kref-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission File Number: 001-38082

KKR Real Estate Finance Trust Inc.

(Exact name of registrant as specified in its charter)

Maryland

47-2009094

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

30 Hudson Yards,

Suite 7500

New York,

10001

(Address of principal executive offices)

(Zip Code)

(212) 750-8300

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

KREF

New York Stock Exchange

6.50% Series A Cumulative Redeemable Preferred Stock, par value $0.01 per share

KREF PRA

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☒

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

The number of shares of the registrant's common stock, par value $0.01 per share, outstanding as of April 21, 2025 was 67,806,289.

KKR REAL ESTATE FINANCE TRUST INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2025

INDEX


			PAGE
Part I - Financial Information			5
Item 1. Condensed Consolidated Financial Statements (Unaudited)			5
Condensed Consolidated Balance Sheets (Unaudited) as of March 31 , 2025 and December 31, 202 4			5
Condensed Consolidated Statements of Income (Unaudited) for the Three Months Ended March 31 , 202 5 and 202 4			6
Condensed Consolidated Statements of Changes in Equity (Unaudited) for the Three Months Ended March 31, 202 5 and 202 4			7
Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31 , 202 5 and 202 4			8
Notes to Condensed Consolidated Financial Statements (Unaudited)			10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			46
Item 3. Quantitative and Qualitative Disclosures about Market Risk			72
Item 4. Controls and Procedures			71
Part II - Other Information			72
Item 1. Legal Proceedings			72
Item 1A. Risk Factors			72
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			72
Item 3. Defaults Upon Senior Securities			72
Item 4. Mine Safety Disclosures			72
Item 5. Other Information			72
Item 6. Exhibits			73
Signatures			74

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which reflect our current views with respect to, among other things, our operations and financial performance. You can identify these forward-looking statements by the use of words such as "outlook," "believe," "expect," "potential," "continue," "may," "should," "seek," "approximately," "predict," "intend," "will," "plan," "estimate," "anticipate," the negative version of these words, other comparable words or other statements that do not relate strictly to historical or factual matters. By their nature, forward-looking statements speak only as of the date they are made, are not statements of historical fact or guarantees of future performance and are subject to risks, uncertainties, assumptions or changes in circumstances that are difficult to predict or quantify. Our expectations, beliefs and projections are expressed in good faith and we believe there is a reasonable basis for them. However, there can be no assurance that management's expectations, beliefs and projections will result or be achieved and actual results may vary materially from what is expressed in or indicated by the forward-looking statements.

There are many factors that may cause our actual results to differ materially from the forward-looking statements, including factors set forth under Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 (the "Form 10-K") and Part I, Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Form 10-Q, as such factors may be updated from time to time in our other periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov and on the investor relations section of our website at www.kkrreit.com. You should evaluate all forward-looking statements made in this Form 10-Q in the context of these risks and uncertainties.

We caution you that the risks, uncertainties and other factors referenced below may not contain all of the risks, uncertainties and other factors that are important to you. In addition, we cannot assure you that we will realize the results, benefits or developments that we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our business in the way expected. All forward-looking statements in this Form 10-Q apply only as of the date made and are expressly qualified in their entirety by the cautionary statements included in this Form 10-Q and in other filings we make with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements to reflect subsequent events or circumstances, except as required by law.

Except where the context requires otherwise, the terms "Company," "we," "us," "our" and "KREF" refer to KKR Real Estate Finance Trust Inc., a Maryland corporation, and its subsidiaries; "Manager" refers to KKR Real Estate Finance Manager LLC, a Delaware limited liability company, our external manager; and "KKR" refers to KKR & Co. Inc., a Delaware corporation, and its subsidiaries.

SUMMARY OF MATERIAL RISKS

The following is a summary of the risk factors associated with investing in our securities. You should read this summary together with a more detailed description of these risks in the "Risk Factors" section of this report and in other filings that we make from time to time with the SEC.

•the general political, economic, competitive, and other conditions in the United States and in any foreign jurisdictions in which we invest and their impact on our loan portfolio, financial condition and business operations;

•fluctuations in interest rates and credit spreads could reduce our ability to generate income on our loans and other investments, which could lead to a significant decrease in our results of operations, cash flows and the market value of our investments and could materially impair our ability to pay distributions to our stockholders;

•adverse developments in the real estate and real estate capital markets could negatively impact our performance;

•adverse legislative or regulatory developments, including with respect to tax laws, securities laws, and the laws governing financial and lending institutions;

•adverse developments in the availability of attractive loan and other investment opportunities whether they are due to competition, regulation or otherwise, could adversely affect our results of operations;

Table of Contents

•adverse economic trends and changes in economic conditions, including as a result of heightened inflation, slower growth or recession, changes to fiscal and monetary policy, higher interest rates, increased tariffs and trade tensions, geopolitical conditions, labor shortages, currency fluctuations and challenges in global supply chains;

•events giving rise to increases in our current expected credit loss reserve;

•reduced demand for office, multifamily or retail space, and/or hybrid work schedules which allow work from remote locations other than the employer's office premises;

•our results of operations, financial condition, liquidity position, and business could be adversely impacted if we experience (i) difficulty accessing financing or raising capital, including due to a significant dislocation in or shut-down of the capital markets, (ii) a reduction in the yield on our investments, (iii) an increase in the cost of our financing, (iv) an inability to borrow incremental amounts or an obligation to repay amounts under our financing arrangements, or (v) defaults by borrowers in paying debt service on outstanding loans;

•deterioration in the performance of the properties securing our investments that may cause deterioration in the performance of our investments, adversely impact certain of our financing arrangements and our liquidity, risks in collection of contractual interest payments, and potentially, principal losses to us;

•difficulty or delays in redeploying the proceeds from repayments of our existing investments may cause our financial performance to decline;

•acts of God such as hurricanes, earthquakes and other natural disasters, pandemics, acts of war and/or terrorism and other events that may cause unanticipated and uninsured performance declines and/or losses to us or the owners and operators of the real estate securing our investments;

•increased competition from entities engaged in mortgage lending and/or investing in our target assets;

•conflicts with KKR and its affiliates, including our Manager, could result in decisions that are not in the best interests of our stockholders;

•we are dependent on our Manager and its access to KKR’s investment professionals and resources. We may not find a suitable replacement for the Manager if the Management Agreement is terminated, or if key personnel leave the employment of KKR or otherwise become unavailable to us.

•our qualification as a real estate investment trust ("REIT") for U.S. federal income tax purposes and our exclusion from registration under the Investment Company Act of 1940, as amended (the "Investment Company Act"); and

•authoritative accounting principles generally accepted in the United States of America ("GAAP") or policy changes from such standard-setting bodies such as the Financial Accounting Standards Board (the "FASB"), the Securities and Exchange Commission (the "SEC"), the Internal Revenue Service, the New York Stock Exchange and other authorities that we are subject to, as well as their counterparts in any foreign jurisdictions where we might do business.

Table of Contents

PART I — FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

KKR Real Estate Finance Trust Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (Unaudited)

(Amounts in thousands, except share and per share data)


	March 31, 2025		December 31, 2024
Assets
Cash and cash equivalents	$	106,411	$	104,933
Commercial real estate loans, held-for-investment	6,108,987		5,888,622
Less: Allowance for credit losses	(142,337)		(117,103)
Commercial real estate loans, held-for-investment, net	5,966,650		5,771,519

Real estate owned, held for investment, net	263,271		262,479
Real estate owned assets, held for sale	56,874		56,554
Equity method investment, real estate asset	81,759		81,708
Equity method investment, CMBS B-Pieces	35,740		35,598
Accrued interest receivable	27,967		28,754
Other assets	15,857		8,853
Total Assets	$	6,554,529	$	6,350,398

Liabilities and Equity
Liabilities
Secured financing agreements, net	$	3,024,168	$	2,798,674
Collateralized loan obligations, net	1,581,004		1,766,104
Secured term loan, net	535,923		333,853
Dividends payable	16,956		17,178
Accrued interest payable	14,761		19,939
Real estate owned liabilities, held for sale	1,151		1,328
Due to affiliates	6,222		5,919
Other liabilities	10,789		8,524
Total Liabilities	5,190,974		4,951,519

Commitments and Contingencies (Note 13)	—		—

Equity
Preferred Stock, $0.01 par value, 50,000,000 shares authorized
Series A cumulative redeemable preferred stock, (13,110,000 shares issued and outstanding as of March 31, 2025 and December 31, 2024); liquidation preference of $327,750, or $25.00 per share	131		131
Common stock, $0.01 par value, 300,000,000 authorized (67,824,496 and 68,713,596 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively)	678		686
Additional paid-in capital	1,706,988		1,714,684
Accumulated deficit	(397,977)		(370,471)
Total KKR Real Estate Finance Trust Inc. Stockholders’ Equity	1,309,820		1,345,030
Noncontrolling interests in equity of consolidated joint ventures	53,735		53,849
Total Equity	1,363,555		1,398,879
Total Liabilities and Equity	$	6,554,529	$	6,350,398

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

KKR Real Estate Finance Trust Inc. and Subsidiaries

Condensed Consolidated Statements of Income (Unaudited)

(Amounts in thousands, except share and per share data)


	Three Months Ended March 31,
	2025		2024
Net Interest Income
Interest income	$	113,967	$	151,620
Interest expense	82,626		112,476
Total net interest income	31,341		39,144

Other Income

Income (loss) from equity method investments	(201)		845
Other miscellaneous income	1,187		1,792
Revenue from real estate owned operations	2,889		4,978

Total other income	3,875		7,615

Operating Expenses
Provision for credit losses, net	24,863		33,266
Management fee to affiliate	5,797		6,340

General and administrative	4,831		4,992
Expenses from real estate owned operations	5,474		5,549
Total operating expenses	40,965		50,147

Income (Loss) Before Income Taxes	(5,749)		(3,388)
Income tax expense	—		41
Net Income (Loss)	(5,749)		(3,429)
Net income (loss) attributable to noncontrolling interests	(888)		(321)
Net Income (Loss) Attributable to KKR Real Estate Finance Trust Inc. and Subsidiaries	(4,861)		(3,108)
Preferred stock dividends	5,326		5,326
Participating securities' share in earnings	363		305
Net Income (Loss) Attributable to Common Stockholders	$	(10,550)	$	(8,739)

Net Income (Loss) Per Share of Common Stock
Basic and Diluted	$	(0.15)	$	(0.13)

Weighted Average Number of Shares of Common Stock Outstanding
Basic and Diluted	68,765,877		69,386,568


Dividends Declared per Share of Common Stock	$	0.25	$	0.25

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

KKR Real Estate Finance Trust Inc. and Subsidiaries

Condensed Consolidated Statements of Changes in Equity (Unaudited)

(Amounts in thousands, except share data)


	Series A Preferred Stock			Common Stock
	Shares	Par Value		Shares	Par Value		Additional Paid-In Capital		Accumulated Deficit		Repurchased Stock		Total KKR Real Estate Finance Trust Inc. Stockholders' Equity		Noncontrolling Interests in Equity of Consolidated Joint Ventures		Total Equity
Balance at December 31, 2024	13,110,000	$	131	68,713,596	$	686	$	1,714,684	$	(370,471)	$	—	$	1,345,030	$	53,849	$	1,398,879



