR, subject to certain floors of not less than zero, or an index approximating LIBOR, and (ii) a margin, based on the collateral. As of September 30, 2018 and December 31, 2017 , 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 28.8% and 32.9% , respectively (or 25.6% and 27.3% , respectively, if KREF had borrowed the maximum amount approved by its repurchase agreement counterparties as of such dates). (E) 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. In September 2018, KREF and Wells Fargo Bank, National Association (" Wells Fargo ") amended the master repurchase agreement to increase the maximum facility size from $750.0 million to $1,000.0 million . As of September 30, 2018 , the collateral-based margin was between 1.50% and 2.15% . (F) In November 2017, KREF and Morgan Stanley Bank, N.A. (" Morgan Stanley ") amended and restated the master repurchase agreement to extend the facility maturity date and to increase the maximum facility size from $500.0 million to $600.0 million and, subject to customary conditions, permits KREF to request the facility be further increased to $750.0 million . The current stated maturity of the facility is December 2020 , 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 September 30, 2018 , the collateral-based margin was between 2.00% and 2.45% . (G) In July 2018, KREF and Goldman Sachs Bank USA (" Goldman Sachs ") amended the November 2017 restated master purchase agreement to modify certain terms and provisions. The amended and restated facility includes a $350.0 million term facility with a maturity date of October 2020 and a $50.0 million swingline facility with 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 September 30, 2018 , the carrying value excluded $1.5 million unamortized debt issuance costs presented as " — Other assets " in KREF 's Condensed Consolidated Balance Sheets. As of September 30, 2018 , the collateral-based margin was between 1.70% and 2.00% . (H) In August 2018, KREF entered into a $200.0 million loan financing facility with BMO Harris Bank ("BMO Facility") with a third party lender. The facility provides asset-based financing on a non-mark to market basis with matched-term up to five years with partial recourse to KREF . There were no amounts outstanding on this facility as of September 30, 2018 . (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 September 30, 2018 , the carrying value excluded $0.8 million unamortized debt issuance costs presented as " — Other assets " in KREF 's Condensed Consolidated Balance Sheets. (J) Facility amounts represent consolidated CMBS trust(s) that are not beneficially owned by KREF 's stockholders. The facility and collateral carrying amounts included $3.8 million accrued interest payable and $4.0 million accrued interest receivable as of September 30, 2018 . As of December 31, 2017 , the facility and collateral carrying amounts included $18.7 million accrued interest payable and $19.7 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. Refer to Note 7 for additional discussion of KREF 's VIE assets and liabilities. September 30, 2018 , the activity related to the carrying value of KREF ’s secured financing agreements, term loan financing and other consolidated debt obligations were as follows: Secured Financing Agreements, Net (A) Variable Interest Entity Liabilities, at Fair Value Total Balance as of December 31, 2017 $ 964,800 $ 5,256,926 $ 6,221,726 Principal borrowings 1,607,725 — 1,607,725 Principal repayments/ sales/ deconsolidation (451,026 ) (4,062,624 ) (4,513,650 ) Deferred debt issuance costs (8,562 ) — (8,562 ) Amortization of deferred debt issuance costs 3,017 — 3,017 Fair value adjustment — (92,499 ) (92,499 ) Other (B) — (14,864 ) (14,864 ) Balance as of September 30, 2018 $ 2,115,954 $ 1,086,939 $ 3,202,893 (A) Includes Term Loan Financing Facility and Asset Specific Financing Facility. September 30, 2018 Term Loan Facility Count Outstanding Face Amount Carrying Value Wtd. Avg. Yield/Cost (A) Guarantee (B) Wtd. Avg. Term (C) Collateral assets 6 $ 717,500 $ 711,982 L + 3.0% n.a. May 2023 Financing provided n.a 582,483 578,010 L + 1.7% n.a. May 2023 (A) Floating rate loans and related liabilities are indexed to one-month LIBOR. KREF's net interest rate exposure is in direct proportion to its interest in the net assets indexed to that rate. In addition to cash coupon, yield/cost includes the amortization of deferred origination/financing costs. (B) Financing under the Term Loan Facility is non-recourse to KREF. (C) |
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 September 30, 2018 and December 31, 2017 : Outstanding Face Amount Net Counterparty Exposure Percent of Stockholders' Equity Weighted Average Life (Years) (A) September 30, 2018 Wells Fargo $ 791,297 $ 304,871 26.6 % 1.8 Morgan Stanley 483,558 224,557 19.6 1.5 Total / Weighted Average $ 1,274,855 $ 529,428 46.2 % 1.7 December 31, 2017 Wells Fargo $ 485,250 $ 203,303 19.2 % 1.6 Morgan Stanley 423,347 251,463 23.7 2.0 Total / Weighted Average $ 908,597 $ 454,766 42.9 % 1.8 (A) |
Schedule of Maturities of Debt Obligations | KREF ’s secured financing agreements, term loan financing and other consolidated debt obligations in place as of September 30, 2018 had current contractual maturities as follows: Year Nonrecourse (A) Recourse (B) Total 2018 $ 2,779 $ — $ 2,779 2019 13,098 505,432 518,530 2020 179,359 985,632 1,164,991 2021 484,634 — 484,634 2022 18,565 52,500 71,065 Thereafter 979,779 — 979,779 $ 1,678,214 $ 1,543,564 $ 3,221,778 (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% |
Convertible Notes, Net (Tables)
Convertible Notes, Net (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Disclosure [Abstract] | |
Interest Expense, Debt | The following table details our interest expense related to the Convertible Notes: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Cash coupon $ 2,201 $ — $ 3,253 $ — Discount and issuance cost amortization 349 — 512 — Total interest expense $ 2,550 — $ 3,765 — |
Convertible Notes | The following table details the net book value of our Convertible Notes on our Condensed Consolidated Balance Sheets: September 30, 2018 December 31, 2017 Face value $ 143,750 $ — Deferred financing costs (4,745 ) — Unamortized discount (1,666 ) — Net book value $ 137,339 $ — |
Loan Participations Sold (Table
Loan Participations Sold (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract] | |
Schedule of Participating Mortgage Loans | The following table summarizes the loan participation sold liabilities that KREF recognized since the corresponding syndications of the participations in the senior loans were not treated as sales: September 30, 2018 Loan Participations Sold Count Principal Balance Carrying Value Yield/Cost (A) Guarantee (B) Term Total loan 1 $ 97,440 $ 97,024 L + 3.0% n.a. September 2022 Senior participation (C) 1 83,886 83,442 L + 1.8% n.a. September 2022 (A) Floating rate loans and related liabilities are indexed to one-month LIBOR. KREF 's net interest rate exposure is in direct proportion to its interest in the net assets of the senior loan. (B) As of September 30, 2018 , the loan participation sold was subject to partial recourse of $10.0 million , which amount may be reduced to zero upon achievement of certain property performance metrics. (C) During the nine months ended September 30, 2018 , KREF recorded $ 2.3 million of interest income and $2.4 million of interest expense related to the loan participation KREF |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Variable Interest Entities | The following table presents the KREF recognized Trust's(s') Assets and Liabilities: September 30, 2018 December 31, 2017 Trusts' Assets Commercial mortgage loans held in variable interest entities, at fair value (A) $ 1,100,089 $ 5,372,811 Accrued interest receivable 4,015 19,740 Trusts' Liabilities Variable interest entity liabilities, at fair value (B) 1,086,939 5,256,926 Accrued interest payable 3,828 18,661 (A) Includes accrued interest receivable. (B) CMBS trusts consolidated by KREF , as a percentage of the collateral unpaid principal balance and weighted by the fair value of the CMBS tranches beneficially owned by KREF 's stockholders: September 30, 2018 December 31, 2017 September 30, 2018 December 31, 2017 Geography Collateral Property Type California 33.3 % 23.2 % Retail 28.4 % 25.2 % Texas 11.1 12.7 Office 27.4 26.4 New York 8.3 9.1 Hospitality 13.0 15.0 Missouri 5.3 4.6 Multifamily 9.9 10.6 Pennsylvania 5.2 4.5 Industrial/ Flex 9.6 9.6 Florida 4.2 5.5 Self Storage 5.9 3.0 Massachusetts* 3.6 1.7 Mixed Use 3.8 6.9 Illinois 2.7 7.1 Mobile Home 1.8 2.7 Georgia 2.6 2.9 Other 0.2 0.6 New Hampshire* 2.4 1.0 100.0 % 100.0 % Delaware* 2.0 1.3 Virginia* 1.7 1.2 Other U.S. 17.6 25.2 Total 100.0 % 100.0 % |
Change In Net Assets Related to Consolidated Variable Interest Entities | The following table presents " Other Income — Change in net assets related to consolidated variable interest entities ": Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Net interest earned $ 584 $ 3,138 $ 4,604 $ 9,357 Unrealized gain (loss) (205 ) 887 (2,144 ) 3,453 Change in net assets related to consolidated variable interest entities $ 379 $ 4,025 $ 2,460 $ 12,810 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Equity [Abstract] | |
Schedule of Common Stock Issued | KREF issued the following shares of common stock: Pricing Date Shares Issued Net Proceeds As of December 31, 2015 13,636,416 $ 272,728 February 2016 2,000,000 40,000 May 2016 3,000,138 57,130 June 2016 (A) 21,838 — August 2016 5,500,000 109,875 As of December 31, 2016 24,158,392 479,733 February 2017 7,386,208 147,662 April 2017 10,379,738 207,595 May 2017- Initial Public Offering 11,787,500 219,356 As of December 31, 2017 53,711,838 1,054,346 August 2018 5,000,000 98,326 As of September 30, 2018 58,711,838 $ 1,152,672 (A) KREF did not receive any proceeds with respect to 21,838 shares of common stock issued to certain current and former employees of, and non-employee consultants to, KKR and third-party investors in the private placement completed in March 2016, in accordance with KREF 's Stockholders Agreement dated as of March 29, 2016 |
