KREF - Earnings call transcript Q1 2021 | KKR Real Estate Finance Trust Inc.

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Operator

Good morning, and welcome to the KKR Real Estate Finance Trust Inc., First Quarter 2021 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Jack Switala. Please go ahead sir.

Jack Switala

Great. operator. you, Thank KKR the the Finance earnings Trust Welcome quarter Real of for first XXXX. call to Estate We hope that safe all of you and and your healthy. families are

contain certain related to recently Relations earnings joined everyone you will As measures the and KREF. release of I'm portion our mentioned, this of to Jack reconciled available these for I events operator connecting forward which will with site. is Investor Relations both our are not do our am the call that factors going future most Today, like non-GAAP in refer and are COO, financial as serve presentation, supplementary call, our recently Web cautionary forward GAAP or which President joined Salem; Matt and our would to of refer to on looking in Investor I will This the on I Please Mattson; the we the figures CFO, directly. for which Head to forward-looking Switala. statements, and performance. CEO, to statements. Nagaty. call remind XX-Q also by KKR filed our guarantee Mostafa Patrick on

provide Before over Matt, I a results. to turn our quick I the of will recap call

a the of per For and $X.XX to share from or as of $X.XX of lower increased of XX. we by driven compared which to million XXXX, continued CECL $XX.XX per this the first Distributable asset per were CECL $X.X $X.XX had December of value share, or $XX.X benefit quarter March the strong provision. impact income $XX.X share, a million growth as as our XXXX, GAAP includes net million which quarter performance. per included share earnings portfolio XX, Book $XX.XX,

April, of With reflects the price, would middle annualized that, a on now yield like per with $X.XX share quarter. the note dividend paid X.X% call first an closing the Matt. respect Finally, I dividend to to to cash turn of in Based we would yesterday's I over

Matt Salem

quarter of covering $X.XX team. distributable you welcome everyone and and where great covered are of is dividend $X.XX us Jack, earnings we dividend with off thank despite all morning, XXXX outstanding another in in Good distributable today. our share to and is a X.Xx. the year, you, results this KREF terms This joining a Thank the to X.Xx, safe. the of financial global by per pandemic. by continuation start We the over had hope healthy success earnings you for

from seeing after Our strong earnings to on portfolio to floors. lead business of which begin half existing benefit normalize. will elevated earnings the which year, and back performance to in We're expect property LIBOR repayments continue plans, to the good we progress

billion continued quarter million estate as X.X with originated two totaling three to focus remained this of and of funding multifamily a origination by past properties Net first sponsors. XX. grew over and On the In active owned loans high office portfolio XXX one comprised property. we real March exceeded quality the premier front, on our quarter, XXX we million

opportunities, loans earlier us which set, our XXX perpetual at growing service this XXX.X stock million take to over lead this of grow Our to month; of remains To leverage operating portfolio This our capital a released cost raised and allows end. either time. institutional fixed will permanent clients million of X.X%. robust, with quarter improve advantage market under current support of approximately to subsequent opportunity or pipeline we exclusivity, closed preferred

our be office On helpful thought we same on with conservative I more has A markets gateway we continue a with on is, little the and a answer focus how on approach are highlight it the Dallas a But approaching approaches COVID markets. cautious the to recently give the short marginally to I market, would origination pre-COVID office to want are color the front, we we'll closed. loan sector. so impacted growth office.

The this it's real with billion deep sponsor, Dallas is estate premier In first AUM and case, start on over Fort market. XXX with sponsorship. a of all thing loans a Worth knowledge the of we

fluid quality a that Second location. decision in is asset convenience. proximity and A property in to makers location, is close infill value This located Class suburban and a housing

CapEx Our plan occupied with and rent a base. expire. transitional the leases target And currently property XX% as undergone recently profile. our business light consistent to and diverse intends increase is tenant plan tenant The has occupancy is sponsor to a

basis XX% Finally, low low cost we have financing at cost. on acquisition a loan to

pipeline, forward that and under KREF. market million been or in are XXX exclusivity, either our XX committed to active loans closed for represents amount which principal with the Turning we've year

Our desire in real impact COVID on to which activity opportunities attractive on some reflects current market, our capitalize from stem the of estate.