Repurchase and retirement of common stock	—	—		(889,100)	(8)		(9,823)		—		—		(9,831)		—		(9,831)
Stock-based compensation, net	—	—		—	—		2,127		—		—		2,127		—		2,127
Net income (loss)	—	—		—	—		—		(4,861)		—		(4,861)		(888)		(5,749)
Contribution by noncontrolling interest	—	—		—	—		—		—		—		—		774		774
Series A preferred dividends declared, $0.41 per share	—	—		—	—		—		(5,326)		—		(5,326)		—		(5,326)
Common dividends declared, $0.25 per share	—	—		—	—		—		(16,956)		—		(16,956)		—		(16,956)
Participating security dividends declared, $0.25 per share	—	—		—	—		—		(363)		—		(363)		—		(363)
Balance at March 31, 2025	13,110,000	$	131	67,824,496	$	678	$	1,706,988	$	(397,977)	$	—	$	1,309,820	$	53,735	$	1,363,555


	Series A Preferred Stock			Common Stock
	Shares	Par Value		Shares	Par Value		Additional Paid-In Capital		Accumulated Deficit		Repurchased Stock		Total KKR Real Estate Finance Trust Inc. Stockholders' Equity		Noncontrolling Interests in Equity of Consolidated Joint Venture		Total Equity
Balance at December 31, 2023	13,110,000	$	131	69,313,860	$	693	$	1,815,077	$	(314,370)	$	(96,764)	$	1,404,767	$	(585)	$	1,404,182
Stock-based compensation, net	—	—		—	—		2,296		—		—		2,296		—		2,296
Net income (loss)	—	—		—	—		—		(3,108)		—		(3,108)		(321)		(3,429)
Series A preferred dividends declared, $0.41 per share	—	—		—	—		—		(5,326)		—		(5,326)		—		(5,326)
Common dividends declared, $0.25 per share	—	—		—	—		—		(17,328)		—		(17,328)		—		(17,328)
Participating security dividends declared, $0.25 per share	—	—		—	—		—		(305)		—		(305)		—		(305)

Balance at March 31, 2024	13,110,000	$	131	69,313,860	$	693	$	1,817,373	$	(340,437)	$	(96,764)	$	1,380,996	$	(906)	$	1,380,090

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

KKR Real Estate Finance Trust Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

(Amounts in thousands)


	Three Months Ended March 31,
	2025		2024
Cash Flows From Operating Activities
Net income (loss)	$	(5,749)	$	(3,429)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Accretion of deferred loan fees and discounts	(3,354)		(4,724)
Payment-in-kind interest	(402)		(25)
Amortization of deferred debt issuance costs and discounts	3,083		5,029
(Income) loss from equity method investment	882		(32)
Provision for credit losses, net	24,863		33,266
Depreciation and amortization	490		—
Stock-based compensation expense	2,127		2,296

Changes in operating assets and liabilities:
Assets related to real estate owned, held for sale, net of liabilities	(497)		3,023
Accrued interest receivable, net	787		401
Other assets	(2,482)		499
Accrued interest payable	(5,178)		(960)
Due to affiliates	(122)		(183)
Other liabilities	1,468		(673)
Net cash provided by (used in) operating activities	15,916		34,488

Cash Flows From Investing Activities
Proceeds from principal repayments of commercial real estate loans	182,095		334,680
Originations and fundings of commercial real estate loans	(400,204)		(95,814)
Capital expenditures on real estate owned	(1,282)		(2,110)



Contributions to equity method investment, real estate asset	(1,075)		—
Net cash provided by (used in) investing activities	(220,466)		236,756

Cash Flows From Financing Activities
Proceeds from borrowings under secured financing agreements	603,390		118,754

Proceeds from issuance of secured term loan	209,813		—
Proceeds from noncontrolling interest contributions	774		—


Principal repayments on borrowings under secured financing agreements	(377,004)		(382,144)
Principal repayments on collateralized loan obligations	(185,128)		—

Payments of debt and collateralized debt obligation issuance costs	(14,163)		(2,249)
Payments of common stock dividends	(17,178)		(29,805)
Payments of preferred stock dividends	(5,326)		(5,326)


Payments to repurchase common stock	(9,831)		—

Net cash provided by (used in) financing activities	205,347		(300,770)

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	797		(29,526)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	106,547		148,313
Cash, Cash Equivalents and Restricted Cash at End of Period	$	107,344	$	118,787

Table of Contents


	Three Months Ended March 31,
	2025		2024
Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	$	106,411	$	106,517
Restricted cash (Note 8)	933		12,270
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash Flows	$	107,344	$	118,787

Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest	$	84,721	$	108,407

Supplemental Schedule of Non-Cash Investing and Financing Activities
Dividend declared, not yet paid	16,956		17,328
Loan principal repayments held by a servicer	1,500		3,500

Deferred financing costs, not yet paid	1,229		2,060
Loan funding held in escrow	—		7,325

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 1. Business and Organization

KKR Real Estate Finance Trust Inc. (together with its consolidated subsidiaries, referred to throughout this report as the "Company" or "KREF") is a Maryland corporation that was formed and commenced operations on October 2, 2014 as a mortgage real estate investment trust ("REIT") that focuses primarily on originating and acquiring transitional senior loans secured by commercial real estate ("CRE") assets.

KREF has elected and intends to maintain its qualification to be taxed as a REIT under the requirements of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), for U.S. federal income tax purposes. As such, KREF will generally not be subject to U.S. federal income tax on that portion of its income that it distributes to stockholders if it distributes at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. See Note 16 regarding taxes applicable to KREF.

KREF is externally managed by KKR Real Estate Finance Manager LLC ("Manager"), an indirect subsidiary of KKR & Co. Inc. (together with its subsidiaries, "KKR"), through a management agreement ("Management Agreement") pursuant to which the Manager provides a management team and other professionals who are responsible for implementing KREF’s business strategy, subject to the supervision of KREF’s board of directors. For its services, the Manager is entitled to management fees and incentive compensation, both defined in, and in accordance with the terms of, the Management Agreement (Note 14).

As of March 31, 2025, KKR beneficially owned 10,000,001 shares, or 14.7% of KREF's outstanding common stock.

KREF's principal business activities are related to the origination and purchase of credit investments related to CRE. KREF’s Chief Executive Officer is the Chief Operating Decision Maker ("CODM") who allocates resources and assesses financial performance. The CODM reviews net income (loss) attributable to KREF and assesses the performance of KREF's current portfolio of leveraged and unleveraged commercial real estate loans and makes operating decisions accordingly. As a result, KREF conducts its business as a single operating segment. All expense categories on the Condensed Consolidated Statements of Operations are significant and there are no other significant segment expenses that would require disclosure.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 2. Summary of Significant Accounting Policies

Basis of Presentation — The unaudited condensed consolidated financial statements and accompanying notes of KREF are prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and instructions to Form 10-Q. The condensed consolidated financial statements, including the accompanying notes, are unaudited and exclude some of the disclosures required in annual financial statements. The condensed consolidated financial statements include the accounts of KREF and its consolidated subsidiaries, and all intercompany transactions and balances have been eliminated. In the opinion of management, all adjustments considered necessary for a fair presentation of KREF’s financial position, results of operations and cash flows have been included and are of a normal and recurring nature. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated financial statements should be read in conjunction with KREF's Annual Report on Form 10-K.

Use of Estimates — The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Such estimates include, but are not limited to, the determination of allowance for credit loss, asset impairment or loan write-off, and fair value recorded or disclosed. Actual results could materially differ from those estimates.

Consolidation — KREF consolidates those entities that (i) it controls through either majority ownership or voting rights or (ii) management determines that KREF is the primary beneficiary of entities deemed to be variable interest entities ("VIEs").

Variable Interest Entities — VIEs are entities (i) in which equity investors do not have an interest with the characteristics of a controlling financial interest, (ii) that do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties or (iii) established with non-substantive voting rights. A VIE is required to be consolidated only by its primary beneficiary, which is defined as the party that has the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and that has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could be potentially significant to the VIE (Note 9).

To assess whether KREF has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, KREF considers all the facts and circumstances, including its role in establishing the VIE and its ongoing rights and responsibilities. This assessment includes, first, identifying the activities that most significantly impact the VIE’s economic performance; and second, identifying which party, if any, has power to direct those activities. To assess whether KREF has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE, KREF considers all of its economic interests and applies judgment in determining whether these interests, in the aggregate, are considered potentially significant to the VIE.

Collateralized Loan Obligations — KREF consolidates collateralized loan obligations (“CLOs”) when it determines that the CLO issuers are VIEs and that KREF is the primary beneficiary of such VIEs.

The collateral assets of KREF's CLOs, comprised of a pool of loan participations, are included in “Commercial real estate loans, held-for-investment, net” on the Condensed Consolidated Balance Sheets. The liabilities of KREF's consolidated CLOs consist solely of obligations to the senior CLO noteholders, excluding subordinated CLO tranches held by KREF as such interests are eliminated in consolidation, and are presented in “Collateralized loan obligations, net” on the Condensed Consolidated Balance Sheets. The collateral assets of the CLOs can only be used to settle the obligations of the consolidated CLOs. The interest income from the CLOs’ collateral assets and the interest expense on the CLOs’ liabilities are presented on a gross basis in “Interest income” and “Interest expense”, respectively, in KREF's Condensed Consolidated Statements of Income.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Real Estate Owned Joint Venture — KREF has two joint ventures that hold the majority of KREF’s investments in real estate owned (“REO”) and determined the joint ventures to be VIEs (Note 9). KREF owns a majority of the equity interests in the joint ventures and participates in the profits and losses. Management concluded that KREF is the primary beneficiary of the joint ventures as KREF holds decision-making power over the activities that most significantly impact the economic performance and has the obligation to absorb losses or the right to receive benefits that could be potentially significant to the joint ventures.

Noncontrolling Interests — Noncontrolling interests represent the ownership interests in certain consolidated subsidiaries held by entities or persons other than KREF. These noncontrolling interests do not include redemption features and are presented as "Noncontrolling interests in equity of consolidated joint ventures" on the Condensed Consolidated Balance Sheets.

Equity Method Investments — Investments are accounted for under the equity method when KREF has significant influence over the operations of an investee but does not consolidate that investment. Equity method investments, for which management has not elected a fair value option, are initially recorded at cost and subsequently adjusted for KREF's share of net income or loss and cash contributions and distributions each period.

KREF classifies distributions received from equity method investees using the cumulative earnings approach. Distributions received up to the cumulative earnings from each equity method investee are considered returns on investment and presented within “Cash Flows from Operating Activities” in the Condensed Consolidated Statements of Cash Flows; excess distributions received are considered returns of investment and presented within “Cash Flows From Investing Activities” in the Condensed Consolidated Statements of Cash Flows.

Fair Value — GAAP requires the categorization of the fair value of financial instruments into three broad levels that form a hierarchy based on the transparency of inputs to the valuation.

Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.

Level 2 — Inputs are other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability.

Level 3 — Inputs are unobservable for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

KREF follows this hierarchy for its financial instruments. The classifications are based on the lowest level of input that is significant to the fair value measurement.

Valuation Process — The Manager reviews the valuation of Level 3 financial instruments as part of KKR's quarterly process. KKR’s valuation process for Level 3 measurements, as described below, subjected valuations to the review and oversight of various committees. KKR has a global valuation committee assisted by the asset class-specific valuation committees, including a real estate valuation committee that reviews and approves all preliminary Level 3 valuations for real estate assets, including the financial instruments held by KREF. The global valuation committee is responsible for coordinating and implementing KKR’s valuation process to ensure consistency in the application of valuation principles across portfolio investments and between periods. All Level 3 valuations are also subject to approval by the global valuation committee.