Dividends Declared | During the nine months ended September 30, 2018 , KREF 's board of directors declared the following dividends on shares of its common stock and special voting preferred stock: Amount Declaration Date Record Date Payment Date Per Share Total March 12, 2018 March 29, 2018 April 13, 2018 $ 0.40 $ 21,230 May 7, 2018 June 29, 2018 July 13, 2018 0.43 22,804 September 11, 2018 September 28, 2018 October 12, 2018 0.43 24,951 $ 68,985 |
Schedule of Earnings Per Share, Basic and Diluted | The following table illustrates the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2018 and 2017 : Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Numerator Net income (loss) attributable to common stockholders $ 20,821 $ 17,339 $ 67,921 $ 41,784 Denominator Basic weighted average common shares outstanding 55,903,126 53,696,967 54,111,272 42,501,356 Dilutive restricted stock units 18,529 74 21,059 174 Diluted weighted average common shares outstanding 55,921,655 53,697,041 54,132,331 42,501,530 Net income (loss) attributable to common stockholders, per: Basic common share $ 0.37 $ 0.32 $ 1.26 $ 0.98 Diluted common share $ 0.37 $ 0.32 $ 1.25 $ 0.98 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity | The following table summarizes the activity in KREF ’s outstanding RSUs and the weighted-average grant date fair value per RSU: Restricted Stock Units Weighted Average Grant Date Fair Value Per RSU (A) Unvested as of December 31, 2017 154,878 $ 18.61 Granted 11,878 20.70 Vested (54,037 ) 20.47 Forfeited/ cancelled (2,740 ) 20.47 Unvested as of September 30, 2018 109,979 $ 20.49 (A) |
Schedule of Share-based Compensation Arrangement by Share-based Payment Award, Restricted Stock Units, Vested and Expected to Vest | KREF expects the unvested RSUs outstanding to vest during the following years: Year Restricted Stock Units 2018 — 2019 60,927 2020 49,052 Total 109,979 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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: September 30, December 31, 2018 2017 Management fees $ 4,164 $ 3,748 Incentive compensation 3,286 — Expense reimbursements and other 250 694 $ 7,700 $ 4,442 Affiliates Expenses — The following table contains the amounts included in KREF 's Condensed Consolidated Statements of Income that arose from transactions with the Manager: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 Management fees $ 4,164 $ 3,989 $ 12,016 $ 9,513 Incentive compensation 3,286 — 3,286 — Expense reimbursements and other (A) 37 366 767 931 $ 7,487 $ 4,355 $ 16,069 $ 10,444 (A) KREF presents these amounts in " Operating Expenses — General and administrative " in its Condensed Consolidated Statements of Income. Affiliate expense reimbursements presented in the table above exclude the out-of-pocket costs paid by the Manager to parties unaffiliated with the Manager on behalf of KREF , and for which KREF reimburses the Manager in cash. For the three and nine months ended September 30, 2018 , these cash reimbursements were $0.3 million and $2.5 million , respectively. For the three and nine months ended September 30, 2017 , these cash reimbursements were $0.9 million and $1.1 million |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
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 September 30, 2018 were as follows: Fair Value Principal Balance (A) Carrying Value (B) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 192,771 $ 192,771 $ 192,771 $ — $ — $ 192,771 Commercial mortgage loans, held-for-investment, net (C) 3,282,184 3,261,878 — — 3,266,234 3,266,234 Equity method investments, at fair value 24,745 24,745 — — 24,745 24,745 Commercial mortgage loans held in variable interest entities, at fair value 1,130,672 1,100,089 — — 1,100,089 1,100,089 $ 4,630,372 $ 4,579,483 $ 192,771 $ — $ 4,391,068 $ 4,583,839 Liabilities Secured financing agreements, net $ 2,126,047 $ 2,115,954 $ — $ — $ 2,126,047 $ 2,126,047 Convertible notes, net 143,750 137,339 146,208 — — 146,208 Loan participations sold, net 83,886 83,442 — — 83,257 83,257 Variable interest entity liabilities, at fair value 1,095,731 1,086,939 — — 1,086,939 1,086,939 $ 3,449,414 $ 3,423,674 $ 146,208 $ — $ 3,296,243 $ 3,442,451 (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 $20.3 million unamortized origination discounts and deferred nonrefundable fees. The carrying value of secured financing agreements is presented net of $10.1 million unamortized debt issuance costs. (C) Includes senior loans for which KREF sold a loan participation that was not treated as a sale under GAAP, with a carrying value of $83.4 million and a fair value of $83.3 million as of September 30, 2018 . 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, 2017 were as follows: Fair Value Principal Balance (A) Carrying Value (B) Level 1 Level 2 Level 3 Total Assets Cash and cash equivalents $ 103,120 $ 103,120 $ 103,120 $ — $ — $ 103,120 Restricted cash 400 400 400 — — 400 Commercial mortgage loans, held-for-investment, net (C) 1,901,693 1,888,510 — — 1,894,870 1,894,870 Equity method investments, at fair value 14,390 14,390 — — 14,390 14,390 Commercial mortgage loans held in variable interest entities, at fair value 5,305,976 5,372,811 — — 5,372,811 5,372,811 $ 7,325,579 $ 7,379,231 $ 103,520 $ — $ 7,282,071 $ 7,385,591 Liabilities Secured financing agreements, net $ 969,347 $ 964,800 $ — $ — $ 969,347 $ 969,347 Loan participations sold, net 82,000 81,472 — — 81,836 81,836 Variable interest entity liabilities, at fair value 4,996,817 5,256,926 — — 5,256,926 5,256,926 $ 6,048,164 $ 6,303,198 $ — $ — $ 6,308,109 $ 6,308,109 (A) The principal balance of commercial mortgage loans excludes premiums and discounts. (B) The carrying value of commercial mortgage loans is presented net of $13.2 million origination discounts and deferred nonrefundable fees. The carrying value of secured financing agreements is presented net of $4.5 million unamortized debt issuance costs. (C) Includes senior loans for which KREF sold a loan participation that was not treated as a sale under GAAP, with a carrying value of $81.5 million and a fair value of $81.8 million as of December 31, 2017 . |
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 September 30, 2018 . Assets Liabilities Commercial Mortgage Loans Held in Variable Interest Entities, at Fair Value Variable Interest Entity Liabilities, at Fair Value Net Balance as of December 31, 2017 $ 5,372,811 $ 5,256,926 $ 115,885 Gains (losses) included in net income Realized gain (loss) 13,000 — 13,000 Unrealized gain (loss) included in change in net assets related to consolidated variable interest entities (94,643 ) (92,499 ) (2,144 ) Purchases and sales/repayments Purchases — — — Sales/Repayments/Deconsolidation (4,175,371 ) (4,062,624 ) (112,747 ) Other (A) (15,708 ) (14,864 ) (844 ) Balance as of September 30, 2018 $ 1,100,089 $ 1,086,939 $ 13,150 (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 September 30, 2018 . Assets Liabilities Commercial Mortgage Loans Held in Variable Interest Entities, at Fair Value Variable Interest Entity Liabilities, at Fair Value Net Balance as of December 31, 2017 $ 5,372,811 $ 5,256,926 $ 115,885 Gains (losses) included in net income Realized gain (loss) 13,000 — 13,000 Unrealized gain (loss) included in change in net assets related to consolidated variable interest entities (94,643 ) (92,499 ) (2,144 ) Purchases and sales/repayments Purchases — — — Sales/Repayments/Deconsolidation (4,175,371 ) (4,062,624 ) (112,747 ) Other (A) (15,708 ) (14,864 ) (844 ) Balance as of September 30, 2018 $ 1,100,089 $ 1,086,939 $ 13,150 (A) |
Fair Value Inputs, Liabilities, Level 3 Inputs | 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 September 30, 2018 : Fair Value Valuation Methodologies Unobservable Inputs (A) Weighted Average (B) Range Assets (C) Commercial mortgage loans, held-for-investment, net $ 3,266,234 Discounted cash flow Loan-to-value ratio 67.8% 49.4% - 80.3% Discount rate 6.7% 2.6% - 13.9% Commercial mortgage loans held in variable interest entities, at fair value (D) 1,100,089 Discounted cash flow Yield 8.3% 2.4% - 37.1% $ 4,366,323 Liabilities Secured financing agreements, net $ 2,126,047 Market comparable Credit spread 1.8% 1.4% - 2.5% Loan participations sold, net 83,257 Discounted cash flow Loan-to-value ratio 52.9% 52.9% - 52.9% Discount rate 3.6% 2.6% - 4.6% Variable interest entity liabilities, at fair value 1,086,939 Discounted cash flow Yield 6.4% 2.4% - 16.5% $ 3,296,243 (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) KREF carries a $24.4 million investment in an aggregator vehicle alongside RECOP (Note 7 ) at its pro rata share of the aggregator's net asset value, which management believes approximates fair value. (D) 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 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent event investing activities | KREF originated the following senior loan subsequent to September 30, 2018 : Description/ Location Property Type Month Originated Maximum Face Amount Initial Face Amount Funded Interest Rate (A) Maturity Date (B) LTV Senior Loan, Queens, NY Multifamily October 2018 $ 45,000 $ 42,000 L + 2.8% November 2023 70% Senior Loan, Philadelphia, NY Multifamily October 2018 $ 77,000 $ 77,000 L + 2.7 November 2023 73% Total/Weighted Average $ 122,000 $ 119,000 L + 2.7% 72% (A) Floating rate based on one-month USD LIBOR. (B) Maturity date assumes all extension options are exercised, if applicable. |
Business and Organization (Deta
Business and Organization (Details) - KKR | Sep. 30, 2018shares |
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 Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | |||||