we While the and to is we focus science and sectors. are office, average note XX% to current continue increasing life this XX% pre-COVID industrial in the target to our pipeline similar to weighted and multifamily IRR I activity, activity range. and select our underwritten like profiles

comprised X% second properties. Performance to Patrick. Our lighter with on will portfolio continue remains into about the as portfolio interest successful we call composition earnings, the competitive beyond. to a institutional approximately the portfolio. that, comprised and and we multifamily positioning of of across quarter. in quarter XX% originations loans summarize, of franchise I and represent and portfolio by excited XX% portfolio market on the of underweight had strong real and quality remains turn floating-rate over of We're quarter Hospitality is collected senior secured just the portfolio of our the performance. be our the With loan office and head consistent predominantly transitional To estate. the and is first as retail

Patrick Mattson

morning everyone. good and Matt, you, Thank

our ratio and of quarter respectively. ratio market our non-mark-to-market remaining X.Xx Also, of end, debt-to-equity subject remains end total marks. XX% of the quarter As always leverage XX% balance financing a credit X.Xx and completely asset leading and is to as were

our return quarter invest first at and ratio we sits range ratio leverage stock the But in leverage new total subsequent the and the rates, debt-to-equity Following as capital. respectively to we quarters X.Xx X.Xx ratios today. expect our preferred to

discussed we an review As risk the five a in last scale quarter. consistent and evaluate we assign risk process loan weighted is the quarterly the portfolio we risk to X.XX past, robust The in average current asset on have rating. every updated of have rating a rating portfolio point with

now San provide QX. X, improvement watch The rating our As result loans a risk in better, Approximately in we presentation. in XX% trends to the breakout in of Diego Lauderdale of loan. our XX% are credit which risk other are Hotel our has X continue rated comprised rated seeing improving and X% three Portland portfolio and the prior in is a Notably multifamily lead loan retail a Fort the additional list we've X loan. the Furthermore, of to assets. or done is five is in loans positive upgraded from properties, risk detailed momentum which of we risk QX, improved our specifically, rated of loans to supplemental quarters, being may primarily

comments in margins. increased certainty, and reserves. while to last we of always it's received challenged, quarter, the with continue difficult next In While we regarding continue CECL in We with million property effective consistent existing activity the And of approximately are sponsors net prospective adequate remains year. repayment remains property. the to to second the term, half elevated our our with phase dialogue repayments interest the XXX in-place quarter and believe and expectation KREF repayments there for benefit to floors from continue the the near its should predict of LIBOR first

rate, of rates, is the basis is to are floor points. to While X.XX%. floors the floor loan on portfolio X% resetting the around typically XX% new subject to a almost portfolio has LIBOR half currently, LIBOR loan XX at entirely loans a of least and at of of spot least XX floating LIBOR portfolio

we As loan in portfolio through originations. rotation and a repayments experience new our

We NIM over expect compress portfolio effective our time. to

our the and us. distributable $X.XX quarter growth XXX remain perpetual quarter since preferred on offering, revolver another offense, of growing the well and total take have rate XXX recent totaling XXX for XXX robust the quarter and preferred improved to of capital originating that undrawn capacity company the summary, today. a for Thank portfolio closed operating million happy inaugural million to pipeline strong with liquidity X approximately of million. pipeline million loans per And of closing completed stock now leverage. with share. in We joining corporate senior new an elevated adding strong or over we're floating KREF In of your us exclusivity, you end. a remain Combined finished capitalize stock questions. cash under issuance, We permanent positions available we XXX position This on positioned included million with earnings Finally, to of opportunities.

