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What changed in KKR Real Estate Finance Trust Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of KKR Real Estate Finance Trust Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+319 added−336 removedSource: 10-K (2026-02-03) vs 10-K (2025-02-03)

Top changes in KKR Real Estate Finance Trust Inc.'s 2025 10-K

319 paragraphs added · 336 removed · 264 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur retained interest when utilizing structural leverage is subordinate to the lien of the third-party lender that owns the senior interest. 5 Table of Contents During the year ended and as of December 31, 2024, we: • Extended the final maturity of a $1.0 billion term credit facility to September 2029 • Had no final facility maturities until 2026 and no corporate debt due until 2027 As a result, our Non-Mark-to-Market financing was $3.9 billion as of December 31, 2024, representing 79% of our secured financing.
Biggest changeOur retained interest when utilizing structural leverage is subordinate to the lien of the third-party lender that owns the senior interest. 5 Table of Contents During the year ended and as of December 31, 2025, we: • Refinanced and upsized the secured term loan from $339.5 million to $650.0 million, reduced the spread from S+3.50% to S+2.50%, and extended the maturity to March 2032 • Increased the borrowing capacity of the corporate revolving credit facility by $90.0 million to $700.0 million and extended the maturity date until 2030 • Entered into three term lending agreements totaling $650.0 million, which provide match-term financing on a non-mark-to-market basis, and a new £300.0 million term credit agreement to finance European originations • Currently have no final facility maturities until 2027 and no corporate debt due until 2030 As a result, our Non-Mark-to-Market financing was $3.5 billion as of December 31, 2025, representing 74% of our secured financing.
Such CMBS securities are purchased at a substantial discount to their principal amount and are much more sensitive to changes in the underlying credit of the securities and credit 7 Table of Contents spreads than to fluctuations in interest rates.
Such CMBS securities are purchased at a substantial discount to their principal amount and are much more sensitive to changes in the underlying credit of the securities and credit spreads than 7 Table of Contents to fluctuations in interest rates.
With respect to our fixed-rate CMBS portfolio indirectly held through an equity method investment, rising interest rates could have a negative effect on the value of the securities in our portfolio.
With respect to our fixed-rate CMBS investment held through an equity method investment, rising interest rates could have a negative effect on the value of the securities in our portfolio.
For additional information regarding our portfolio as of December 31, 2024, see Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our Financing Strategy We raise capital through offerings of our equity and debt securities to fund future investments.
For additional information regarding our portfolio as of December 31, 2025, see Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations." Our Financing Strategy We raise capital through offerings of our equity and debt securities to fund future investments.
In a rising interest environment, our interest income on our current portfolio is expected to increase as rates increase. In a declining interest rate environment, our interest income is expected to decrease as index rates decrease; in certain circumstances, however, rate floors relating to our loan portfolio may offset some of the impact from declining rates.
In a rising interest environment, our interest income on our current portfolio is expected to increase as rates increase. In a declining interest rate environment, our interest income is expected to decrease as benchmark rates decrease; in certain circumstances, however, rate floors relating to our loan portfolio may offset some of the impact from declining rates.
These interests are not secured by the underlying real estate, but upon the occurrence of a default, the preferred equity provider typically has the right to effect a change of control with respect to the ownership of the property. • CMBS B-Pieces (New Issue) — We may also make investments that consist generally of below investment-grade bonds comprising some or all of the BB-rated, B-rated and unrated tranches of a CMBS securitization pool.
These interests are not secured by the underlying real estate, but upon the occurrence of a default, the preferred equity provider typically has the right to effect a change of control with respect to the ownership of the property. • Commercial Mortgage-Backed Securities ("CMBS") B-Pieces (New Issue) — We may also make investments that consist generally of below investment-grade bonds comprising some or all of the BB-rated, B-rated and unrated tranches of a CMBS securitization pool.
In our lending and investing activities, we compete for opportunities with a variety of institutional lenders and investors, including other REITs, specialty finance companies, public and private funds (including funds that KKR or its affiliates may sponsor, advise and/or manage), commercial and investment banks, commercial finance and insurance companies and other financial institutions.
In our lending and investing activities, we compete for opportunities with a variety of institutional lenders and investors, including other REITs, specialty finance companies, public and private funds (including 8 Table of Contents funds that KKR or its affiliates may sponsor, advise and/or manage), commercial and investment banks, commercial finance and insurance companies and other financial institutions.
Several other REITs have raised, or are expected to raise, significant amounts of capital, and may have investment objectives that overlap with ours, which may create additional competition for lending and investment opportunities. Some competitors may have a lower cost of funds and access to funding sources that are 8 Table of Contents not available to us.
Several other REITs have raised, or are expected to raise, significant amounts of capital, and may have investment objectives that overlap with ours, which may create additional competition for lending and investment opportunities. Some competitors may have a lower cost of funds and access to funding sources that are not available to us.
Our Manager's investment committee, which is comprised of Ralph Rosenberg, KKR's Chairman of Real Assets and Chairman of our board of directors, Chris Lee, President of KKR Real Estate and Vice Chairman of our board of directors, Matt Salem, Head of KKR’s Real Estate Credit and Chief Executive Officer of KREF, Patrick Mattson, Chief Operating Officer of KKR’s Real Estate Credit and President and Chief Operating Officer of KREF, Joel Traut, Partner and Head of Originations, Jenny Box, Co-Head of KKR’s Special Situations, Roger Morales, Head of KKR's Real Estate Acquisitions Americas and Justin Pattner, Head of KKR's Real Estate Equity Americas, advises and consults with our Manager and its investment professionals with respect to our investment strategy, portfolio construction, financing and investment guidelines and risk management and approves all of our investments.
Our Manager's investment committee, which is comprised of Ralph Rosenberg, KKR's Chairman of Real Assets and Chairman of our board of directors, Chris Lee, President of KKR Real Estate and Vice Chairman of our board of directors, Matt Salem, Head of KKR’s Real Estate Credit and Chief Executive Officer of KREF, Patrick Mattson, Chief Operating Officer of KKR’s Real Estate Credit and President and Chief Operating Officer of KREF, Joel Traut, Partner and Head of Originations, Jenny Box, Co-Head of KKR’s Strategic Investments Group, Roger Morales, Head of KKR's Commercial Real Estate Acquisitions and Justin Pattner, Head of KKR's Real Estate Equity Americas, advises and consults with our Manager and its investment professionals with respect to our investment strategy, portfolio construction, financing and investment guidelines and risk management and approves all of our investments.
We expect the majority of our future investment activity to focus on originating floating-rate senior loans, which may include both domestic and international, that we finance with our repurchase facilities and non-mark-to-market financing including term lending arrangements, asset based financing and collateralized loan obligations.
We expect the majority of our future investment activity to focus on originating floating-rate senior loans, which may include both domestic and international, that we finance with our repurchase facilities and non-mark-to-market financing including term lending agreements, asset specific financing and collateralized loan obligations.
We plan to maintain leverage levels appropriate to our specific portfolio. As of December 31, 2024, our total leverage ratio was 3.6-to-1. We will endeavor to match the terms and indices of our assets and liabilities and will also seek to minimize the risks associated with mark-to-market and recourse borrowing.
We plan to maintain leverage levels appropriate to our specific portfolio. As of December 31, 2025, our total leverage ratio was 3.9-to-1. We will endeavor to match the terms and indices of our assets and liabilities and will also seek to minimize the risks associated with mark-to-market and recourse borrowing.
Our senior loans as of December 31, 2024 had a weighted average LTV of 65%, and we have focused our portfolio on senior positions in the capital structure where the sponsor has meaningful cash or imputed equity subordinated to our position to provide what we believe is downside protection in the event of credit impairment at the asset level.
Our senior loans as of December 31, 2025 had a weighted average LTV at origination of 66%, and we have focused our portfolio on senior positions in the capital structure where the sponsor has meaningful cash or imputed equity subordinated to our position to provide what we believe is downside protection in the event of credit impairment at the asset level.
The remaining 21% of our secured borrowings, which is primarily comprised of three master repurchase agreements, are only subject to credit marks. In addition, we may use structural leverage by syndicating senior mortgage interests in our originated senior loans to other investors and create a subordinated interest that we retain for our portfolio.
The remaining 26% of our secured borrowings, which is comprised of four master repurchase agreements, are only subject to credit marks. In addition, we may use structural leverage by syndicating senior mortgage interests in our originated senior loans to other investors and create a subordinated interest that we retain for our portfolio.
We currently hold CMBS B-Piece investments indirectly through our investment in an aggregator vehicle alongside KKR Real Estate Credit Opportunity Partners L.P. ("RECOP I"), a KKR-managed investment fund. See Part II, Item 7.
We currently hold CMBS B-Piece investments directly through a consolidated CMBS trust and indirectly through our investment in an aggregator vehicle alongside KKR Real Estate Credit Opportunity Partners L.P. ("RECOP I"), a KKR-managed investment fund. See Part II, Item 7.
In addition, as part of our portfolio financing strategy, we may use both direct and structural leverage. Our use of direct leverage includes the utilization of repurchase facilities, term lending arrangements, asset based financing, collateralized loan obligations, secured term loan and revolving credit agreements.
In addition, as part of our portfolio financing strategy, we may use both direct and structural leverage. Our use of direct leverage includes the utilization of repurchase facilities, term lending agreements, term loan facility, asset specific financing, collateralized loan obligations, secured term loan and revolving credit agreement.
The map below illustrates the geographic distribution of the properties securing our loan portfolio as of December 31, 2024: 4 Table of Contents The following charts illustrate the diversification of our loan portfolio (A) as of December 31, 2024, based on type of investment, interest rate, underlying property type, geographic location, vintage and loan to value ("LTV"): The charts above are based on total loan exposure of our commercial real estate loans.
The map below illustrates the geographic distribution of the properties securing our loan portfolio as of December 31, 2025: 4 Table of Contents The following charts illustrate the diversification of our loan portfolio (A) as of December 31, 2025, based on type of investment, interest rate, underlying property type, geographic location, vintage and loan to value ("LTV"): (A) Charts are based on outstanding principal of our commercial real estate loans.
Impact of Interest Rate Environment Generally, our business model is such that rising interest rates will result in an increase to our net income, while declining interest rates will decrease our net income. As of December 31, 2024, substantially all of our loans by total loan exposure earned a floating rate of interest indexed to Term SOFR.
Impact of Interest Rate Environment Generally, our business model is such that rising interest rates will result in an increase to our net income, while declining interest rates will decrease our net income. As of December 31, 2025, substantially all of our loans by total loan exposure earned a floating rate of interest benchmarked to Term SOFR, SONIA or EURIBOR.
KKR sponsors investment funds that invest in private equity, credit and real assets, and as strategic partners that manage hedge funds. KKR is listed on the NYSE (NYSE: KKR) and reported $624.4 billion of assets under management ("AUM") as of September 30, 2024.
KKR sponsors investment funds that invest in private equity, credit and real assets, and as strategic partners that manage hedge funds. KKR is listed on the NYSE (NYSE: KKR) and reported $723.2 billion of assets under management ("AUM") as of September 30, 2025.
Rosenberg, KKR's Chairman of Real Assets and Chairman of our board of directors, KKR Real Estate had $79.6 billion of AUM as of September 30, 2024. Mr.
Rosenberg, KKR's Chairman of Real Assets and Chairman of our board of directors, KKR Real Estate had $84.6 billion of AUM as of September 30, 2025. Mr.
"Management's Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk." As of December 31, 2024, our floating-rate loan portfolio and financing arrangements were all indexed to Term SOFR.
"Management's Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures About Market Risk—Interest Rate Risk." As of December 31, 2025, our floating-rate loan portfolio and financing arrangements were all benchmarked to Term SOFR, SONIA or EURIBOR.
Term lending arrangements, asset based financing and collateralized loan obligations provide us with Non-Mark-to-Market financing sources, which reduces our exposure to market fluctuations. These Non-Mark-to-Market financing sources, which represented 79% of our secured financing as of December 31, 2024, are not subject to credit or capital markets mark-to-market provisions.
Our term lending agreements, term loan facility, asset specific financing, collateralized loan obligations, secured term loan and revolving credit agreement provide us with Non-Mark-to-Market financing sources, which reduces our exposure to market fluctuations. These Non-Mark-to-Market financing sources, which represented 74% of our secured financing as of December 31, 2025, are not subject to credit or capital markets mark-to-market provisions.
The following chart illustrates the sensitivity of our net interest income to changes in Term SOFR on a per weighted average diluted common share basis: Quarterly Net Interest Income Per Share Sensitivity to Change in Market Rates Term SOFR = 4.33% ($ Impact Per Share) As of December 31, 2024 For a further discussion, see Part II, Item 7.
The following chart illustrates the sensitivity of our net interest income to changes in benchmark rates on a per weighted average diluted common share basis: Quarterly Net Interest Income Per Share Sensitivity to Change in Benchmark Rates Term SOFR = 3.69% ($ Impact Per Share) EURIBOR = 2.03% SONIA = 3.75% As of December 31, 2025 For a further discussion, see Part II, Item 7.
Rosenberg, who has over 35 years of real estate equity and debt transactions experience, is supported at KKR Real Estate by a team of approximately 140 dedicated investment and asset/portfolio management professionals across 16 offices globally.
Rosenberg, who has over 35 years of real estate equity and debt transactions experience, is supported at KKR Real Estate by a team of approximately 130 dedicated Real Estate management, investment and asset/portfolio management professionals across 14 cities in 10 countries.
We had a common book value of $1,017.3 million as of December 31, 2024 and established a diversified investment portfolio which totaled $6,271.6 million, consisting primarily of performing senior commercial real estate loans.
We had a common book value of $844.8 million as of December 31, 2025 and established a diversified investment portfolio which totaled $5,924.2 million, consisting primarily of performing senior commercial real estate loans.
(D) LTV is based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated. Weighted average LTV excludes risk-rated 5 loans.
(C) "Other" property type includes Student Housing (2%) and Mixed Use ( (D) LTV is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated. Weighted average LTV excludes risk-rated 5 loans.
The following table details our outstanding financing arrangements as of December 31, 2024 (amounts in thousands): Portfolio Financing Outstanding Principal Balance Maximum Capacity Master repurchase agreements $ 1,038,066 $ 2,000,000 Collateralized loan obligations 1,766,231 1,766,231 Term lending agreements 789,647 1,288,371 Term loan facility 553,966 1,000,000 Asset specific financing 343,216 490,625 Warehouse facility — 500,000 Secured term loan 339,500 339,500 Revolving credit agreement 80,000 610,000 Total portfolio financing $ 4,910,626 $ 7,994,727 The following chart illustrates our progress in diversifying our financing sources and expanding our non-mark-to-market financing sources to reduce our exposure to market volatility: Outstanding Financing (1) (1) Based on outstanding principal amount of secured financing. 6 Table of Contents Financing Risk Management The amount of leverage employed on our assets will depend on our Manager's assessment of the credit, liquidity, price volatility and other risks of those assets and the financing counterparties and availability of particular types of financing at any given time.
The following table details our outstanding financing arrangements as of December 31, 2025 (amounts in thousands): Portfolio Financing Outstanding Principal Balance Maximum Capacity Master repurchase agreements $ 1,220,707 $ 2,304,250 Collateralized loan obligations 1,198,378 1,198,378 Term lending agreements 771,823 1,377,032 Term loan facility 513,202 1,000,000 Asset specific financing 365,318 480,625 Warehouse facility — 500,000 Secured term loan 646,750 646,750 Revolving credit agreement — 700,000 Total portfolio financing $ 4,716,178 $ 8,207,035 The following chart illustrates our progress in diversifying our financing sources and expanding our non-mark-to-market financing sources to reduce our exposure to market volatility: Outstanding Financing (1) (A) Based on outstanding principal amount of secured financing. 6 Table of Contents Financing Risk Management The amount of leverage employed on our assets will depend on our Manager's assessment of the credit, liquidity, price volatility and other risks of those assets and the financing counterparties and availability of particular types of financing at any given time.
Our aggregate investment portfolio totaled $6.3 billion as of December 31, 2024, which is primarily comprised of $5.9 billion of total outstanding principal of senior and mezzanine CRE loans, $335.8 million net investment directly or indirectly in real estate owned assets (“REO”), and a $35.6 million investment in CMBS B-Pieces (indirectly-owned through RECOP I).
Our aggregate investment portfolio totaled $5,924.2 million as of December 31, 2025, which is primarily comprised of $5,361.9 million of total outstanding principal of senior CRE loans, $502.6 million net investment directly or indirectly in real estate owned assets (“REO”), $44.6 million CMBS investments and a $15.1 million investment in an affiliated company.
As of December 31, 2024, all of our investments were located in the United States. 3 Table of Contents The following charts illustrate the size of our portfolio and related compound annual growth rate ("CAGR") and common book value, over the years ended December 31, 2024 and the preceding four years (dollars in millions): (A) Common book value as of December 31, 2024 includes the impact of a CECL allowance of $119.6 million.
In addition, we originate floating-rate loans for which we syndicate a senior position and retain a subordinated interest for our portfolio. 3 Table of Contents The following charts illustrate the size of our portfolio and related compound annual growth rate ("CAGR") and common book value, over the years ended December 31, 2025 and the preceding four years (amounts in millions): (A) Common book value as of December 31, 2025 includes the impact of a CECL allowance of $204.1 million and accumulated depreciation of $5.1 million.
(A) Excludes: (i) Real Estate Assets, (ii) CMBS B-Pieces and (iii) fully written off loans. (B) We classify a loan as life science if more than 50% of the gross leasable area is leased to, or will be converted to, life science-related space. (C) Other property type includes Self-Storage (2%), Student Housing (2%) and Mixed Use (1%).
Excludes fully written off loans, loans held in consolidated CMBS trust, and equity method investment, unconsolidated entity. (B) We classify a loan as life science if more than 50% of the gross leasable area is leased to, or will be converted to, life science-relat ed space.
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In addition, we originate floating-rate loans for which we syndicate a senior position and retain a subordinated interest for our portfolio.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeTo the extent that we invest in non-U.S. real estate-related assets, we may be subject to certain risks associated with international investments generally, including, among others: • currency exchange matters, including fluctuations in currency exchange rates and costs associated with conversion of investment principal and income from one currency to another; • less developed or efficient financial markets than in the United States, which may lead to potential price volatility and relative illiquidity; • the burdens of complying with international regulatory requirements and prohibitions that differ between jurisdictions; • changes in laws or clarifications to existing laws that could impact our tax treaty positions, which could adversely impact the returns on our investments; • a less developed legal or regulatory environment, differences in the legal and regulatory environment or enhanced legal and regulatory compliance; • political hostility to investments by foreign investors; • higher inflation rates; • higher transaction costs; • difficulty enforcing contractual obligations; • fewer investor protections; • war or other hostilities; • potentially adverse tax consequences; or • other economic and political risks, including potential exchange control regulations and restrictions on our non-U.S. investments and repatriation of profits from investments or of capital invested, the risks of political, 22 Table of Contents economic or social instability, the possibility of expropriation or confiscatory taxation and adverse economic or political developments.