Convertible notes, net | $ 137,339 | $ 0 | [1] | ||
Restricted cash | 0 | 400 | [1] | ||
Unrestricted cash and cash equivalents balance to satisfy liquidity covenants | 19,300 | 12,100 | |||
Deferred debt issuance costs, net | 16,500 | 4,600 | |||
Other assets | 20,046 | 7,239 | [1] | ||
Deferred stock issuance costs | 2,400 | 2,100 | |||
Redeemable preferred stock | $ 402 | ||||
Consolidated Joint Venture One | |||||
Related Party Transaction [Line Items] | |||||
Noncontrolling interest ownership percentage by parent | 95.00% | ||||
Redeemable preferred stock | $ 0 | 3,090 | [1] | $ 3,053 | $ 3,030 |
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] | |||||
Redeemable preferred stock | $ 402 | 949 | [1] | $ 949 | $ 0 |
Secured Financing Agreements | |||||
Related Party Transaction [Line Items] | |||||
Accumulated amortization | (800) | $ (500) | |||
Redeemable Noncontrolling Interest | |||||
Related Party Transaction [Line Items] | |||||
Convertible notes, net | $ 1,300 | ||||
[1] | Derived from the audited consolidated financial statements as of December 31, 2017 |
Commercial Mortgage Loans - Loa
Commercial Mortgage Loans - Loans Held-for-investment and Loans Held-for-sale (Details) $ in Thousands | Sep. 30, 2018USD ($)loan | Dec. 31, 2017USD ($)loan | Sep. 30, 2018USD ($)loan | Dec. 31, 2017USD ($)loan |
Investment Holdings [Line Items] | ||||
Carrying Value | $ 3,261,878 | $ 1,888,510 | $ 3,261,878 | $ 1,888,510 |
Loans held-for-investment | ||||
Investment Holdings [Line Items] | ||||
Outstanding Face Amount | 3,282,184 | 1,901,693 | 3,282,184 | 1,901,693 |
Carrying Value | $ 3,261,878 | $ 1,888,510 | 3,261,878 | 1,888,510 |
Loan Count | loan | 35 | 28 | ||
Floating Rate Loan | 99.20% | 98.60% | ||
Coupon | 5.90% | 6.10% | ||
Life (Years) | 3 years 10 months 24 days | 3 years 8 months 12 days | ||
Loans held-for-investment | Senior loans | ||||
Investment Holdings [Line Items] | ||||
Outstanding Face Amount | $ 3,226,649 | $ 1,794,963 | 3,226,649 | 1,794,963 |
Carrying Value | $ 3,206,484 | $ 1,782,054 | 3,206,484 | 1,782,054 |
Loan Count | loan | 27 | 18 | ||
Floating Rate Loan | 100.00% | 100.00% | ||
Coupon | 5.80% | 5.80% | ||
Life (Years) | 3 years 9 months 18 days | 3 years 8 months 12 days | ||
Loans held-for-investment | Mezzanine loans | ||||
Investment Holdings [Line Items] | ||||
Outstanding Face Amount | $ 55,535 | $ 106,730 | 55,535 | 106,730 |
Carrying Value | $ 55,394 | $ 106,456 | $ 55,394 | $ 106,456 |
Loan Count | loan | 8 | 10 | ||
Floating Rate Loan | 52.80% | 75.40% | ||
Coupon | 11.80% | 11.30% | ||
Life (Years) | 4 years 3 months 18 days | 3 years 8 months 12 days | ||
Consolidated Joint Venture One | Redeemable Noncontrolling Interest | ||||
Investment Holdings [Line Items] | ||||
Noncontrolling interest ownership percentage | 5.00% | 5.00% | ||
Consolidated Joint Venture One | Loans held-for-investment | Variable Interest Entity, Primary Beneficiary | ||||
Investment Holdings [Line Items] | ||||
Loan Count | loan | 6 | 7 | ||
Consolidated Joint Venture One | Loans held-for-investment | Mezzanine loans | Variable Interest Entity, Primary Beneficiary | ||||
Investment Holdings [Line Items] | ||||
Outstanding Face Amount | $ 26,200 | $ 61,200 | $ 26,200 | $ 61,200 |
Senior Participation Loan | ||||
Investment Holdings [Line Items] | ||||
Carrying Value | 83,442 | 81,500 | 83,442 | 81,500 |
Senior Participation Loan | Loans held-for-investment | Senior loans | ||||
Investment Holdings [Line Items] | ||||
Outstanding Face Amount | 83,900 | 82,000 | 83,900 | 82,000 |
Carrying Value | $ 83,500 | $ 81,500 | $ 83,500 | $ 81,500 |
Minimum | LIBOR | ||||
Investment Holdings [Line Items] | ||||
Interest Rate | 2.26% | |||
Maximum | LIBOR | ||||
Investment Holdings [Line Items] | ||||
Interest Rate | 1.56% |
Commercial Mortgage Loans - Act
Commercial Mortgage Loans - Activities Related to Carrying Value of Mortgage Loans (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | |
Beginning balance | $ 1,888,510 |
Purchases and originations, net | 1,697,074 |
Proceeds from principal repayments | (330,939) |
Accretion of loan discount and other amortization, net | 7,233 |
Ending balance | 3,261,878 |
Loans held-for-investment | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | |
Beginning balance | 1,888,510 |
Purchases and originations, net | 1,697,074 |
Proceeds from principal repayments | (330,939) |
Accretion of loan discount and other amortization, net | 7,233 |
Ending balance | 3,261,878 |
Loans held-for-sale | |
SEC Schedule, 12-29, Real Estate Companies, Investment in Movement in Mortgage Loans on Real Estate [Roll Forward] | |
Beginning balance | 0 |
Purchases and originations, net | 0 |
Proceeds from principal repayments | 0 |
Accretion of loan discount and other amortization, net | 0 |
Ending balance | $ 0 |
Commercial Mortgage Loans - Nar
Commercial Mortgage Loans - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2018 | Dec. 31, 2017 | |
Investment Holdings [Line Items] | ||
Unamortized origination discounts and deferred nonrefundable fees | $ 20.3 | $ 13.2 |
Loans held-for-investment | ||
Investment Holdings [Line Items] | ||
Unamortized origination discounts and deferred nonrefundable fees | $ 20.3 | $ 13.2 |
Loans held-for-investment | Credit Concentration Risk | ||
Investment Holdings [Line Items] | ||
Concentration of credit risk | 100.00% |
Commercial Mortgage Loans - L_2
Commercial Mortgage Loans - Loan Risk Ratings (Details) $ in Thousands | Sep. 30, 2018USD ($)loan | Dec. 31, 2017USD ($)loan |
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Carrying Value | $ 3,261,878 | $ 1,888,510 |
Mortgage Loans on Real Estate, Total Exposure | $ 66,600 | $ 63,000 |
Commercial Mortgage Loan | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of loans | loan | 35 | 28 |
Carrying Value | $ 3,261,878 | $ 1,888,510 |
Mortgage Loans on Real Estate, Total Exposure | $ 3,348,793 | $ 1,964,645 |
Commercial Mortgage Loan | 1 | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of loans | loan | 0 | 0 |
Carrying Value | $ 0 | $ 0 |
Mortgage Loans on Real Estate, Total Exposure | $ 0 | $ 0 |
Commercial Mortgage Loan | 2 | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of loans | loan | 8 | 4 |
Carrying Value | $ 446,525 | $ 155,092 |
Mortgage Loans on Real Estate, Total Exposure | $ 448,821 | $ 156,123 |
Commercial Mortgage Loan | 3 | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of loans | loan | 27 | 23 |
Carrying Value | $ 2,815,353 | $ 1,717,000 |
Mortgage Loans on Real Estate, Total Exposure | $ 2,899,972 | $ 1,792,022 |
Commercial Mortgage Loan | 4 | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of loans | loan | 0 | 1 |
Carrying Value | $ 0 | $ 16,418 |
Mortgage Loans on Real Estate, Total Exposure | $ 0 | $ 16,500 |
Commercial Mortgage Loan | 5 | ||
SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Line Items] | ||
Number of loans | loan | 0 | 0 |
Carrying Value | $ 0 | $ 0 |
Mortgage Loans on Real Estate, Total Exposure | $ 0 | $ 0 |
Commercial Mortgage Loans - Con
Commercial Mortgage Loans - Concentration of Credit Risk (Details) - Loans held-for-investment | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Geography | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 100.00% | 100.00% |
Geography | New York | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 25.40% | 29.30% |
Geography | Georgia | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 13.30% | 11.00% |
Geography | Washington | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 10.20% | 0.00% |
Geography | California | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 9.20% | 14.90% |
Geography | Minnesota | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 6.80% | 7.00% |
Geography | Florida | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 5.90% | 2.20% |
Geography | Massachusetts | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 5.90% | 0.00% |
Geography | New Jersey | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 4.40% | 7.10% |
Geography | Pennsylvania | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 4.30% | 0.00% |
Geography | Oregon | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 3.70% | 6.30% |
Geography | Hawaii | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 3.10% | 5.30% |
Geography | Colorado | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 2.90% | 5.10% |
Geography | Washington D.C. | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 2.80% | 4.20% |
Geography | Tennessee | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 1.60% | 2.80% |
Geography | Other U.S. | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.50% | 4.80% |
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 | 53.00% | 41.70% |
Collateral Property Type | Multifamily | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 33.30% | 24.70% |
Collateral Property Type | Condo (Residential) | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 5.60% | 10.80% |
Collateral Property Type | Industrial | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 4.00% | 6.80% |
Collateral Property Type | Retail | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 3.90% | 13.80% |
Collateral Property Type | Hospitality | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.20% | 2.20% |
Debt Obligations - Summary of D
Debt Obligations - Summary of Debt (Details) | Apr. 16, 2018trust | Dec. 31, 2017USD ($)extension | Oct. 31, 2017USD ($) | May 31, 2017extension | Apr. 30, 2017extension | Sep. 30, 2018USD ($) | Sep. 02, 2018USD ($) | Sep. 01, 2018USD ($) | Aug. 31, 2018USD ($) | Nov. 01, 2017USD ($) | May 01, 2017USD ($) | |
Debt Instrument [Line Items] | ||||||||||||
Outstanding Face Amount | $ 3,221,778,000 | |||||||||||
Carrying Value | $ 1,888,510,000 | 3,261,878,000 | ||||||||||
Unamortized debt issuance costs | $ 4,500,000 | $ 5,600,000 | ||||||||||