Valuation of Commercial Real Estate Loans — Management considers KREF's commercial real estate loans to be Level 3 assets in the fair value hierarchy as such assets are illiquid, structured investments that are specific to the sponsor, underlying property and its operating performance (Note 15). For financial statement disclosure purposes, on a quarterly basis, management generally engages an independent valuation firm to estimate the fair value of each loan categorized as a Level 3 asset. These loans are generally valued using a discounted cash flow model based on assumptions regarding the collection of principal and interest and estimated market rates. Management reviews the quarterly loan valuation estimates provided by the independent valuation firm. For collateral dependent loans, KREF may apply alternative valuation methods based on the fair value of the underlying collateral. Determination of collateral value involves significant judgment, including assumptions regarding capitalization rates, discount rates, leasing, occupancy rates, and other factors.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Valuation of CLO Consolidated VIEs — Management estimates the fair value of the CLO liabilities using prices obtained from an independent valuation firm. If prices received from the independent valuation firm are inconsistent with values determined in connection with management’s independent review, management makes inquiries to the independent valuation firm about the prices received and related methods. In the event management determines the price obtained from an independent valuation firm to be unreliable or an inaccurate representation of the fair value of the CLO liabilities (based on considerations given to observable market data), management then compiles evidence independently and presents the independent valuation firm with such evidence supporting a different value. As a result, the independent valuation firm may revise their price after evaluating any additional evidence.

However, if management continues to disagree with the price from the independent valuation firm, in light of evidence that management compiled independently and believes to be compelling, valuations are then prepared using inputs based on non-binding broker quotes obtained from independent, well-known, major financial brokers that are CLO market makers. In validating any non-binding broker quote used in this circumstance, management compares the non-binding quote to the observable market data points in addition to understanding the valuation methodologies used by the market makers. These market participants may utilize a similar methodology as the independent valuation firm to value the CLO liabilities, with the key input of expected yield determined independently based on both observable and unobservable factors. To avoid reliance on any single broker-dealer, management receives a minimum of two non-binding quotes, of which the average is used.

Other Valuation Matters — For Level 3 financial assets originated, or otherwise acquired, and financial liabilities assumed during the current calendar quarter that were conducted in an orderly transaction with an unrelated party, management generally believes that the transaction price provides the most observable indication of fair value given the illiquid nature of these financial instruments, unless management is aware of any circumstances that may cause a material change in the fair value through the remainder of the reporting period. For instance, significant changes to the underlying property or its planned operations may cause material changes in the fair value of commercial real estate loans acquired, or originated, by KREF.

KREF’s determination of fair value is based upon the best information available for a given circumstance and may incorporate assumptions that are management’s best estimates after consideration of a variety of internal and external factors. When an independent valuation firm expresses an opinion on the fair value of a financial instrument in the form of a range, management selects a value within the range provided by the independent valuation firm, generally the midpoint, to assess the reasonableness of management’s estimated fair value for that financial instrument.

Refer to Note 15 for additional information regarding the valuation of KREF's financial assets and liabilities.

Transfer of Financial Assets and Financing Agreements — KREF will, from time to time, transfer loans, securities and other assets as well as finance assets in the form of secured borrowings. In each case, management evaluates whether the transaction constitutes a sale through legal isolation of the transferred financial asset from KREF, the ability of the transferee to pledge or exchange the transferred asset without constraint and the transfer of control of the transferred asset. For transfers that constitute sales, KREF (i) recognizes the financial assets it retains and liabilities it has incurred, if any, (ii) derecognizes the financial assets it has sold, and derecognizes liabilities when extinguished and (iii) recognizes a realized gain, or loss, based upon the excess, or deficient, proceeds received over the carrying value of the transferred asset. KREF does not recognize a gain, or loss, on interests retained, if any, where management elected the fair value option prior to sale.

Balance Sheet Measurement

Cash and Cash Equivalents and Restricted Cash — KREF considers cash equivalents as highly liquid short-term investments with maturities of 90 days or less when purchased. KREF maintains its cash deposits with major financial institutions. Substantially all such amounts on deposit exceed insured limits.

Commercial Real Estate Loans Held-For-Investment and Allowance for Credit Losses — KREF recognizes its investments in commercial real estate loans based on management's intent, and KREF's ability, to hold those investments through their contractual maturity. Management classifies those loans that management does not intend to sell in the foreseeable future, and KREF is able to hold until maturity, as held-for-investment. Loans that are held-for-investment are carried at their aggregate outstanding principal, net of applicable (i) unamortized origination or acquisition premiums and discounts, (ii) unamortized deferred nonrefundable fees and other direct loan origination costs, and (iii) allowance for credit losses, net of write-offs of uncollectible loans. If a loan is determined to be uncollectible, management writes off the uncollectible portion of the loan balance through a charge to "Allowance for credit losses" and the respective loan balance. KREF applies the interest method to

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

amortize origination or acquisition premiums and discounts and deferred nonrefundable fees or other direct loan origination costs, or on a straight-line basis when it approximates the interest method. Loans for which management elects the fair value option at the time of origination, or acquisition, are carried at fair value on a recurring basis.

KREF recognizes and measures the allowance for credit losses under the Current Expected Credit Loss ("CECL") model, which requires a reporting entity to estimate expected credit losses, not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, and off-balance sheet credit exposures such as unfunded loan commitments. The allowance for credit losses is deducted from the respective loans’ amortized cost basis on KREF's Condensed Consolidated Balance Sheets. The allowance for credit losses attributed to unfunded loan commitments is included in “Other liabilities” on the Condensed Consolidated Balance Sheets (Note 8).

Commencing in the second quarter of 2024, KREF estimated CECL reserves using the Weighted-Average Remaining Maturity, or the WARM method, which has been identified as a loss-rate method for estimating CECL reserves under GAAP. Under the WARM method, KREF references historical loan loss data across a comparable data set and applies such loss rate to each loan over its expected remaining term, taking into consideration expected economic conditions over the relevant timeframe.

To arrive at a CECL reserve using the WARM method, KREF considers various factors including (i) historical loss experience in the commercial real estate lending market, (ii) timing of expected repayments and expected loan future funding, and (iii) KREF’s view of the current and future macroeconomic environment for a reasonable and supportable forecast period. KREF derives a historical loss rate predominately based on a commercial mortgage-backed securities (“CMBS”) database with historical losses from 1998 through 2025 provided by a third party. KREF focuses on the most relevant subset of CMBS data that is determined to be the most comparable to its own portfolio. 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. Therefore, KREF also considers 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.

For collateral dependent loans for which KREF determines foreclosure of the collateral is probable, KREF measures the expected losses based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. For collateral dependent loans for which KREF determines foreclosure is not probable, KREF applies a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan. A loan is determined to be collateral dependent if (i) a borrower or sponsor is experiencing financial difficulty, and (ii) the loan is expected to be substantially repaid through the sale of the underlying collateral. Such determination requires the use of significant judgment and can be based on several factors subject to uncertainty. Considerations used in determination of financial difficulty may include, but are not limited to, whether the borrower's operating cash flow is sufficient to cover the current and future debt service requirements, the borrower’s ability to refinance the loan, market liquidity and other circumstances that can affect the borrower’s ability to satisfy its contractual obligations under the loan agreement.

KREF may adopt other acceptable alternative approaches to estimate the CECL reserve in the future based on factors such as, but not limited to, the type of loan, the underlying collateral and the availability of relevant historical market loan loss data.

Commercial Real Estate Loans, Held-For-Sale — Loans that KREF originates or acquires, which KREF is unable to hold, or management intends to sell or otherwise dispose of, in the foreseeable future are classified as held-for-sale and are carried at the lower of amortized cost or fair market value.

Real Estate Owned — To maximize recovery from a defaulted loan, KREF may assume legal title or physical possession of the underlying collateral through foreclosure or the execution of a deed in lieu of foreclosure. Foreclosed properties are initially recognized at fair value in accordance with Accounting Standards Codification ("ASC") 805 on KREF's Condensed Consolidated Balance Sheets as "Real Estate Owned" when KREF assumes legal title or physical possession. KREF’s cost basis in REO equals the estimated fair value on the acquisition date. The value of acquired REO is allocated based on the relative fair values of assets acquired and liabilities assumed, including, but not limited to, land, building, furniture and fixtures, and intangibles.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

REO assets held for investment, except for land, are depreciated or amortized using the straight-line method over estimated useful lives of up to 40 years for buildings, up to 15 years for land and building improvements, and the remaining lease terms for lease intangibles. Renovations and/or replacements that improve or extend the life of the REO asset are capitalized and depreciated over their estimated useful lives. The cost of ordinary repairs and maintenance are expensed as incurred.

REO assets are classified as held for sale in the period when they meet the criteria under ASC 360. Once a REO is classified as held for sale, depreciation is suspended and the asset is reported at the lower of its carrying value or fair value less cost to sell. The actual sales price of the REO could differ from the estimated fair value. If circumstances arise that were previously considered unlikely and, as a result, KREF decides not to sell the real estate asset previously classified as held for sale, the real estate asset is reclassified as held for investment. Upon reclassification, the real estate asset is measured at the lower of (i) its carrying amount prior to classification as held for sale, adjusted for depreciation expense that would have been recognized had the real estate been classified as held for investment, and (ii) its estimated fair value at the time of reclassification.

REO assets are evaluated for impairment on a quarterly basis. KREF considers the following factors when performing the impairment analysis: (i) significant underperformance relative to anticipated operating results; (ii) significant negative industry and economic outlook or trends; (iii) expected material costs necessary to extend the life or operate the REO asset; and (iv) KREF’s ability to hold and dispose of the REO asset in the ordinary course of business. A REO asset is considered for impairment when the sum of estimated future undiscounted cash flows to be generated by the REO asset over the estimated remaining holding period is less than the carrying value of such REO asset. An impairment charge is recorded when the carrying value of the REO exceeds the fair value. When determining the fair value of a REO asset, KREF makes certain assumptions including, but not limited to, projected operating cash flows, comparable selling prices and projected cash flows from the eventual disposition of the REO asset.

For all REO assets (Note 4), KREF may opportunistically transact as suitable opportunities emerge.

Secured Financing Agreements — KREF's secured financing agreements, including uncommitted repurchase facilities, term lending agreements, warehouse facility, asset specific financings and term loan facility, are treated as floating-rate collateralized financing arrangements carried at their contractual amounts, net of unamortized debt issuance costs (Note 5). Included within KREF's secured financing agreements is KREF's corporate revolving credit agreement ("Revolver"), which is full recourse to certain guarantor wholly-owned subsidiaries of KREF.

Secured Term Loan, Net — KREF records its secured term loan at its contractual amount, net of unamortized original issuance discount and deferred financing costs (Note 7) on its Condensed Consolidated Balance Sheets. Any original issuance discount or deferred financing costs are amortized through the maturity date of the secured term loan as additional non-cash interest expense.

Dividends Payable — KREF records dividends payable on its common stock and preferred stock upon declaration of such dividends. In March 2025, KREF's board of directors declared a dividend of $0.25 per share of common stock to stockholders of record as of March 31, 2025, which was accrued in “Dividends payable” on KREF’s Condensed Consolidated Balance Sheets as of March 31, 2025 and was subsequently paid on April 15, 2025. In January 2025, KREF's board of directors declared a dividend of $0.41 per each issued and outstanding share of the Company’s 6.50% Series A Cumulative Redeemable Preferred Stock, which represents an annual dividend of $1.625 per share. The dividend was paid on March 14, 2025 to KREF’s preferred stockholders of record as of February 28, 2025.