Biggest changeInvestments in foreign assets are subject to certain risks associated with international investments generally, including, among others: • currency exchange matters, including fluctuations in currency exchange rates and costs associated with conversion of investment principal and income from one currency to another, which may have an adverse impact on the valuation of our assets or income, including for purposes of our REIT requirements, regardless of any hedging activities we undertake, which may not be adequate; • less developed or efficient financial markets than in the United States, which may lead to potential price volatility and relative illiquidity; • the burdens of complying with international regulatory requirements and prohibitions that differ between jurisdictions; • differing laws and regulations regarding foreclosure and the exercise of other remedies in the case of default, which may be more difficult or costly compared to U.S. assets; • changes in laws or clarifications to existing laws that could impact our tax treaty positions, which could adversely impact the returns on our investments; • a less developed legal or regulatory environment, differences in the legal and regulatory environment or enhanced legal and regulatory compliance; • political hostility to investments by foreign investors; • higher inflation rates; • higher transaction costs; 22 Table of Contents • greater difficulty enforcing contractual obligations; • fewer investor protections; • war or other hostilities; • potentially adverse tax consequences; • political and economic instability abroad; or • other economic and political risks, including potential exchange control regulations and restrictions on our non-U.S. investments and repatriation of profits from investments or of capital invested, the risks of political, economic or social instability, the possibility of expropriation or confiscatory taxation and adverse economic or political developments.
Net operating income of an income-producing property can be affected by, among other things: • tenant mix and tenant bankruptcies; • success of tenant businesses; • property management decisions, including with respect to capital improvements, particularly in older building structures; • renovations or repositionings during which operations may be limited or halted completely; • property location and condition, including without limitation, any need to address climate-related risks; • competition from other properties offering the same or similar services; • changes in laws that increase operating expenses or limit rents that may be charged; • any liabilities relating to environmental matters at the property; 12 Table of Contents • changes in global, national, regional or local economic conditions and/or specific industry segments; • increases in remote working arrangements and the subsequent effect on demand for CRE; • global trade disruption, supply chain issues, significant introduction of trade barriers and bilateral trade frictions; • labor shortages and increasing wages; • higher inflation rates; • declines in global, national, regional or local real estate values; • declines in global, national, regional or local rental or occupancy rates; • changes in interest rates and in the state of the credit and securitization markets and the debt and equity capital markets, including diminished availability or lack of debt financing for CRE; • changes in real estate tax rates and other operating expenses; • changes in governmental rules, regulations and fiscal policies, including environmental legislation, income tax regulations and other tax legislation; • outbreaks of contagious or pandemic diseases; • acts of God, natural disasters, climate change related risks, terrorism, social unrest and civil disturbances, which may decrease the availability of or increase the cost of insurance or result in uninsured losses; and • adverse changes in zoning laws.
Net operating income of an income-producing property can be affected by, among other things: • tenant mix and tenant bankruptcies; • success of tenant businesses; • property management decisions, including with respect to capital improvements, particularly in older building structures; • renovations or repositionings during which operations may be limited or halted completely; • property location and condition, including without limitation, any need to address climate-related risks; • competition from other properties offering the same or similar services; • changes in laws that increase operating expenses or limit rents that may be charged; • any liabilities relating to environmental matters at the property; • changes in global, national, regional or local economic conditions and/or specific industry segments; • increases in remote working arrangements and the subsequent effect on demand for CRE; • global trade disruption, supply chain issues, significant introduction of trade barriers and bilateral trade frictions; 12 Table of Contents • labor shortages and increasing wages; • higher inflation rates; • declines in global, national, regional or local real estate values; • declines in global, national, regional or local rental or occupancy rates; • changes in interest rates and in the state of the credit and securitization markets and the debt and equity capital markets, including diminished availability or lack of debt financing for CRE; • changes in real estate tax rates and other operating expenses; • changes in governmental rules, regulations and fiscal policies, including environmental legislation, income tax regulations and other tax legislation; • outbreaks of contagious or pandemic diseases; • acts of God, natural disasters, climate change related risks, terrorism, social unrest and civil disturbances, which may decrease the availability of or increase the cost of insurance or result in uninsured losses; and • adverse changes in zoning laws.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Portfolio.” 17 Table of Contents Any credit ratings assigned to our investments or to us will be subject to ongoing evaluations and revisions and we cannot assure you that those ratings will not be downgraded. Some of our investments may be rated by rating agencies.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Portfolio.” Any credit ratings assigned to our investments or to us will be subject to ongoing evaluations and revisions and we cannot assure you that those ratings will not be downgraded. 17 Table of Contents Some of our investments may be rated by rating agencies.
Further, any downgrade of the Company’s credit ratings by any of credit agencies that cover our debt may make it more difficult and costly for us to access capital.
Further, any downgrade of the Company’s credit ratings by any of the credit agencies that cover our debt may make it more difficult and costly for us to access capital.
For example, under certain circumstances, a lender who has inappropriately exercised control over the management and policies of a debtor may have its claims subordinated or disallowed or may be found liable for damages suffered by parties as a result of such actions.
For example, under certain circumstances, a lender who has inappropriately exercised control over the management and policies of a debtor may have its claims subordinated or disallowed or may be found liable for damages suffered by parties as a result of such actions.
In a period of declining interest rates, our interest income on floating-rate investments would generally decrease, while any decrease in the interest we are charged on our floating-rate debt may be subject to floors and may not compensate for such decrease in interest income.
In a period of declining interest rates, our interest income on floating-rate investments would generally decrease, while any decrease in the interest we are charged on our floating-rate debt may be subject to floors and may not compensate for such decrease in interest income.
There may be no guidance from the SEC staff that applies directly to our factual situations and as a result we may have to apply SEC staff guidance that relates to other factual situations by analogy. No assurance can be given that the SEC or its staff will concur with our classification of our assets.
There may be no guidance from the SEC staff that applies directly to our factual situations and as a result we may have to apply SEC staff guidance that relates to other factual situations by analogy. No assurance can be given that the SEC or its staff will concur with our classification of our assets.
There is no guarantee that we will be able to adjust our assets in the manner required to maintain an exclusion from registration under the Investment Company Act and any adjustment in our strategy or assets could have a material adverse effect on us.
There is no guarantee that we will be able to adjust our assets in the manner required to maintain an exclusion from registration under the Investment Company Act and any adjustment in our strategy or assets could have a material adverse effect on us.
The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. In addition, cybersecurity has become a top priority for regulators around the world. In addition, cybersecurity has become a top priority for regulators around the world.
The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. In addition, cybersecurity has become a top priority for regulators around the world.
In certain limited cases (e.g., in connection with a workout, restructuring and/or foreclosing proceedings involving one or more of our debt investments), the success of our investment strategy with respect thereto will depend, in part, on our ability to effectuate loan modifications and/or restructures and improve the operations of our borrower entities.
In certain limited cases (e.g., in connection with a workout, restructuring and/or foreclosing proceedings involving one or more of our debt investments), the success of our investment strategy with respect thereto will depend, in part, on our ability to effectuate loan modifications, extensions and/or restructures and improve the operations of our borrower entities.
To the extent we suffer such losses with respect to these transitional loans, it could adversely affect our results of operations and financial condition. Prepayment rates may adversely affect the value of our portfolio of assets. Generally, our borrowers may repay their loans prior to their stated final maturities.
To the extent we suffer such losses with respect to these transitional loans, it could adversely affect our results of operations and financial condition. Prepayment and extension rates may adversely affect the value of our portfolio of assets. Generally, our borrowers may repay their loans prior to their stated final maturities.
The imperfect correlation between the value of a derivative and the underlying assets may result in losses on the derivative transaction that are greater than the gain in the value of the underlying assets in our portfolio. • Valuation Risk : The derivative instruments used by us may be difficult to value or involve the risk of mispricing or improper valuation, especially where the markets for such derivatives instruments are illiquid and/or such derivatives involve complex structures, or where there is imperfect correlation between the value of the derivative instrument and the underlying asset, reference rate or index. 21 Table of Contents • Counterparty Risk : Derivative instruments also involve exposure to counterparty risk, since contract performance depends in part on the financial condition of the counterparty.
The imperfect correlation between the value of a derivative and the underlying assets may result in losses on the derivative transaction that are greater than the gain in the value of the underlying assets in our portfolio. • Valuation Risk : The derivative instruments used by us may be difficult to value or involve the risk of mispricing or improper valuation, especially where the markets for such derivatives instruments are illiquid and/or such derivatives involve complex structures, or where there is imperfect correlation between the value of the derivative instrument and the underlying asset, reference rate or benchmark. 21 Table of Contents • Counterparty Risk : Derivative instruments also involve exposure to counterparty risk, since contract performance depends in part on the financial condition of the counterparty.
Such OTC derivatives are also typically not subject to the same type of investor protections or governmental regulation as exchange traded instruments. • Imperfect Correlation : When used for hedging purposes, an imperfect or variable degree of correlation between price movements of the derivative instrument and the underlying asset, reference rate or index sought to be hedged may prevent us from achieving the intended hedging effect or expose us to the risk of loss.
Such OTC derivatives are also typically not subject to the same type of investor protections or governmental regulation as exchange traded instruments. • Imperfect Correlation : When used for hedging purposes, an imperfect or variable degree of correlation between price movements of the derivative instrument and the underlying asset, reference rate or benchmark sought to be hedged may prevent us from achieving the intended hedging effect or expose us to the risk of loss.
Further, such modifications and/or restructuring may entail, among other things, a substantial reduction in the interest rate and substantial write-offs of the principal of such loan, debt securities or other interests.
Further, such modifications, extensions and/or restructuring may entail, among other things, a substantial reduction in the interest rate and substantial write-offs of the principal of such loan, debt securities or other interests.
We refer to these subsidiaries as our “CLO subsidiaries.” Rule 3a-7 under the Investment Company Act is available to certain structured financing vehicles that are engaged in the business of holding financial assets that, by their terms, convert into cash within a finite time period and that issue fixed income securities entitling holders to receive payments 36 Table of Contents that depend primarily on the cash flows from these assets, provided that, among other things, the structured finance vehicle does not engage in certain portfolio management practices resembling those employed by management investment companies (e.g., mutual funds).
We refer to these subsidiaries as our “CLO subsidiaries.” Rule 3a-7 under the Investment Company Act is available to certain structured financing vehicles that are engaged in the business of holding financial assets that, by their terms, convert into cash within a finite time period and that issue fixed income securities entitling holders to receive payments that depend primarily on the cash flows from these assets, provided that, among other things, the structured finance vehicle does not engage in certain portfolio management practices resembling those employed by management investment companies (e.g., mutual funds).
Under the terms of the management agreement, our Manager and its affiliates and their respective directors, officers, employees, managers, trustees, control persons, partners, equityholders and stockholders are not liable to us, our directors, stockholders or any subsidiary of ours, or their directors, officers, employees or stockholders for any acts or omissions performed in accordance with and pursuant to the management agreement, whether by or through attempted piercing of the corporate veil, by or through a claim, 30 Table of Contents by the enforcement of any judgment or assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, or otherwise, except by reason of acts or omissions constituting bad faith, willful misconduct, gross negligence, or reckless disregard of their duties under the management agreement.
Under the terms of the management agreement, our Manager and its affiliates and their respective directors, officers, employees, managers, trustees, control persons, partners, equityholders and stockholders are not liable to us, our directors, stockholders or any subsidiary of ours, or their directors, officers, employees or stockholders for any acts or omissions performed in accordance with and pursuant to the management agreement, whether by or through attempted piercing of the corporate veil, by or through a claim, by the enforcement of any judgment or assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other applicable law, or otherwise, except by reason of acts or omissions constituting bad faith, willful misconduct, gross negligence, or reckless disregard of their duties under the management agreement.
See “Risks Related to Our REIT Status and Certain Other Tax Considerations—Our charter does not permit any person (including certain entities treated as individuals for this purpose) to own more than 9.8% of any class or series of our outstanding capital stock, and attempts to acquire shares of any class or series of our capital stock in excess of this 9.8% limit would not be effective without an exemption from those prohibitions by our board of directors.” Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit your recourse in the event of actions not in your best interests.
See “Risks Related to Our REIT Status and Certain Other Tax Considerations—Our charter does not permit any person (including certain entities treated as individuals for this purpose) to own more than 9.8% of any class or series of our outstanding capital stock, and attempts to acquire shares of any class or series of our capital stock in excess of this 9.8% limit would not be effective without an exemption from those prohibitions by our board of directors.” 51 Table of Contents Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit your recourse in the event of actions not in your best interests.
For example, we may acquire assets, including debt securities requiring us to accrue original issue discount or recognize market discount income, that generate taxable income in excess of economic income or in advance of the corresponding cash flow from the assets referred to as “phantom income.” In addition, if a borrower with respect to a particular debt instrument encounters financial difficulty rendering it unable to pay 43 Table of Contents stated interest as due, we may nonetheless be required to continue to recognize the unpaid interest as taxable income with the effect that we will recognize income but will not have a corresponding amount of cash available for distribution to our stockholders.
For example, we may acquire assets, including debt securities requiring us to accrue original issue discount or recognize market discount income, that generate taxable income in excess of economic income or in advance of the corresponding cash flow from the assets referred to as “phantom income.” In addition, if a borrower with respect to a particular debt instrument encounters financial difficulty rendering it unable to pay stated interest as due, we may nonetheless be required to continue to recognize the unpaid interest as taxable income with the effect that we will recognize income but will not have a corresponding amount of cash available for distribution to our stockholders.
We believe that a change in any one of the following factors could adversely affect our results of operations and impair our ability to pay distributions at current levels or at all to our stockholders: • our ability to make profitable investments; • margin calls or other expenses that reduce our cash flow; • defaults in our asset portfolio or decreases in the value of our portfolio; • the impact of declining interest rates on our net interest income; and • the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates.
We believe that a change in any one of the following factors could adversely affect our results of operations and impair our ability to pay distributions at current levels or at all to our stockholders: • our ability to make profitable investments; • margin calls or other expenses that reduce our cash flow; 52 Table of Contents • defaults in our asset portfolio or decreases in the value of our portfolio; • the impact of declining interest rates on our net interest income; and • the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates.
Moreover, even if the “protective” election were to be effective, the Subsidiary REIT would be subject to regular corporate income tax, and we cannot assure you that we would not fail to satisfy the requirement that not more than 20% of the value of our total assets may be represented by the securities of one or more taxable REIT subsidiaries.
Moreover, even if the “protective” election were to be effective, the Subsidiary REIT would be subject to regular corporate income tax, and we cannot assure you that we would not fail to satisfy the requirement that not more than 25% of the value of our total assets may be represented by the securities of one or more taxable REIT subsidiaries.
Our investments in subordinated debt and mezzanine tranches of a borrower’s capital structure and our remedies with respect thereto, including the ability to foreclose on any collateral securing such investments, are subject to the rights of any senior creditors and, to the extent applicable, contractual intercreditor and/or participation agreement provisions.
Our current and future investments in subordinated debt and mezzanine tranches of a borrower’s capital structure and our remedies with respect thereto, including the ability to foreclose on any collateral securing such investments, are subject to the rights of any senior creditors and, to the extent applicable, contractual intercreditor and/or participation agreement provisions.
Under various U.S. federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances.
Under various federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances.
State licensing statutes vary from state to state and prescribe or impose various recordkeeping requirements; restrictions on loan origination and servicing practices, including limits on finance charges and the type, amount and manner of charging fees; disclosure requirements; requirements that licensees submit to periodic examination; surety bond and minimum specified net worth requirements; periodic financial reporting requirements; notification requirements for changes in principal officers, stock 35 Table of Contents ownership or corporate control; restrictions on advertising; and requirements that loan forms be submitted for review.
State licensing statutes vary from state to state and prescribe or impose various recordkeeping requirements; restrictions on loan origination and servicing practices, including limits on finance charges and the type, amount and manner of charging fees; disclosure requirements; requirements that licensees submit to periodic examination; surety bond and minimum specified net worth requirements; periodic financial reporting requirements; notification requirements for changes in principal officers, stock ownership or corporate control; restrictions on advertising; and requirements that loan forms be submitted for review.
If we identify material weaknesses in our internal controls over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or to assert that our internal controls over financial reporting is effective or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could 40 Table of Contents be negatively affected.
If we identify material weaknesses in our internal controls over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner or to assert that our internal controls over financial reporting is effective or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected.
If we enter into such a transaction in the future, we could be taxable at the highest corporate income tax rate on a portion of the income arising from a taxable mortgage pool, referred to as “excess inclusion income,” that is allocable to the percentage of our shares held in record name by disqualified organizations (generally tax-exempt entities that are exempt from the tax on unrelated business taxable income, such as state pension plans and charitable remainder trusts and government entities).
If we enter into such a transaction in the future, 45 Table of Contents we could be taxable at the highest corporate income tax rate on a portion of the income arising from a taxable mortgage pool, referred to as “excess inclusion income,” that is allocable to the percentage of our shares held in record name by disqualified organizations (generally tax-exempt entities that are exempt from the tax on unrelated business taxable income, such as state pension plans and charitable remainder trusts and government entities).
If any Subsidiary REIT were to fail to qualify as a REIT, then (i) that Subsidiary REIT would become subject to regular U.S. federal, state, and local corporate income tax, (ii) our interest in such Subsidiary REIT would cease to be a qualifying asset for purposes of the REIT asset tests, and (iii) it is possible that we would fail certain of the REIT asset tests, in which event we also would fail to maintain our qualification as a REIT unless we could avail ourselves of certain relief provisions.
If any Subsidiary REIT were to fail to qualify as a REIT, then (i) that Subsidiary REIT would become subject to regular U.S. federal, state, and local corporate income tax, (ii) our interest in such Subsidiary REIT would cease to be a qualifying asset for purposes of the REIT asset tests, and (iii) it is possible that we would fail certain of the REIT asset tests, in which event we also would fail to maintain our 46 Table of Contents qualification as a REIT unless we could avail ourselves of certain relief provisions.
Although we intend to make regular quarterly distributions to holders of our common stock and we currently expect to distribute at least 90% of our net taxable income to our stockholders on an annual basis, we have not established a minimum distribution payment level and our ability to pay distributions may be adversely affected by a number of 51 Table of Contents factors, including the risk factors described in this Annual Report on Form 10-K.
Although we intend to make regular quarterly distributions to holders of our common stock and we currently expect to distribute at least 90% of our net taxable income to our stockholders on an annual basis, we have not established a minimum distribution payment level and our ability to pay distributions may be adversely affected by a number of factors, including the risk factors described in this Annual Report on Form 10-K.
If a borrower fails to complete the construction of a project or experiences cost overruns, there could be adverse consequences associated with the loan, including a decline in the value of the property securing the loan, a borrower claim against us for 24 Table of Contents failure to perform under the loan documents if we choose to stop funding, increased costs to the borrower that the borrower is unable to pay, a bankruptcy filing by the borrower, and abandonment by the borrower of the collateral for the loan.
If a borrower fails to complete the construction of a project or experiences cost overruns, there could be adverse consequences associated with the loan, including a decline in the value of the property securing the loan, a borrower claim against us for failure to perform under the loan documents if we choose to stop funding, increased costs to the borrower that the borrower is unable to pay, a bankruptcy filing by the borrower, and abandonment by the borrower of the collateral for the loan.
The current term of the management agreement extends to December 31, 2025 and will be automatically renewed for additional one-year terms thereafter; provided, however, that our Manager may terminate the management agreement annually upon 180 days’ prior notice.
The current term of the management agreement extends to December 31, 2026 and will be automatically renewed for additional one-year terms thereafter; provided, however, that our Manager may terminate the management agreement annually upon 180 days’ prior notice.
Although our Manager will seek to resolve any conflicts of interest in a fair and equitable manner in accordance 34 Table of Contents with the allocation policy and its prevailing policies and procedures with respect to conflicts resolution among KKR funds generally, only those transactions set forth in this paragraph will be required to be presented for approval by the independent directors. • Management agreement.
Although our Manager will seek to resolve any conflicts of interest in a fair and equitable manner in accordance with the allocation policy and its prevailing policies and procedures with respect to conflicts resolution among KKR funds generally, only those transactions set forth in this paragraph will be required to be presented for approval by the independent directors. • Management agreement.