Average haircut weighted by outstanding face amount of collateral | 32.90% | 28.80% | ||||||||||
Average haircut weighted by outstanding face amount of collateral is maximum amount is borrowed | 27.30% | 25.60% | ||||||||||
Deferred debt issuance costs, net | $ 4,600,000 | $ 16,500,000 | ||||||||||
Accrued interest payable | 1,623,000 | [1] | 6,376,000 | |||||||||
Accrued interest receivable | 8,423,000 | [1] | 12,395,000 | |||||||||
Variable Interest Entity, Primary Beneficiary | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Outstanding Face Amount | 1,095,731,000 | |||||||||||
Carrying Value | 5,256,926,000 | $ 1,086,939,000 | ||||||||||
Weighted Average Funding Cost | 4.40% | |||||||||||
Weighted Average Life (Years) | 6 years 3 months 18 days | |||||||||||
Number of trusts | trust | 5 | |||||||||||
Accrued interest payable | 18,661,000 | $ 3,828,000 | ||||||||||
Accrued interest receivable | 19,740,000 | [1] | 4,015,000 | |||||||||
Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum Facility Size | 400,000,000 | |||||||||||
CMBS | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Carrying Value | 5,256,926,000 | 1,086,939,000 | ||||||||||
CMBS | Variable Interest Entity, Primary Beneficiary | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Outstanding Face Amount | 1,095,731,000 | |||||||||||
Carrying Value | 5,256,926,000 | $ 1,086,939,000 | ||||||||||
Weighted Average Funding Cost | 4.40% | |||||||||||
Weighted Average Life (Years) | 6 years 3 months 18 days | |||||||||||
Outstanding Face Amount | $ 1,130,672,000 | |||||||||||
Carrying Value | $ 1,100,089,000 | |||||||||||
Weighted Average Life (Years) | 6 years 3 months 18 days | |||||||||||
Accrued interest payable | 18,700,000 | $ 3,800,000 | ||||||||||
Accrued interest receivable | 19,700,000 | 4,000,000 | ||||||||||
Secured Financing Agreements | Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Carrying Value | 964,800,000 | 2,115,954,000 | ||||||||||
Secured Financing Agreements | Wells Fargo | Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Outstanding Face Amount | 791,297,000 | |||||||||||
Carrying Value | 482,146,000 | 787,487,000 | ||||||||||
Maximum Facility Size | $ 1,000,000,000 | $ 1,000,000,000 | ||||||||||
Weighted Average Funding Cost | 4.40% | |||||||||||
Weighted Average Life (Years) | 1 year 9 months 18 days | |||||||||||
Outstanding Face Amount | $ 1,096,789,000 | |||||||||||
Carrying Value | $ 1,090,273,000 | |||||||||||
Weighted Average Life (Years) | 3 years 10 months 24 days | |||||||||||
Number of extensions | extension | 2 | |||||||||||
Extension term | 12 months | |||||||||||
Secured Financing Agreements | Wells Fargo | Facility | Minimum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Collateral based margin | 1.50% | |||||||||||
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 | $ 483,558,000 | |||||||||||
Carrying Value | $ 421,904,000 | 482,064,000 | ||||||||||
Maximum Facility Size | $ 500,000,000 | $ 600,000,000 | $ 750,000,000 | $ 600,000,000 | ||||||||
Weighted Average Funding Cost | 4.60% | |||||||||||
Weighted Average Life (Years) | 1 year 6 months | |||||||||||
Outstanding Face Amount | $ 709,123,000 | |||||||||||
Carrying Value | $ 705,658,000 | |||||||||||
Weighted Average Life (Years) | 3 years 2 months 12 days | |||||||||||
Number of extensions | extension | 1 | |||||||||||
Extension term | 12 months | |||||||||||
Additional borrowing capacity | 750,000,000 | |||||||||||
Secured Financing Agreements | Morgan Stanley | Facility | Minimum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Collateral based margin | 2.00% | |||||||||||
Secured Financing Agreements | Morgan Stanley | Facility | Maximum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Collateral based margin | 2.45% | |||||||||||
Secured Financing Agreements | Goldman Sachs | Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Outstanding Face Amount | $ 268,709,000 | |||||||||||
Carrying Value | $ 60,750,000 | 268,709,000 | ||||||||||
Maximum Facility Size | $ 400,000,000 | |||||||||||
Weighted Average Funding Cost | 4.40% | |||||||||||
Weighted Average Life (Years) | 3 years | 1 year 4 months 24 days | ||||||||||
Outstanding Face Amount | $ 362,191,000 | |||||||||||
Carrying Value | $ 359,960,000 | |||||||||||
Weighted Average Life (Years) | 4 years 3 months 18 days | |||||||||||
Deferred debt issuance costs, net | $ 1,500,000 | |||||||||||
Secured Financing Agreements | Goldman Sachs | Facility | Minimum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Collateral based margin | 1.70% | |||||||||||
Secured Financing Agreements | Goldman Sachs | Facility | Maximum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Collateral based margin | 2.00% | |||||||||||
Secured Financing Agreements | BMO Harris | Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Outstanding Face Amount | $ 0 | |||||||||||
Carrying Value | 0 | (316,000) | ||||||||||
Maximum Facility Size | $ 200,000,000 | |||||||||||
Weighted Average Funding Cost | 0.20% | |||||||||||
Weighted Average Life (Years) | 0 years | |||||||||||
Outstanding Face Amount | $ 0 | |||||||||||
Carrying Value | $ 0 | |||||||||||
Weighted Average Life (Years) | 0 days | |||||||||||
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 | 1.10% | |||||||||||
Weighted Average Life (Years) | 0 years | |||||||||||
Number of extensions | extension | 1 | |||||||||||
Extension term | 12 months | |||||||||||
Deferred debt issuance costs, net | $ 800,000 | |||||||||||
Loan Facility | Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum Facility Size | 0 | $ 200,000,000 | ||||||||||
Term Facility | Goldman Sachs | Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum Facility Size | 350,000,000 | |||||||||||
Swingline Facility | Goldman Sachs | Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Maximum Facility Size | $ 50,000,000 | |||||||||||
Revolving Credit Facility | Goldman Sachs | Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Weighted Average Life (Years) | 1 year | |||||||||||
Total Debt | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Outstanding Face Amount | 2,639,295,000 | |||||||||||
Carrying Value | 6,221,726,000 | 2,624,883,000 | ||||||||||
Maximum Facility Size | $ 2,275,000,000 | |||||||||||
Weighted Average Funding Cost | 4.40% | |||||||||||
Weighted Average Life (Years) | 3 years 7 months 6 days | |||||||||||
Total Debt | Secured Financing Agreements | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Outstanding Face Amount | $ 2,168,103,000 | |||||||||||
Carrying Value | 2,155,891,000 | |||||||||||
Total Debt | Secured Financing Agreements | Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Outstanding Face Amount | 1,543,564,000 | |||||||||||
Carrying Value | $ 964,800,000 | 1,537,944,000 | ||||||||||
Maximum Facility Size | $ 2,275,000,000 | |||||||||||
Weighted Average Funding Cost | 4.40% | |||||||||||
Weighted Average Life (Years) | 1 year 7 months 6 days | |||||||||||
[1] | Derived from the audited consolidated financial statements as of December 31, 2017 |
Debt Obligations - Repurchase A
Debt Obligations - Repurchase Agreement (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Repurchase Agreement Counterparty [Line Items] | ||
Outstanding Face Amount | $ 3,221,778 | |
Wells Fargo | ||
Repurchase Agreement Counterparty [Line Items] | ||
Outstanding Face Amount | $ 485,250 | |
Net Counterparty Exposure | $ 304,871 | $ 203,303 |
Percent of Stockholders' Equity | 26.60% | 19.20% |
Weighted Average Years to Maturity | 1 year 9 months 18 days | 1 year 7 months 6 days |
Morgan Stanley | ||
Repurchase Agreement Counterparty [Line Items] | ||
Outstanding Face Amount | $ 423,347 | |
Net Counterparty Exposure | $ 224,557 | $ 251,463 |
Percent of Stockholders' Equity | 19.60% | 23.70% |
Weighted Average Years to Maturity | 1 year 6 months | 2 years |
Wells Fargo, National Association and Morgan Stanley, N.A. | ||
Repurchase Agreement Counterparty [Line Items] | ||
Outstanding Face Amount | $ 1,274,855 | $ 908,597 |
Net Counterparty Exposure | $ 529,428 | $ 454,766 |
Percent of Stockholders' Equity | 46.20% | 42.90% |
Weighted Average Years to Maturity | 1 year 8 months 12 days | 1 year 9 months 18 days |
Debt Obligations - Term Loan Fa
Debt Obligations - Term Loan Facility (Details) $ in Thousands | Jun. 30, 2018 | Sep. 30, 2018USD ($)loan | Apr. 30, 2018USD ($) |
Debt Instrument [Line Items] | |||
Weighted average interest rate | 3.00% | ||
Facility | Term Loan Facility I | |||
Debt Instrument [Line Items] | |||
Borrowing capacity | $ 600,000 | $ 200,000 | |
Term (in years) | 5 years | ||
Weighted average interest rate | 1.40% | ||
Debt instrument, interest rate, stated percentage | 3.70% | ||
Carrying value | $ 578,010 | ||
Number of collateralized loans | loan | 6 | ||
Unpaid principal balance | $ 717,500 | ||
Debt instrument, face amount | 582,483 | ||
Fair value | $ 711,982 | ||
Interest Rate | 1.70% | ||
Collateralized Securities | Facility | Term Loan Facility I | |||
Debt Instrument [Line Items] | |||
Interest Rate | 3.00% |
Debt Obligations - Debt Activit
Debt Obligations - Debt Activity (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Debt Instrument, Increase (Decrease), Net [Roll Forward] | ||
Deferred debt issuance costs | $ (9,702) | $ (3,051) |
Fair value adjustment | (92,499) | |
All Debt Instruments, Excluding Instruments Treated as Lines of Credit | ||
Debt Instrument, Increase (Decrease), Net [Roll Forward] | ||
Beginning balance | 6,221,726 | |
Principal borrowings | 1,607,725 | |
Principal repayments/ sales/ deconsolidation | (4,513,650) | |
Deferred debt issuance costs | (8,562) | |
Amortization of deferred debt issuance costs and premium/discount on debt obligations | 3,017 | |
Fair value adjustment | (92,499) | |
Other | (14,864) | |
Ending balance | 3,202,893 | |
Facility | Secured Financing Agreements | ||
Debt Instrument, Increase (Decrease), Net [Roll Forward] | ||