Operator

will Jade Rahmani our begin [Operator from Instructions] first with today question-and-answer come the KBW. now We session. And will question

Jade Rahmani

wondering, be was back the if I earnings of half in a back pressure after normalize. to Are around in year? your half little elevated put color could you the saying the elevated Matt, or of you earnings just comments year which half that under expect back the around year repayments that you can of the the

Matt Salem

Jade, thank you the excellent for question.

sure. through see and embedded pretty for in repayments the to we our start I be guess guess quarters, that's like the we'll LIBOR best the of that existing we and sit to heavy third feel couple once some it's But as best over that we right those so difficult seeing think earnings. We're next quarters our quarter, is predict with you'll when look still of now the elevated and could normalization earnings as have more fourth and get forward we floors. portfolio

Jade Rahmani

repayments from income? have an benefit prepayment And will accelerated earnings those

Matt Salem

of that. mean, Yes. get we'll I some

that those and following in they a not see of from pay particular that through. through, little -- bit excess come and will quarters floors those that the obviously, then, in We we're LIBOR benefiting we'll anymore off, in come obviously NIM, quarter, quarter, but

Jade Rahmani

company XX% weighted compare generated? the the XX% And the with to that IRR pipeline, how the IRRs, average historically on of has does

Matt Salem

Yes.

very market comment If pipeline think today, environment about would you I guess to one the be wanted the is big.

look lots to at. opportunities of So there's

from we you've that's capital what debt in a compression environment competitive So of in lot And and the the of also And side yield positive there's of competition way is you cost market. seeing, high. and compress. ourselves, finance we're market. see spread a being seen that That certainly said, the certainly

is you of little saw slightly pre-COVID. say loans asked And pre-COVID. did couple we My higher guess more quarters the we over ROE I next pipeline, look a the that of like what kind will saw about the than so doing the we of that in bit of would we're some that's kind

XX%, the the competitive of XX% expectation as closer to on in So that all pressures our continue. context, just to IRR market

Jade Rahmani

stock issuance about preferred be, the what the equity? sense last would would book it value, level in management, stock above capital just at capital with -- common the question of And issue terms issuance, makes to X%

Matt Salem

Yes.

when access our a term think our been the pretty solved a market to preferred past The I lot we've stock. for in about near it's the accretive only equity lot disciplined of issuance, in or liquidity. it took of needs term near for the

pipeline. we So developing had a

On focused really to equity the we a mentioned, were on last were successful on we able preferred. execute we deal call, and the

we're trying what repayments. our and expectations balance ahead really looking of these is to So

that's preferred bit And here think we raising certainly heavy we third repayment thinking continue take our schedule. of a near a say us near and what little about change in equity repayments, into pipeline the we and to That's -- fourth the terms things start because bit think our term. repayments gives it then in get it of term, more can and in caution can't grow to as did the start how a our probably could little that so, quarter say not the to beyond about but we of to takes we'll care we're are pipeline existing I'd

Operator

come will with from James. Raymond question Laws next Stephen our And

Stephen Laws

percentage first in follow subsequent when unique quarter the looks originations on Jade's to lower like was are maybe that kind these be guess But at much it I QX. I I questions loans, than your could loans, a end of, funded to loan look of all coincidence. up but realize just certainly and

and the into second half. that try manage you wave As your refinance or pipeline repayment in

take XQ draw-downs XX actively increase do or post X/XX is look that have in months coincidental Is six trying or You or the post something commitment three the or with to you just those to unfunded originations originations? balance to months? that place

Matt Salem

the obviously, little our of and you're quarter-over-quarter you're appropriate sector having some some think off I rolled little we've funding where in little funding, the originations. of the that opportunities where of from of level bit the a being bit bit base for, a lending some build some out is a market program future new to takes response future describing I coincidental said, it's is seeing, in That is more participation from think of pressure most and or market, industrial of a funding have future that construction we industrial. coming what

most that of driving component terms of that's kind that So all, of quarter-over-quarter. that you're in funding change of most future not but seeing

sector COVID, big obviously, on opportunity accelerated with really historically, that, a think it's and we lot but So, it's a a with a haven't we sector attractive and and e-commerce it's set. lent

of deals number. that's and And that so we've done driving a couple

Stephen Laws

comp which yet. maybe pick would on most for then, did that entire how And how I hadn't made it a for basis? maybe quarter, that very from pick in obviously tough What and Q did change was then the basis, Great. a then common apologies, sequential change through a be year-over-year companies, income the

Patrick Mattson

I'll talk about Patrick, it's that. Stephen,

the saw driven on of couple assets. change, we income, the pick it's little bit of just by quarter, a first a So into really

think one some in loan York. hotel assets in I loan a these we've our including as as talked New in well condo Brooklyn, the about past, of

the is that I $XX So Lauderdale or modified, the we've got one loan million that going hotel million true-up the in forward. reversal a Fort current of quarter, hotel of which and pick, pay X.X loan, we there balance also loans would saw is the a in hotel a was other about down, note got now loan pick our of total.

that think the the XXX,XXX I we for change amount had, net it's modest about a was So quarter.