Our taxable income may be greater than our cash flow available for distribution, including as a result of our investments in certain debt instruments, causing us to recognize “phantom income” for U.S. federal income tax purposes, and certain modifications of debt instruments by us could cause the modified debt to not qualify as a good REIT asset, thereby jeopardizing our REIT qualification.
Our taxable income may be greater than our cash flow available for distribution, including as a result of our investments in certain debt instruments, causing us to recognize “phantom income” for U.S. federal income tax purposes, and certain 43 Table of Contents modifications of debt instruments by us could cause the modified debt to not qualify as a good REIT asset, thereby jeopardizing our REIT qualification.
These provisions could have the effect of limiting or precluding a third party from making an unsolicited acquisition proposal for our company or of delaying, deferring or preventing a change in control under circumstances that otherwise could provide 50 Table of Contents the holders of shares of our common stock with the opportunity to realize a premium over the then current market price.
These provisions could have the effect of limiting or precluding a third party from making an unsolicited acquisition proposal for our company or of delaying, deferring or preventing a change in control under circumstances that otherwise could provide the holders of shares of our common stock with the opportunity to realize a premium over the then current market price.
Furthermore, to the extent not restricted by confidentiality requirements or applicable law, KKR may apply experience and information gained in providing services to our investments to provide services to competing investments of KKR investment vehicles, which may have adverse consequences for us or our investments. • Other affiliate transactions. We may borrow money from multiple lenders, including KKR.
Furthermore, to the extent not restricted by confidentiality requirements or applicable law, KKR may apply experience and information gained in providing services to our investments to provide services to competing investments of KKR investment vehicles, which may have adverse consequences for us or our investments. • Other related party transactions. We may borrow money from multiple lenders, including KKR.
If it were established that we were an unregistered investment company, there would be a risk that we would be subject to monetary penalties and injunctive relief in an action brought by the SEC, that we would be unable to 37 Table of Contents enforce contracts with third parties, that third parties could seek to obtain rescission of transactions undertaken during the period it was established that we were an unregistered investment company.
If it were established that we were an unregistered investment company, there would be a risk that we would be subject to monetary penalties and injunctive relief in an action brought by the SEC, that we would be unable to enforce contracts with third parties, that third parties could seek to obtain rescission of transactions undertaken during the period it was established that we were an unregistered investment company.
If such renovation is not completed in a timely manner, or if it costs more than expected, the borrower 13 Table of Contents may experience a prolonged reduction of net operating income and may not be able to make payments on our investment on a timely basis or at all, which could result in significant losses.
If such renovation is not completed in a timely manner, or if it costs more than expected, the borrower may experience a prolonged reduction of net operating income and may not be able to make payments on our investment on a timely basis or at all, which could result in significant losses.
Construction lending involves a higher degree of risk of non-payment and loss than other types of lending due to a variety of factors, including the difficulties in estimating construction costs and anticipating construction delays (or governmental shut-downs of construction activity) and, generally, the dependency on timely, successful completion and the lease-up and commencement of operations post-completion.
Construction lending involves a higher degree of risk of non-payment and loss than other types of lending due to a variety of factors, including the difficulties in estimating construction 24 Table of Contents costs and anticipating construction delays (or governmental shut-downs of construction activity) and, generally, the dependency on timely, successful completion and the lease-up and commencement of operations post-completion.
Our access to sources of financing will depend upon a number of factors, over which we have little or no control, including: • general economic or market conditions; • the market’s view of the quality of our assets; 26 Table of Contents • the market’s perception of our growth potential; • our current and potential future earnings and cash distributions; and • the market price of the shares of our common stock.
Our access to sources of financing will depend upon a number of factors, over which we have little or no control, including: • general economic or market conditions; • the market’s view of the quality of our assets; • the market’s perception of our growth potential; • our current and potential future earnings and cash distributions; and • the market price of the shares of our common stock.
In addition, certain regulatory requirements with respect to derivatives, including record keeping, financial responsibility or segregation of customer funds and positions are still under development and could impact our hedging transactions and how we and our counterparty must manage such transactions. We may be subject to counterparty risk associated with any hedging activities.
In addition, certain regulatory requirements with respect to derivatives, including record keeping, financial responsibility or segregation of customer funds and 28 Table of Contents positions are still under development and could impact our hedging transactions and how we and our counterparty must manage such transactions. We may be subject to counterparty risk associated with any hedging activities.
Even after the lapse of the five-year prohibition period, any business combination with an interested stockholder must be recommended by our board of directors and approved by the affirmative vote of at least: 49 Table of Contents • 80% of the votes entitled to be cast by stockholders; and • two-thirds of the votes entitled to be cast by stockholders other than the interested stockholder and affiliates and associates thereof.
Even after the lapse of the five-year prohibition period, any business combination with an interested stockholder must be recommended by our board of directors and approved by the affirmative vote of at least: • 80% of the votes entitled to be cast by stockholders; and • two-thirds of the votes entitled to be cast by stockholders other than the interested stockholder and affiliates and associates thereof.
The use of derivative instruments also requires an understanding not only of the underlying asset, reference rate or index but also of the derivative itself, without the benefit of observing the performance of the derivative under all possible market conditions.
The use of derivative instruments also requires an understanding not only of the underlying asset, reference rate or benchmark but also of the derivative itself, without the benefit of observing the performance of the derivative under all possible market conditions.
In addition, we may suffer a loss due to the incurrence of transaction costs related to executing these transactions. To the extent that we incur a loss executing or participating in future securitizations for the reasons described above or for other reasons, it could materially and adversely impact our business and financial condition.
In addition, we may suffer a loss due to the incurrence of transaction costs related to executing these transactions. To the extent 23 Table of Contents that we incur a loss executing or participating in future securitizations for the reasons described above or for other reasons, it could materially and adversely impact our business and financial condition.
In addition, the SEC or its staff may, in the future, issue further guidance that may require us to re-classify our assets for purposes of the Investment Company Act, including for purposes of our subsidiaries’ compliance with the exclusion provided in Section 3(c)(5)(C) of, or Rule 3a-7 under, the Investment Company Act.
In addition, the SEC or its staff may, in the future, issue further guidance that may require us to re-classify our assets for purposes of the Investment Company Act, including for 37 Table of Contents purposes of our subsidiaries’ compliance with the exclusion provided in Section 3(c)(5)(C) of, or Rule 3a-7 under, the Investment Company Act.
Furthermore, in the event that the license agreement is terminated, we will be required to change our name and ticker symbol and cease using the “KKR” name. Any of these events could disrupt our recognition in the marketplace, damage any goodwill we may have generated and otherwise harm our business.
Furthermore, in the event that the license agreement is terminated, we will be required 35 Table of Contents to change our name and ticker symbol and cease using the “KKR” name. Any of these events could disrupt our recognition in the marketplace, damage any goodwill we may have generated and otherwise harm our business.
If any of our counterparties were to limit or cease operation, it could lead to financial losses for us. We may utilize a wide variety of derivative financial instruments for risk management purposes, the use of which may entail greater than ordinary investment risks.
If any of our counterparties were to limit or cease operation, it could lead to financial losses for us. 27 Table of Contents We may utilize a wide variety of derivative financial instruments for risk management purposes, the use of which may entail greater than ordinary investment risks.
If successful, these types of attacks on our or KKR’s network or other systems could have a material adverse effect on our business and results of operations, due to, among other things, the loss of investor or proprietary data, interruptions or delays in the operation of our business and damage to our reputation.
If successful, these types of attacks on our or KKR’s network or other systems could 47 Table of Contents have a material adverse effect on our business and results of operations, due to, among other things, the loss of investor or proprietary data, interruptions or delays in the operation of our business and damage to our reputation.
As of December 31, 2024, 13,160,000 shares of preferred stock are classified as 6.50% Series A Cumulative Redeemable Preferred Stock and one share of preferred stock is classified as special non-voting preferred stock.
As of December 31, 2025, 13,160,000 shares of preferred stock are classified as 6.50% Series A Cumulative Redeemable Preferred Stock and one share of preferred stock is classified as special non-voting preferred stock.
If rules or regulations were to extend to us or our affiliates the regulatory and supervisory requirements, such as capital and liquidity standards, currently applicable to banks, then the regulatory and operating costs associated therewith could 38 Table of Contents adversely impact the implementation of our investment strategy and our returns.
If rules or regulations were to extend to us or our affiliates the regulatory and supervisory requirements, such as capital and liquidity standards, currently applicable to banks, then the regulatory and operating costs associated therewith could adversely impact the implementation of our investment strategy and our returns.
Such changes and have included and/or may in the future include economic and/or market fluctuations, increases in remote working arrangements, changes in environmental, zoning and other laws, casualty or condemnation losses, regulatory limitations on rents, decreases in property values, changes in the appeal of properties to tenants, changes in supply and demand of real estate products, fluctuations in real estate fundamentals (including average occupancy and room rates for hotel properties), energy and supply shortages, various uninsured or uninsurable risks, natural 10 Table of Contents disasters, terrorism, acts of war, outbreaks of pandemic or contagious diseases, changes in government regulations (such as rent control), political and legislative uncertainty, changes in monetary policy, changes in real property tax rates and operating expenses, changes in interest rates, changes in the availability of debt financing and/or mortgage funds which may render the sale or refinancing of properties difficult or impracticable, increased mortgage defaults, increases in borrowing rates, escalating global trade tensions, the conflict between Russia and Ukraine, conflict and deteriorating geopolitical conditions in the Middle East, the adoption or expansion of economic sanctions or trade restrictions, negative developments in the economy that depress travel activity, adverse changes in demand and/or real estate values generally and other factors that are beyond our control.
Such changes and have included and/or may in the future include economic and/or market fluctuations, increases in remote working arrangements, changes in environmental, zoning and other laws, casualty or condemnation losses, regulatory limitations on rents, decreases in property values, changes in the appeal of properties to tenants, changes in supply and demand of real estate products, fluctuations in real estate fundamentals (including average occupancy and room rates for hotel properties), energy and supply shortages, various uninsured or uninsurable risks, natural 10 Table of Contents disasters, terrorism, acts of war, outbreaks of pandemic or contagious diseases, changes in government regulations (such as rent control), political and legislative uncertainty, changes in monetary policy, changes in real property tax rates and operating expenses, changes in interest rates, changes in the availability of debt financing and/or mortgage funds which may render the sale or refinancing of properties difficult or impracticable, increased mortgage defaults, increases in borrowing rates, escalating global trade tensions including the adoption or expansion of economic sanctions or trade restrictions, global conflicts, negative developments in the economy that depress travel activity, adverse changes in demand and/or real estate values generally and other factors that are beyond our control.
In the event of any default under transitional loans that may be held by us, we bear the risk of loss of principal and non-payment of interest and fees to the extent of any deficiency between the value of the mortgage collateral and the principal amount and unpaid interest of the transitional loan.
In the event of any default under transitional loans that may be held by us, we bear the risk of loss of principal and non-payment of interest and fees to the extent of any deficiency between 13 Table of Contents the value of the mortgage collateral and the principal amount and unpaid interest of the transitional loan.
As advisor to such KKR investment vehicles, KKR, including our Manager, may owe a fiduciary or other duty to the KKR investment vehicles and may face a conflict of interest in respect of the advice they give to, or the decisions made with regard to, us and such KKR investment vehicles. • Co-investments.
As advisor to such KKR investment vehicles, KKR, including our 33 Table of Contents Manager, may owe a fiduciary or other duty to the KKR investment vehicles and may face a conflict of interest in respect of the advice they give to, or the decisions made with regard to, us and such KKR investment vehicles. • Co-investments.
We also may be subject to state and local or foreign taxes on our income or property, including franchise, payroll, mortgage recording and transfer taxes, either directly or at the level of the other companies through which we indirectly own assets.
We also may be subject to state and local or foreign taxes on our income or property, including franchise, payroll, 41 Table of Contents mortgage recording and transfer taxes, either directly or at the level of the other companies through which we indirectly own assets.
As a result, the acquisition of less than 9.8% of any class or series of our outstanding capital stock by an individual or entity could cause an individual to own constructively in excess of 9.8% of such class or series of our outstanding capital stock, and thus violate the ownership limit.
As a result, the acquisition of less than 9.8% of any class or series of our outstanding capital stock by 42 Table of Contents an individual or entity could cause an individual to own constructively in excess of 9.8% of such class or series of our outstanding capital stock, and thus violate the ownership limit.
In addition, our investment portfolio will 27 Table of Contents always be exposed to certain risks that cannot be fully or effectively hedged, such as credit risk relating both to particular securities and counterparties. Hedging against interest rate or currency exposure may adversely affect our earnings, which could reduce our cash available for distribution to stockholders.
In addition, our investment portfolio will always be exposed to certain risks that cannot be fully or effectively hedged, such as credit risk relating both to particular securities and counterparties. Hedging against interest rate or currency exposure may adversely affect our earnings, which could reduce our cash available for distribution to stockholders.
Furthermore, when KKR proprietary entities or KKR investment vehicles have interests or requirements that do not align with our interests, including differing liquidity needs or desired investment horizons, conflicts may arise in the manner in which any voting or control 33 Table of Contents rights are exercised with respect to the relevant investment, potentially resulting in an adverse impact on us.
Furthermore, when KKR proprietary entities or KKR investment vehicles have interests or requirements that do not align with our interests, including differing liquidity needs or desired investment horizons, conflicts may arise in the manner in which any voting or control rights are exercised with respect to the relevant investment, potentially resulting in an adverse impact on us.
In any reorganization or liquidation proceeding relating to our investments, we may lose our entire investment, may be required to accept cash or securities with a value less than our original investment and/ 19 Table of Contents or may be required to accept payment over an extended period of time.
In any reorganization or liquidation proceeding relating to our investments, we may lose our entire investment, may be required to accept cash or securities with a value less than our original investment and/or may be required to accept payment over an extended period of time.
Incurring substantial debt could subject us to many risks that, if realized, would materially and adversely affect us, including the risk that: • our cash flow from operations may be insufficient to make required payments of principal of and interest on our debt or we may fail to comply with covenants contained in our debt agreements, which is likely to result in (i) acceleration of such debt (and any other debt containing a cross-default or cross-acceleration provision), which we then may be unable to repay from internal funds or to refinance on favorable terms, or at all, (ii) our inability to borrow undrawn amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements, which would result in a decrease in our liquidity, and/or (iii) the loss of some or all of our collateral assets to foreclosure or sale; • our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase in an amount sufficient to offset the higher financing costs; • we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions or other purposes; and • we may not be able to refinance any debt that matures prior to the maturity (or realization) of an underlying investment it was used to finance on favorable terms or at all.
Incurring substantial debt could subject us to many risks that, if realized, would materially and adversely affect us, including the risk that: • our cash flow from operations may be insufficient to make required payments of principal of and interest on our debt or we may fail to comply with covenants contained in our debt agreements, which is likely to result in (i) acceleration of such debt (and any other debt containing a cross-default or cross-acceleration provision), which we then may be unable to repay from internal funds or to refinance on favorable terms, or at all, (ii) our inability to borrow undrawn amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements, which would result in a decrease in our liquidity, and/or (iii) the loss of some or all of our collateral assets to foreclosure or sale; • our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase in an amount sufficient to offset the higher financing costs; • we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions or other purposes; and • we may not be able to refinance any debt that matures prior to the maturity (or realization) of an underlying investment it was used to finance on favorable terms or at all. 25 Table of Contents There can be no assurance that a leveraging strategy will be successful, and such strategy may subject us to increased risk of loss and could adversely affect our results of operations and financial condition.
These provisions increase the cost to us of terminating the management agreement and adversely affect our ability to terminate the management agreement without cause. Our Manager’s liability is limited under the management agreement and we have agreed to indemnify our Manager against certain liabilities.
These provisions increase the cost to us of terminating the management agreement and adversely affect our ability to terminate the management agreement without cause. 30 Table of Contents Our Manager’s liability is limited under the management agreement and we have agreed to indemnify our Manager against certain liabilities.
In such circumstances, KKR’s interest in maximizing the investment return of its proprietary entities creates a conflict of interest in that our Manager may be motivated to allocate more attractive investments to the proprietary entities under its management and allocate less attractive investments to us.
In such circumstances, KKR’s interest in maximizing the investment return of its proprietary entities creates a conflict of interest in that our Manager may be motivated to allocate more attractive investments to the 32 Table of Contents proprietary entities under its management and allocate less attractive investments to us.
Although there is a substantial lack of clarity regarding the likelihood, timing and details of potential changes or reforms by the new administration and U.S. Congress, such changes or reforms may impose additional costs on our current or future investments, require the attention of senior management or result in other limitations on our business or investments.
Although there is a substantial lack of clarity regarding the likelihood, timing and details of potential changes or reforms by the current administration and U.S. Congress, such changes or reforms may impose additional costs on 38 Table of Contents our current or future investments, require the attention of senior management or result in other limitations on our business or investments.
A disaster or a disruption in the infrastructure that supports our business, including a disruption involving electronic communications or other services used by us or third parties with whom we conduct business, or directly affecting our headquarters, could have a material adverse impact on our ability to continue to operate our business without interruption.
A disaster or a disruption in the infrastructure that supports our business, including a disruption involving electronic communications or other services used by us or third parties with whom we conduct business, or directly affecting our headquarters, could have a material adverse impact on our ability to continue to operate our business 48 Table of Contents without interruption.
The value of such derivatives also depends upon the price of the underlying asset, reference rate or index, which may also be subject to volatility.
The value of such derivatives also depends upon the price of the underlying asset, reference rate or benchmark, which may also be subject to volatility.
Notwithstanding that KKR may not receive commissions from such agency cross-transactions, it may nonetheless have a potential conflict of interest with respect to us and the other parties to those transactions to the extent it receives commissions or other compensation from such other parties. • KKR stakes in third-party hedge fund managers. KKR has stakes in third-party hedge fund managers.
Notwithstanding that KKR may not receive commissions from such agency cross-transactions, it may nonetheless have a potential conflict of interest with respect to us and the other parties to those transactions to the extent it receives commissions or other compensation from such other parties. 34 Table of Contents • KKR stakes in third-party hedge fund managers.
Significant restrictions exist, and additional restrictions may be added in the future, regarding who may hold risk retention interests, the structure of the entities that hold risk retention interests and when 23 Table of Contents and how such risk retention interests may be transferred. Therefore such risk retention interests will generally be illiquid.
Significant restrictions exist, and additional restrictions may be added in the future, regarding who may hold risk retention interests, the structure of the entities that hold risk retention interests and when and how such risk retention interests may be transferred. Therefore, such risk retention interests will generally be illiquid.
In addition, under certain circumstances, payments to us and distributions by us to the stockholders may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance, preferential payment or similar transaction under applicable bankruptcy and insolvency laws.
In addition, under certain circumstances, payments to us 19 Table of Contents and distributions by us to the stockholders may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance, preferential payment or similar transaction under applicable bankruptcy and insolvency laws.
Additionally, sustainability-related matters and our response to these matters could harm our business, including in areas such as diversity, equity and inclusion, human rights, climate change and environmental stewardship, support for local communities, 39 Table of Contents corporate governance and transparency and considering sustainability-related factors in our investment processes.
Additionally, sustainability-related matters and our response to these matters could harm our business, including in areas such as diversity, equity and inclusion, human rights, climate change and environmental stewardship, support for local communities, corporate governance and transparency and considering sustainability-related factors in our investment processes.
We may not have control over certain of our loans and investments. Our ability to manage our portfolio of loans and investments may be limited by the form in which they are made.