Repurchased Stock — KREF accounts for repurchases of its common stock based on the settlement date and presents repurchased stock in “Repurchased stock” on its Condensed Consolidated Balance Sheets (Note 10). Payments for stock repurchases that are not yet settled as of the reporting date are presented within “Other assets” on the Condensed Consolidated Balance Sheets. Retirement of repurchased stock is recorded as an offset to “Additional paid-in capital” on the Condensed Consolidated Balance Sheets. As of March 31, 2025, all shares repurchased by KREF were retired.

Income Recognition

Interest Income — KREF accrues interest income on loans based on the outstanding principal amount and contractual terms of the loan. Interest income also includes origination fees, direct loan origination costs and related exit fees for loans that KREF originates, but where management did not elect the fair value option, as a yield adjustment using the interest method over the loan term, or on a straight line basis when it approximates the interest method. KREF expenses origination fees and direct loan

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

origination costs for loans acquired, but not originated, by KREF as well as loans for which management elected the fair value option, as incurred.

Revenue from Real Estate Owned Operations — Revenue from REO operations is primarily comprised of rental income, including base rent and reimbursements of property operating expenses. For leases that have fixed and measurable base rent escalations, KREF recognizes base rent on a straight-line basis over the non-cancelable lease terms. The difference between such rental income earned and the cash rent amount is recorded as straight-line rent receivable and presented within "Other assets" on the Condensed Consolidated Balance Sheets. Reimbursement of property operating expenses arises from tenant leases which provide for the recovery of certain operating expenses and real estate taxes of the respective property. This revenue is accrued in the same periods as the expenses are incurred. Rental income is presented within “Revenue from real estate owned operations” in the Condensed Consolidated Statements of Income.

Other Income — KREF recognizes interest income earned on its cash balances and miscellaneous fee income in “Other miscellaneous income” on its Condensed Consolidated Statements of Income.

Gain (Loss) on Sale of Investments — KREF recognizes the excess, or deficiency, of net proceeds received less the net carrying value of investments sold, as gains or losses, respectively.

Expense Recognition

Commercial Real Estate Loans, Held-For-Investment — For each loan in KREF's portfolio, management performs an evaluation, at least quarterly, of credit quality indicators of loans classified as held-for-investment using applicable loan, property, market and sponsor information obtained from borrowers, loan servicers and local market participants. Such indicators may include the net present value of the underlying collateral, property operating cash flows, the sponsor’s financial wherewithal and competency in managing the property, macroeconomic trends, and property submarket—specific economic factors. The evaluation of these credit quality indicators requires significant judgment by management to determine whether failure to collect contractual amounts is probable.

If management deems that it is probable that KREF will be unable to collect all amounts owed according to the contractual terms of a loan, deterioration in credit quality of that loan is indicated. Management evaluates all available facts and circumstances that might impact KREF’s ability to collect outstanding loan balances when determining loan write-offs. These facts and circumstances may vary and may include, but are not limited to, (i) the underlying collateral performance and/or value, (ii) communications with the borrower, (iii) compliance with debt covenants, (iv) events of default by the borrower, or (v) other facts that impact the borrower’s ability to pay the contractual amounts due under the terms of the loan.

If management considers a loan to be uncollectible, management writes off the loan through a charge to "Allowance for credit losses" based on the present value of expected future cash flows discounted at the loan’s contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. Significant judgment is required in determining collectibility and in estimating the resulting credit loss, and actual losses, if any, could materially differ from those estimates.

Loans are placed on nonaccrual status when principal or interest is 90 days or more past due unless the loan is both well secured and in the process of collection, or when repayment of interest and principal is, in management's judgment, in doubt. Interest received on loans placed on nonaccrual status may be accounted for under the cost-recovery method under certain circumstances, whereby interest collected on a loan is a reduction to its amortized cost. Management may return a loan to accrual status when repayment of principal and interest is reasonably assured.

In certain circumstances, KREF may also modify terms of a loan agreement to accommodate a borrower experiencing financial difficulty. Such modifications typically include interest rate reductions, payment extension and modification of loan covenants.

In conjunction with reviewing commercial real estate loans held-for-investment for impairment, KREF evaluates its commercial real estate loans at least once per quarter, assesses the risk factors of each loan, and assigns a risk rating based on a variety of factors, including, without limitation, underlying real estate performance, values of comparable properties, durability and quality of property cash flows, sponsor experience and financial wherewithal, and the existence of a risk-mitigating loan structure. Additional key considerations include debt service coverage ratios, loan structure, real estate and credit market dynamics, and risk of default or principal loss. Based on a five-point scale, KREF's loans are rated "1" through "5," from less

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

risk to greater risk, which ratings are defined as follows: 1 (Very Low Risk); 2 (Low Risk); 3 (Medium Risk); 4 (High Risk/Potential for Loss); and 5 (Impaired/Loss Likely).

Commercial Real Estate Loans, Held-For-Sale — For commercial real estate loans held-for-sale, KREF applies the lower of cost or fair market value, and may be required, from time to time, to record an impairment.

Accrued Interest Receivables — KREF elected not to measure an allowance for credit losses for accrued interest receivables. KREF generally writes off an accrued interest receivable balance when interest is 90 days or more past due unless the loan is both well secured and in the process of collection. Write-offs of accrued interest receivable are recognized as "Provision for (reversal of) credit losses, net" in the Condensed Consolidated Statements of Income.

Tenant Receivables — KREF periodically reviews its REO tenant receivables for collectability, taking into consideration changes in factors such as the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area where the property is located. Tenant receivables, including receivables arising from the straight-lining of rents, are written-off directly when management deems that the collectability of substantially all future lease payments from a specified lease is not probable, at which point, KREF will begin recognizing revenue on a cash basis, based on actual amounts received (Note 4). Any receivables that are deemed to be uncollectible are recognized as a reduction to “Revenue from real estate owned operations” in the Condensed Consolidated Statements of Income.

Interest Expense — KREF expenses contractual interest due in accordance with KREF's financing agreements as incurred.

Deferred Debt Issuance Costs — KREF capitalizes and amortizes deferred financing costs incurred in connection with financing arrangements over their respective expected term using the interest method, or on a straight line basis when it approximates the interest method. KREF presents such expensed amounts, as well as deferred amounts written off, as additional interest expense in its Condensed Consolidated Statements of Income.

General and Administrative Expenses — KREF expenses general and administrative costs, including legal and audit fees, insurance premiums, and other costs as incurred.

Management and Incentive Compensation to Affiliate — KREF expenses management fees and incentive compensation earned by the Manager on a quarterly basis in accordance with the Management Agreement (Note 14).

Income Taxes — Certain activities of KREF are conducted through joint ventures that are formed as limited liability companies, taxed as partnerships, and consolidated by KREF. Some of these joint ventures are subject to state and local income taxes, based on the tax jurisdictions in which they operate. In addition, certain activities of KREF are conducted through taxable REIT subsidiaries consolidated by KREF. Taxable REIT subsidiaries are subject to federal, state and local income taxes (Note 16).

As of March 31, 2025 and December 31, 2024, KREF did not have any material deferred tax assets or liabilities arising from future tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in accordance with GAAP and their respective tax bases.

KREF recognizes tax benefits for uncertain tax positions only if it is more likely than not that the position is sustainable based on its technical merits. Interest and penalties on uncertain tax positions are included as a component of the provision for income taxes in KREF's Condensed Consolidated Statements of Income. As of March 31, 2025, KREF did not have any material uncertain tax positions.

Stock-Based Compensation

KREF's stock-based compensation consists of awards issued to employees of the Manager or its affiliates that vest over the life of the awards, as well as restricted stock units issued to certain members of KREF's board of directors. KREF recognizes the compensation cost of stock-based awards to its directors and employees of the Manager or its affiliates on a straight-line basis over the awards’ term at their grant date fair value. Certain stock-based awards are entitled to nonforfeitable dividends, at the same rate as those declared on the common stock, during the vesting period. Such nonforfeitable dividends are deducted from "Retained earnings (Accumulated deficit)" in the condensed consolidated financial statements. KREF accounts for forfeitures as they occur. Refer to Note 11 for additional information.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Earnings per Share

KREF calculates basic earnings per share ("EPS") using the two-class method, which defines unvested share-based payment awards that contain nonforfeitable rights to dividends as participating securities. The two-class method is an allocation formula that determines earnings per share for each share of common stock and participating securities according to dividends declared and participation rights in undistributed earnings. Under this method, all earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights. Basic EPS, is calculated by dividing net income (loss) attributable to common stockholders by the weighted average number of common stock outstanding for the period.

KREF presents diluted EPS under the more dilutive of the treasury stock and if-converted methods or the two-class method. Under the treasury stock and if-converted methods, the denominator includes weighted average common stock outstanding plus the incremental dilutive shares issuable from restricted stock units and an assumed conversion of convertible instruments. The numerator includes any changes in income (loss) attributable to common stockholders that would result from the assumed conversion of these potential shares of common stock. Refer to Note 12 for additional discussion of earnings per share.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires a public business entity to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. The guidance is effective for KREF in its 2027 annual reporting. The guidance is applied prospectively and may be applied retrospectively. KREF is evaluating the impact of ASU 2024-03.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 3. Commercial Real Estate Loans

The following table summarizes KREF's investments in commercial real estate loans as of March 31, 2025 and December 31, 2024:


								Weighted Average(C)
Loan Type	Outstanding Principal		Amortized Cost(A)		Carrying Value(B)		Loan Count	Floating Rate Loan %		Coupon(D)		Life (Years)(E)
March 31, 2025
Loans held-for-investment(F)
Senior loans	$	6,122,636	$	6,108,987	$	5,966,650	54	98.6	%	7.5	%	2.0





December 31, 2024
Loans held-for-investment(F)
Senior loans	$	5,900,163	$	5,888,622	$	5,771,519	51	98.6	%	7.5	%	2.0

(A) Amortized cost represents the outstanding loan principal, net of applicable unamortized discounts, loan origination fees, cost recovery interest and write-offs on uncollectible loan balances.

(B) Carrying value represents the loan amortized cost, net of applicable allowance for credit losses.

(D) Weighted average coupon assumes the greater of applicable index rate, or the applicable contractual rate floor. Excludes loans on nonaccrual status.

(E) The weighted average life assumes all extension options are exercised by the borrowers.

(F) Excludes fully written off loans.

Activity — For the three months ended March 31, 2025, the loan portfolio activity was as follows:


	Amortized Cost		Allowance for Credit Losses		Carrying Value








Balance at December 31, 2024	$	5,888,622	$	(117,103)	$	5,771,519
Originations and future fundings, net(A)	400,204		—		400,204
Proceeds from loan repayments	(183,595)		—		(183,595)
Accretion of loan discount and other amortization, net	3,354		—		3,354
Payment-in-kind interest	402		—		402
(Provision for) Reversal of credit losses	—		(25,234)		(25,234)



Balance at March 31, 2025	$	6,108,987	$	(142,337)	$	5,966,650

(A) Net of applicable premiums, discounts and deferred loan origination costs. Includes fundings on previously originated loans.

As of March 31, 2025 and December 31, 2024, there were $9.4 million and $7.3 million, respectively, of unamortized origination discounts and deferred fees included in "Commercial real estate loans, held-for-investment, net" on the Condensed Consolidated Balance Sheets.