Stephen Laws

great. Okay,

to talk can about question, maybe two Industrial, some loans, So Thanks, York. pretty, relative the of York maybe resi, New debt, Matt, peers. especially hospitality, small Patrick. last four New Queens just Brooklyn

You feet guys the were there on ground.

maybe that people just and guys us So how and bigger returning based given you and far a you other you are guys to the as in reopening give New there. seeing picture things like as can just the are all York office things

Matt Salem

Sure. little repopulation think say would just Well, mentioned you've see offices I But obviously, markets the bit as some to start first a foremost full the probably that pandemic, with than it's sector. We stabilize, apartment I starting to out think fall the there -- down a see now just and from to slow but folks, to slowly and the you're more prices opening a that the bit starting you're ins these starting you're more move of you York apartment people lot back up go little a And little I moved number of impacting, opening. of seen I about come to the of We've think the lot a are open. other see tenants. talk opening come bit. concessions where is see during that's multifamily seen some New reopening, as in

I occupancy on delayed financing the uncertain still point New is loans are, this a market making say where said where in cautious certainly let the assumptions at the office little terms settle bit would sector resetting are will office and Manhattan. conservative understand And are the rates you think York rents in in still. on sublease very and in has are where I to are embedded more, people trying of markets can, the new I And to in time.

we qualities asset the we specifically that about that -- property the I have condo, or of types on condo the mentioned. terms think two asset that we you inventory In think that when have loans the the

I at sale, under velocity in you're number yet. terms and units lot think seen of XX now of the much sales that versus COVID can on property, how has progress market. New of there's almost in its and closed product of cycle read articles that of haven't a about a and there York that you million a in later Certainly lot a we've it's is condo think one sales I that bit we've velocity. seeing seen across still plan, certainly had contract business for since the little You're And we've business readily our

you sell think you there's market units that and around comments York. New clearing liquidity are to in just I lower as down regard So and the I'd if the Those and meet certainly levels. you the it positive market, comes prices, certainly shows that make can

Stephen Laws

comments there. Patrick Great. raise. for quarter Appreciate the capital nice recent and the color that Thanks on congratulations a and the

Operator

And our from BTIG. next question Tim will come Hayes with

Tim Hayes

hot about versus are around, are think with this leads you're strategy, capital made have funding and costs I Part very of all is, a on of well. you curious But, I Matt, costs that seeing backdrop term pre-COVID. comment done a your in kind to lot loans just year? you peers -- repo question as feel one advance and/or first know up the the to competing how transitional with a you rates just B the I come before, how have down relates strategy about near markets already move back now? And then, executed might just have light circle your on that right as all one new financing my but to want -- CLOs seeing that CRE, And you in banks

Patrick Mattson

Tim, take those. it’s I'll of good both morning, Patrick,

liability we the cost, seeing So the on yes, are compression financing side. first, on

Sometimes in these tandem. don't always move

on board the repo sometimes And the across there's spreads delay happening seeing a asset we're in side. compress certainly market. to what's But the

market, two a on as that's securitization CLO market, market of seeing come we're think week. some in what's the to our and I or And happening has CRE, think broader I this that have public side. driven side, private deals the noted very year access been the you by including a part CLO in to one peers active

is very efficient and cost of active very very, capital. a So

track that's -- continue we market to an that's that active closely. So a

cost very CLO. capital attractive our on of a have existing We

We of a haven't repayments had to-date. lot

very what the even thinking course seeing, we're side, over the financing needs we're reinvestment in by CRE, from on cost So about capital. period, year. though past we're the benefiting still this liability particular, we're But attractive that market, encouraged of we're as CLO of in