We may not have control over certain of our loans and investments. 11 Table of Contents Our ability to manage our portfolio of loans and investments may be limited by the form in which they are made.
If that partnership or limited liability company owned nonqualifying assets or earned nonqualifying income, we may not be able to satisfy all of the REIT income or 44 Table of Contents asset tests.
If that partnership or limited liability company owned nonqualifying assets or earned nonqualifying income, we may not be able to satisfy all of the REIT income or asset tests.
Additionally, the investment programs employed by KKR for KKR investment vehicles or proprietary entities of KKR could 32 Table of Contents conflict with the transactions and strategies employed by our Manager in managing our company.
Additionally, the investment programs employed by KKR for KKR investment vehicles or proprietary entities of KKR could conflict with the transactions and strategies employed by our Manager in managing our company.
We cannot predict when or if any new U.S. federal income tax law, regulation or administrative interpretation, 46 Table of Contents or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation or interpretation may take effect retroactively.
We cannot predict when or if any new U.S. federal income tax law, regulation or administrative interpretation, or any amendment to any existing U.S. federal income tax law, regulation or administrative interpretation, will be adopted, promulgated or become effective and any such law, regulation or interpretation may take effect retroactively.
In addition, our debt service payments will reduce cash flow available for distributions to stockholders. As a borrower, we are also subject to the risk that we 25 Table of Contents may not be able to meet our debt service obligations.
In addition, our debt service payments will reduce cash flow available for distributions to stockholders. As a borrower, we are also subject to the risk that we may not be able to meet our debt service obligations.
If unauthorized parties gain access to such information and technology systems, they may be able to steal, publish, delete or modify private and sensitive information, including nonpublic personal information related to shareholders (and their beneficial 47 Table of Contents owners) and material nonpublic information.
If unauthorized parties gain access to such information and technology systems, they may be able to steal, publish, delete or modify private and sensitive information, including nonpublic personal information related to shareholders (and their beneficial owners) and material nonpublic information.
Generally, a derivative is a financial contract the value of which depends upon, or is derived from, the value of an underlying asset, reference rate or index and may relate to individual debt or equity instruments, interest rates, currencies or currency exchange rates, commodities, related indices or other assets.
Generally, a derivative is a financial contract the value 20 Table of Contents of which depends upon, or is derived from, the value of an underlying asset, reference rate or benchmark and may relate to individual debt or equity instruments, interest rates, currencies or currency exchange rates, commodities, related indices or other assets.
In addition, we are managed by our Manager, a KKR affiliate, and our executive officers are employees of our 31 Table of Contents Manager or one or more of its affiliates.
In addition, we are managed by our Manager, a KKR affiliate, and our executive officers are employees of our Manager or one or more of its affiliates.
Shares owned by the acquiror, by officers or by employees who are directors of the corporation are excluded from shares entitled to vote on the matter.
Shares owned by the acquiror, by 50 Table of Contents officers or by employees who are directors of the corporation are excluded from shares entitled to vote on the matter.
As a result of any high levels of concentration, any adverse economic, political, climate-related or other conditions that disproportionately affects those geographic areas or asset classes could have a magnified adverse effect on 16 Table of Contents our results of operations and financial condition, and the value of our stockholders’ investments could vary more widely than if we invested in a more diverse portfolio of loans.
As a result of any high levels of concentration, any adverse economic, political, climate-related or other conditions that disproportionately affects those geographic areas or asset classes could have a magnified adverse effect on our results of operations and financial condition, and the value of our stockholders’ investments could vary more widely than if we invested in a more diverse portfolio of loans. 16 Table of Contents Our investment strategy may be changed without stockholder consent.
For taxable years beginning before January 1, 2026, however, non-corporate taxpayers may deduct up to 20% of certain pass-through business income, including “qualified REIT dividends” (generally, dividends received by a REIT shareholder that are not designated as capital gain dividends or qualified dividend income), subject to certain limitations, resulting in an effective maximum U.S. federal income tax rate of 29.6% on such income.
However, non-corporate taxpayers may deduct up to 20% of certain pass-through business income, including “qualified REIT dividends” (generally, dividends received by a REIT shareholder that are not designated as capital gain dividends or qualified dividend income), subject to certain limitations, resulting in an effective maximum U.S. federal income tax rate of 29.6% on such income.
There are various conflicts of interest in our relationship with KKR, including with our Manager and in the allocation of investment opportunities to KKR investment vehicles and us, which could result in decisions that are not in the best interests of our stockholders. As of December 31, 2024, KKR beneficially owned 14.6% of our outstanding common stock.
There are various conflicts of interest in our relationship with KKR, including with our Manager and in the allocation of investment opportunities to KKR investment vehicles and us, which could result in decisions that are not in the best interests of our stockholders. As of December 31, 2025, KKR beneficially owned 15.5% of our outstanding common stock.
While we plan to monitor the aggregate value of the securities of our taxable REIT subsidiaries and intend to conduct our affairs so that such securities will represent less than 20% of the value of our total assets, there can be no assurance that we will be able to comply with the taxable REIT subsidiary limitation or avoid the application of the 100% excise tax discussed above in all market conditions.
While we plan to monitor the aggregate value of the securities of our taxable REIT subsidiaries and intend to conduct our affairs so that such securities will represent less than 25% (20% for taxable years beginning before January 1, 2026) of the value of our total assets, there can be no assurance that we will be able to comply with the taxable REIT subsidiary limitation or avoid the application of the 100% excise tax discussed above in all market conditions.
Funds and accounts managed by such third-party managers and underlying portfolio funds and accounts may invest in securities or other financial instruments of companies in which we may also have an interest, or in competitors of ours or our investments.
KKR has stakes in third-party hedge fund managers. Funds and accounts managed by such third-party managers and underlying portfolio funds and accounts may invest in securities or other financial instruments of companies in which we may also have an interest, or in competitors of ours or our investments.
The IRS could challenge our estimates as to the loan value of the real property associated with such construction loans.
The IRS could challenge our estimates as to the loan value of the real property associated with such 44 Table of Contents construction loans.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor a discussion of how risks from cybersecurity threats affect KREF’s business, see “Part 1. Item 1A. Risk Factors – Structural, Organizational and Operational Risks – Operational risks, including the risk of cyberattacks, may disrupt our business, result in losses or limit our growth” in this Annual Report on Form 10-K.
Biggest changeFor a discussion of how risks from cybersecurity threats affect KREF’s business, see “Part 1. Item 53 Table of Contents 1A. Risk Factors – Structural, Organizational and Operational Risks – Operational risks, including the risk of cyberattacks, may disrupt our business, result in losses or limit our growth” in this Annual Report on Form 10-K.
The technology and information security risk committee is responsible for overseeing the cybersecurity risk environment for KKR’s 52 Table of Contents asset management business, which includes identifying and monitoring KKR’s technology risks, including those related to information security, business disruption, fraud and privacy related risks, and also promoting cybersecurity awareness at the firm.
The technology and information security risk committee is responsible for overseeing the cybersecurity risk environment for KKR’s asset management business, which includes identifying and monitoring KKR’s technology risks, including those related to information security, business disruption, fraud and privacy related risks, and also promoting cybersecurity awareness at the firm.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS The section entitled “Litigation” appearing in Note 13 of our consolidated financial statements included in this Form 10-K is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 53 Table of Contents PART II.
Biggest changeITEM 3. LEGAL PROCEEDINGS The section entitled “Litigation” appearing in Note 13 of our consolidated financial statements included in this Form 10-K is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 54 Table of Contents PART II.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeITEM 4. MINE SAFETY DISCLOSURES 53 PART II. 54 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 54 ITEM 6. RESERVED 56 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 57 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 81 ITEM 8.
Biggest changeITEM 4. MINE SAFETY DISCLOSURES 54 PART II. 55 ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 55 ITEM 6. RESERVED 57 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 58 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 82 ITEM 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table sets forth the dividends declared on our common stock during each calendar quarter for 2024 and 2023: Declaration Date Record Date Payment Date Per Share 2024 February 1, 2024 March 28, 2024 April 15, 2024 $ 0.25 June 13, 2024 June 28, 2024 July 15, 2024 0.25 September 13, 2024 September 30, 2024 October 15, 2024 0.25 December 12, 2024 December 31, 2024 January 15, 2025 0.25 2023 March 17, 2023 March 31, 2023 April 14, 2023 $ 0.43 June 15, 2023 June 30, 2023 July 14, 2023 0.43 September 15, 2023 September 29, 2023 October 13, 2023 0.43 December 15, 2023 December 29, 2023 January 12, 2024 0.43 54 Table of Contents Stockholder Return Performance The following graph is a comparison of the cumulative total stockholder return on shares of our common stock, the Russell 2000 Index (the “Russell 2000”), and the FTSE NAREIT All Mortgage Capped Index, a published industry index, from December 31, 2019 to December 31, 2024.
Biggest changeThe following table sets forth the dividends declared on our common stock during each calendar quarter for 2025 and 2024: Declaration Date Record Date Payment Date Per Share 2025 March 14, 2025 March 31, 2025 April 15, 2025 $ 0.25 June 10, 2025 June 30, 2025 July 15, 2025 0.25 September 11, 2025 September 30, 2025 October 15, 2025 0.25 December 10, 2025 December 31, 2025 January 15, 2026 0.25 2024 February 1, 2024 March 28, 2024 April 15, 2024 $ 0.25 June 13, 2024 June 28, 2024 July 15, 2024 0.25 September 13, 2024 September 30, 2024 October 15, 2024 0.25 December 12, 2024 December 31, 2024 January 15, 2025 0.25 55 Table of Contents Stockholder Return Performance The following graph is a comparison of the cumulative total stockholder return on shares of our common stock, the Russell 2000 Index (the “Russell 2000”), and the FTSE NAREIT All Mortgage Capped Index, a published industry index, from December 31, 2020 to December 31, 2025.
(2) Restricted stock units are not exercisable for consideration. 55 Table of Contents Issuer Purchases of Equity Securities Under the Company's current share repurchase program, which was originally announced on May 9, 2018, and subsequently extended and/or increased on June 17, 2019, June 15, 2020 and February 3, 2023, we may repurchase up to an aggregate of $100.0 million of our common stock effective as of February 3, 2023, of which up to $50.0 million may be repurchased under a pre-set trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act, and provide for repurchases of common stock when the market price per share is below book value per share (calculated in accordance with GAAP as of 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.
(2) Restricted stock units are not exercisable for consideration. 56 Table of Contents Issuer Purchases of Equity Securities Under the Company's current share repurchase program, which was originally announced on May 9, 2018, and subsequently extended and/or increased on June 17, 2019, June 15, 2020 and February 3, 2023, we may repurchase up to an aggregate of $100.0 million of our common stock effective as of February 3, 2023, of which up to $50.0 million may be repurchased under a pre-set trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act, and provide for repurchases of common stock when the market price per share is below book value per share (calculated in accordance with GAAP as of 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.
The graph assumes that $100 was invested on December 31, 2019 in our common stock, the Russell 2000 and the FTSE NAREIT All Mortgage Capped Index and that all dividends were reinvested without the payment of any commissions.
The graph assumes that $100 was invested on December 31, 2020 in our common stock, the Russell 2000 and the FTSE NAREIT All Mortgage Capped Index and that all dividends were reinvested without the payment of any commissions.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES On May 5, 2017, our common stock began trading on the NYSE under the symbol “K REF.” A s of January 30, 2025, the re were 20 ho lders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES On May 5, 2017, our common stock began trading on the NYSE under the symbol “K REF.” A s of January 30, 2026, the re were 19 ho lders of record of our common stock.
The program does not have an expiration date and may be suspended, modified or discontinued at any time. As of December 31, 2024, we had $90.0 million of remaining capacity to repurchase shares under the program.
The program does not have an expiration date and may be suspended, modified or discontinued at any time. As of December 31, 2025, we had $46.7 million of remaining capacity to repurchase shares under the program.
Total Return Performance Period Ended 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 KKR Real Estate Finance Trust, Inc. $ 100.0 $ 97.4 $ 123.0 $ 91.3 $ 99.5 $ 83.7 Russell 2000 100.0 120.3 138.0 109.8 128.3 143.1 FTSE NAREIT All Mortgage Capped Index 100.0 80.4 93.9 68.6 79.0 78.7 Equity Compensation Plan Information The following table summarizes information, as of December 31, 2024, relating to our equity compensation plans pursuant to which shares of our common stock or other equity securities may be granted from time to time: Plan Category Number of securities to be issued upon exercise of outstanding options, warrants, and rights (1) Weighted-average exercise price of outstanding options, warrants and rights (2) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column 1) Equity compensation plans approved by security holders 1,454,925 $ — 1,358,928 Equity compensation plans not approved by security holders — — — Total 1,454,925 $ — 1,358,928 (1) Reflects the aggregate number of equity-based awards granted under our Amended and Restated KKR Real Estate Finance Trust Inc. 2016 Omnibus Incentive Plan that remained outstanding as of December 31, 2024.
Total Return Performance Period Ended 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 12/31/2025 KKR Real Estate Finance Trust, Inc. $ 100.0 $ 126.3 $ 93.7 $ 102.2 $ 85.9 $ 77.9 Russell 2000 100.0 114.8 91.3 106.7 119.0 134.2 FTSE NAREIT All Mortgage Capped Index 100.0 116.8 85.4 98.3 98.0 111.6 Equity Compensation Plan Information The following table summarizes information, as of December 31, 2025, relating to our equity compensation plans pursuant to which shares of our common stock or other equity securities may be granted from time to time: Plan Category Number of securities to be issued upon exercise of outstanding options, warrants, and rights (1) Weighted-average exercise price of outstanding options, warrants and rights (2) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column 1) Equity compensation plans approved by security holders 1,691,685 $ — 2,289,960 Equity compensation plans not approved by security holders — — — Total 1,691,685 $ — 2,289,960 (1) Reflects the aggregate number of equity-based awards granted under our Amended and Restated KKR Real Estate Finance Trust Inc. 2025 Omnibus Incentive Plan that remained outstanding as of December 31, 2025.
The following table sets forth information regarding purchases of shares of our common stock by us or on our behalf during the three months ended December 31, 2024 (amounts in thousands, except share and per share data) : Period Beginning Period Ending Total number of shares purchased Average price paid per share Amounts paid for shares purchased as part of publicly announced program Total number of shares purchased as part of publicly announced program Approximate dollar value of shares that may yet be purchased under the program October 1, 2024 October 31, 2024 150,000 $ 11.75 $ 1,762 150,000 $ 98,238 November 1, 2024 November 30, 2024 571,553 11.64 6,651 721,553 91,587 December 1, 2024 December 31, 2024 137,502 11.54 1,587 859,055 90,000 Total/Average 859,055 $ 11.64 $ 10,000
The following table sets forth information regarding purchases of shares of our common stock by us or on our behalf during the three months ended December 31, 2025 (amounts in thousands, except share and per share data) : Period Beginning Period Ending Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced program Amounts paid for shares purchased as part of publicly announced program Approximate dollar value of shares that may yet be purchased under the program October 1, 2025 October 31, 2025 — $ — 10,353,632 $ — $ 55,974 November 1, 2025 November 30, 2025 882,743 8.18 11,236,375 7,219 48,755 December 1, 2025 December 31, 2025 238,200 8.49 11,474,575 2,022 46,733 Total/Average 1,120,943 $ 8.24 $ 9,241

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOffice 1/13/2022 228.5 100.0 94.9 14.2 + 3.3 3.1 $347 / SF 55 3 28 Senior Loan Orlando, FL Multifamily 12/14/2021 97.4 97.4 95.9 24.4 + 3.1 2.0 $253,077 / unit 74 3 29 Senior Loan Boston, MA Industrial 6/28/2022 273.2 95.7 95.0 19.9 + 3.0 2.5 $195 / SF 52 3 30 Senior Loan Brisbane, CA Life Science 7/22/2021 94.3 94.3 86.8 25.6 + 3.4 3.6 $750 / SF 71 3 31 Senior Loan Raleigh, NC Multifamily 4/27/2022 91.6 91.6 84.5 44.4 + 3.2 2.3 $263,954 / unit 68 4 32 Senior Loan Brandon, FL Multifamily 1/13/2022 90.3 90.3 69.7 18.7 + 3.1 2.1 $194,258 / unit 75 3 33 Senior Loan San Carlos, CA Life Science 2/1/2022 139.7 89.1 55.1 16.5 + 1.0 2.9 $376 / SF 68 3 34 Senior Loan Dallas, TX Office 1/22/2021 87.0 87.0 87.0 15.5 + 3.4 1.1 $294 / SF 65 3 35 Senior Loan Dallas, TX Multifamily 12/23/2021 85.0 85.0 78.2 16.3 + 2.9 2.0 $240,717 / unit 67 3 36 Senior Loan Miami, FL Multifamily 10/14/2021 84.5 84.5 84.5 17.8 + 2.9 1.9 $287,415 / unit 76 3 37 Senior Loan Philadelphia, PA Mixed Use 6/28/2024 83.7 83.7 30.1 14.4 + 4.1 4.5 $59 / SF 66 3 62 Table of Contents Investment (A) Location Property Type Investment Date Total Whole Loan (B) Committed Principal/Investment Amount Outstanding Principal/ Investment Amount Net Equity (C) Coupon (D)(E) Max Remaining Term (Years) (D)(F) Loan/Investment Per SF / Unit / Key (G) Origination LTV (D)(H) Risk Rating 38 Senior Loan Charlotte, NC Multifamily 12/14/2021 79.3 79.3 77.0 12.0 + 3.1 2.0 $209,168 / unit 74 3 39 Senior Loan Hollywood, FL Multifamily 12/20/2021 71.0 71.0 71.0 13.5 + 2.8 2.0 $287,449 / unit 74 3 40 Senior Loan Denver, CO Multifamily 9/14/2021 70.3 70.3 70.3 10.7 + 2.8 1.8 $290,496 / unit 78 3 41 Senior Loan Nashville, TN Hospitality 12/9/2021 66.0 66.0 64.8 11.9 + 3.7 2.0 $281,672 / key 68 3 42 Senior Loan Plano, TX Multifamily 3/31/2022 63.3 63.3 63.3 23.3 + 0.9 2.6 $238,000 / unit 75 3 43 Senior Loan Dallas, TX Multifamily 8/18/2021 63.1 63.1 63.1 12.1 + 3.9 1.7 $175,278 / unit 70 3 44 Senior Loan Durham, NC Multifamily 12/15/2021 59.5 59.5 57.0 17.5 + 2.8 3.0 $165,120 / unit 67 3 45 Senior Loan San Antonio, TX Multifamily 4/20/2022 57.6 57.6 56.4 14.9 + 2.7 2.3 $164,950 / unit 79 3 46 Senior Loan Atlanta, GA Multifamily 12/10/2021 53.0 53.0 51.4 13.0 + 3.0 2.0 $170,197 / unit 67 3 47 Senior Loan Sharon, MA Multifamily 12/1/2021 51.9 51.9 51.9 7.9 + 2.9 1.9 $270,443 / unit 70 3 48 Senior Loan Reno, NV Industrial 4/28/2022 140.4 50.5 50.5 11.5 + 2.7 2.4 $117 / SF 74 3 49 Senior Loan Dallas, TX Multifamily 4/1/2022 43.9 43.9 42.6 11.7 + 2.9 2.3 $119,706 / unit 73 3 50 Senior Loan Carrollton, TX Multifamily 4/1/2022 43.7 43.7 43.7 13.5 + 0.9 2.6 $136,478 / unit 74 3 51 Senior Loan Georgetown, TX Multifamily 12/16/2021 35.2 35.2 35.2 8.8 + 3.4 2.0 $167,381 / unit 68 3 Total/Weighted Average Senior Loans Unlevered $ 8,696.9 $ 6,354.4 $ 5,900.2 $ 1,438.5 + 3.2% 2.0 65 % 3.1 Real Estate Assets 1 Real Estate Owned Mountain View, CA Office 6/28/2024 n.a. $ 120.8 120.8 120.8 n.a. n.a. $393 / SF n.a. n.a. 2 Real Estate Owned Portland, OR Retail / Redevelopment 12/16/2021 n.a. 88.2 88.2 88.2 n.a. n.a. n.a. n.a. n.a. 3 Equity Method Investment (I) Seattle, WA Life Science 6/28/2024 n.a. 81.7 81.7 40.7 n.a. n.a. $521 / SF n.a. n.a. 4 Real Estate Owned Philadelphia, PA Office / Garage 12/22/2023 n.a. $ 45.1 45.1 45.1 n.a. n.a. $112 / SF n.a. n.a.