KREF may enter into loan modifications that include, among other changes, incremental capital contributions or partial repayments from certain borrowers, repurposing of reserves, and a temporary partial deferral of coupon as payment-in-kind interest (“PIK Interest”), which is capitalized, compounded, and added to the outstanding principal balance of the respective loans.

In June 2024, KREF modified a risk-rated 5 mezzanine office loan located in Boston, MA, with an outstanding principal balance of $37.5 million. The terms of the modification included, among others, a restructure of the mezzanine loan into (i) a $12.5 million senior mezzanine note and (ii) a $25.0 million junior mezzanine note which is subordinate to a new $10.0 million sponsor interest. 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, KREF modified a risk-rated 5 senior life science loan located in San Carlos, CA, with an outstanding principal balance of $103.2 million. The terms of the modification included a $13.1 million principal repayment, and a restructure of the $90.1 million senior loan (after the $13.1 million repayment) into (i) a $89.1 million committed senior mortgage loan (with $34.9 million in unfunded commitment), and (ii) a $35.9 million subordinated note which is subordinate to a new $20.0 million sponsor interest. The restructured senior loan earns a coupon rate of S+1.00% and has a new term of three years. The $35.9 million subordinated note was deemed uncollectible and written off in December 2024. The loan

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

modification was accounted for as a new loan for GAAP purposes. The restructured senior loan with an outstanding principal balance of $57.0 million was risk-rated 3 as of March 31, 2025.

Loan Risk Ratings — KREF evaluates its commercial real estate loan portfolio at least once per quarter. In conjunction with its commercial real estate loan portfolio review, KREF assesses the risk factors of each loan and assigns a risk rating based on a variety of factors. Loans are rated “1” (Very Low Risk) through “5” (Impaired/Loss Likely), which ratings are defined in Note 2.

The following tables summarize the carrying value of the loan portfolio based on KREF's internal risk ratings:


	March 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	283,206		283,762		5		—	—		—		—
3	47	5,164,289		5,173,397		85		47	5,393,333		5,400,698		92
4	2	273,692		273,692		4		2	193,687		193,727		3
5	3	387,800		391,785		6		2	301,602		305,738		5
Total loan receivable	54	$	6,108,987	$	6,122,636	100	%	51	$	5,888,622	$	5,900,163	100	%
Allowance for credit losses		(142,337)							(117,103)
Loan receivable, net		$	5,966,650						$	5,771,519

* Numbers presented may not foot due to rounding.

(A) Excludes fully written off loans.

As of March 31, 2025, the average risk rating of KREF's portfolio was 3.1, weighted by outstanding loan principal, consistent with that as of December 31, 2024.

Loan Vintage — The following tables present the amortized cost of the loan portfolio by KREF's internal risk rating and year of origination. The risk ratings are updated as of March 31, 2025 and December 31, 2024 in the corresponding table.


March 31, 2025
				Amortized Cost by Year of Origination(A)
Risk Rating	Number of Loans(B)	Outstanding Principal(B)		2025		2024		2023		2022		2021		Prior		Total
Commercial Real Estate Loans
1	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2	2	283,762		—		—		—		—		283,206		—		283,206
3	47	5,173,397		370,826		81,452		205,583		1,605,875		2,493,692		406,861		5,164,289
4	2	273,692		—		—		—		—		273,692		—		273,692
5	3	391,785		—		—		—		197,688		—		190,112		387,800
	54	$	6,122,636	$	370,826	$	81,452	$	205,583	$	1,803,563	$	3,050,590	$	596,973	$	6,108,987

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)


December 31, 2024
				Amortized Cost by Year of Origination(A)
Risk Rating	Number of Loans(B)	Outstanding Principal(B)		2024		2023		2022		2021		2020		Prior		Total
Commercial Real Estate Loans
1	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
2	—	—		—		—		—		—		—		—		—
3	47	5,400,698		85,151		205,586		1,600,399		3,007,464		150,638		344,095		5,393,333
4	2	193,727		—		—		84,425		109,262		—		—		193,687
5	2	305,738		—		—		111,490		—		—		190,112		301,602
	51	$	5,900,163	$	85,151	$	205,586	$	1,796,314	$	3,116,726	$	150,638	$	534,207	$	5,888,622
Year-to-date gross write-offs charged				$	—	$	—	$	35,902	$	136,037	$	1,832	$	—	$	173,771
Year-to-date gross write-offs recovered				$	—	$	—	$	—	$	—	$	—	$	225	$	225

(A) Represents the date a loan was originated or acquired. Origination dates are subsequently updated to reflect material loan modifications.

(B) Excludes fully written off loans.

Allowance for Credit Losses — The following tables present the changes to the allowance for credit losses for the three months ended March 31, 2025 and 2024, respectively:


	Commercial Real Estate Loans		Unfunded Loan Commitments		Total



Balance at December 31, 2024	$	117,103	$	2,478	$	119,581
Provision for (reversal of) credit losses, net	25,234		(371)		24,863


Balance at March 31, 2025	$	142,337	$	2,107	$	144,444


	Commercial Real Estate Loans		Unfunded Loan Commitments		Total



Balance at December 31, 2023	$	210,470	$	2,052	$	212,522
Provision for (reversal of) credit losses, net	33,164		102		33,266


Balance at March 31, 2024	$	243,634	$	2,154	$	245,788

As of March 31, 2025, the allowance for credit losses was $144.4 million. The CECL provision of $24.9 million for the three months ended March 31, 2025 was due primarily to additional reserves for risk-rated 5 and also risk-rated 4 loans in the multifamily and life science sectors.

KREF had a risk-rated 5 senior office loan located in Minneapolis, MN, originated in November 2017. The property is located in a challenged leasing market. As of March 31, 2025, the loan had an outstanding principal balance of $194.4 million, an unfunded commitment of $5.0 million and an amortized cost of $190.1 million. The loan’s maturity is July 2025. Since June 2023, the loan has been on nonaccrual status. During the three months ended March 31, 2025, KREF recognized $2.0 million of interest income on this loan.

KREF had a risk-rated 5 senior multifamily loan located in West Hollywood, CA, originated in January 2022. As of March 31, 2025, the loan had an outstanding principal balance of $112.2 million and an amortized cost of $112.5 million. The loan's maximum maturity is February 2027, assuming all extension options are exercised. Since September 2024, this loan has been on nonaccrual status. During the three months ended March 31, 2025, KREF recognized $1.8 million of interest income on this loan.

KREF had a risk-rated 5 senior multifamily loan located in Raleigh, NC, originated in April 2022. As of March 31, 2025, the loan had an outstanding principal balance and amortized cost of $85.2 million with an unfunded commitment of $6.5 million. The loan's maximum maturity is May 2027, assuming all extension options are exercised. In March 2025, this loan was placed on nonaccrual status. During the three months ended March 31, 2025, KREF recognized $1.2 million of interest income on this loan.

The 5-rated loans were determined to be collateral dependent as of March 31, 2025. KREF estimated expected losses based on the loan’s collateral fair value, which was determined by applying a capitalization rate between 5.3% and 9.8%, a discount rate between 9.5% and 11.0%, and an average price per square foot ("PSF") of $1,375.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

As of March 31, 2024, the allowance for credit losses was $245.8 million. The CECL provision of $33.3 million for the three months ended March 31, 2024 was primarily due to additional reserves on risk-rated 5 senior loans predominantly in the office sector, as well as macroeconomic conditions.

Concentration of Credit Risk — The following tables present the geographies and property types of collateral underlying KREF's commercial real estate loans as a percentage of the loans' principal amounts:


	March 31, 2025		December 31, 2024			March 31, 2025		December 31, 2024
Geography(A)					Collateral Property Type(A)
California	17.9	%	16.9	%	Multifamily	48.4	%	46.7	%
Massachusetts	13.5		13.1		Office	18.4		19.2
Texas	13.4		15.1		Industrial	12.9		13.4
Florida	9.6		8.7		Life Science	11.5		11.7
Virginia	8.1		8.6		Hospitality	4.2		4.2
North Carolina	5.0		5.3		Self-Storage	2.4		2.5
Washington D.C.	4.5		4.6		Student Housing	1.8		1.9
New York	4.3		4.5		Mixed Use	0.4		0.5
Pennsylvania	4.2		4.5		Total	100.0	%	100.0	%
Washington	3.9		4.0
Minnesota	3.2		3.3
Nevada	2.5		2.6
Georgia	2.4		2.7
Arizona	1.8		0.5
Illinois	1.5		1.5
Tennessee	1.2		1.1
Colorado	1.1		1.2
Alabama	0.9		1.1
Other U.S.	1.0		0.7
Total	100.0	%	100.0	%

(A) Excludes fully written off loans

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 4. Real Estate Owned

Real Estate Owned, Held For Investment

Portland, OR Retail / Redevelopment — In December 2021, KREF took title to a Portland retail property and accounted for the property on a consolidated basis (Note 9). The transaction was accounted for as an asset acquisition under ASC 805. Accordingly, KREF recorded the property and its net assets on the Condensed Consolidated Balance Sheets based on the estimated fair value of acquired assets and assumed liabilities. KREF contributed a portion of the REO asset to a joint venture (the "REO JV") with a third party local developer (“JV Partner”), whereby KREF 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 Condensed Consolidated Balance Sheets.

Mountain View, CA Office — In June 2024, KREF and a KKR affiliate took title to a Mountain View office property through a deed-in-lieu of foreclosure ("DIL") and KREF accounted for the property on a consolidated basis (Note 9). KREF and the KKR affiliate's interest in the property was 68.9% and 31.1%, respectively. The transaction was accounted for as an asset acquisition under ASC 805. Accordingly, KREF recorded the property and its net assets on the Condensed Consolidated Balance Sheets based on the estimated fair value of acquired assets and assumed liabilities. The KKR affiliate's interest in the property was presented within "Noncontrolling interests in equity of consolidated joint ventures" on the Condensed Consolidated Balance Sheets.

Real Estate Owned, Held For Sale

Philadelphia, PA Office / Garage — In December 2023, KREF took title to a Philadelphia office portfolio through a DIL. The transaction was accounted for as an asset acquisition under ASC 805. Accordingly, KREF recorded the portfolio and its net assets on the Condensed Consolidated Balance Sheets based on the estimated fair value of acquired assets and assumed liabilities.

In June 2024, KREF sold a portion of the portfolio and provided financing to the buyer through a senior loan. The senior loan had an outstanding principal balance of $24.4 million ($77.7 million total commitment) as of March 31, 2025 and earned a coupon rate of S+4.0%, with a maximum maturity of July 2029, assuming all extension options are exercised. The senior loan is presented within “Commercial real estate loans, held-for-investment, net” on the Condensed Consolidated Balance Sheets.

As of March 31, 2025, the remaining REO assets and liabilities met the criteria to be classified as held for sale under ASC 360. As such, depreciation and amortization on the REO and related lease intangibles were suspended.