Tim Hayes

partially in helpful. NIM And, spreads into just the spreads Do to of I expectations are it offset offset offset, more guess are that's that's guess fully trajectory just seeing expectations repayments to of what funding if that pressure there. offset portfolio to kind a would it's spread what the assets, coming new you you year, tighter guess That's going costs power asset [indiscernible]? up. it. than there. or on based recycled the for basis? earnings And see I yield? it's I just I'm as guess, really expect maybe in, your the Got more on little trying happens what lower partially levels -- or kind normalized really the think coming spread, curious I bring those what see broadly, velocity we'll Or of maybe just You're could contraction next would, repayments But put pick and and or more as just

Matt Salem

Sure.

offset being I sort about partial think spread. as of So the the happening to assets what's on

a in portfolio these -- that the floors. benefit from you NIMs current we of the have think are really I separate have LIBOR a bit also little to effective of

underwrote the a that's last gotten over not originally or of those the but we benefit half loans year we've that and the NIM we were so. when anticipating, obviously, So

of that are pre-pandemic the NIMs compare standpoint, relative and -- attractive. I not pre-pandemic from very that today that from to levels, actually market, I basis, on if think different the compare a market a if NIM about some seeing it's we're So very the

try today, of them we NIMs lot like effective compression. look compare our it if will think I to to a

comparison really very and If drop you before pre-pandemic comparable. we in market, actually they're to saw LIBOR, the a in dramatic at look it,

the and on So we're of obviously with that the activity liability pleased side. level that's happening

of with I other these floors. as we think get benefit down thing LIBOR loans of the that will these pay the likely higher some

we're on rates. resetting LIBOR new a floors mentioned opening remarks, current to the I the As spot

does the point LIBOR positive XX basis higher and portfolio if at LIBOR which have to and in some future, floors, we'll XX when point rising get some that LIBOR to positive rise, benefit within the we'll a that correlation some in means rate So environment.

Tim Hayes

around Right. and I of look next given NIM get I'm where kind trend one dividend expectations in comments that's for just if kind kind to we to what And But early before normalized of go together. year. curious back some is could coverage, makes it provide you like, see and can just run sense. kind expecting earnings attune your of we COVID that of That as coverage more can rate

Matt Salem

Yes.

were deployed, I pre-COVID or next think that quarters where about how transpires right so. fairly the that I think and it's representative. That sort think over we said, all of fully really our early are to year

is that sort exact So, of had will think coverage, But earnings some sort difficult to come in levels I down. I it's terms of elevation will too that expectation of think the i.e., our we've predict I of that in these they of think at normalize, this point. terms in

Tim Hayes

Sure.

earlier, but Okay. just to credit, some rent how you just on underlying know And portfolio's have maybe April, in give us your an quarter? relative and collection, idea so collections the comments or you far properties trended first then made can interest I

Matt Salem

that say loans is April the early collection sort that I which of I tad would some collecting the five it the we're rated on, flow of of two a standpoint, to get probably that all it's not think same a bit interest through. on loans. numbers, remains from

of properties, we're I think the some particular, multi-family look I quarters year. on trends seeing occupancy of improvement the of underlying from sort the when we're last there, in at assets, later the the seeing, positive if that

that's think So I encouraging.

our been, they've very collections tenant trend continue. very seen expect have across at exact terms directionally, I sort what we've I that high to the those have but been portfolio, little assets issue I it's in and So think with positive. don't an of figure collections of

Tim Hayes

there, appreciate Great. guys. Well, a color the Congrats I on quarter. strong

Operator

Charlie from Arestia with question our will And come JPMorgan. next

Charlie Arestia

on follow guess up, question or way. Tim's I similar them a of realistically financing question already, asking Most to wanted on the covered different I guess, in been a side, but have

last have I I that directionally those warehouse was on in coming traditional origination guys the at floor late talk close coming you funding all see that the see through how loan you more putting diversified the And that on amortizing the there guys term those guess where are You And started on loan the bps the loans plus to like inside look portfolio bottom of L costs? ultimately, at here? new you bit that are XXX lines. Can beyond structure When in think XXX about believe year, your just overall, March. and the spreads. that. going from loans spreads versus economics new a I funding you you line the book, flowing And

Matt Salem

instance. get return part first we're little the than mid the playing take of over we've front the in to you. catch origination little we call hand a and like, seeing all We in it bit on industrial to some of it, side. lending the and for could craving on context then coupons, sectors more little construction a light more can bit now. a that X% there for new I return it like say And that's low would been we right assets kind transitional -- I of in

transitional the assets say you I to context, but -- X% now. light in would I'll X% over hand that low So it very like right for Patrick, second the call part. mid,

Patrick Mattson

Yes.