Biggest changeMultifamily 1/31/2025 142.2 85.3 84.5 20.8 + 3.0 4.1 $212,737 / unit 70 3 33 Senior Loan Various, Europe Hospitality 12/2/2025 357.1 79.3 74.0 17.7 + 3.0 5.1 $70,987 / key 70 3 34 Senior Loan Phoenix, AZ Multifamily 3/26/2025 79.0 79.0 79.0 15.3 + 2.3 4.3 $312,332 / unit 69 3 35 Senior Loan Philadelphia, PA Mixed Use 6/28/2024 77.7 77.7 24.4 24.4 + 4.0 3.5 $75 / SF 72 3 36 Senior Loan Brandon, FL Multifamily 1/13/2022 76.7 76.7 72.7 23.0 + 3.1 1.1 $188,319 / unit 75 3 64 Table of Contents Investment (A) Location Property Type Investment Date Total Whole Loan (B) Committed Principal/Investment Amount Outstanding Principal/ Investment Amount Net Equity (C) Coupon (D)(E) Max Remaining Term (Years) (D)(F) Loan/Investment Per SF / Unit / Key (G) Origination LTV (D)(H) Risk Rating 37 Senior Loan Nashville, TN Hospitality 1/6/2025 75.8 75.8 75.0 14.5 + 3.3 4.0 $326,087 / key 64 3 38 Senior Loan Delray Beach, FL Multifamily 3/26/2025 73.0 73.0 73.0 14.1 + 2.3 4.3 $257,042 / unit 71 3 39 Senior Loan Melville, NY Multifamily 7/25/2025 142.1 71.1 19.8 4.8 + 3.9 4.6 $475,251 / unit 55 3 40 Senior Loan Hollywood, FL Multifamily 12/20/2021 71.0 71.0 71.0 16.4 + 2.8 1.0 $287,449 / unit 74 3 41 Senior Loan Denver, CO Multifamily 9/14/2021 70.3 70.3 70.3 15.2 + 2.8 0.8 $290,496 / unit 78 3 42 Senior Loan Charlotte, NC Multifamily 12/14/2021 67.3 67.3 65.0 14.3 + 3.1 1.0 $176,560 / unit 74 3 43 Senior Loan Plano, TX Multifamily 3/31/2022 63.3 63.3 63.3 29.9 + 2.8 1.6 $238,000 / unit 75 3 44 Senior Loan Dallas, TX Multifamily 8/18/2021 63.1 63.1 63.1 15.0 + 3.9 0.7 $175,278 / unit 70 3 45 Senior Loan Atlanta, GA Multifamily 9/16/2025 60.8 60.8 60.8 11.6 + 2.4 4.8 $211,847 / unit 67 3 46 Senior Loan Durham, NC Multifamily 12/15/2021 59.5 59.5 58.1 23.9 + 2.8 2.0 $168,461 / unit 67 3 47 Senior Loan San Antonio, TX Multifamily 4/20/2022 57.6 57.6 56.4 15.3 + 2.7 1.3 $164,950 / unit 79 3 48 Senior Loan Sharon, MA Multifamily 12/1/2021 51.9 51.9 51.9 11.4 + 2.9 0.9 $270,443 / unit 70 3 49 Senior Loan Atlanta, GA Multifamily 12/10/2021 51.4 51.4 51.4 13.0 + 3.0 1.0 $170,197 / unit 67 3 50 Senior Loan Reno, NV Industrial 4/28/2022 140.4 50.5 50.5 11.5 + 2.7% 1.4 $117 / SF 74 3 51 Senior Loan Carrollton, TX Multifamily 4/1/2022 43.7 43.7 43.7 20.6 + 2.9% 1.6 $136,478 / unit 74 3 52 Senior Loan Dallas, TX Multifamily 4/1/2022 42.4 42.4 42.4 20.4 + 2.9% 0.2 $119,144 / unit 73 3 53 Senior Loan Georgetown, TX Multifamily 12/16/2021 35.2 35.2 35.2 8.8 + 3.4 1.0 $167,381 / unit 68 3 Total/Weighted Average Senior Loans Unlevered $ 9,090.9 $ 5,775.7 $ 5,361.9 $ 1,469.8 + 3.3% 1.8 66 % 3.2 Real Estate Assets 1 Real Estate Owned Mountain View, CA Office 6/28/2024 n.a. $ 121.2 $ 121.2 $ 121.2 n.a. n.a. $392 / SF n.a. 2 Equity Method Investment (I) Seattle, WA Life Science 6/28/2024 n.a. 96.8 96.8 55.8 n.a. n.a. $609 / SF n.a. 3 Real Estate Owned West Hollywood, CA Condo 4/15/2025 n.a. 95.0 95.0 40.0 n.a. n.a. $2,566,405 / unit n.a. 4 Real Estate Owned Portland, OR Retail / Redevelopment 12/16/2021 n.a. 94.7 94.7 94.7 n.a. n.a. n.a. n.a. 5 Real Estate Owned Raleigh, NC Multifamily 8/12/2025 n.a. 71.6 71.6 31.6 n.a. n.a. $223,852 / unit n.a. 6 Real Estate Owned Philadelphia, PA Office 12/22/2023 n.a. 23.3 23.3 23.3 n.a. n.a. $111 / SF n.a.
Sales of our common stock made pursuant to the ATM may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act. During the year ended December 31, 2024, we did not sell any shares of common stock under the ATM.
Sales of our common stock made pursuant to the ATM may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act. During the year ended December 31, 2025, we did not sell any shares of common stock under the ATM.
(E) Maximum maturity assumes all extension options are exercised by the borrower; however, our loans may be repaid prior to such date. (F) LTV is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated.
(D) Maximum maturity assumes all extension options are exercised by the borrower; however, our loans may be repaid prior to such date. (E) LTV is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated.
The table above does not include the amounts payable to our Manager under our management agreement as they are not fixed and determinable. See Note 14 to our consolidated financial statements included in this Form 10-K for additional terms and details of the fees payable under our management agreement.
The table above does not include the amounts payable to our Manager under our management agreement as they are not fixed and determinable. See Note 16 to our consolidated financial statements included in this Form 10-K for additional terms and details of the fees payable under our management agreement.
Such financial covenants include a minimum consolidated tangible net worth of $650.0 million and a maximum total debt to total assets ratio of 83.3%. As of December 31, 2024, we were in compliance with the covenants of our financing facilities.
Such financial covenants include a minimum consolidated tangible net worth of $650.0 million and a maximum total debt to total assets ratio of 83.3%. As of December 31, 2025, we were in compliance with the covenants of our financing facilities.
Amounts borrowed are subject to a maximum 25.0% recourse limit. (B) Any amounts borrowed are full recourse to certain subsidiaries of KREF. Amounts are estimated based on the amount outstanding under the Revolver and the interest rate in effect as of December 31, 2024.
Amounts borrowed are subject to a maximum 25.0% recourse limit. (B) Any amounts borrowed are full recourse to certain subsidiaries of KREF. Amounts are estimated based on the amount outstanding under the Revolver and the interest rate in effect as of December 31, 2025.
Our taxable income does not necessarily equal our net income as calculated in accordance with GAAP, or our Distributable Earnings as described above under "Key Financial Measures and Indicators — Distributable Earnings". Subsequent Events Our subsequent events are detailed in Note 17 to our consolidated financial statements.
Our taxable income does not necessarily equal our net income as calculated in accordance with GAAP, or our Distributable Earnings as described above under "Key Financial Measures and Indicators — Distributable Earnings". Subsequent Events Our subsequent events are detailed in Note 19 to our consolidated financial statements.
Covenants —Each of our repurchase facilities, term lending agreements, warehouse facility and our Revolver contain customary terms and conditions, including, but not limited to, negative covenants relating to restrictions on our operations with respect to our status as a REIT, and financial covenants, such as: • a trailing four quarter interest income to interest expense ratio covenant (1.3 to 1.0 beginning September 30, 2024 through June 30, 2025, then 1.4 to 1.0 thereafter); 69 Table of Contents • a consolidated tangible net worth covenant (75.0% of the aggregate net cash proceeds of any equity issuances made and any capital contributions received by us and KKR Real Estate Finance Holdings L.P.
Covenants — Each of our repurchase facilities, term lending agreements, warehouse facility and our Revolver contain customary terms and conditions, including, but not limited to, negative covenants relating to restrictions on our operations with respect to our status as a REIT, and financial covenants, such as: • a trailing four quarter interest income to interest expense ratio covenant (1.3 to 1.0 beginning September 30, 2024 through June 30, 2026, then 1.4 to 1.0 thereafter); • a consolidated tangible net worth covenant (75.0% of the aggregate net cash proceeds of any equity issuances made and any capital contributions received by us and KKR Real Estate Finance Holdings L.P.
(our "Operating Partnership") or up to approximately $1,300.2 million, depending on the agreement; • a total indebtedness covenant (83.3% of our Total Assets, as defined in the applicable financing agreements); and • a cash liquidity covenant (the greater of (i) $10.0 million or (ii) 5.0% of KREF's recourse indebtedness; from September 30, 2024 and through June 30, 2025 the Revolver has a minimum cash liquidity covenant of $75.0 million) With respect to our secured term loan, we are required to comply with customary loan covenants and event of default provisions that include, but are not limited to, negative covenants relating to restrictions on operations with respect to our status as a REIT, and financial covenants.
(our "Operating Partnership") or up to approximately $1.3 billion, depending on the agreement; • a total indebtedness covenant (83.3% of our Total Assets, as defined in the applicable financing agreements); and • a cash liquidity covenant (the greater of (i) $10.0 million or (ii) 5.0% of KREF's recourse indebtedness; from September 30, 2024 and through June 30, 2026 the Revolver has a minimum cash liquidity covenant of $75.0 million) With respect to our secured term loan, we are required to comply with customary loan covenants and event of default provisions that include, but are not limited to, negative covenants relating to restrictions on operations with respect to our status as a REIT, and financial covenants.
(B) Total Whole Loan represents the total commitment of the entire loan originated, including participations by KKR affiliated entities. (C) Net equity reflects (i) the amortized cost basis of our loans, net of borrowings; (ii) Real Estate Owned ("REO"), net of borrowings and noncontrolling interests, and (iii) the investment amount of equity method investments, net of borrowings.
(B) Total Whole Loan represents the total commitment of the entire loan originated, including participations by KKR affiliated entities. (C) Net equity reflects (i) the amortized cost basis of our loans, net of borrowings; (ii) real estate assets, net of borrowings and noncontrolling interests, and (iii) the investment amount of equity method investments, net of borrowings.
If conditions change from those expected, it is possible that the judgments and estimates described below could change, which may result in a change in our allowance for credit losses, future write-offs of our investments, and valuation of our investment 78 Table of Contents portfolio, among other effects.
If conditions change from those expected, it is possible that the judgments and estimates described below could change, which may result in a change in our allowance for credit losses, future write-offs of our investments, and valuation of our investment portfolio, among other effects.
(B) Available borrowings represents the undrawn amount we could draw under the terms of each credit facility, based on collateral already approved and pledged. Master Repurchase Agreements We utilize master repurchase facilities to finance the origination of senior loans.
(B) Available borrowings represents the undrawn amount we could draw under the terms of each credit facility, based on collateral already approved and pledged. 68 Table of Contents Master Repurchase Agreements We utilize master repurchase facilities to finance the origination of senior loans.
(H) For senior loans, LTV is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated; for mezzanine loans, LTV is based on the initial balance of the whole loan divided by the as-is appraised value as of the date the loan was originated; for CMBS B-Pieces, LTV is based on the weighted average LTV of the underlying loan pool at issuance.
(H) For senior loans, LTV is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated; for mezzanine loans, LTV is based on the initial balance of the whole loan divided by the as-is appraised value as of the date the loan was originated; for CMBS investments, LTV is based on the weighted average LTV of the underlying loan pool at issuance.
This is only an estimate as actual amounts borrowed, the timing of repayments and interest rates may vary over time. The Revolver matures in March 2027. (C) The amounts are estimated by assuming the amounts outstanding under these facilities and the interest rates in effect as of December 31, 2024 will remain constant into the future.
This is only an estimate as actual amounts borrowed, the timing of repayments and interest rates may vary over time. The Revolver matures in March 2030. (C) The amounts are estimated by assuming the amounts outstanding under these facilities and the interest rates in effect as of December 31, 2025 will remain constant into the future.
Accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to understanding our financial statements because they involve significant judgments and uncertainties that could affect our reported assets and liabilities, as well as our reported revenue and expenses.
Accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to understanding our financial statements because they involve significant judgments and uncertainties that could affect our reported assets and liabilities, as well as our 79 Table of Contents reported revenue and expenses.
As of December 31, 2024, $93.2 million remained available for issuance under the ATM.
As of December 31, 2025, $93.2 million remained available for issuance under the ATM.
See Notes 5, 6, 7 and 10 to our consolidated financial statements for additional details regarding our secured financing agreements, collateralized loan obligations, secured term loan and stock activity. 75 Table of Contents Debt-to-Equity Ratio and Total Leverage Ratio The following table presents our debt-to-equity ratio and total leverage ratio: December 31, 2024 December 31, 2023 Debt-to-equity ratio (A) 1.6x 2.3x Total leverage ratio (B) 3.6x 4.2x (A) Represents (i) total outstanding debt agreements (excluding non-recourse facilities) and secured term loan, less cash to (ii) KREF's stockholders' equity, in each case, at period end.
See Notes 5, 6, 7 and 12 to our consolidated financial statements for additional details regarding our secured financing agreements, collateralized loan obligations, secured term loan and stock activity. 76 Table of Contents Debt-to-Equity Ratio and Total Leverage Ratio The following table presents our debt-to-equity ratio and total leverage ratio: December 31, 2025 December 31, 2024 Debt-to-equity ratio (A) 2.2x 1.6x Total leverage ratio (B) 3.9x 3.6x (A) Represents (i) total outstanding debt agreements (excluding non-recourse facilities) and secured term loan, less cash to (ii) KREF's stockholders' equity, in each case, at period end.
We may use our Revolver as a source of financing, which is designed to provide short-term liquidity to originate or de-lever loans, pay operating expenses and borrow amounts for general corporate purposes. Our Revolver is secured by corporate level guarantees and includes net equity interests in the investment portfolio.
In September 2025, we further upsized our Revolver to $700.0 million. We may use our Revolver as a source of financing, which is designed to provide short-term liquidity to originate or de-lever loans, pay operating expenses and borrow amounts for general corporate purposes. Our Revolver is secured by corporate level guarantees and includes net equity interests in the investment portfolio.
Our Non-Mark-to-Market Financing Sources, which accounte d for 79% of our total financing as of December 31, 2024, are not subject to credit or capital markets mark-to-market provisions. The remaining 21% of our total financing, which is comprised of three master repurchase agreements, are only subject to credit marks.
Our Non-Mark-to-Market Financing Sources, which accounte d for 74% of our total financing as of December 31, 2025, are not subject to credit or capital markets mark-to-market provisions. The remaining 26% of our total financing, which is comprised of three master repurchase agreements, are only subject to credit marks.
See Note 2 — Summary of Significant Accounting Policies, to our consolidated financial statements included in this Form 10-K for detailed discussion of allowance for credit losses. 59 Table of Contents Our Portfolio We have established a $6,271.6 million portfolio of diversified investments, consisting primarily of senior commercial real estate loans as of December 31, 2024.
See Note 2 — Summary of Significant Accounting Policies, to our consolidated financial statements included in this Form 10-K for detailed discussion of allowance for credit losses. 61 Table of Contents Our Portfolio We have established a $5,924.2 million portfolio of diversified investments, consisting primarily of senior commercial real estate loans as of December 31, 2025.
The allowance for credit losses attributed to unfunded loan commitments is included in “Other liabilities” on the Consolidated Balance Sheets. Commencing in the second quarter of 2024, we have estimated CECL reserves using the Weighted-Average Remaining Maturity, or WARM method, which has been identified as a loss-rate method for estimating CECL reserves by the Financial Accounting Standards Board (“FASB”).
The allowance for credit losses attributed to unfunded loan commitments is included in “Other liabilities” on the Consolidated Balance Sheets. We estimate CECL reserves using the Weighted-Average Remaining Maturity, or WARM method, which has been identified as a loss-rate method for estimating CECL reserves by the Financial Accounting Standards Board (“FASB”).
Our Non-Mark-to-Market Financing Sources, which accounted for 79% of our total financing as of December 31, 2024, are not subject to credit or capital markets mark-to-market provisions. The remaining 21% of our total financing, which are comprised of three master repurchase agreements, are only subject to credit marks.
Our Non-Mark-to-Market Financing Sources, which accounted for 74% of our total financing as of December 31, 2025, are not subject to credit or capital markets mark-to-market provisions. The remaining 26% of our total financing, which are comprised of three master repurchase agreements, are only subject to credit marks.
During the year ended December 31, 2024, we funded $298.2 million of CRE loans and received $1,426.4 million from the repayments and sale of CRE loans. During the year ended December 31, 2023, we funded $677.3 million of CRE loans and received $691.3 million from the repayments of CRE loans.
During the year ended December 31, 2024, we funded $298.2 million of CRE loans and we received $1,426.4 million from the repayments of CRE loans.
As described in Note 9 to our consolidated financial statements, we have off-balance sheet arrangements related to VIEs that we account for using the equity method of accounting and in which we hold an economic interest or have a capital commitment.
As described in Note 11 to our consolidated financial statements, we have off-balance sheet arrangements related to VIEs that we account for by either consolidating or by using the equity method of accounting when we hold an economic interest or have a capital commitment.
Guarantees — In connection with our financing arrangements, including master repurchase agreements, term lending agreements, and asset specific financing, our Operating Partnership has entered into a limited guarantee in favor of each lender, under which our Operating Partnership guarantees the obligations of the borrower under the respective financing agreement (i) in the case of certain defaults, up to a maximum liability of 25.0% of the then-outstanding repurchase price of the eligible loans, participations or securities, as applicable, or (ii) up to a maximum liability of 100.0% in the case of certain "bad boy" defaults.
We had no outstanding financing through non-consolidated senior interests as of December 31, 2025. 70 Table of Contents Guarantees — In connection with our financing arrangements, including master repurchase agreements, term lending agreements, and asset specific financing, our Operating Partnership has entered into a limited guarantee in favor of each lender, under which our Operating Partnership guarantees the obligations of the borrower under the respective financing agreement (i) in the case of certain defaults, up to a maximum liability of 25.0% of the then-outstanding repurchase price of the eligible loans, participations or securities, as applicable, or (ii) up to a maximum liability of 100.0% in the case of certain "bad boy" defaults.