Leases — KREF assumed certain legacy lease arrangements upon the acquisition of the REO assets and entered into lease arrangements during the hold period. These arrangements entitle KREF to receive contractual rent payments during the lease periods and tenant reimbursements for certain property operating expenses, including common area costs, insurance, utilities and real estate taxes. KREF elects the practical expedient to not separate the lease and non-lease components of the rent payments and accounts for these lease arrangements as operating leases.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

The following table presents the REO assets and liabilities included on KREF's Condensed Consolidated Balance Sheets:


	March 31, 2025		December 31, 2024
Real estate owned, held for investment
Assets
Real estate owned - land	$	192,652	$	192,652
Real estate owned - land improvements	10,817		9,586
Real estate owned - buildings	58,642		58,642
Real estate owned - building improvements	2,633		2,582
Real estate owned	264,744		263,462
Less: Accumulated depreciation	(1,473)		(983)
Real estate owned, net	263,271		262,479
Cash(A)	850		747
In-place lease intangibles(B)	117		134
Tenant receivables(B)	150		188
Other assets(B)	3,575		2,329
Total	$	267,963	$	265,877
Liabilities
Unfavorable lease intangibles(C)	$	639	$	730
Other liabilities(C)	4,438		3,568
Total	$	5,077	$	4,298

Real estate owned, held for sale
Assets
Real estate owned, held for sale	$	45,127	$	45,127
In-place lease intangibles	7,887		7,887
Favorable lease intangibles	2,663		2,663
Tenant receivables	509		—
Other assets	688		877
Total	$	56,874	$	56,554
Liabilities
Unfavorable lease intangibles	$	378	$	378
Other liabilities	773		950
Total	$	1,151	$	1,328

(A) Included in “Cash and cash equivalents” on the Condensed Consolidated Balance Sheets.

(B) Included in “Other assets” on the Condensed Consolidated Balance Sheets.

The following table presents the REO operations and related income (loss) included in KREF’s Condensed Consolidated Statements of Income:


	Three Months Ended March 31,
		2025		2024
Rental income		$	1,690	$	4,370
Other operating income(A)		1,199		621
Revenue from REO operations		2,889		4,991
Operating expense		(4,984)		(5,549)
Depreciation expense		(490)		—
Expenses from REO operations		(5,474)		(5,549)

Total		$	(2,585)	$	(558)

(A) Includes $13 thousand of "Other miscellaneous income" on the Condensed Consolidated Statement of Income during the three months ended
March 31, 2024.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

The following table presents the amortization of REO, held for investment lease intangibles included in KREF’s Condensed Consolidated Statements of Income:


		Three Months Ended March 31,
	Income Statement Location		2025		2024
Asset
In-place lease intangibles	Expenses from real estate owned operations		$	17	$	17
Liability
Unfavorable lease intangibles	Revenue from real estate owned operations		91		91

The following table presents the amortization of lease intangibles related to REO, held for investment for each of the succeeding fiscal years:


Year	In-place Lease Intangible Assets	Unfavorable Lease Intangible Liabilities
2025	50	274
2026	67	365

Future Minimum Lease Payments — The following table presents the future minimum lease payments to be collected under non-cancelable operating leases, excluding tenant reimbursements of expenses:


Year	Contractual Lease Payments
2025	$	5,224
2026	5,843
2027	4,880
2028	3,475
2029	2,457
Thereafter	5,010

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 5. Debt Obligations

The following table summarizes KREF's secured financing arrangements in place as of March 31, 2025 and December 31, 2024:


	March 31, 2025														December 31, 2024
	Facility										Collateral				Facility
	Current Maturity	Final Stated Maturity(A)	Maximum Facility Size		Outstanding Principal		Carrying Value(B)		Weighted Average Funding Cost(C)		Outstanding Principal		Carrying Value		Carrying Value(B)
Master Repurchase Agreements(D)
Wells Fargo	Sep 2027	Sep 2029	$	1,000,000	$	760,823	$	759,587	6.0	%	$	1,093,651	$	1,063,930	$	650,621
Morgan Stanley	Mar 2026	Mar 2026	600,000		270,397		268,996		6.6		398,197		397,405		276,875
Goldman Sachs	Dec 2025	Dec 2027	400,000		108,973		108,218		7.0		204,497		203,353		107,973
Term Loan Facility
KREF Lending VII(E)	Match-term	Match-term	1,000,000		613,082		612,888		6.4		792,538		783,027		553,834
Term Lending Agreements
KREF Lending IX	Match-term	Match-term	460,877		437,983		437,428		6.2		600,156		596,989		437,002
KREF Lending XII	Match-term	Match-term	350,000		99,071		99,042		5.7		149,396		147,375		99,233
KREF Lending XV	Match-term	Match-term	300,000		121,616		120,680		5.8		152,020		148,948		—
BMO Facility	Match-term	Match-term	300,000		74,899		74,809		6.3		94,953		94,413		74,727
KREF Lending V	Jun 2025	Jun 2026	100,720		100,720		100,679		7.0		220,203		219,384		177,408
Warehouse Facility
HSBC Facility	Mar 2026	Mar 2026	500,000		—		(9)		—		—		—		(12)
Asset Specific Financing
KREF Lending XIII	Oct 2026	Oct 2027	265,625		195,198		194,025		7.6		229,644		225,588		193,285
KREF Lending XIV	Oct 2026	Oct 2027	125,000		58,519		57,846		7.4		73,148		71,595		47,761
KREF Lending XI	Sep 2025	Sep 2026	100,000		100,000		99,979		7.1		125,000		124,023		99,967
Revolving Credit Agreement
Revolver(F)	Mar 2030	Mar 2030	660,000		90,000		90,000		6.5		n.a.		n.a.		80,000
Total / Weighted Average			$	6,162,222	$	3,031,281	$	3,024,168	6.4	%					$	2,798,674

(A) Final Stated Maturity is determined based on the maximum maturity of the underlying financing agreements or corresponding loans, assuming all extension options in KREF's discretion are exercised. The weighted average life of the match-term facilities was 1.0 and 2.4 years, based on the current and final stated maturities, respectively, of the average weighted outstanding principal of collateral loans as of March 31, 2025.

(B) Net of $7.1 million and $6.2 million unamortized deferred financing costs as of March 31, 2025 and December 31, 2024, respectively.

(C) Including deferred financing costs and applicable index in effect as of March 31, 2025. Average weighted by the outstanding principal of the facility.

(D) As of March 31, 2025 and December 31, 2024, the percentage of the outstanding principal of the collateral sold and not borrowed under these repurchase agreements, or average "haircut" weighted by outstanding principal of collateral, was 32.8% and 34.9%, respectively (or 30.5% and 32.1%, respectively, if KREF had borrowed the maximum amount approved by its repurchase agreement counterparties as of such dates).

(E) The term loan facility provides asset-based financing on a non-mark-to-market basis with match-term up to five years, with an additional two-year extension available to KREF.

(F) In March 2025, borrowing capacity under the Revolver increased from $610.0 million to $660.0 million As of March 31, 2025, the revolver carrying value excluded $6.5 million unamortized debt issuance costs presented within "Other assets" on KREF's Condensed Consolidated Balance Sheets.

As of March 31, 2025 and December 31, 2024, KREF had outstanding master repurchase agreements, term lending agreements and warehouse facility where the amount at risk with any individual counterparty, or group of related counterparties, exceeded 10.0% of KREF’s stockholders' equity. The amount at risk under these arrangements is the net counterparty exposure, defined as the excess of the carrying amount (or market value, if higher than the carrying amount, for repurchase agreements) of the assets sold under agreement to repurchase, including accrued interest receivable plus any cash or other assets on deposit to secure the repurchase obligation, over the amount of the repurchase liability, adjusted for accrued interest payable.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

The following table summarizes certain characteristics of KREF's repurchase agreements where the amount at risk with any individual counterparty, or group of related counterparties, exceeded 10.0% of KREF’s stockholders' equity as of March 31, 2025 and December 31, 2024:


	Outstanding Principal		Net Counterparty Exposure		Percent of Stockholders' Equity		Weighted Average Life (Years)(A)
March 31, 2025
Morgan Stanley	$	731,249	$	317,558	24.2	%	1.4
Wells Fargo	760,823		309,572		23.6		2.4

Total / Weighted Average	$	1,492,072	$	627,130	47.8	%	1.9
December 31, 2024
Morgan Stanley	$	755,455	$	316,833	23.5	%	1.6
Wells Fargo	651,922		282,980		21.0		2.3

Total / Weighted Average	$	1,407,377	$	599,813	44.5	%	1.9

(A) Average weighted by the outstanding principal of borrowings under the secured financing agreement.

Debt obligations included in the tables above are obligations of KREF’s consolidated subsidiaries, which own the related collateral, and such collateral is generally not available to other creditors of KREF.

While KREF is generally not required to post margin under certain repurchase agreement terms for changes in general capital market conditions such as changes in credit spreads or interest rates, KREF may be required to post margin for changes in conditions to specific loans that serve as collateral for those repurchase agreements. Such changes may include declines in the appraised value of property that secures a loan or a negative change in the borrower's ability or willingness to repay a loan. To the extent that KREF is required to post margin, KREF's liquidity could be significantly impacted. Both KREF and its lenders work cooperatively to monitor the performance of the properties and operations related to KREF's loan investments to mitigate investment-specific credit risks. Additionally, KREF incorporates terms in the loans it originates to further mitigate risks related to loan nonperformance.

Activity — For the three months ended March 31, 2025, the activity related to the carrying value of KREF’s secured financing agreements were as follows:


	Secured Financing Agreements, Net





Balance as of December 31, 2024	$	2,798,674
Principal borrowings	603,390
Principal repayments	(377,004)
Deferred debt issuance costs	(2,847)
Amortization of deferred debt issuance costs	1,955
Balance as of March 31, 2025	$	3,024,168

Maturities — KREF’s secured financing arrangements in place as of March 31, 2025 had contractual maturities as follows:


Year	Nonrecourse(A)		Recourse(A)(B)		Total
2025	$	126,497	$	42,166	$	168,663
2026	717,649		139,217		856,866
2027	1,169,727		244,077		1,413,804
2028	199,888		10,194		210,082
2029	82,687		27,563		110,250
2030	151,212		120,404		271,616
	$	2,447,660	$	583,621	$	3,031,281

(A) Represents the earlier of (i) the maximum maturity of the underlying loans pledged as collateral or (ii) the maximum maturity of the respective financing agreements.

(B) Except for the Revolver, which is full recourse, amounts borrowed are subject to a maximum 25.0% recourse limit. The Revolver matures in March 2030.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Covenants — KREF is required to comply with customary loan covenants and event of default provisions related to its secured financing agreements and Revolver, including, but not limited to, negative covenants relating to restrictions on operations with respect to KREF’s status as a REIT, and financial covenants. Such financial covenants include 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 cash proceeds of any equity issuances made and any capital contributions received by KREF and certain subsidiaries, or up to approximately $1.3 billion depending upon the facility); a total indebtedness covenant (83.3% of KREF's 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).

As of March 31, 2025 and December 31, 2024, KREF was in compliance with its financial debt covenants.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 6. Collateralized Loan Obligations

In August 2021, KREF financed a pool of loan participations from its existing loan portfolio through a managed CLO ("KREF 2021-FL2"). In February 2022, KREF financed a pool of loan participations from its existing multifamily loan portfolio through a managed CLO ("KREF 2022-FL3"). The CLOs provide KREF with match-term financing on a non-mark-to-market and non-recourse basis.

The following tables outline CLO collateral assets and respective borrowing as of March 31, 2025 and December 31, 2024:


	March 31, 2025													December 31, 2024
	Facility									Collateral				Facility
	Wtd. Avg. Term(A)	Maximum Facility Size		Outstanding Principal		Carrying Value		Wtd. Avg. Funding Cost(B)		Outstanding Principal		Carrying Value		Carrying Value
KREF 2021-FL2	February 2039	$	796,742	$	796,742	$	796,742	5.8	%	$	1,001,492	$	986,118	$	930,070
KREF 2022-FL3	February 2039	784,361		784,361		784,262		6.1		936,861		932,999		836,034
Total		$	1,581,103	$	1,581,103	$	1,581,004	5.9	%	$	1,938,353	$	1,919,117	$	1,766,104

(A) The term of the CLO notes represents the rated final distribution date. Repayments of CLO notes are dependent on timing of underlying collateral loan asset repayments post reinvestment period.