Beginning balance | 964,800 | |
Principal borrowings | 1,607,725 | |
Principal repayments/ sales/ deconsolidation | (451,026) | |
Deferred debt issuance costs | (8,562) | |
Amortization of deferred debt issuance costs and premium/discount on debt obligations | 3,017 | |
Fair value adjustment | 0 | |
Other | 0 | |
Ending balance | 2,115,954 | |
CMBS | ||
Debt Instrument, Increase (Decrease), Net [Roll Forward] | ||
Beginning balance | 5,256,926 | |
Principal borrowings | 0 | |
Principal repayments/ sales/ deconsolidation | (4,062,624) | |
Deferred debt issuance costs | 0 | |
Amortization of deferred debt issuance costs and premium/discount on debt obligations | 0 | |
Fair value adjustment | (92,499) | |
Other | (14,864) | |
Ending balance | $ 1,086,939 |
Debt Obligations - Maturities (
Debt Obligations - Maturities (Details) $ in Thousands | Sep. 30, 2018USD ($) |
Debt Instrument [Line Items] | |
2,018 | $ 2,779 |
2,019 | 518,530 |
2,020 | 1,164,991 |
2,021 | 484,634 |
2,022 | 71,065 |
Thereafter | 979,779 |
Total Long Term Debt | $ 3,221,778 |
Recourse limit | 25.00% |
Nonrecourse | |
Debt Instrument [Line Items] | |
2,018 | $ 2,779 |
2,019 | 13,098 |
2,020 | 179,359 |
2,021 | 484,634 |
2,022 | 18,565 |
Thereafter | 979,779 |
Total Long Term Debt | 1,678,214 |
Recourse | |
Debt Instrument [Line Items] | |
2,018 | 0 |
2,019 | 505,432 |
2,020 | 985,632 |
2,021 | 0 |
2,022 | 52,500 |
Thereafter | 0 |
Total Long Term Debt | $ 1,543,564 |
Debt Obligations - Covenants (D
Debt Obligations - Covenants (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Debt Disclosure [Abstract] | |
Interest income to interest expense ratio | 1.5 |
Percent of aggregate cash proceeds and any capital contributions | 75.00% |
Amount of aggregate cash proceeds and any capital contributions | $ 800 |
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 |
Convertible Notes, Net - Narrat
Convertible Notes, Net - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
May 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | ||
Debt Instrument [Line Items] | |||||||
Outstanding Face Amount | $ 3,221,778 | $ 3,221,778 | |||||
Affiliate expenses | 7,487 | $ 4,355 | 16,069 | $ 10,444 | |||
Amortization of debt discount | (7,206) | $ (2,301) | |||||
Accrued interest payable | 6,376 | 6,376 | $ 1,623 | [1] | |||
Convertible Debt | |||||||
Debt Instrument [Line Items] | |||||||
Affiliate expenses | 4,500 | ||||||
Convertible Notes Payable | |||||||
Debt Instrument [Line Items] | |||||||
Debt issuance costs, gross | 4,745 | 4,745 | 0 | ||||
Convertible Notes Payable | Notes Due in 2023 | |||||||
Debt Instrument [Line Items] | |||||||
Outstanding Face Amount | $ 143,750 | ||||||
Debt instrument, interest rate, stated percentage | 6.125% | ||||||
Debt issuance costs, gross | $ 5,100 | $ 5,100 | $ 5,100 | ||||
Debt instrument, convertible, shares issued | 43.9386 | ||||||
Debt Instrument, convertible, conversion price | $ 22.76 | $ 22.76 | |||||
Debt instrument, convertible, conversion premium | 10.00% | ||||||
Debt instrument, convertible, conversion price less premium | $ 20.69 | $ 20.69 | |||||
Amortization of debt discount | $ 1,800 | ||||||
Debt instrument, interest rate, effective percentage | 6.50% | 6.92% | 6.92% | ||||
Accrued interest payable | $ 3,300 | $ 3,300 | $ 0 | ||||
KKR Credit & Markets | Convertible Debt | |||||||
Debt Instrument [Line Items] | |||||||
Affiliate expenses | $ 800 | ||||||
[1] | Derived from the audited consolidated financial statements as of December 31, 2017 |
Convertible Notes, Net - Intere
Convertible Notes, Net - Interest Expense, Debt (Details) - Convertible Notes Payable - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Debt Instrument [Line Items] | ||||
Cash coupon | $ 2,201 | $ 0 | $ 3,253 | $ 0 |
Discount and issuance cost amortization | 349 | 0 | 512 | 0 |
Total interest expense | $ 2,550 | $ 0 | $ 3,765 | $ 0 |
Convertible Notes, Net - Conver
Convertible Notes, Net - Convertible Notes, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | |||
Convertible senior notes, net | $ 137,339 | $ 0 | [1] |
Convertible Notes Payable | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | 143,750 | 0 | |
Deferred financing costs | (4,745) | 0 | |
Unamortized discount | (1,666) | 0 | |
Convertible senior notes, net | $ 137,339 | $ 0 | |
[1] | Derived from the audited consolidated financial statements as of December 31, 2017 |
Loan Participations Sold (Detai
Loan Participations Sold (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)loan | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Participating Mortgage Loans [Line Items] | |||||
Carrying Value | $ 3,261,878 | $ 3,261,878 | $ 1,888,510 | ||
Weighted average interest rate | 3.00% | 3.00% | |||
Interest income | $ 28,558 | $ 18,994 | $ 71,127 | $ 42,168 | |
Total loan | |||||
Participating Mortgage Loans [Line Items] | |||||
Number of loans sold | loan | 1 | ||||
Principal Balance | 97,440 | $ 97,440 | |||
Carrying Value | 97,024 | $ 97,024 | |||
Senior Participation Loan | |||||
Participating Mortgage Loans [Line Items] | |||||
Number of loans sold | loan | 1 | ||||
Principal Balance | 83,886 | $ 83,886 | |||
Carrying Value | $ 83,442 | $ 83,442 | $ 81,500 | ||
Weighted average interest rate | 1.80% | 1.80% | |||
Partial recourse, amount | $ 10,000 | $ 10,000 | |||
Interest income | 2,300 | ||||
Interest expense | $ 2,400 |
Variable Interest Entities - Na
Variable Interest Entities - Narrative (Details) $ in Thousands | Apr. 16, 2018USD ($)trust | Jun. 30, 2018USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)investment | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) |
Variable Interest Entity [Line Items] | |||||||
Realized gain on sale of investments | $ 0 | $ 0 | $ 13,000 | $ 0 | |||
Number of equity method investments | investment | 2 | ||||||
Variable Interest Entity, Primary Beneficiary | |||||||
Variable Interest Entity [Line Items] | |||||||
Number of trusts sold | trust | 4 | ||||||
Number of trusts | trust | 5 | ||||||
Payments to acquire noncontrolling interest | $ 1,300 | ||||||
Variable Interest Entity, Primary Beneficiary | Consolidated Joint Venture One | Loans held-for-investment | |||||||
Variable Interest Entity [Line Items] | |||||||
Ownership percentage in VIE | 95.00% | ||||||
CMBS | Variable Interest Entity, Primary Beneficiary | |||||||
Variable Interest Entity [Line Items] | |||||||
Unpaid principal balance | $ 112,700 | 34,900 | $ 34,900 | $ 309,200 | |||
Fair value | $ 13,000 | $ 13,000 | 114,900 | ||||
Realized gain on sale of investments | $ 13,000 | ||||||
Face amount of sold investment | 94,400 | ||||||
Fair value of sold investment | $ 99,700 | ||||||
RECOP | Variable Interest Entity, Not Primary Beneficiary | |||||||
Variable Interest Entity [Line Items] | |||||||
Ownership percentage in VIE | 3.50% | ||||||
KKR Manager | Variable Interest Entity, Not Primary Beneficiary | |||||||
Variable Interest Entity [Line Items] | |||||||
Ownership percentage in VIE | 4.70% |
Variable Interest Entities - Re
Variable Interest Entities - Recognized Trusts' Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | |
Variable Interest Entity [Line Items] | |||
Accrued interest receivable | $ 12,395 | $ 8,423 | [1] |
Accrued interest payable | 6,376 | 1,623 | [1] |
Variable Interest Entity, Primary Beneficiary | |||
Variable Interest Entity [Line Items] | |||
Commercial mortgage loans held in variable interest entities, at fair value | 1,100,089 | 5,372,811 | [1] |
Accrued interest receivable | 4,015 | 19,740 | [1] |
Variable interest entity liabilities, at fair value | 1,086,939 | 5,256,926 | |
Accrued interest payable | $ 3,828 | $ 18,661 | |
[1] | Derived from the audited consolidated financial statements as of December 31, 2017 |
Variable Interest Entities - Ch
Variable Interest Entities - Change in Net Assets Related to Consolidated Variable Interest Entities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Variable Interest Entity [Line Items] | ||||
Net interest earned | $ 28,558 | $ 18,994 | $ 71,127 | $ 42,168 |
Change in net assets related to consolidated variable interest entities | 379 | 4,025 | 2,460 | 12,810 |
Variable Interest Entity, Primary Beneficiary | ||||
Variable Interest Entity [Line Items] | ||||
Net interest earned | 584 | 3,138 | 4,604 | 9,357 |
Unrealized gain (loss) | (205) | 887 | (2,144) | 3,453 |
Change in net assets related to consolidated variable interest entities | $ 379 | $ 4,025 | $ 2,460 | $ 12,810 |
Variable Interest Entities - Co
Variable Interest Entities - Concentration of Credit Risk (Details) - Variable Interest Entities, CMBS | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2017 | |
Geography | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 100.00% | 100.00% |
Geography | California | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 33.30% | 23.20% |
Geography | Texas | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 11.10% | 12.70% |
Geography | New York | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 8.30% | 9.10% |
Geography | Missouri | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 5.30% | 4.60% |
Geography | Pennsylvania | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 5.20% | 4.50% |
Geography | Florida | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 4.20% | 5.50% |
Geography | Massachusetts | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 3.60% | 1.70% |
Geography | Illinois | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 2.70% | 7.10% |
Geography | Georgia | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 2.60% | 2.90% |
Geography | New Hampshire | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 2.40% | 1.00% |
Geography | Delaware | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 2.00% | 1.30% |
Geography | Virginia | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 1.70% | 1.20% |