B piece diversified our is loan term one obviously side, of structure. On the Charlie, financing financing the

obviously, a call But see by of kind ability think this in of date that there fresh that got We've we're is of X in a what of that I it's loan diversifying encouraged right of two expires what this average soft We reset, you'll But we we're kind that seeing form to and, the down market. there's been CLO about year. sort to range deals that we'll we're number our seeing encouraged B and think the now we've of think then. that that, holistically, weighted potentially September that points about that capital. repo an all, are and by driving there. to pricing between market we're kind what you've of aggregate time. cost but a term got cost capital, costs very of of one see seen from I doing. component one And to over disciplined facilities, And we've it, so think we're

Charlie Arestia

Got it.

Thanks pipeline, new loans of portfolio, your then, forward switching thoughts real more family just I rental by Okay. get one broadly on that there. type. get over it's couple last It April we'd like, post environment on real growth to for gears of single property quarters seems a your kind love quick, secured looking the competitive of curious And that. saw to at the and outlook been COVID just the area the

Patrick Mattson

well. I one the Matt, as like accelerated sector can COVID it's take that we one. a obviously areas Yes, Yes, a lot, of

loan lot within equity. unique rental lot of of This we broadly, covered, liquidity it's across is to rent so, has a It's sciences And that is pre-pandemic. pandemic. and debt has particular what single that for think a family another area of benefited you -- build Phoenix. the opportunity institutional area that both a area from the and when about doing to we're This sponsor for cross industrial life an an would access certainly be got

So portfolio, as but the in But part like this see we'd very And large of to like lot opportunities I we this do continue don't of being if sector. there's will the liquidity a this, find, we a sector. these. can

us. terms pick have So for sense that to we'll risk in of the and find create our spots can makes we kind returns profile where of

Operator

Don Wells And come Fandetti from with will our Fargo. next question

Don Fandetti

sense dipped on pre-COVID, where sort give to congratulations there? on can of where and we Lauderdale the new hotel, on remind Matt Jack are a it's you role. the us occupancy was Yes. Fort the today, recovery just where our RevPAR

Matt Salem

thanks the Don, for question.

Have Let me that the my head. top numbers off those up. of pull on

Don Fandetti

No problem.

Matt Salem

the ADR hundreds. the me in was and current give three month, Let you the high occupancy XXs

hundreds. two high very RevPAR So

like back If that. it actually we like higher. occupancy is to number, line is a in [T-XX] call [ph] pre-COVID, you look stabilized a with And ADR

So beating, T-XX ahead is our of month pre-COVID. current calling for this RevPAR is

and vacations is time in obviously good Now, like Florida of in be terms things keep this to mind, a that. in

very So the we the we and that, or here the sponsor recent And million. clearly performance that accrued been out to modification asset off would committed expected interest loan with paying by the has but the is pocket of interest $XX most have pick delevering and had the strong. coming the

loan So, for et and three a performance all four these the we this to most so. a cetera, modification, upgraded recent from

Don Fandetti

seeing sounds guess Got the would bit into can, those lot little for it. pretty ecommerce that shift construction risk a you sort of types there you, to some the developments these deals? like order create of where Or competitive. industrial. for also it to leading of Thanks would be like that is value? think sort I competition of is you Are a details. the pipeline I on enough in in