The change in provision for credit losses during the year ended December 31, 2024 was due primarily to less incremental reserves on risk-rated 5 loans compared to the prior year. 73 Table of Contents Year ended December 31, 2023 Compared to Year ended December 31, 2022 Net Interest Income Net interest income decreased by $4.3 million, during the year ended December 31, 2023, as compared to the prior year.
The change in provision for credit losses during the year ended December 31, 2025 was due primarily to incremental reserves on risk-rated 5 loans compared to the prior year. 74 Table of Contents Year ended December 31, 2024 Compared to Year ended December 31, 2023 Net Interest Income Net interest income decreased by $29.9 million, during the year ended December 31, 2024, as compared to the prior year.
The following charts illustrate the diversification and composition of our loan portfolio as of December 31, 2024, based on type of investment, interest rate, underlying property type, geographic location, vintage and LTV: The charts above are based on total loan exposure of our commercial real estate loans.
The following charts illustrate the diversification and composition of our loan portfolio as of December 31, 2025, based on type of investment, interest rate, underlying property type, geographic location, vintage and LTV: (A) Charts are based on outstanding principal of our commercial real estate loans.
(G) Loan Per SF / Unit / Key is based on the current principal amount divided by the current SF / Unit / Key. For Senior Loans 2, 3, 5, 16 and 19, Loan Per SF / Unit / Key is calculated as the total commitment amount of the loan divided by the proposed SF / Unit / Key.
(G) Loan Per SF / Unit / Key is based on the current principal amount divided by the current SF / Unit / Key. For Senior Loans 1, 2, 4, 10, 16 and 39, Loan Per SF / Unit / Key is calculated as the total commitment amount of the loan divided by the proposed SF / Unit / Key.
These non-consolidated senior interests provide structural leverage on a non-mark-to-market, match-term basis for our net investments, which are typically reflected in the form of mezzanine loans or other subordinate interests on our consolidated balance sheets and in our consolidated statement of income. We had no outstanding financing through non-consolidated senior interests as of December 31, 2024.
These non-consolidated senior interests provide structural leverage on a non-mark-to-market, match-term basis for our net investments, which are typically reflected in the form of mezzanine loans or other subordinate interests on our consolidated balance sheets and in our consolidated statement of income.
As of December 31, 2024, the average loan commitment in our portfolio was $124.6 million and multifamily and industrial loans comprised 60% of our loan portfolio. In addition, we owned Real Estate Assets with an investment amount of $335.8 million, comprised of the acquired properties (directly or indirectly) and capitalized redevelopment costs, as of December 31, 2024.
As of December 31, 2025, the average loan commitment in our portfolio was $109.0 million and multifamily and industrial loans comprised 58% of our loan portfolio. In addition, we owned Real Estate Assets with an investment amount of $502.6 million, comprised of the acquired properties (directly or indirectly) and capitalized redevelopment costs, as of December 31, 2025.
Earnings (Loss) Per Share and Dividends Declared The following table sets forth the calculation of basic and diluted net income (loss) per share and dividends declared per share (amounts in thousands, except share and per share data): Three Months Ended Year Ended December 31, December 31, 2024 2024 2023 Net income (loss) attributable to common stockholders $ 14,578 $ 13,071 $ (53,919) Weighted-average number of shares of common stock outstanding, basic and diluted 69,342,983 69,396,890 69,180,039 Net income (loss) per share, basic and diluted $ 0.21 $ 0.19 $ (0.78) Dividends declared per share $ 0.25 $ 1.00 $ 1.72 Distributable Earnings Distributable Earnings, a measure that is not prepared in accordance with GAAP, is a key indicator of our ability to generate sufficient income to pay our quarterly dividends and in determining the amount of such dividends, which is the primary focus of yield/income investors who comprise a significant portion of our investor base.
Earnings (Loss) Per Share and Dividends Declared The following table sets forth the calculation of basic and diluted net income (loss) per share and dividends declared per share (amounts in thousands, except share and per share data): Three Months Ended Year Ended December 31, December 31, 2025 2025 2024 Net income (loss) attributable to common stockholders $ (31,989) $ (69,885) $ 13,071 Weighted-average number of shares of common stock outstanding, basic and diluted 65,442,561 66,807,432 69,396,890 Net income (loss) per share, basic and diluted $ (0.49) $ (1.05) $ 0.19 Dividends declared per share $ 0.25 $ 1.00 $ 1.00 Distributable Earnings Distributable Earnings, a measure that is not prepared in accordance with GAAP, is a key indicator of our ability to generate sufficient income to pay our quarterly dividends and in determining the amount of such dividends, which is the primary focus of yield/income investors who comprise a significant portion of our investor base.
As of December 31, 2024, all of our investments were located in the United States.
As of December 31, 2025, all of our investments were located in the United States and Europe.
The lender under the applicable repurchase facility sets the valuation and any revaluation of the collateral assets in its sole, good faith discretion. 67 Table of Contents As a contractual matter, the lender has the right to reset the value of the assets at any time based on then-current market conditions, but the market convention is to reassess valuations on a monthly, quarterly and annual basis using the financial information delivered pursuant to the facility documentation regarding the real property, borrower and guarantor under such underlying loans.
As a contractual matter, the lender has the right to reset the value of the assets at any time based on then-current market conditions, but the market convention is to reassess valuations on a monthly, quarterly and annual basis using the financial information delivered pursuant to the facility documentation regarding the real property, borrower and guarantor under such underlying loans.
Therefore, we also 79 Table of Contents consider other loan specific credit quality factors such as the risk rating of the loan, a near-term maturity, nature of construction loans, and economic conditions specific to the property type of the underlying collateral.
There is significant uncertainty related to future macroeconomic conditions. Therefore, we also consider other loan specific credit quality factors such as the risk rating of the loan, a near-term maturity, nature of construction loans, and economic conditions specific to the property type of the underlying collateral.
Total/Weighted Average Real Estate Assets $ 335.8 $ 335.8 $ 294.8 Other Investments 1 CMBS B-Pieces (J) Various Various 2/13/2017 n.a. 40.0 35.6 35.6 4.7 4.5 n.a. 58 n.a.
Total/Weighted Average Real Estate Assets $ 502.6 $ 502.6 $ 366.5 CMBS Investments 1 CMBS B-Pieces (J) Various, U.S. Various 2/13/2017 n.a. $ 40.0 $ 35.4 $ 35.4 4.7% 3.5 58 % 2 CMBS B-Pieces Various, U.S.
Cash Flows The following table sets forth changes in cash and cash equivalents for the years ended December 31, 2024, 2023 and 2022 (dollars in thousands): Year Ended December 31, 2024 2023 2022 Cash Flows From Operating Activities $ 132,563 $ 155,715 $ 141,125 Cash Flows From Investing Activities 1,116,237 13,487 (1,177,133) Cash Flows From Financing Activities (1,290,566) (271,510) 1,012,859 Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash $ (41,766) $ (102,308) $ (23,149) 76 Table of Contents Cash Flows from Operating Activities Our cash flows from operating activities were primarily driven by our net interest income, which is a result of the income generated by our investments less financing costs.
Cash Flows The following table sets forth changes in cash and cash equivalents for the years ended December 31, 2025, 2024 and 2023 (amounts in thousands): Year Ended December 31, 2025 2024 2023 Cash Flows From Operating Activities $ 72,283 $ 132,563 $ 155,715 Cash Flows From Investing Activities 264,291 1,116,237 13,487 Cash Flows From Financing Activities (355,783) (1,290,566) (271,510) Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash $ (19,209) $ (41,766) $ (102,308) 77 Table of Contents Cash Flows from Operating Activities Our cash flows from operating activities were primarily driven by our net interest income, which is a result of the income generated by our investments less financing costs.
For Senior Loan 8, the total whole loan is $199.4 million, including (i) a fully funded senior mortgage loan of $120.0 million, at an interest rate of S+2.25% and (ii) a mezzanine note with a commitment of $79.4 million, of which $74.4 million was funded as of December 31, 2024 , at a fixed interest rate of 4.5%.
For Senior Loan 6, the total whole loan is on non-accrual and has an outstanding principal balance of $194.4 million, including (i) a fully funded senior mortgage loan of $120.0 million, at an interest rate of S+2.25% and (ii) a mezzanine note with a commitment of $79.4 million, of which $74.4 million was funded as of December 31, 2025 , at a fixed interest rate of 4.5% PIK.
Our primary sources of liquidity include $104.9 million of cash on our Consolidated Balance Sheets, $530.0 million of available capacity on our corporate Revolver, $49.9 million of available borrowings under our financing arrangements based on existing collateral, and cash flows from operations.
Our primary sources of liquidity include $84.6 million of cash on our Consolidated Balance Sheets, $700.0 million of available capacity on our Revolver, $27.7 million of available borrowings under our financing arrangements based on existing collateral, and cash flows from operations.
Total/Weighted Average Other Investments $ 40.0 $ 35.6 $ 35.6 4.7% 4.5 58 % Grand Total / Weighted Average $ 6,730.2 $ 6,271.6 $ 1,768.9 7.5% 2.0 65 % 3.1 * Numbers presented may not foot due to rounding. 63 Table of Contents (A) Our total portfolio represents the current principal amount or investment amount on senior and mezzanine loans, real estate assets and other investments.
Total/Weighted Average Other Investments $ 15.1 $ 15.1 $ 15.1 Grand Total / Weighted Average $ 6,342.6 $ 5,924.2 $ 1,896.1 6.9% 1.8 65 % 3.2 * Numbers presented may not foot due to rounding. 65 Table of Contents (A) Our total portfolio represents the current principal amount or investment amount on senior and mezzanine loans, real estate assets, CMBS investments and other investments.
(D) Weighted average is weighted by the current principal amount for our senior and mezzanine loans and by the investment amount of CMBS B-Pieces. Risk-rated 5 loans are excluded from the weighted average LTV. (E) Coupon expressed as spread over Term SOFR. (F) Maximum remaining term (years) assumes all extension options are exercised, if applicable.
(D) Weighted average is weighted by the current principal amount of our loans and the investment amount of CMBS investments. Weighted average LTV excludes risk-rated 5 loans and weighted average coupon excludes loans on nonaccrual status. (E) Coupon expressed as spread over Term SOFR, SONIA or EURIBOR. (F) Maximum remaining term (years) assumes all extension options are exercised, if applicable.
During the year ended December 31, 2024, we collected 98% of interest payments due on our loan portfolio. As of December 31, 2024, the average risk rating of our loan portfolio was 3.1, weighted by total loan exposure.
During the year ended December 31, 2025, we collected 100% of interest payments due on our loan portfolio. As of December 31, 2025, the average risk rating of our loan portfolio was 3.2, weighted by loan outstanding principal.
(I) Represents real estate assets held through a Tenant-in-Common ("TIC") agreement between us and a KKR affiliate. We hold a 74.6% economic interest in the real estate assets and share decision-making with the KKR affiliate under the TIC agreement. (J) Represents our investment in an aggregator vehicle that invests in CMBS B-Pieces.
We hold a 74.6% economic interest in the real estate assets and share decision-making with the KKR affiliate under the TIC agreement. (J) Represents our investment in an aggregator vehicle that invests in CMBS B-Pieces. Committed principal represents our total commitment to the aggregator vehicle whereas current principal represents the current funded amount.
The senior and junior mezzanine notes earn a PIK interest rate of S+7.0% and have a maximum maturity of February 2028. Both mezzanine notes were deemed uncollectible and written off in June 2024. In December 2024, we modified a risk-rated 5 senior life science loan located in San Carlos, CA, with an outstanding principal balance of $103.2 million.
Both mezzanine notes were deemed uncollectible and written off in June 2024. 67 Table of Contents In December 2024, we modified a risk-rated 5 senior life science loan located in San Carlos, CA, with an outstanding principal balance of $103.2 million.
This increase was primarily due to a net increase of $62.7 million in the provision for credit losses. 74 Table of Contents Liquidity and Capital Resources Overview We have capitalized our business to date primarily through the issuance and sale of our common stock and preferred stock, borrowings from three master repurchase agreements, and borrowings from our Non-Mark-to-Market Financing Sources, which were comprised of collateralized loan obligations, term lending agreements, term loan facility, secured term loan, asset specific financing, warehouse facility, and corporate revolver.
The change in provision for credit losses during the year ended December 31, 2024 was due primarily to less incremental reserves on risk-rated 5 loans compared to the prior year. 75 Table of Contents Liquidity and Capital Resources Overview We have capitalized our business to date primarily through the issuance and sale of our common stock and preferred stock, borrowings from three master repurchase agreements, and borrowings from our Non-Mark-to-Market Financing Sources, which were comprised of collateralized loan obligations, term lending agreements, term loan facility, secured term loan, asset specific financing, warehouse facility, and Revolver.
The following table calculates our book value per share (amounts in thousands, except share and per share data): December 31, 2024 December 31, 2023 KKR Real Estate Finance Trust Inc. stockholders' equity $ 1,345,030 $ 1,404,767 Series A preferred stock (liquidation preference of $25.00 per share) (327,750) (327,750) Common stockholders' equity $ 1,017,280 $ 1,077,017 Shares of common stock issued and outstanding at period end 68,713,596 69,313,860 Add: Deferred stock units 206,112 72,708 Total shares outstanding at period end 68,919,708 69,386,568 Book value per share $ 14.76 $ 15.52 Book value as of December 31, 2024 included the impact of an estimated CECL credit loss allowance of $119.6 million, or ($1.74) per share.
The following table calculates our book value per share (amounts in thousands, except share and per share data): December 31, 2025 December 31, 2024 KKR Real Estate Finance Trust Inc. stockholders' equity $ 1,172,550 $ 1,345,030 Series A preferred stock (liquidation preference of $25.00 per share) (327,750) (327,750) Common stockholders' equity $ 844,800 $ 1,017,280 Shares of common stock issued and outstanding at period end 64,367,737 68,713,596 Add: Deferred stock units 395,889 206,112 Total shares outstanding at period end 64,763,626 68,919,708 Book value per share $ 13.04 $ 14.76 Book value as of December 31, 2025 included the impact of an estimated CECL allowance of $204.1 million, or ($3.15) per share and accumulated depreciation of $5.1 million, or ($0.08) per share.
We recognized $23.6 million of deferred loan fees and origination discounts accreted into interest income during the year ended December 31, 2023, as compared to $25.1 million during the prior year. We recorded $26.2 million of deferred financing costs amortization into interest expense during the year ended December 31, 2023, as compared to $23.9 million during the prior year.
We recorded $16.9 million of deferred loan fees and origination discounts accreted into interest income during the year ended December 31, 2025, as compared to $17.2 million during the prior year.
Under the TIC agreement, we and the KKR affiliate held an economic interest of 74.6% and 25.4%, respectively, and shared decision-making. Under ASC 970-810, we accounted for the TIC agreement as an undivided interest in the property and recorded an $82.0 million "Equity method investment, real estate asset" in the Consolidated Balance Sheets.
Under the TIC agreement, we and the KKR affiliate held an economic interest of 74.6% and 25.4%, respectively, and shared decision-making. Under ASC 970-810, we accounted for the TIC agreement as an undivided interest in the property and recorded an equity method investment based on our share of the estimated fair value of the property's net assets.
(D) LTV is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated.
(C) "Other" property type includes Student Housing (2%) and Mixed Use ( (D) LTV is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated.
If the credit underlying collateral value decreases, the gross amount of leverage available to us will be reduced as our assets are marked-to-market, which would reduce our liquidity.
If the credit underlying collateral value decreases, the gross amount of leverage available to us will be reduced as our assets are marked-to-market, which would reduce our liquidity. The lender under the applicable repurchase facility sets the valuation and any revaluation of the collateral assets in its sole, good faith discretion.
The following table sets forth interest received from, and paid for, our investments (dollars in thousands): Year Ended December 31, 2024 2023 2022 Interest received $ 558,478 $ 612,046 $ 362,178 Interest paid 398,805 430,275 201,007 Net interest collections $ 159,673 $ 181,771 $ 161,171 Our net interest collections were partially offset by cash used to pay management and incentive fees, as follows (dollars in thousands): Year Ended December 31, 2024 2023 2022 Management Fees to affiliate $ 25,137 $ 26,225 $ 24,391 Incentive Fees to affiliate — 2,491 634 Total management and incentive fee payments $ 25,137 $ 28,716 $ 25,025 Cash Flows from Investing Activities Our cash flows from investing activities primarily consisted of cash inflows from loan repayments and cash outflows to fund commitments under existing loan investments.
The following table sets forth interest received from, and paid for, our investments (amounts in thousands): Year Ended December 31, 2025 2024 2023 Interest Received: Senior Loans 420,361 558,478 612,046 Net assets of consolidated variable interest entity, CMBS trust 581 — — Total 420,942 558,478 612,046 Interest paid: Senior Loans 315,915 398,805 430,275 Net interest collections $ 105,027 $ 159,673 $ 181,771 Our net interest collections were partially offset by cash used to pay management fees, as follows (amounts in thousands): Year Ended December 31, 2025 2024 2023 Management Fees to related parties $ 23,071 $ 25,137 $ 26,225 Incentive Fees to related parties — — 2,491 Total management and incentive fee payments $ 23,071 $ 25,137 $ 28,716 Cash Flows from Investing Activities Our cash flows from investing activities primarily consisted of cash inflows from loan repayments and net proceeds from the sale of real estate owned, partially offset by cash outflows for loan originations and funding commitments under existing loan investments.
The facilities pro vide non-recourse m atch-term asset-based financing on a non-mark-to-market basis. 68 Table of Contents Revolving Credit Agreement In 2022, we upsized our corporate revolving credit agreement (“Revolver”), administered by Morgan Stanley Senior Funding, Inc., to $610.0 million and extended the maturity date to March 2027.
Asset Specific Financing Our asset specific financing facilities provide us with asset-based financing on a non-mark-to-market basis, are match-term to the underlying loans and are non-recourse. 69 Table of Contents Revolving Credit Agreement In March 2025, we upsized our Revolver, administered by Morgan Stanley Senior Funding, Inc., to $660.0 million and extended the maturity date to March 2030.
The restructured senior loan with an outstanding principal balance of $90.5 million was risk-rated 3 as of December 31, 2024. In June 2024, we modified a risk-rated 5 mezzanine office loan located in Boston, MA, with an outstanding principal balance of $37.5 million.
(A) Excludes fully written off loans. In June 2024, we modified a risk-rated 5 mezzanine office loan located in Boston, MA, with an outstanding principal balance of $37.5 million.
As of December 31, 2024, the average risk rating of our portfolio was 3.1 , weig hted by total loan exposure, as compared to 3.2 as of December 31, 2023.
As of December 31, 2025, the average risk rating of KREF's portfolio was 3.2, weighted by outstanding loan principal, as compared to 3.1 as of December 31, 2024.
Our corporate Revolver and secured term loan are secured by corporate level guarantees and include net equity interests in the investment portfolio. We may seek additional sources of liquidity from syndicated financing, other borrowings (including borrowings not related to a specific investment) and future offerings of equity and debt securities.
We may seek additional sources of liquidity from syndicated financing, other borrowings (including borrowings not related to a specific investment) and future offerings of equity and debt securities.
We expect the majority of our future investment activity to focus on originating floating-rate senior loans that we finance with our repurchase and other financing facilities, with a secondary focus on originating floating-rate loans for which we syndicate a senior position and retain a subordinated interest for our portfolio.
As of December 31, 2025, substantially all of our loans by outstanding principal earned a floating rate of interest. We expect the majority of our future investment activity to focus on originating floating-rate senior loans that we finance with our repurchase and other financing facilities.