(B) Including deferred financing costs and applicable index in effect as of March 31, 2025. Average weighted by the outstanding principal of the facility.

The following table presents the CLO assets and liabilities included in KREF’s Condensed Consolidated Balance Sheets:


Assets	March 31, 2025		December 31, 2024
Cash	$	—	$	—
Commercial real estate loans, held-for-investment	1,937,380		2,123,347
Less: Allowance for credit losses	(18,263)		(20,005)
Commercial real estate loans, held-for-investment, net	1,919,117		2,103,342

Accrued interest receivable	9,284		9,785
Other assets	155		155
Total	$	1,928,556	$	2,113,282
Liabilities
Collateralized loan obligations	$	1,581,103	$	1,766,231
Deferred financing costs	(99)		(127)
Collateralized loan obligations, net	1,581,004		1,766,104
Accrued interest payable	3,644		4,097

Total	$	1,584,648	$	1,770,201

The following table presents the components of net interest income of CLOs included in KREF’s Condensed Consolidated Statements of Income:


	Three Months Ended March 31,
		2025		2024
Interest income		$	36,971	$	48,860
Interest expense		25,058		34,365
Net interest income		$	11,913	$	14,495

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 7. Secured Term Loan, Net

In March 2025, KREF refinanced the existing secured term loan of $339.5 million with a new $550.0 million secured term loan due March 2032. The transaction was accounted for as a partial debt extinguishment under GAAP. The secured term loan is partially amortizing, with an amount equal to 1.0% per annum of the principal balance due in quarterly installments starting June 30, 2025. The secured term loan contains restrictions relating to liens, asset sales, indebtedness, investments and transactions with affiliates, and is secured by KREF level guarantees and does not include asset-based collateral.

Upon the completion of the secured term loan transaction, KREF recorded a $0.7 million issuance discount and $8.4 million in issuance costs. The loan issuance discount and issuance costs were capitalized and amortized into interest expense over the term of the secured term loan. Inclusive of the discount and issuance cost amortization, KREF’s total cost of the secured term loan was S+3.6%, subject to the applicable SOFR floor, as of March 31, 2025.

The following table summarizes KREF’s secured term loan as of March 31, 2025 and December 31, 2024, respectively:


	March 31, 2025		December 31, 2024
Principal	$	550,000	$	339,500
Deferred financing costs	(11,019)		(2,988)
Unamortized discount	(3,058)		(2,659)
Carrying value	$	535,923	$	333,853

Covenants — KREF is required to comply with customary loan covenants and event of default provisions related to its secured term loan that include, but are not limited to, negative covenants relating to restrictions on operations with respect to KREF’s status as a REIT, and financial covenants. Such financial covenants include a minimum consolidated tangible net worth of $650.0 million and a maximum Total Debt to Total Assets Ratio, as defined in the secured term loan agreements, of 83.3%. KREF was in compliance with such covenants as of March 31, 2025 and December 31, 2024.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 8. Other Assets and Liabilities

The following tables present the components of KREF's other assets and other liabilities as of March 31, 2025 and December 31, 2024, respectively:


	March 31, 2025		December 31, 2024
Other assets
Restricted cash	$	933	$	1,614
Deferred financing cost, Revolver	6,516		2,811
Assets related to real estate owned, held for investment	3,842		2,651
Other	4,566		1,777
Total	$	15,857	$	8,853
Other liabilities
Liabilities related to real estate owned, held for investment	$	5,077	$	4,298
Allowance for credit losses on unfunded commitments	2,107		2,478
Other	3,605		1,748
Total	$	10,789	$	8,524

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 9. Consolidation and Equity Method Investments

Collateralized Loan Obligations — KREF consolidates CLOs when it determines that the CLO issuers, wholly-owned subsidiaries of KREF, are VIEs and that KREF is the primary beneficiary of such VIEs (Note 6). Management considers KREF to be the primary beneficiary of the CLO issuers as KREF has the ability to control the most significant activities of the CLO issuers, the obligation to absorb losses, and the right to receive benefits of the CLOs through the subordinate interests the CLO issuers own.

Consolidated Real Estate Owned Joint Ventures

Portland, OR Retail / Redevelopment — In December 2021, KREF took title to a Portland retail property and contributed a portion of the REO asset to a REO JV with a JV Partner, where KREF had a 90% interest and the JV Partner had a 10% interest. Management determined the REO JV to be a VIE as the REO JV has insufficient equity-at-risk and concluded that KREF is the primary beneficiary of the REO JV as KREF holds decision-making power over the activities that most significantly impact the economic performance and has the obligation to absorb losses, or the right to receive benefits, that could be potentially significant to the REO JV. As of March 31, 2025, KREF had a priority of distributions up to $80.9 million before the JV Partner can participate in the economics of the REO JV.

Mountain View, CA Office — In June 2024, KREF and a KKR affiliate took title to a Mountain View office property. The property was held in a joint venture where KREF and the KKR affiliate held a 68.9% and 31.1% interest, respectively, and shared decision-making. Management determined the joint venture to be a VIE as the joint venture was established with non-substantive voting rights and concluded that KREF is the primary beneficiary of the joint venture as KREF holds decision-making power over the activities that most significantly impact the economic performance and has the obligation to absorb losses, or the right to receive benefits, that could be potentially significant to the joint venture.

Equity Method Investment — Real Estate Asset

Seattle, WA Life Science — In June 2024, KREF and a KKR affiliate, took title to a Seattle life science property through a deed-in-lieu of foreclosure under a Tenant-in-Common ("TIC") agreement. Under the TIC agreement, KREF and the KKR affiliate held an economic interest of 74.6% and 25.4%, respectively, and shared decision-making. Under ASC 970-810, KREF accounted for the TIC agreement as an undivided interest in the property and recorded an equity method investment based on KREF’s share of the estimated fair value of the property’s net assets.

Equity Method Investment — CMBS B-Pieces

As of March 31, 2025, KREF held a 3.5% interest in RECOP I, an unconsolidated VIE of which KREF is not the primary beneficiary. The aggregator vehicle in which KREF invests is controlled and advised by affiliates of the Manager. RECOP I primarily acquired junior tranches of CMBS newly issued by third parties. KREF will not pay any fees to RECOP I, but KREF bears its pro rata share of RECOP I's expenses. KREF reported its share of the net asset value of RECOP I in its Condensed Consolidated Balance Sheets, presented as “Equity method investment, CMBS B-Pieces” and its share of net income, presented as “Income (loss) from equity method investment” in the Condensed Consolidated Statements of Income.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 10. Equity

Authorized Capital — On October 2, 2014, KREF's board of directors authorized KREF to issue up to 350,000,000 shares of stock, at $0.01 par value per share, consisting of 300,000,000 shares of common stock and 50,000,000 shares of preferred stock, subject to certain restrictions on transfer and ownership of shares. Restrictions placed on the transfer and ownership of shares relate to KREF's REIT qualification requirements.

Common Stock — As of March 31, 2025, there were 67,824,496 common shares issued and outstanding, which included 1,214,534 net shares of common stock issued in connection with vested restricted stock units.

Share Repurchase Program — Under KREF's current share repurchase program, which has no expiration date, KREF may repurchase up to an aggregate of $100.0 million of its 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 the end of the most recent quarterly period for which financial statements are available), and the remaining $50.0 million may be used for repurchases in the open market, pursuant to pre-set trading plans meeting the requirements of Rule 10b5-1 under the Exchange Act, in privately negotiated transactions or otherwise. The timing, manner, price and amount of any common stock repurchases will be determined by KREF in its discretion and will depend on a variety of factors, including legal requirements, price, liquidity and economic considerations, and market conditions. The program does not require KREF to repurchase any specific number of shares of common stock. The program does not have an expiration date and may be suspended, modified or discontinued at any time.

During the three months ended March 31, 2025, KREF repurchased and retired 889,100 shares of its common stock under the repurchase program at an average price per share of $11.03 for a total of $9.8 million. As of March 31, 2025, KREF had $80.2 million of remaining capacity to repurchase shares under the program.

At the Market Stock Offering Program — In February 2019, KREF entered into an equity distribution agreement with certain sales agents, pursuant to which KREF may sell, from time to time, up to an aggregate sales price of $100.0 million of its common stock pursuant to a continuous offering program (the “ATM”). Sales of KREF’s 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 of 1933, as amended. The timing and amount of actual sales will depend on a variety of factors including market conditions, the trading price of KREF’s common stock, KREF’s capital needs, and KREF’s determination of the appropriate sources of funding to meet such needs.

During the three months ended March 31, 2025, KREF did not issue or sell any shares of common stock under the ATM. As of March 31, 2025, $93.2 million remained available for issuance under the ATM.

6.50% Series A Cumulative Redeemable Preferred Stock — The perpetual Series A Preferred Stock is redeemable, at KREF's option, at a liquidation price of $327.8 million, or $25.00 per share, plus accrued and unpaid dividends commencing in April 2026. Dividends on the Series A Preferred Stock are payable quarterly at a rate of 6.50% per annum of the $25.00 liquidation preference, which is equivalent to $1.625 per annum per share. With respect to dividend rights and liquidation, the Series A Preferred Stock ranks senior to KREF's common stock.

Noncontrolling Interests — Noncontrolling interests represent an interest held by investors other than KREF in consolidated joint ventures that hold KREF’s real estate asset investments. KREF and the noncontrolling interest holders typically contribute to the joint ventures' ongoing operating shortfalls and capital expenditures on a pari passu basis. Distributions from the joint ventures are allocated between KREF and the noncontrolling interest holders based on contractual terms and waterfalls as outlined in the joint venture agreements.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Dividends — During the three months ended March 31, 2025 and 2024, KREF's board of directors declared the following dividends on shares of its common stock:


			Amount
Declaration Date	Record Date	Payment Date	Per Share		Total
2025
March 14, 2025	March 31, 2025	April 15, 2025	$	0.25	$	16,956



					$	16,956
2024
February 1, 2024	March 28, 2024	April 15, 2024	$	0.25	$	17,328



					$	17,328

During the three months ended March 31, 2025 and 2024, KREF's board of directors declared the following dividends on shares of its Series A Preferred Stock:


			Amount
Declaration Date	Record Date	Payment Date	Per Share		Total
2025
January 31, 2025	February 28, 2025	March 14, 2025	$	0.41	$	5,326



					$	5,326
2024
February 1, 2024	February 29, 2024	March 15, 2024	$	0.41	$	5,326



					$	5,326

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 11. Stock-based Compensation

KREF is externally managed by the Manager and does not currently have any employees. However, as of March 31, 2025, certain individuals employed by the Manager and affiliates of the Manager and certain members of KREF's board of directors were compensated, in part, through the issuance of stock-based awards.

As of March 31, 2025, KREF had 1,247,563 restricted stock unit (“RSU”) awards outstanding under the KKR Real Estate Finance Trust Inc. 2016 Omnibus Incentive Plan that was adopted on February 12, 2016 and amended and restated on November 17, 2016 (the "Incentive Plan") to certain members of KREF’s board of directors and employees of the Manager or its affiliates, none of whom are KREF employees. RSUs awarded to employees of the Manager or its affiliates, generally vest over three consecutive one-year periods and awards to certain members of KREF's board of directors generally vest over a one-year period, pursuant to the terms of the respective award agreements and the terms of the Incentive Plan. As of March 31, 2025, all outstanding RSU awards were entitled to nonforfeitable dividends during the vesting periods, at the same rate as those declared on the common stock.