Matt Salem

sector, bit but lot here. does it construction building, of obviously The opportunity or office. competitive a is like whether that's component multi-storey industrial a multi of than more little feel a It's there's simple a

the base, However, of institutions. just is especially the the from capital limit does fact that it construction some regulated

of opportunity feet it's about And side so, there's think exposure and business, if square area the knowledge. we have here equity millions of and our an you think I certainly of market

side, to vice knowledge in a nicely I that on that areas of think the doing so from we have we use overall overlap equity lot what works and credit investing with can we're the it theme of our And side versa. on

given in sector. that we're the So I -- in of certainly seeing there's do increase opportunity demand lot a think just

will So the continue I'm through hoping year. that

Operator

Steve DeLaney from with come will question Securities. next JMP our And

Steve DeLaney

in given I The X.X to to obviously, CECL welcome working you to upgraded we could would look forward. left are has to loans? list moving everything be CECL million on been four three? with rated And only related covered would Jack, four and the reduction my If thoroughly. is Guys, there forward there be the those loans pretty provision. thing have I ahead? in the specifically also also that several upgraded were other year that that two, Is the recoveries additional Thanks. like

Mostafa Nagaty

Hope Yes, This question. Thanks you're Good Mostafa morning, doing Steve. well. for is good your question. Nagaty.

quarter-over-quarter. had And stick it a the in of kind to to going benefits. our we reserve the resulted we're So effect] X.X CECL and net this [ready is this [ph] decrease obviously,

quarter, this prior implemented economic scenario that it's which line we quarter. macro much is most pretty in slightly For really better that than

some resulted of mind on we portion namely for Fort offsetting the originations, our Lauderdale double that offset of some also that increase. upgrades hotel were That factors, were resulted this the I a that's a the of keep good repayments. So some think the There -- that also good about of in portion quarter, were will by originations decrease. the in the had,

factors, some as that macroeconomic touched upgrade there you factors loan So I key hotel think well here but kind just for on the the the offsetting of the as were assumption. two

Steve DeLaney

questions. of you taken Well, Okay. lot a know I guys have

And I there. in leave XXXX. position set great So you're sounds up it it will like a for

Thank you. congratulations. So

Operator

And Cyganovich our will question next come from Citi. with Arren

Arren Cyganovich

Is to your You properties? mentioned continue Are the quarter. increase? to of you've post large type seeing sponsors of of of your sponsors? you kind pipeline activity What's seeing sponsor the activity of with and had it? activity lot the business? a is nice Are Are some more a fairly you related the that coming broadening similar

Matt Salem

specifically around sets to inflation, low estate. concern up against can real the about capital view, the alternative a And think our really the certainly side, up of rate it now, into there's on year. real interest lot year, in potentially refinance all right up the of environment, a from fourth ramping if be last yield continues this got as I And macro I activity and well where pent was what increased nicely. of see quarter It's up and inflation. in saw flow long-term but -- the within would real we of demand, as sponsors. on a think continuation just definitely hedge acquisition both estate we think component side estate a you in from the That's space pretty there set say I and a of a

So our create the expectation that is into which capital you'll activity will see us. for sector, flowing obviously and sponsors benefit our continued the

that what In terms between focus, the think world we lot and a much similar the more I a on we where there's now the the described nots. have it's in haves. there's And and real see haves call, of to estate bifurcation clear of

interest housing sectors. most are with sectors so all And the the

rental, bit programs set multifamily, housing COVID of of probably housing senior little a behind the unique there's is question family, capital the back But, a that, reasons. is is for for impact sector, that So new around of the for fall. sponsors obviously of announced how for seen [ph] as our single schools therefore, our some think sectors. for The sector. really that's level seeing not coming some we've activity retail the space think industrial, not certainly big these that's I all student because most on Obviously, lot sector involved well, given those that's tenant of demand And of that base, play this I just office need you're like base, to base from in. a for mark, activity. lot things space the what here from driving in of great do on But real the retail a play historically still you've we're to pause, that's then, in obvious life there's as it's capital science, obviously And a up or sector. there's to And converted back-to-school for a big something [lend] transition. not the to did the how sectors.

So just have I'd the people on a real too nothing where unexpected, focus growth. say activity continue identified and

Operator

back over Jack conclude will turn the question-and-answer remarks. to to closing this for I'd the any session. like Switala Then conference

Jack Switala

joining team out reach our everyone. Great. today. to ups. Hey, the everyone, thanks Feel any or me with call follow for Thanks to free here

Operator

for you now has conference The Thank today's presentation. attending concluded.

at lines this disconnect your time. now may You

KKR Real Estate Finance Trust (KREF) 27 Apr 212021 Q1 Earnings call transcript