The facility provides us with asset-based financing on a non-mark-to-market basis with match-term up to five years, with additional two-year extension available, and is non-recourse to us. Warehouse Facility In 2020, we entered into a $500.0 million Loan and Security Agreement with HSBC Bank USA, National Association (“HSBC Facility”) with a current facility maturity date of March 2026.
Term Loan Facility Our term loan facility provides us with asset-based financing on a non-mark-to-market basis, is match-term up to five years, with an additional two-year extension available, and is non-recourse. Warehouse Facility Our warehouse facility provides us with asset-based financing on a non-mark-to-market basis, has a current facility maturity of March 2026, and is partial recourse.
We contributed a portion of the REO asset with a carrying value of $68.9 million to a joint venture (the "REO JV") with a third party local developer (“JV Partner”), whereby we had a 90% interest and the JV Partner had a 10% interest.
We contributed a portion of the REO asset to a joint venture (the "REO JV") with a third party local developer (“JV Partner”), whereby we had a 90% interest and the JV Partner had a 10% interest. The JV Partner's interest in the property was presented within "Noncontrolling interests in equity of consolidated joint ventures" on the Consolidated Balance Sheets.
The following table details overall statistics for our loan portfolio as of December 31, 2024 (dollars in thousands): Total Loan Exposure Total Loan Portfolio Floating Rate Loans Fixed Rate Loans (A) Number of loans (B) 51 51 — Principal balance $ 5,900,163 $ 5,816,425 $ 83,738 Amortized cost 5,888,622 5,804,884 83,738 Unfunded loan commitments (C) 454,280 448,418 5,862 Weighted average cash coupon (D) 7.5 % S + 3.2% * Weighted average all-in yield (D) 7.8 % S + 3.5% * Weighted average maximum maturity (years) (E) 2.0 2.0 0.7 Weighted average LTV (F) 65 % 65 % n.a. * Rounds to zero (A) Represents mezzanine loans with commitments of $79.4 million and $10.2 million, respectively, accompanying two senior loans. $83.7 million of loan principal was funded, of which $74.4 million was placed on nonaccrual status, as of December 31, 2024.
The following table details overall statistics for our loan portfolio as of December 31, 2025 (amounts in thousands): Outstanding Principal Total Floating Rate Loans Fixed Rate Loans (A) Number of loans (B) 53 53 — Principal balance $ 5,361,863 $ 5,287,463 $ 74,400 Amortized cost 5,347,756 5,273,356 74,400 Unfunded loan commitments 413,851 408,851 5,000 Weighted average cash coupon (C) 7.0 % + 3.3 % * Weighted average all-in yield (C) 7.3 % + 3.6 % * Weighted average maximum maturity (years) (D) 1.8 1.8 0.5 Weighted average LTV (E) 66 % 66 % n.a. * Rounds to zero (A) Represents a mezzanine loan with a commitment of $79.4 million accompanying a senior loan. $74.4 million of loan principal was funded and on nonaccrual status as of December 31, 2025.
Office 11/9/2021 181.0 181.0 174.1 65.6 + 3.1 2.9 $488 / SF 55 3 12 Senior Loan West Palm Beach, FL Multifamily 12/29/2021 171.5 171.5 171.0 28.3 + 2.8 2.0 $210,607 / unit 73 3 13 Senior Loan Boston, MA Life Science 4/27/2021 332.3 166.2 163.2 36.9 + 3.7 1.4 $678 / SF 66 3 14 Senior Loan Various Self-Storage 12/21/2022 311.6 155.8 144.3 31.8 + 3.8 3.0 $21,689 / unit 65 3 15 Senior Loan Plano, TX Office 2/6/2020 150.7 150.7 150.7 25.4 + 2.8 0.1 $208 / SF 64 3 16 Senior Loan Redwood City, CA Life Science 9/30/2022 580.7 145.2 60.7 11.5 + 4.5 2.8 $885 / SF 53 3 17 Senior Loan Boston, MA Multifamily 3/29/2019 137.0 137.0 137.0 27.9 + 3.4 0.3 $351,282 / unit 63 3 18 Senior Loan Arlington, VA Multifamily 1/20/2022 135.3 135.3 134.3 29.0 + 2.9 2.1 $447,644 / unit 65 3 19 Senior Loan Cambridge, MA Life Science 12/22/2021 401.3 115.7 96.5 23.8 + 4.0 2.0 $1,072 / SF 51 3 20 Senior Loan Philadelphia, PA Office 6/19/2018 114.3 114.3 114.3 21.7 + 2.8 2.1 $117 / SF 71 3 21 Senior Loan San Diego, CA Multifamily 10/20/2021 114.3 114.3 109.3 35.9 + 3.4 1.9 $472,996 / unit 71 4 22 Senior Loan Pittsburgh, PA Student Housing 6/8/2021 112.5 112.5 112.5 19.1 + 3.0 1.4 $155,602 / unit 74 3 23 Senior Loan West Hollywood, CA Multifamily 1/26/2022 112.2 112.2 111.3 26.8 + 3.1 2.1 $3,009,145 / unit n.a. 5 24 Senior Loan Chicago, IL Office 7/15/2019 105.0 105.0 90.5 38.3 + 2.3 3.6 $87 / SF 59 3 25 Senior Loan Las Vegas, NV Multifamily 12/28/2021 101.1 101.1 101.1 16.7 + 2.8 2.0 $191,460 / unit 61 3 26 Senior Loan Cary, NC Multifamily 11/21/2022 100.0 100.0 95.3 18.7 + 3.4 2.9 $244,275 / unit 63 3 27 Senior Loan Washington, D.C.
Office 11/9/2021 181.0 181.0 180.5 72.2 + 3.4 1.9 $506 / SF 55 3 8 Senior Loan West Palm Beach, FL Multifamily 12/29/2021 171.5 171.5 171.4 39.3 + 2.8 1.0 $211,091 / unit 73 2 9 Senior Loan Boston, MA Life Science 4/27/2021 332.3 166.2 164.1 62.5 + 3.7 0.1 $681 / SF n.a. 5 10 Senior Loan Redwood City, CA Life Science 9/30/2022 580.9 145.2 100.1 19.8 + 4.5 1.8 $886 / SF 53 3 11 Senior Loan Various, United Kingdom Industrial 11/19/2025 471.5 141.4 141.4 34.0 + 2.8 4.9 $148 / SF 75 3 12 Senior Loan Plano, TX Office 2/6/2020 139.7 139.7 136.7 33.0 + 4.1 0.6 $189 / SF 64 3 13 Senior Loan Raleigh, NC Industrial 6/24/2025 407.6 125.0 125.0 24.0 + 2.4 4.5 $152 / SF 71 3 14 Senior Loan Arlington, VA Multifamily 1/20/2022 119.3 119.3 119.3 28.1 + 3.1 1.1 $397,644 / unit 65 3 15 Senior Loan San Diego, CA Multifamily 10/20/2021 115.7 115.7 114.7 43.7 + 3.6 0.9 $496,557 / unit n.a. 5 16 Senior Loan Cambridge, MA Life Science 12/22/2021 401.3 115.7 99.0 39.7 + 4.0 1.0 $1,072 / SF n.a. 5 17 Senior Loan Philadelphia, PA Office 6/19/2018 114.3 114.3 114.3 28.3 + 2.8 1.1 $117 / SF 71 3 18 Senior Loan Dallas, TX Office 11/7/2025 228.2 114.1 92.6 18.0 + 3.2 4.9 $367 / SF 52 3 19 Senior Loan Pittsburgh, PA Student Housing 6/8/2021 112.5 112.5 112.5 23.3 + 3.0 0.4 $155,602 / unit 74 2 20 Senior Loan Chicago, IL Office 7/15/2019 105.0 105.0 90.7 53.8 + 2.3 2.6 $87 / SF 59 4 21 Senior Loan Las Vegas, NV Multifamily 12/28/2021 101.1 101.1 101.1 23.1 + 2.8 1.0 $191,460 / unit 61 3 22 Senior Loan Washington, D.C.
The quarterly incentive compensation is calculated and paid in arrears with a three-month lag. 58 Table of Contents The following table provides a reconciliation of GAAP net income attributable to common stockholders to Distributable Earnings (amounts in thousands, except share and per share data): Three Months Ended Year Ended December 31, December 31, 2024 Per Diluted Share (A) 2024 Per Diluted Share (A) 2023 Per Diluted Share (A) Net Income (Loss) Attributable to Common Stockholders $ 14,578 $ 0.21 $ 13,071 $ 0.19 $ (53,919) $ (0.78) Adjustments Non-cash equity compensation expense 1,559 0.02 8,261 0.12 8,075 0.12 Depreciation and amortization 739 0.01 1,471 0.02 — — Unrealized (gains) or losses, net (244) — (545) (0.01) 1,859 0.03 Provision for credit losses, net 4,594 0.07 80,605 1.16 175,116 2.53 (Gain) loss on sale of investments — — 615 0.01 — — Non-cash convertible notes discount amortization — — — — 133 — Distributable Earnings before realized loss $ 21,226 $ 0.31 $ 103,478 $ 1.49 $ 131,264 $ 1.90 Realized loss on loan write-offs, net (B) (35,902) (0.52) (173,546) (2.50) (73,706) (1.07) Realized loss on sale of investments — — (615) (0.01) — — Distributable Earnings (Loss) $ (14,676) $ (0.21) $ (70,683) $ (1.02) $ 57,558 $ 0.83 Diluted weighted average common shares outstanding 69,342,983 69,396,890 69,180,039 (A) Numbers presented may not foot due to rounding.
The quarterly incentive compensation is calculated and paid in arrears with a three-month lag. 60 Table of Contents The following table provides a reconciliation of GAAP net income attributable to common stockholders to Distributable Earnings (amounts in thousands, except share and per share data): Three Months Ended Year Ended December 31, December 31, 2025 Per Diluted Share* 2025 Per Diluted Share* 2024 Per Diluted Share* Net Income (Loss) Attributable to Common Stockholders $ (31,989) $ (0.49) $ (69,885) $ (1.05) $ 13,071 $ 0.19 Adjustments Non-cash equity compensation expense 1,485 0.02 7,927 0.12 8,261 0.12 Depreciation and amortization 1,167 0.02 3,628 0.05 1,471 0.02 Unrealized (gain) loss on investments (47) — (5) — (545) (0.01) Unrealized (gain) loss on foreign currency translation (1,190) (0.02) (1,190) (0.02) — — Unrealized (gain) loss on foreign currency forward contracts 1,305 0.02 1,305 0.02 — — Provision for credit losses, net 43,686 0.67 119,372 1.79 80,605 1.16 (Gain) loss on sale of investments — — (1,192) (0.02) 615 0.01 Distributable Earnings before realized gains and losses $ 14,417 $ 0.22 $ 59,960 $ 0.90 $ 103,478 $ 1.49 Realized loss on loan write-offs, net — — (34,828) (0.52) (173,546) (2.50) Realized gain (loss) on sale of investments — — 1,192 0.02 (615) (0.01) Distributable Earnings (Loss) $ 14,417 $ 0.22 $ 26,324 $ 0.39 $ (70,683) $ (1.02) Diluted weighted average common shares outstanding 65,442,561 66,807,432 69,396,890 * Per share amounts presented may not foot due to rounding.
As a result, we recognized a $18.6 million loan write-off for the difference between the amortized cost of the foreclosed loan and our share of the fair value of the property’s net assets and closing costs. 71 Table of Contents Results of Operations The following table summarizes the changes in our results of operations for years ended December 31, 2024, 2023, and 2022 (dollars in thousands, except per share data): Year Ended December 31, Increase (Decrease) Year Ended December 31, Increase (Decrease) 2024 2023 Dollars Percentage 2023 2022 Dollars Percentage Net Interest Income Interest income $ 564,629 $ 640,412 $ (75,783) (12) % $ 640,412 $ 421,968 $ 218,444 52 % Interest expense 412,913 458,802 (45,889) (10) 458,802 236,095 222,707 94 Total net interest income 151,716 181,610 (29,894) (16) 181,610 185,873 (4,263) (2) Other Income Income (loss) from equity method investments 1,518 1,417 101 7 1,417 4,655 (3,238) (70) Other miscellaneous income 5,738 11,237 (5,499) (49) 11,237 5,568 5,669 102 Revenue from real estate owned operations 22,866 8,545 14,321 168 8,545 8,971 (426) (5) Gain on sale of investments (615) — (615) 100 — — — — Total other income 29,507 21,199 8,308 39 21,199 19,194 2,005 10 Operating Expenses Provision for (reversal of ) credit losses, net 80,605 175,116 (94,511) (54) 175,116 112,373 62,743 56 Management fee to affiliate 24,533 26,171 (1,638) (6) 26,171 25,680 491 2 Incentive compensation to affiliate — 2,491 (2,491) (100) 2,491 634 1,857 293 General and administrative 18,410 18,788 (378) (2) 18,788 17,616 1,172 7 Expenses from real estate owned operations 23,100 11,190 11,910 106 11,190 11,113 77 1 Total operating expenses 146,648 233,756 (87,108) (37) 233,756 167,416 66,340 40 Income (Loss) Before Income Taxes 34,575 (30,947) 65,522 212 (30,947) 37,651 (68,598) (182) Income tax expense 248 710 (462) (65) 710 58 652 1,124 Net Income (Loss) 34,327 (31,657) 65,984 208 (31,657) 37,593 (69,250) (184) Net income (loss) attributable to noncontrolling interests (1,264) (806) (458) 57 (806) (510) (296) 58 Net Income (Loss) Attributable to KKR Real Estate Finance Trust Inc. and Subsidiaries 35,591 (30,851) 66,442 215 (30,851) 38,103 (68,954) (181) Preferred stock dividends 21,304 21,304 — — 21,304 21,304 — — Participating securities' share in earnings 1,216 1,764 (548) (31) 1,764 1,428 336 24 Net Income (Loss) Attributable to Common Stockholders $ 13,071 $ (53,919) $ 66,990 124 $ (53,919) $ 15,371 $ (69,290) (451) Net Income (Loss) Per Share of Common Stock Basic and Diluted $ 0.19 $ (0.78) $ 0.97 124 $ (0.78) $ 0.23 $ (1.01) (439) Weighted Average Number of Shares of Common Stock Outstanding Basic and Diluted 69,396,890 69,180,039 216,851 — 69,180,039 67,553,578 1,626,461 2 Dividends Declared per Share of Common Stock $ 1.00 $ 1.72 $ (0.72) (42) $ 1.72 $ 1.72 $ — — 72 Table of Contents Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Net Interest Income Net interest income decreased by $29.9 million, during the year ended December 31, 2024, as compared to the prior year.
Accordingly, we reported the net investment value of the economic interest in our Consolidated Balance Sheets, presented as “Equity method investment, unconsolidated entity” and our share of net income, presented as “Income (loss) from equity method investments” on the Consolidated Statements of Income. 72 Table of Contents Results of Operations The following table summarizes the changes in our results of operations for years ended December 31, 2025, 2024, and 2023 (amounts in thousands, except per share data): Year Ended December 31, Increase (Decrease) Year Ended December 31, Increase (Decrease) 2025 2024 Dollars Percentage 2024 2023 Dollars Percentage Net Interest Income Interest income $ 435,599 $ 564,629 $ (129,030) (23) % $ 564,629 $ 640,412 $ (75,783) (12) % Interest expense 322,961 412,913 (89,952) (22) 412,913 458,802 (45,889) (10) Total net interest income 112,638 151,716 (39,078) (26) 151,716 181,610 (29,894) (16) Other Income Revenue from real estate owned operations 16,522 22,866 (6,344) (28) 22,866 8,545 14,321 168 Income (loss) from equity method investments (512) 1,518 (2,030) (134) 1,518 1,417 101 7 Change in net assets of consolidated variable interest entity, CMBS trust 730 — 730 100 — — — — Gain (loss) on sale of investments 1,192 (615) 1,807 294 (615) — (615) 100 Gain (loss) on foreign currency translation 1,190 — 1,190 100 — — — — Gain (loss) on foreign currency forward contracts (1,265) — (1,265) 100 — — — — Other miscellaneous income 4,646 5,738 (1,092) (19) 5,738 11,237 (5,499) (49) Total other income 22,503 29,507 (7,004) (24) 29,507 21,199 8,308 39 Operating Expenses Provision for (reversal of ) credit losses, net 119,372 80,605 38,767 48 80,605 175,116 (94,511) (54) Expenses from real estate owned operations 25,675 23,100 2,575 11 23,100 11,190 11,910 106 Management fees to related parties 22,677 24,533 (1,856) (8) 24,533 26,171 (1,638) (6) Incentive compensation to related parties — — — — — 2,491 (2,491) (100) General and administrative 18,062 18,410 (348) (2) 18,410 18,788 (378) (2) Total operating expenses 185,786 146,648 39,138 27 146,648 233,756 (87,108) (37) Income (Loss) Before Income Taxes (50,645) 34,575 (85,220) (246) 34,575 (30,947) 65,522 212 Income tax expense (156) 248 (404) (163) 248 710 (462) (65) Net Income (Loss) (50,489) 34,327 (84,816) (247) 34,327 (31,657) 65,984 208 Net income (loss) attributable to noncontrolling interests (3,438) (1,264) (2,174) 172 (1,264) (806) (458) 57 Net Income (Loss) Attributable to KKR Real Estate Finance Trust Inc. and Subsidiaries (47,051) 35,591 (82,642) (232) 35,591 (30,851) 66,442 215 Preferred stock dividends 21,304 21,304 — — 21,304 21,304 — — Participating securities' share in earnings 1,530 1,216 314 26 1,216 1,764 (548) (31) Net Income (Loss) Attributable to Common Stockholders $ (69,885) $ 13,071 $ (82,956) (635) $ 13,071 $ (53,919) $ 66,990 124 Net Income (Loss) Per Share of Common Stock Basic and Diluted $ (1.05) $ 0.19 $ (1.24) (653) $ 0.19 $ (0.78) $ 0.97 124 Weighted Average Number of Shares of Common Stock Outstanding Basic and Diluted 66,807,432 69,396,890 (2,589,458) (4) 69,396,890 69,180,039 216,851 — Dividends Declared per Share of Common Stock $ 1.00 $ 1.00 $ — — $ 1.00 $ 1.72 $ (0.72) (42) 73 Table of Contents Year Ended December 31, 2025 Compared to Year Ended December 31, 2024 Net Interest Income Net interest income decreased by $39.1 million, during the year ended December 31, 2025, as compared to the prior year.
Our Manager has processes and procedures in place to monitor and assess the credit quality of our CMBS B-Piece investments and promote the regular and active management of these investments.
The restructured senior loan with an outstanding principal balance of $61.6 million was risk-rated 3 as of December 31, 2025. CMBS B-Piece Investments Our Manager has processes and procedures in place to monitor and assess the credit quality of our CMBS B-Piece investments and promote the regular and active management of these investments.
Our maximum risk of loss associated with our interests in these VIEs is limited to the carrying value of our investment in the entities and any unfunded capital commitments.
Our maximum risk of loss associated with our interests in these VIEs is limited to the carrying value of our net investment in such entities and any unfunded capital commitments. As of December 31, 2025, we held $9.2 million of net investment in a consolidated CMBS trust and $35.4 million of interests in a CMBS equity method investment.
Weighted Average LTV excludes risk-rated 5 loans. For Senior Loans 2, 3, 5, 16 and 19, LTV is calculated as the total commitment amount of the loan divided by the as-stabilized value as of the date the loan was originated.
Weighted Average LTV excludes risk-rated 5 loans. For Senior Loans 1, 2, 4, 10, 16 and 39, LTV is calculated as the total commitment amount of the loan divided by the as-stabilized value as of the date the loan was originated. (I) Represents real estate assets held through a Tenant-in-Common ("TIC") agreement between us and a KKR affiliate.