Geography | Other U.S. | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 17.60% | 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 | 28.40% | 25.20% |
Collateral Property Type | Office | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 27.40% | 26.40% |
Collateral Property Type | Hospitality | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 13.00% | 15.00% |
Collateral Property Type | Multifamily | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 9.90% | 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 | 5.90% | 3.00% |
Collateral Property Type | Self Storage | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 3.80% | 6.90% |
Collateral Property Type | Mobile Home | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 1.80% | 2.70% |
Collateral Property Type | Other | ||
Concentration Risk [Line Items] | ||
Concentration of credit risk | 0.20% | 0.60% |
Equity - Schedule of Common Sto
Equity - Schedule of Common Stock Issued (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended | |||||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | |||
Common Stock Issuance [Roll Forward] | |||||||
Beginning balance | $ 1,059,145 | [1] | $ 505,037 | $ 505,037 | |||
Beginning balance (shares) | 53,685,440 | ||||||
Issuance of stock | $ 99,500 | 580,306 | |||||
Ending balance | $ 1,146,301 | $ 1,061,950 | $ 1,059,145 | [1] | $ 505,037 | ||
Ending balance (shares) | 58,022,590 | 53,685,440 | |||||
Common Stock, Net | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Beginning balance (shares) | 53,711,838 | 24,158,392 | 24,158,392 | 13,636,416 | |||
Ending balance (shares) | 58,711,838 | 53,711,838 | 24,158,392 | ||||
Common Stock Including Additional Paid in Capital & Offering Costs | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Beginning balance | $ 1,054,346 | $ 479,733 | $ 479,733 | $ 272,728 | |||
Ending balance | $ 1,152,672 | $ 1,054,346 | $ 479,733 | ||||
Private Placement | |||||||
Class of Stock [Line Items] | |||||||
Share price (usd per share) | $ 20 | ||||||
February 2016 | Common Stock, Net | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock (shares) | 2,000,000 | ||||||
February 2016 | Common Stock Including Additional Paid in Capital & Offering Costs | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock | $ 40,000 | ||||||
May 2016 | Common Stock, Net | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock (shares) | 3,000,138 | ||||||
May 2016 | Common Stock Including Additional Paid in Capital & Offering Costs | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock | $ 57,130 | ||||||
June 2016 | Common Stock, Net | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock (shares) | 21,838 | ||||||
June 2016 | Common Stock Including Additional Paid in Capital & Offering Costs | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock | $ 0 | ||||||
August 2016 | Common Stock, Net | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock (shares) | 5,500,000 | ||||||
August 2016 | Common Stock Including Additional Paid in Capital & Offering Costs | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock | $ 109,875 | ||||||
February 2017 | Common Stock, Net | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock (shares) | 7,386,208 | ||||||
February 2017 | Common Stock Including Additional Paid in Capital & Offering Costs | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock | $ 147,662 | ||||||
April 2017 | Common Stock, Net | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock (shares) | 10,379,738 | ||||||
April 2017 | Common Stock Including Additional Paid in Capital & Offering Costs | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock | $ 207,595 | ||||||
May 2017- Initial Public Offering | Common Stock, Net | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock (shares) | 11,787,500 | ||||||
May 2017- Initial Public Offering | Common Stock Including Additional Paid in Capital & Offering Costs | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock | $ 219,356 | ||||||
August 2018 | Common Stock, Net | |||||||
Common Stock Issuance [Roll Forward] | |||||||
Issuance of stock (shares) | 5,000,000 | ||||||
[1] | Derived from the audited consolidated financial statements as of December 31, 2017 |
Equity - Narrative (Details)
Equity - Narrative (Details) - USD ($) | Jan. 23, 2015 | Aug. 31, 2018 | May 31, 2017 | Apr. 30, 2017 | Feb. 28, 2017 | Mar. 31, 2016 | Sep. 30, 2018 | Sep. 30, 2017 | Jun. 13, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2015 | Oct. 02, 2014 |
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Common stock and preferred stock, shares authorized | 350,000,000 | |||||||||||||
Common stock par value (usd per share) | $ 0.01 | $ 0.01 | $ 0.01 | |||||||||||
Common stock authorized (shares) | 300,000,000 | 300,000,000 | 300,000,000 | |||||||||||
Preferred stock authorized (shares) | 50,000,000 | 50,000,000 | 50,000,000 | |||||||||||
Value of stock acquired per transaction for LLC interest allocation | $ 100,000,000 | |||||||||||||
Stock repurchase program, authorized amount (up to) | $ 100,000,000 | $ 100,000,000 | ||||||||||||
Stock repurchase program, remaining authorized repurchase amount | $ (49,300,000) | (50,000,000) | $ (50,000,000) | |||||||||||
Treasury stock, shares, acquired | 697,109 | |||||||||||||
Treasury stock acquired, average cost per share (dollars per share) | $ 19.54 | |||||||||||||
Treasury stock, value, acquired | $ 13,600,000 | |||||||||||||
Common stock issued (shares) | 58,022,590 | 53,685,440 | ||||||||||||
Common stock outstanding (shares) | 58,022,590 | 53,685,440 | ||||||||||||
Treasury stock, held (shares) | 723,507 | 26,398 | ||||||||||||
Preferred stock par or stated value (usd per share) | $ 0.01 | $ 0.01 | ||||||||||||
Value of stock redeemed | $ 125,000 | |||||||||||||
Common Stock | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Sale of stock, number of shares issued in transaction | 5,000,000 | |||||||||||||
Share price (usd per share) | $ 19.90 | |||||||||||||
Shares issued related to vesting of RSUs | 34,259 | |||||||||||||
Stock-based compensation, shares | 34,259 | |||||||||||||
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 | ||||||||||||
Dividend rate | 12.50% | |||||||||||||
Stock redeemed (shares) | 125 | |||||||||||||
Value of stock redeemed | $ 100,000 | |||||||||||||
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 | |||||||||||||
Redemption price (usd per share) | $ 0.01 | |||||||||||||
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% | |||||||||||||
KKR Real Estate FInance Manager L.L.C | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Common stock, percent of limited liability company interest | 6.67% | |||||||||||||
KREF | KKR | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Common stock (shares) | 23,758,616 | |||||||||||||
Issued and outstanding common stock owned, percentage | 41.00% | |||||||||||||
KKR Real Estate FInance Trust Inc. on Behalf of Third Party | KKR | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Common stock (shares) | 3,758,616 | |||||||||||||
Private Placement | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Capital commitment | $ 277,400,000 | |||||||||||||
Share price (usd per share) | $ 20 | |||||||||||||
Common stock issued (shares) | 21,838 | |||||||||||||
Private Placement | Common Stock | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Sale of stock, number of shares issued in transaction | 10,379,738 | 7,386,208 | ||||||||||||
Share price (usd per share) | $ 20 | |||||||||||||
Sale of stock, consideration received on transaction | $ 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 | 400,000,000 | |||||||||||||
Private Placement, Third-parties Subsequent to Private Placement Completion | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Capital commitment | $ 248,000,000 | |||||||||||||
IPO | Common Stock | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Sale of stock, number of shares issued in transaction | 11,787,500 | |||||||||||||
Share price (usd per share) | $ 20.50 | |||||||||||||
Over-Allotment Option | Common Stock | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Sale of stock, number of shares issued in transaction | 98,300,000 | 1,537,500 | 98,326,000 | |||||||||||
Consolidated Joint Venture One | Third-Parties | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Noncontrolling interest ownership percentage | 5.00% | |||||||||||||
Common Stock, Net | ||||||||||||||
Subsidiary, Sale of Stock [Line Items] | ||||||||||||||
Common stock issued (shares) | 58,711,838 | 53,711,838 | 24,158,392 | 13,636,416 |
Equity - Schedule of Dividends
Equity - Schedule of Dividends Declared (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 11, 2018 | May 07, 2018 | Mar. 12, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 |
Equity [Abstract] | |||||||
Dividend Declared per Share of Common Stock (usd per share) | $ 0.43 | $ 0.43 | $ 0.40 | $ 0.43 | $ 0.37 | $ 1.26 | $ 1.25 |
Dividends declared | $ 24,951 | $ 22,804 | $ 21,230 | $ 68,985 | $ 50,588 |
Equity - Earnings per Share (De
Equity - Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Numerator | ||||
Net Income (Loss) Available to Common Stockholders, Basic | $ 20,821 | $ 17,339 | $ 67,921 | $ 41,784 |
Denominator | ||||
Weighted Average Number of Shares of Common Stock Outstanding, Basic (shares) | 55,903,126 | 53,696,967 | 54,111,272 | 42,501,356 |
Dilutive restricted stock units | 18,529 | 74 | 21,059 | 174 |
Weighted Average Number of Shares of Common Stock Outstanding, Diluted (shares) | 55,921,655 | 53,697,041 | 54,132,331 | 42,501,530 |
Net Income (Loss) Per Share of Common Stock | ||||
Net Income (Loss) Per Share of Common Stock, Basic (usd per share) | $ 0.37 | $ 0.32 | $ 1.26 | $ 0.98 |
Net Income (Loss) Per Share of Common Stock, Diluted (usd per share) | $ 0.37 | $ 0.32 | $ 1.25 | $ 0.98 |
Stock-based Compensation - Narr