Weighted average LTV excludes risk-rated 5 loans. 61 Table of Contents The table below sets forth additional information relating to our portfolio as of December 31, 2024 (dollars in millions): Investment (A) Location Property Type Investment Date Total Whole Loan (B) Committed Principal/Investment Amount Outstanding Principal/ Investment Amount Net Equity (C) Coupon (D)(E) Max Remaining Term (Years) (D)(F) Loan/Investment Per SF / Unit / Key (G) Origination LTV (D)(H) Risk Rating Senior Loans 1 Senior Loan Arlington, VA Multifamily 9/30/2021 $ 381.0 $ 381.0 $ 375.5 $ 84.6 + 3.3% 1.8 $338,320 / unit 69 % 3 2 Senior Loan Boston, MA Life Science 8/3/2022 312.5 312.5 229.0 33.1 + 4.2 2.6 $747 / SF 56 3 3 Senior Loan Bellevue, WA Office 9/13/2021 520.8 260.4 224.5 55.9 + 3.7 2.3 $851 / SF 63 3 4 Senior Loan Various Industrial 4/28/2022 504.5 252.3 252.3 62.4 + 2.7 2.4 $98 / SF 64 3 5 Senior Loan Bronx, NY Industrial 8/27/2021 381.2 228.7 217.2 47.5 + 4.2 1.7 $277 / SF 52 3 6 Senior Loan Los Angeles, CA Multifamily 2/19/2021 220.0 220.0 220.0 36.7 + 2.9 1.2 $410,430 / unit 68 3 7 Senior Loan Various Multifamily 5/31/2019 206.5 206.5 206.5 81.2 + 4.0 0.4 $192,991 / unit 74 3 8 Senior Loan Minneapolis, MN Office 11/13/2017 199.4 199.4 194.4 91.8 + 2.3 0.5 $182 / SF n.a. 5 9 Senior Loan Various Industrial 6/15/2022 375.5 187.8 173.5 42.4 + 2.9 2.5 $135 / SF 50 3 10 Senior Loan The Woodlands, TX Hospitality 9/15/2021 181.4 181.4 181.4 35.4 + 4.3 1.8 $199,513 / key 64 3 11 Senior Loan Washington, D.C.
Weighted average LTV excludes risk-rated 5 loans. 63 Table of Contents The table below sets forth additional information relating to our portfolio as of December 31, 2025 (amounts in millions): Investment (A) Location Property Type Investment Date Total Whole Loan (B) Committed Principal/Investment Amount Outstanding Principal/ Investment Amount Net Equity (C) Coupon (D)(E) Max Remaining Term (Years) (D)(F) Loan/Investment Per SF / Unit / Key (G) Origination LTV (D)(H) Risk Rating Senior Loans 1 Senior Loan Boston, MA Life Science 8/3/2022 $ 312.5 $ 312.5 $ 229.6 $ 34.0 + 4.2% 1.6 $747 / SF 56 % 3 2 Senior Loan Bellevue, WA Office 9/13/2021 520.8 260.4 224.6 56.1 + 3.7 1.3 $851 / SF 63 3 3 Senior Loan Various, U.S.
Committed principal represents our total commitment to the aggregator vehicle whereas current principal represents the current funded amount. 64 Table of Contents Portfolio Surveillance and Credit Quality Our Manager actively manages our portfolio and assesses the risk of any deterioration in credit quality by quarterly evaluating the performance of the underlying property, the valuation of comparable assets as well as the financial wherewithal of the associated borrower.
KREF does not have unilateral authority to direct the activities that most significantly impact the affiliated company's economic performance. 66 Table of Contents Portfolio Surveillance and Credit Quality Our Manager actively manages our portfolio and assesses the risk of any deterioration in credit quality by quarterly evaluating the performance of the underlying property, the valuation of comparable assets as well as the financial wherewithal of the associated borrower.
The historical loss rate is further adjusted to consider expected macroeconomic conditions, such as commercial real estate price indices, unemployment rates and market liquidity, over reasonable and supportable forecast periods. There is significant uncertainty related to future macroeconomic conditions.
We focus on the most relevant subset of CMBS data that is determined to be the most comparable to our own portfolio. 80 Table of Contents The historical loss rate is further adjusted to consider expected macroeconomic conditions, such as commercial real estate price indices, unemployment rates and market liquidity, over reasonable and supportable forecast periods.
We closely monitor our liquidity and intend to maintain sufficient liquidity on our balance sheet in order to meet any margin calls in the event of any significant decreases in asset values.
We closely monitor our liquidity and intend to maintain sufficient liquidity on our balance sheet in order to meet any margin calls in the event of any significant decreases in asset values. In addition, our existing master repurchase facilities are not entirely term-matched financings and may mature before our CRE debt investments that represent underlying collateral to those financings.
(A) Excludes: (i) Real Estate Assets, (ii) CMBS B-Pieces and (iii) fully written off loans. (B) We classify a loan as life science if more than 50% of the gross leasable area is leased to, or will be converted to, life science-relat ed space. (C) "Other" property type includes Self-Storage (2%), Student Housing (2%) and Mixed Use (1%).
Excludes fully written off loans, loans held in consolidated CMBS trust, and equity method investment, unconsolidated entity. (B) We classify a loan as life science if more than 50% of the gross leasable area is leased to, or will be converted to, life science-relat ed space.
These meetings assist our Manager in monitoring our portfolio, identifying any potential loan issues, determining if a re-underwriting of any loan is warranted and examining the timing and severity of any potential losses or impairments. 66 Table of Contents Total Financing Our financing arrangements include our term loan facility, term lending agreements, collateralized loan obligations, secured term loan, warehouse facility, asset specific financing, corporate revolving credit agreement ("Revolver"), non-consolidated senior interest (collectively “Non-Mark-to-Market Financing Sources”) and master repurchase agreements.
Total Financing Our financing arrangements include our term loan facility, term lending agreements, collateralized loan obligations, secured term loan, warehouse facility, asset specific financing, corporate revolving credit agreement ("Revolver"), non-consolidated senior interest (collectively “Non-Mark-to-Market Financing Sources”) and master repurchase agreements.
Cash Flows from Financing Activities During the year ended December 31, 2024, our cash flows from financing activities were primarily driven by (i) repayments of $1,594.5 million under our financing agreements and (ii) payment of $103.1 million in dividends, partially offset by borrowing proceeds of $601.9 million under our financing agreements.
Cash Flows from Financing Activities During the year ended December 31, 2025, our cash flows from financing activities were primarily driven by repayments of $1,655.2 million on our secured financing agreements and repayments of $567.9 million on our collateralized loan obligations, partially offset by borrowing proceeds of $1,717.3 million under our secured financing agreements and proceeds of $310.8 million issued under our secured term loan.
Operating Expenses Total operating expenses increased by $66.3 million during the year ended December 31, 2023, as compared to the prior year period.
This decrease was primarily due to a $6.3 million decrease in revenue from REO Operations. Operating Expenses Total operating expenses increased by $39.1 million during the year ended December 31, 2025, as compared to the prior year period.
The secured term loan matures on September 1, 2027 and contains restrictions relating to liens, asset sales, indebtedness, investments and transactions with affiliates. Our secured term loan is secured by corporate level guarantees and does not include asset-based collateral. Refer to Notes 2 and 7 to our consolidated financial statements for additional discussion of our secured term loan.
The secured term loan is partially amortizing, with an amount equal to 1.0% per annum of the principal balance due in quarterly installments. The secured term loan contains restrictions relating to liens, asset sales, indebtedness, investments and transactions with affiliates, and is secured by corporate level guarantees and does not include asset-based collateral.
In addition, we had $246.6 million of total unencumbered assets, including $209.0 million of real estate owned assets, $2.0 million of unencumbered senior loans and $35.6 million of investments in CMBS B-Pieces, that can be financed, as of December 31, 2024.
We also had $318.0 million of total unencumbered assets, including $215.9 million of real estate owned assets, $44.6 million of CMBS investments and $57.5 million of unencumbered senior loans as of December 31, 2025.
We derive a historical loss rate predominately based on a commercial mortgage-backed securities (“CMBS”) database with historical losses from 1998 through 2024 provided by a third party. We focus on the most relevant subset of CMBS data that is determined to be the most comparable to our own portfolio.
We derive a historical loss rate predominately based on a CMBS database with historical losses from 1998 through 2024 provided by a third party.
The following table summarizes our financing agreements (dollars in thousands): December 31, 2024 December 31, 2023 Borrowings Collateral Borrowings Non-/Mark-to-Market Maximum Facility Size (A) Outstanding Principal Available (B) Outstanding Principal Outstanding Principal Master Repurchase Agreements Mark-to-Credit $ 2,000,000 $ 1,038,066 $ 46,121 $ 1,595,656 $ 1,477,227 Collateralized Loan Obligations Non-Mark-to-Market 1,766,231 1,766,231 — 2,123,481 1,942,750 Term Lending Agreements Non-Mark-to-Market 1,288,371 789,647 3,234 1,154,677 1,329,390 Term Loan Facility Non-Mark-to-Market 1,000,000 553,966 524 714,418 561,377 Warehouse Facility Non-Mark-to-Market 500,000 — — — — Asset Specific Financing Non-Mark-to-Market 490,625 343,216 — 414,706 266,072 Revolver Non-Mark-to-Market 610,000 80,000 530,000 n.a. 160,000 Secured Term Loan Non-Mark-to-Market 339,500 339,500 — n.a. 343,000 Total leverage 7,994,727 4,910,626 579,879 6,079,816 Non-consolidated Senior Interests Non-Mark-to-Market — — — — 188,611 Total $ 7,994,727 $ 4,910,626 $ 579,879 $ 6,268,427 (A) Maximum facility size represents the largest amount of borrowings available under a given facility once sufficient collateral assets have been approved by the lender and pledged by us.
The following table summarizes our financing agreements (amounts in thousands): December 31, 2025 December 31, 2024 Borrowings Collateral Borrowings Non-/Mark-to-Market Maximum Facility Size (A) Outstanding Principal Available (B) Outstanding Principal Outstanding Principal Master Repurchase Agreements Mark-to-Credit $ 2,304,250 $ 1,220,707 $ 25,567 $ 1,895,720 $ 1,038,066 Collateralized Loan Obligations Non-Mark-to-Market 1,198,378 1,198,378 — 1,555,628 1,766,231 Term Lending Agreements Non-Mark-to-Market 1,377,032 771,823 1,473 1,007,873 789,647 Term Loan Facility Non-Mark-to-Market 1,000,000 513,202 622 667,680 553,966 Warehouse Facility Non-Mark-to-Market 500,000 — — — — Asset Specific Financing Non-Mark-to-Market 480,625 365,318 — 454,794 343,216 Revolver Non-Mark-to-Market 700,000 — 700,000 n.a. 80,000 Secured Term Loan Non-Mark-to-Market 646,750 646,750 — n.a. 339,500 Total leverage $ 8,207,035 $ 4,716,178 $ 727,662 $ 4,910,626 (A) Maximum facility size represents the largest amount of borrowings available under a given facility once sufficient collateral assets have been approved by the lender and pledged by us.
Generally, deposits may be redeemed upon demand and are maintained with financial institutions with reputable credit and therefore we believe bear minimal credit risk. To facilitate future offerings of equity, debt and other securities, we have in place an effective shelf registration statement (the “Shelf”) with the SEC.
To facilitate future offerings of equity, debt and other securities, we have in place an effective shelf registration statement (the “Shelf”) with the SEC. The amount of securities that may be issued pursuant to this Shelf is not to exceed $750 million.
December 31, 2024 December 31, 2023 Risk Rating Number of Loans (A) Carrying Value Total Loan Exposure Total Loan Exposure %* Number of Loans (A) Carrying Value Total Loan Exposure (B) Total Loan Exposure %* 1 — $ — $ — — % — $ — $ — — % 2 — — — — 2 19,392 57,925 1 3 47 5,393,333 5,400,698 92 60 6,493,506 6,511,894 86 4 2 193,687 193,727 3 4 325,286 476,112 6 5 2 301,602 305,738 5 3 505,364 512,105 7 Total loan receivable 51 $ 5,888,622 $ 5,900,163 100 % 69 $ 7,343,548 $ 7,558,036 100 % Allowance for credit losses (117,103) (210,470) Loan receivable, net $ 5,771,519 $ 7,133,078 * Numbers presented may not foot due to rounding.
December 31, 2025 December 31, 2024 Risk Rating Number of Loans (A) Carrying Value Outstanding Principal Outstanding Principal %* Number of Loans (A) Carrying Value Outstanding Principal Outstanding Principal %* 1 — $ — $ — — % — $ — $ — — % 2 2 283,816 283,906 5 — — — — 3 46 4,405,274 4,415,095 82 47 5,393,333 5,400,698 92 4 1 90,671 90,671 2 2 193,687 193,727 3 5 4 567,995 572,191 11 2 301,602 305,738 5 Total loan receivable 53 $ 5,347,756 $ 5,361,863 100 % 51 $ 5,888,622 $ 5,900,163 100 % Allowance for credit losses (201,924) (117,103) Loan receivable, net $ 5,145,832 $ 5,771,519 * Numbers presented may not foot due to rounding.
The guidance is effective for our 2027 annual reporting. The guidance is applied prospectively and may be applied retrospectively. We is evaluating the impact of ASU 2024-03. 80 Table of Contents
The guidance is effective for our 2026 annual reporting. The guidance is applied prospectively and may be applied retrospectively. Adoption is not expected to have a material impact on our consolidated financial statements. 81 Table of Contents
In June 2024, we and the KKR affiliate 70 Table of Contents took title to the office property through a DIL and we accounted for the property on a consolidated basis. The transaction was accounted for as an asset acquisition under ASC 805.
Mountain View, CA Office — In June 2024, we and the KKR affiliate took title to a Mountain View office property through a deed-in-lieu of foreclosure ("DIL") and we accounted for the property on a consolidated basis. Ours and the KKR affiliate's interest in the property were 68.9% and 31.1%, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeConversely, a 50 basis point and a 100 basis point increase in the index rates would increase our expected cash flows by approximately $1.1 million and $2.1 million, or $0.02 and $0.03 per common share, respectively, for the same period.
Biggest changeConversely, a 50 basis point and a 100 basis point increase in the benchmark rates would increase our expected cash flows by approximately $0.7 million and $1.3 million, or $0.01 and $0.02 per common share, respectively, for the same period. 82 Table of Contents Prepayment Risk Prepayment risk is the risk that principal will be repaid at an earlier date than anticipated, potentially causing the return on certain investments to be less than expected.
Accordingly, our interest income and expense will generally change directionally with index rates; however, in certain circumstances, rate floors relating to our loan portfolio may partially offset the impact from changing rates.
Accordingly, our interest income and expense will generally change directionally with benchmark rates; however, in certain circumstances, rate floors relating to our loan portfolio may partially offset the impact from changing rates.
However, rate floors relating to our loan portfolio may offs et some of the impact from declining rates. In addition, interest we are charged on our fixed-rate debt would not change. As of December 31, 2024, our accruing loan portfolio and related portfolio financing by principal amount earned or paid a floating rate of interest indexed to Term SOFR.
However, rate floors relating to our loan portfolio may offs et some of the impact from declining rates. In addition, interest we are charged on fixed-rate debt would not change. As of December 31, 2025, our accruing loan portfolio and related portfolio financing earned or paid a floating rate of interest benchmarked to Term SOFR, SONIA or EURIBOR.
Although the Federal Reserve lowered interest rates three times during 2024, interest rates remain elevated and the timing, direction and extent of any future interest rate changes remain uncertain.
The Federal Reserve lowered interest rates three times during 2024 and three times in 2025, with future rate cuts expected. Interest rates remain elevated and the timing, direction and extent of any future interest rate changes remain uncertain.
Credit Yield Risk Credit yields measure the return demanded on financial instruments by the lending market based on their risk of default. Increasing supply of credit-sensitive financial instruments and reduced demand will generally cause the market to require a higher yield on such financial instruments, resulting in a lower price for the financial instruments we hold.
Increasing supply of credit-sensitive financial instruments and reduced demand will generally cause the market to require a higher yield on such financial instruments, resulting in a lower price for the financial instruments we hold.
As of December 31, 2024, a 50 basis point and a 100 basis point decrease in the index rates would decrease our expected cash flows by appro ximately $1.1 million and $2.1 million, or ($0.02) and ($0.03) per common share, respectively, for the following three-month period.
As of December 31, 2025, a 50 basis point and a 100 basis point decrease in the benchmark rates would increase our expected cash flows by approximately $0.1 million and $1.4 million, or $0.00 and $0.02 per common share, respectively, for the following three-month period.
In general, an increase in prepayment rates accelerates the amortization of purchase premiums, thereby reducing the interest income earned on the assets. Conversely, discounts on such assets are accreted into interest income. In general, an increase in prepayment rates accelerates the accretion of purchase discounts, thereby increasing the interest income earned on the assets.
As we receive prepayments of principal on our assets, any premiums paid on such assets are amortized against interest income. In general, an increase in prepayment rates accelerates the amortization of purchase premiums, thereby reducing the interest income earned on the assets. Conversely, discounts on such assets are accreted into interest income.
In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses. 82 Table of Contents
In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses. Currency Risk Our loans and investments that are denominated in a foreign currency are also subject to risks related to movements in currency rates.
Financing Risk We finance our target assets using our repurchase facilities, our term lending agreements, our Term Loan Facility, Warehouse Facility, Asset Based Financing, secured term loan, collateralized loan obligations and through syndicating senior participations in our originated senior loans. Over time, as market conditions change, we may use other forms of leverage in addition to these methods of financing.
Financing Risk We finance our target assets using our repurchase facilities, term lending agreements, term loan facility, warehouse facility, asset based financing, revolving credit agreement, collateralized loan obligations, secured term loan and through syndicating senior participations in our originated senior loans.
Additionally, we may not be able to reinvest the principal repaid at the same or higher yield of the original investment.
In general, an increase in prepayment rates accelerates the accretion of purchase discounts, thereby increasing the interest income earned on the assets. Additionally, we may not be able to reinvest the principal repaid at the same or higher yield of the original investment.
Removed
Prepayment Risk Prepayment risk is the risk that principal will be repaid at an earlier date than anticipated, potentially causing the return on certain investments to be less than expected. As we receive prepayments of principal on our assets, any premiums paid on such 81 Table of Contents assets are amortized against interest income.
Added
These risks may be exacerbated by recent changes in global tariff policies and escalating global trade tensions, which have introduced uncertainty in supply chains and material costs and have contributed to significant market volatility. Credit Yield Risk Credit yields measure the return demanded on financial instruments by the lending market based on their risk of default.
Added
Over time, as market conditions change, we may use other forms of leverage in addition to these methods of financing.
Added
We generally mitigate this exposure by matching the currency of our foreign currency assets to the currency of the borrowings that finance those assets. As a result, we substantially reduce our exposure to changes in portfolio value related to changes in foreign currency rates.
Added
In addition, substantially all of our net asset exposure to the Euro and the British Pounds Sterling has been hedged with foreign currency forward contracts as of December 31, 2025.
Added
The following table outlines our assets and liabilities that are denominated in a foreign currency (amounts in thousands): December 31, 2025 EUR GBP Foreign currency assets € 61,376 £ 115,795 Foreign currency liabilities (36,742) (88,264) Foreign currency contracts - notional (24,746) (28,358) Net exposure to foreign exchange rate movements € (112) £ (827) Net exposure to foreign exchange rate movements in USD $ (132) $ (1,116) 83 Table of Contents

Other KREF 10-K year-over-year comparisons