Stock-based Compensation - Narrative (Details) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)periodshares | Sep. 30, 2017USD ($) | Jun. 21, 2018$ / shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share price (in usd per share) | $ / shares | $ 20.47 | ||||
Award requisite service period | 2 years | ||||
Reduction of capital | $ 0.4 | ||||
Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Number of consecutive vesting periods | period | 3 | ||||
Award vesting period | 1 year | ||||
Shares delivered | shares | 54,037 | ||||
Common Stock | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Unrecognized stock based compensation expense | $ 1.7 | $ 1.7 | |||
Shares delivered | shares | 34,259 | ||||
General and Administrative Expense | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Share-based compensation expense | $ 0.3 | $ 0 | $ 1.6 | $ 0 | |
Director | Restricted Stock Units | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Award vesting period | 1 year |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Stock Unit Activity (Details) - Restricted Stock Units | 9 Months Ended |
Sep. 30, 2018$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Unvested as of December 31, 2017 (in shares) | shares | 154,878 |
Units granted (in shares) | shares | 11,878 |
Units vested (in shares) | shares | (54,037) |
Units Forfeited/ cancelled (in shares) | shares | (2,740) |
Unvested as of September 30, 2018 (in shares) | shares | 109,979 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | |
Unvested as of December 31, 2017, weighted average grant date fair value | $ / shares | $ 18.61 |
Units granted, weighted average grant date fair value | $ / shares | 20.70 |
Units vested, weighted average grant date fair value | $ / shares | 20.47 |
Units Forfeited/ cancelled, weighted average grant date fair value | $ / shares | 20.47 |
Unvested as of September 30, 2018, weighted average grant date fair value | $ / shares | $ 20.49 |
Stock-based Compensation - RSU
Stock-based Compensation - RSU Vesting (Details) - Restricted Stock Units - shares | Sep. 30, 2018 | Dec. 31, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
2,018 | 0 | |
2,019 | 60,927 | |
2,020 | 49,052 | |
Total | 109,979 | 154,878 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Jan. 31, 2017 |
Future Funding Commitment Related to Commercial Mortgage Loan Investments | ||
Long-term Purchase Commitment [Line Items] | ||
Capital commitment | $ 369.9 | |
Variable Interest Entity, Not Primary Beneficiary | Commitment to Invest in Aggregator Vehicle | ||
Long-term Purchase Commitment [Line Items] | ||
Capital commitment | $ 16.2 | $ 40 |
Related Party Transactions - Na
Related Party Transactions - Narrative (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2018USD ($)shares | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)quartershares | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($)shares | ||
Related Party Transaction [Line Items] | ||||||
Management fee (greater of) | $ 7,487,000 | $ 4,355,000 | $ 16,069,000 | $ 10,444,000 | ||
Due to affiliates | 7,700,000 | 7,700,000 | $ 4,442,000 | |||
Due to affiliates | $ 7,700,000 | $ 7,700,000 | $ 4,442,000 | [1] | ||
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 | 4,403,387 | 4,403,387 | ||||
Non-Employee Director | Management Incentive Plan | ||||||
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 | ||||||
Related Party Transaction [Line Items] | ||||||
Units granted (in shares) | shares | 11,878 | |||||
Restricted Stock Units | Management Incentive Plan | ||||||
Related Party Transaction [Line Items] | ||||||
Units granted (in shares) | shares | 11,878 | 154,878 | ||||
Common Stock | Management Incentive Plan | ||||||
Related Party Transaction [Line Items] | ||||||
Number of shares available for awards (shares) | shares | 4,259,149 | 4,259,149 | ||||
Convertible Debt | ||||||
Related Party Transaction [Line Items] | ||||||
Management fee (greater of) | $ 4,500,000 | |||||
Convertible Debt | KKR Credit & Markets | ||||||
Related Party Transaction [Line Items] | ||||||
Management fee (greater of) | $ 800,000 | |||||
Structuring fee, percent | 0.75% | |||||
Amortization of deferred debt issuance costs and premium/discount on debt obligations | $ 5,100,000 | |||||
Loan Facility | ||||||
Related Party Transaction [Line Items] | ||||||
Structuring fee, percent | 0.35% | |||||
CMBS | Quarterly Management Fee | ||||||
Related Party Transaction [Line Items] | ||||||
Due to affiliates | $ 2,400,000 | $ 2,400,000 | ||||
[1] | Derived from the audited consolidated financial statements as of December 31, 2017 |
Related Party Transactions - Ex
Related Party Transactions - Expenses Incurred and Amounts Owed to Affiliates (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Related Party Transaction [Line Items] | ||||||
Due to affiliates | $ 7,700 | $ 7,700 | $ 4,442 | |||
Affiliate expenses | 7,487 | $ 4,355 | 16,069 | $ 10,444 | ||
Management Fees | ||||||
Related Party Transaction [Line Items] | ||||||
Due to affiliates | 4,164 | 4,164 | 3,748 | |||
Affiliate expenses | 4,164 | 3,989 | 12,016 | 9,513 | ||
Incentive compensation | ||||||
Related Party Transaction [Line Items] | ||||||
Due to affiliates | 3,286 | 3,286 | $ 0 | |||
Affiliate expenses | 3,286 | 0 | 3,286 | 0 | ||
Expense reimbursements and other | ||||||
Related Party Transaction [Line Items] | ||||||
Due to affiliates | 250 | 250 | $ 694 | |||
Affiliate expenses | 37 | 366 | 767 | 931 | ||
Out-of-pocket costs reimbursed to KKR Manager | ||||||
Related Party Transaction [Line Items] | ||||||
Affiliate expenses | $ 300 | $ 900 | $ 2,500 | $ 1,100 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Assets and Liabilities Recorded at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | $ 192,771 | $ 103,120 | [1] |
Restricted cash | 0 | 400 | [1] |
Commercial mortgage loans, held-for-investment, net | 3,261,878 | 1,888,510 | [1] |
Equity method investments, at fair value | 24,745 | 14,390 | [1] |
Commercial mortgage loans held in variable interest entities, net | 1,100,089 | 5,372,811 | [1] |
Assets | 4,611,924 | 7,394,893 | [1] |
Secured financing agreements, gross | 3,221,778 | ||
Secured financing agreements, net | 2,115,954 | 964,800 | [1] |
Carrying Value | 3,261,878 | 1,888,510 | |
Convertible notes, net | 137,339 | 0 | [1] |
Variable interest entity liabilities | 1,086,939 | 5,256,926 | [1] |
Liabilities | 3,465,221 | 6,331,709 | [1] |
Unamortized origination discounts and deferred nonrefundable fees | 20,300 | 13,200 | |
Unamortized debt issuance costs | 5,600 | 4,500 | |
Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Commercial mortgage loans, held-for-investment, net, fair value | 3,266,234 | ||
Equity method investments, at fair value | 24,745 | 14,390 | |
Commercial mortgage loans held in variable interest entities, at fair value | 1,100,089 | ||
Variable interest entity liabilities, at fair value | 1,086,939 | ||
Liabilities, fair value | 3,296,243 | ||
Fair Value, Measurements, Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Cash and cash equivalents | 192,771 | 103,120 | |
Cash and cash equivalents, fair value | 192,771 | 103,120 | |
Restricted cash | 400 | ||
Restricted cash and cash equivalents, fair value | 400 | ||
Commercial mortgage loans, held-for-investment, gross | 3,282,184 | 1,901,693 | |
Commercial mortgage loans, held-for-investment, net | 3,261,878 | 1,888,510 | |
Commercial mortgage loans, held-for-investment, net, fair value | 3,266,234 | 1,894,870 | |
Equity method investments, at fair value | 24,745 | 14,390 | |
Commercial mortgage loans held in variable interest entities, gross | 1,130,672 | 5,305,976 | |
Commercial mortgage loans held in variable interest entities, net | 1,100,089 | 5,372,811 | |
Commercial mortgage loans held in variable interest entities, at fair value | 1,100,089 | 5,372,811 | |
Assets gross | 4,630,372 | 7,325,579 | |
Assets | 4,579,483 | 7,379,231 | |
Assets, fair value | 4,583,839 | 7,385,591 | |
Secured financing agreements, gross | 2,126,047 | 969,347 | |
Secured financing agreements, net | 964,800 | ||
Secured financing agreements, net, fair value disclosure | 2,126,047 | 969,347 | |
Outstanding Face Amount | 82,000 | ||
Participating sold, fair value | 83,257 | 81,836 | |
Convertible notes, net | 137,339 | ||
Convertible notes, net, fair value | 146,208 | ||
Variable interest entity liabilities, gross | 1,095,731 | 4,996,817 | |
Variable interest entity liabilities | 1,086,939 | 5,256,926 | |
Variable interest entity liabilities, at fair value | 1,086,939 | 5,256,926 | |
Liabilities gross | 3,449,414 | 6,048,164 | |
Liabilities | 3,423,674 | 6,303,198 | |
Liabilities, fair value | 3,442,451 | 6,308,109 | |
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 | 192,771 | 103,120 | |
Restricted cash and cash equivalents, fair value | 400 | ||
Commercial mortgage loans, held-for-investment, net, fair value | 0 | 0 | |
Equity method investments, at fair value | 0 | 0 | |
Commercial mortgage loans held in variable interest entities, at fair value | 0 | 0 | |
Assets, fair value | 192,771 | 103,520 | |
Secured financing agreements, net, fair value disclosure | 0 | 0 | |
Participating sold, fair value | 0 | 0 | |
Convertible notes, net, fair value | 146,208 | ||
Variable interest entity liabilities, at fair value | 0 | 0 | |
Liabilities, fair value | 146,208 | 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 | ||
Commercial mortgage loans, held-for-investment, net, fair value | 0 | 0 | |
Equity method investments, at fair value | 0 | 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 | |
Participating sold, fair value | 0 | 0 | |
Convertible notes, net, fair value | 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 | ||
Commercial mortgage loans, held-for-investment, net, fair value | 1,894,870 | ||
Commercial mortgage loans held in variable interest entities, at fair value | 5,372,811 | ||
Assets, fair value | 4,391,068 | 7,282,071 | |
Secured financing agreements, net, fair value disclosure | 969,347 | ||
Participating sold, fair value | 83,257 | 81,836 | |
Convertible notes, net, fair value | 0 | ||
Variable interest entity liabilities, at fair value | 1,086,939 | 5,256,926 | |
Liabilities, fair value | 3,296,243 | 6,308,109 | |
Senior Participation Loan | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Mortgage loans on real estate, fair value | 83,300 | 81,800 | |
Carrying Value | 83,442 | 81,500 | |
Senior Participation Loan | Fair Value, Measurements, Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Outstanding Face Amount | 83,886 | ||
Carrying Value | 83,442 | $ 81,472 | |
Convertible Debt | Fair Value, Measurements, Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Debt instrument, face amount | 143,750 | ||
Commercial Mortgage Loan | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Unamortized debt issuance costs | $ 10,100 | ||
[1] | Derived from the audited consolidated financial statements as of December 31, 2017 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Unobservable Input Reconciliation (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2018USD ($) | |
Liabilities | |
Realized gain (loss) | $ 0 |
Unrealized gain (loss) included in change in net assets related to consolidated variable interest entities | (92,499) |
Fair Value, Assets (Liabilities), Net, Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | 115,885 |
Realized gain (loss) | 13,000 |
Unrealized gain (loss) included in change in net assets related to consolidated variable interest entities | (2,144) |
Purchases | 0 |
Sales/Repayments/Deconsolidation | (112,747) |
Other | (844) |
Ending balance | 13,150 |
Variable Interest Entity, Primary Beneficiary | |
Liabilities | |
Beginning balance | 5,256,926 |
Purchases | 0 |
Sales/Repayments/Deconsolidation | (4,062,624) |
Other | (14,864) |
Ending balance | 1,086,939 |
Variable Interest Entity, Primary Beneficiary | Commercial Mortgage Loans Held in Variable Interest Entities, at Fair Value | |
Assets | |
Beginning balance | 5,372,811 |
Realized gain (loss) | 13,000 |
Unrealized gain (loss) included in change in net assets related to consolidated variable interest entities | (94,643) |
Purchases | 0 |
Sales/Repayments/Deconsolidation | (4,175,371) |
Other | (15,708) |
Ending balance | $ 1,100,089 |
Fair Value of Financial Instr_5
Fair Value of Financial Instruments - Unobservable Inputs (Details) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($) | ||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Equity method investments, at fair value | $ 24,745 | $ 14,390 | [1] |
Level 3 | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Commercial mortgage loans, held-for-investment, net | 3,266,234 | ||
Equity method investments, at fair value | 24,745 | $ 14,390 | |
Commercial mortgage loans held in variable interest entities, at fair value | 1,100,089 | ||
Variable interest entity liabilities, at fair value | 1,086,939 | ||
Liabilities | 3,296,243 | ||
Level 3 | Discounted cash flow | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Commercial mortgage loans, held-for-investment, net | 3,266,234 | ||
Equity method investments, at fair value | 24,400 | ||
Commercial mortgage loans held in variable interest entities, at fair value | 1,100,089 | ||
Assets | $ 4,366,323 | ||
Level 3 | Weighted Average | Discounted cash flow | Variable Interest Entities, Liabilities | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Yield | 6.40% | ||
Level 3 | Weighted Average | Discounted cash flow | Loans held-for-investment | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Loan-to-value ratio | 67.80% | ||
Level 3 | Weighted Average | Discounted cash flow | Variable Interest Entities, CMBS | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Yield | 8.30% | ||
Level 3 | Minimum | Discounted cash flow | Variable Interest Entities, Liabilities | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Yield | 2.40% | ||
Level 3 | Minimum | Discounted cash flow | Loans held-for-investment | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Loan-to-value ratio | 49.40% | ||
Level 3 | Minimum | Discounted cash flow | Variable Interest Entities, CMBS | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Yield | 2.40% | ||
Level 3 | Maximum | Discounted cash flow | Variable Interest Entities, Liabilities | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Yield | 16.50% | ||
Level 3 | Maximum | Discounted cash flow | Loans held-for-investment | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Loan-to-value ratio | 80.30% | ||
Level 3 | Maximum | Discounted cash flow | Variable Interest Entities, CMBS | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Yield | 37.10% | ||
Measurement Input, Discount Rate | Level 3 | Weighted Average | Discounted cash flow | Loans held-for-investment | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Discount rate | 0.067 | ||
Measurement Input, Discount Rate | Level 3 | Minimum | Discounted cash flow | Loans held-for-investment | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Discount rate | 0.026 | ||
Measurement Input, Discount Rate | Level 3 | Maximum | Discounted cash flow | Loans held-for-investment | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Discount rate | 0.139 | ||
Measurement Input, Discount Rate | Loan Participations | Level 3 | Weighted Average | Market comparable | Long-term Debt | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Discount rate | 0.036 | ||
Measurement Input, Discount Rate | Loan Participations | Level 3 | Minimum | Discounted cash flow | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Discount rate | 0.026 | ||
Measurement Input, Discount Rate | Loan Participations | Level 3 | Maximum | Discounted cash flow | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Discount rate | 0.046 | ||
Senior Participation Loan | Level 3 | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Secured financing agreements, net | $ 83,257 | ||
Senior Participation Loan | Loan Participations | Level 3 | Weighted Average | Market comparable | Long-term Debt | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Loan-to-value ratio | 52.90% | ||
Senior Participation Loan | Loan Participations | Level 3 | Minimum | Discounted cash flow | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Loan-to-value ratio | 52.90% | ||
Senior Participation Loan | Loan Participations | Level 3 | Maximum | Discounted cash flow | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Loan-to-value ratio | 52.90% | ||
Secured Financing Agreements | Level 3 | Market comparable | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Secured financing agreements, net | $ 2,126,047 | ||
Secured Financing Agreements | Level 3 | Weighted Average | Market comparable | Long-term Debt | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Credit spread | 1.80% | ||
Secured Financing Agreements | Level 3 | Minimum | Market comparable | Long-term Debt | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Credit spread | 1.40% | ||
Secured Financing Agreements | Level 3 | Maximum | Market comparable | Long-term Debt | |||
Fair Value Inputs, Assets, Quantitative Information [Line Items] (Deprecated 2018-01-31) | |||
Credit spread | 2.50% | ||
[1] | Derived from the audited consolidated financial statements as of December 31, 2017 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Current state and local tax expense (benefit) | $ 200,000 | $ 400,000 | |
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 | 1 Months Ended | ||
Oct. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | |
Subsequent Event [Line Items] | |||
Initial Face Amount Funded | $ 3,261,878 | $ 1,888,510 | |
Senior loans | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Maximum Face Amount | $ 122,000,000 | ||
Initial Face Amount Funded | $ 119,000,000 | ||
LTV | 72.00% | ||
Senior loans | Subsequent Event | LIBOR | |||
Subsequent Event [Line Items] | |||
Interest Rate | 2.70% | ||
Senior Loan, Queens, New York | Senior loans | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Maximum Face Amount | $ 45,000,000 | ||
Initial Face Amount Funded | $ 42,000,000 | ||
LTV | 70.00% | ||
Senior Loan, Queens, New York | Senior loans | Subsequent Event | LIBOR | |||
Subsequent Event [Line Items] | |||
Interest Rate | 2.80% | ||
Senior Loan, Philadelphia, New York | Senior loans | Subsequent Event | |||
Subsequent Event [Line Items] | |||
Maximum Face Amount | $ 77,000,000 | ||
Initial Face Amount Funded | $ 77,000,000 | ||
LTV | 73.00% | ||
Senior Loan, Philadelphia, New York | Senior loans | Subsequent Event | LIBOR | |||
Subsequent Event [Line Items] | |||
Interest Rate | 2.70% |
Subsequent Events - Narrative (
Subsequent Events - Narrative (Details) - USD ($) | Nov. 05, 2018 | Nov. 05, 2018 | Oct. 31, 2018 | Sep. 30, 2018 | Sep. 30, 2017 | Oct. 01, 2018 |
Subsequent Event [Line Items] | ||||||
Funding for loans | $ 1,695,188,000 | $ 920,358,000 | ||||
Proceeds from principal repayments of commercial mortgage loans, held-for-investment | 318,996,000 | $ 18,568,000 | ||||
Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Proceeds from principal repayments of commercial mortgage loans, held-for-investment | $ 8,400,000 | |||||
Dividend on common stock | $ 25,000,000 | |||||
Dividend paid (usd per share) | $ 0.43 | |||||
Morgan Stanley | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Principal borrowings | $ 15,500,000 | |||||
Senior loans | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Funding for loans | $ 19,200,000 | |||||
Term Loan Facility I | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Principal borrowings | $ 65,500,000 | $ 55,000,000 | ||||
Facility | ||||||
Subsequent Event [Line Items] | ||||||
Borrowing capacity | $ 400,000,000 | |||||
Facility | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Borrowing capacity | $ 1,000,000,000 |