The following table summarizes the activity in KREF’s outstanding RSUs and the weighted-average grant date fair value per RSU:


	Restricted Stock Units	Weighted Average Grant Date Fair Value Per RSU(A)
Unvested as of December 31, 2024	1,248,813	$	12.35


Forfeited / cancelled	(1,250)	11.27
Unvested as of March 31, 2025	1,247,563	$	12.35

(A) The grant-date fair value is based upon the closing price of KREF’s common stock at the date of grant.

KREF expects the unvested RSUs outstanding to vest during the following years:


Year						Restricted Stock Units
2025						629,974
2026						409,672
2027						207,917
Total						1,247,563

KREF recognizes the compensation cost of RSUs awarded to employees of the Manager, or one or more of its affiliates, on a straight-line basis over the awards’ term at their grant date fair value, consistent with the RSUs awarded to certain members of KREF's board of directors.

During the three months ended March 31, 2025 and 2024, KREF recognized $2.1 million, and $2.3 million, respectively, of stock-based compensation expense included in “General and administrative” expense in the Condensed Consolidated Statements of Income. As of March 31, 2025, there was $11.5 million of total unrecognized stock-based compensation expense related to unvested share-based compensation arrangements. This cost is expected to be recognized over a weighted average period of 1.1 year.

Upon any payment of shares as a result of restricted stock unit vesting, the related personal tax withholding obligation will generally be satisfied by KREF, reducing the number of shares to be delivered by a number of shares necessary to satisfy the related applicable personal tax withholding obligation. The amount results in a cash payment related to this personal tax liability and a corresponding reduction to “Additional paid-in capital” in the Condensed Consolidated Statement of Changes in Equity.

Refer to Note 14 for additional information regarding the Incentive Plan.

Directors and Officers Deferral Plan — In March 2022, KREF's board of directors adopted the KKR Real Estate Finance Trust Inc. Directors and Officers Deferral Plan (the “Deferral Plan”). Pursuant to the Deferral Plan, participants may elect to defer receipt of all or a portion of any shares of KREF’s common stock issuable upon vesting of any RSU granted to such participant in 25% increments. Deferred stock units (“DSU”) credited to a participant are non-voting but shall be entitled to

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

dividend equivalent payments upon payment of dividends on shares of KREF’s common stock in the same form and amount equal to the amount of such dividends and are not subject to deferral under the Deferral Plan.

During the three months ended March 31, 2025, no vested RSUs were deferred under the Deferral Plan. As of March 31, 2025, there were 206,112 DSUs outstanding.

Participating Securities' Share in Earnings — During the three months ended March 31, 2025 and 2024, KREF declared $0.4 million and $0.3 million, respectively, of nonforfeitable dividends on unvested RSUs and outstanding DSUs. Such nonforfeitable dividends were deducted from “Retained earnings (Accumulated deficit)” in the Condensed Consolidated Statement of Changes in Equity.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 12. Earnings (Loss) per Share

Earnings (Loss) per Share — KREF calculates its basic EPS using the two-class method, which defines unvested share-based payment awards that contain nonforfeitable rights to dividends as participating securities. Under the two-class method earnings (distributed and undistributed) are allocated to common shares and participating securities based on their respective rights. Basic EPS, is calculated by dividing net income (loss) attributable to common stockholders by the weighted average common stock outstanding for the period.

KREF presents diluted EPS under the more dilutive of the treasury stock and if-converted methods or the two-class method. Under the treasury stock and if-converted methods, the denominator includes weighted average common stock outstanding plus the incremental dilutive shares issuable from restricted stock units and an assumed conversion of the Convertible Notes (for the periods in which such notes were outstanding). The numerator includes any changes in income (loss) that would result from the assumed conversion of these potential shares of common stock.

For the three months ended March 31, 2025 and 2024, 80,951 and 39,369 weighted average unvested RSUs, respectively, were excluded from the calculation of diluted EPS because the effect was anti-dilutive.

The following table illustrates the computation of basic and diluted EPS for the three months ended March 31, 2025 and 2024:


	Three Months Ended March 31,
		2025		2024
Earnings
Net Income (Loss)		$	(4,861)	$	(3,108)
Less: Preferred stock dividends		5,326		5,326
Less: Participating securities' share in earnings		363		305
Net income (loss) attributable to common stockholders, basic and diluted		$	(10,550)	$	(8,739)

Shares
Weighted average common shares outstanding		68,559,765		69,313,860
Add: Weighted average deferred stock units		206,112		72,708
Diluted weighted average common shares outstanding		68,765,877		69,386,568

Net income (loss) attributable to common stockholders, per:
Basic and diluted common share		$	(0.15)	$	(0.13)

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 13. Commitments and Contingencies

As of March 31, 2025, KREF was subject to the following commitments and contingencies:

Litigation — From time to time, KREF may be involved in various claims and legal actions arising in the ordinary course of business. KREF establishes an accrued liability for legal proceedings only when those matters present loss contingencies that are both probable and reasonably estimable.

As of March 31, 2025, KREF was not involved in any material legal proceedings regarding claims or legal actions against KREF.

Indemnifications — In the normal course of business, KREF enters into contracts that contain a variety of representations and warranties that provide general indemnifications and other indemnities relating to contractual performance. In addition, certain of KREF’s subsidiaries have provided certain indemnities relating to environmental and other matters and has provided nonrecourse carve-out guarantees for fraud, willful misconduct and other customary wrongful acts, each in connection with the financing of certain real estate investments that KREF has made. KREF’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against KREF that have not yet occurred. However, KREF expects the risk of material loss to be low.

Capital Commitments — As of March 31, 2025, KREF had future funding commitments of $418.4 million related to its investments in commercial real estate loans. These future funding commitments primarily relate to construction projects, capital improvements, tenant improvements and leasing commissions. Generally, funding commitments are subject to certain conditions that must be met, such as customary construction draw certifications, minimum credit metrics or executions of new leases before advances are made to the borrower.

In January 2017, KREF committed $40.0 million to invest in an aggregator vehicle alongside RECOP I. The two-year investment period for RECOP I ended in April 2019. As of March 31, 2025, KREF had a remaining commitment of $4.3 million to RECOP I.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 14. Related Party Transactions

Management Agreement — The Management Agreement between KREF and the Manager is subject to certain termination and nonrenewal rights, which in the case of KREF are exercisable by a two-thirds vote by the independent directors of KREF's board of directors. If the independent directors of KREF's board of directors decline to renew the Management Agreement other than for cause, KREF is required to pay the Manager a termination fee equal to three times the total 24-month trailing average annual management fee and incentive compensation earned by the Manager through the most recently completed calendar quarter.

Pursuant to the Management Agreement, the Manager, as agent to KREF and under the supervision of KREF's board of directors, manages the investments, subject to investment guidelines approved by KREF's board of directors; financing activities; and day-to-day business and affairs of KREF and its subsidiaries.

For its services to KREF, the Manager is entitled to a quarterly management fee equal to the greater of $62,500 or 0.375% of weighted average adjusted equity and quarterly incentive compensation equal to 20.0% of the excess of (a) the trailing 12-month distributable earnings (before incentive compensation payable to the Manager) over (b) 7.0% of the trailing 12-month weighted average adjusted equity (“Hurdle Rate”), less incentive compensation KREF already paid to the Manager with respect to the first three calendar quarters of such trailing 12-month period. The quarterly incentive compensation is calculated and paid in arrears with a one-quarter lag.

Adjusted equity generally represents the proceeds received by KREF and its subsidiaries from equity issuances, without duplication and net of offering costs, and distributable earnings, reduced by distributions, equity repurchases, and incentive compensation paid. Distributable earnings generally represent the net income, or loss, attributable to equity interests in KREF and its subsidiaries, without duplication, as well as realized losses not otherwise included in such net income, or loss, excluding non-cash equity compensation expense, incentive compensation, depreciation and amortization and unrealized gains or losses, from and after the effective date to the end of the most recently completed calendar quarter. KREF's board of directors, after majority approval by independent directors, may also exclude one-time events pursuant to changes in GAAP and certain material non-cash income or expense items from distributable earnings. For purposes of calculating incentive compensation, adjusted equity excludes: (i) the effects of equity issued by KREF and its subsidiaries that provides for fixed distributions or other debt characteristics and (ii) unrealized provision for (reversal of) credit losses.

KREF is also required to reimburse the Manager or its affiliates for documented costs and expenses incurred by it and its affiliates on behalf of KREF, except those specifically required to be borne by the Manager under the Management Agreement. The Manager is responsible for, and KREF does not reimburse the Manager or its affiliates for, the expenses related to investment personnel of the Manager and its affiliates who provide services to KREF. However, KREF does reimburse the Manager for KREF's allocable share of compensation paid to certain of the Manager’s non-investment personnel, based on the percentage of time devoted by such personnel to KREF's affairs.

Incentive Plan — KREF's compensation committee or board of directors may administer the Incentive Plan, which provides for awards of stock options; stock appreciation rights; restricted stock; RSUs; limited partnership interests of KKR Real Estate Finance Holdings L.P. (the "Operating Partnership"), a wholly owned subsidiary of KREF, that are directly or indirectly convertible into or exchangeable or redeemable for shares of KREF's common stock pursuant to the limited partnership agreement of the Operating Partnership (“OP Interests”); awards payable by (i) delivery of KREF's common stock or other equity interests, or (ii) reference to the value of KREF's common stock or other equity interests, including OP Interests; cash-based awards; or performance compensation awards.

No more than 7.5% of the issued and outstanding shares of common stock on a fully diluted basis, assuming the exercise of all outstanding stock options granted under the Incentive Plan and the conversion of all warrants and convertible securities into shares of common stock, or a total of 4,028,387 shares of common stock, will be available for awards under the Incentive Plan. In addition, (i) the maximum number of shares of common stock subject to awards granted during a single fiscal year to any non-employee director (as defined in the Incentive Plan), taken together with any cash fees paid to such non-employee director during the fiscal year, may not exceed $1.0 million and (ii) the maximum amount that can be paid to any participant for a single fiscal year during a performance period (or with respect to each single fiscal year if a performance period extends beyond a single fiscal year) pursuant to a performance compensation award denominated in cash may not exceed $10.0 million.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

No awards may be granted under the Incentive Plan on and after February 12, 2026. The Incentive Plan will continue to apply to awards granted prior to such date. During the three months ended March 31, 2025 and 2024, there were no RSU awards granted to KREF's directors and employees of the Manager or its affiliates. As of March 31, 2025, 1,360,178 shares of common stock remained available for awards under the Incentive Plan.

Due to Affiliates — The following table contains the amounts presented in KREF's Condensed Consolidated Balance Sheets that it owes to affiliates:


	March 31, 2025		December 31, 2024
Management fees	$	5,797	$	5,919

KCM fees	425		—
Total	$	6,222	$	5,919

Affiliates Expenses — The following table contains the amounts included in KREF's Condensed Consolidated Statements of Income that arose from transactions with the Manager:


	Three Months Ended March 31,
		2025		2024
Management fees		$	5,797	$	6,340

Expense reimbursements and other		1,483		1,210
Total		$	7,280	$	7,550

In connection with the ATM, KCM, in its capacity as one of the sales agents, will receive commissions for the shares of KREF’s common stock it sells. This amount is not to exceed, but may be less than, 2.0% of the gross sales price per share. KREF did not sell shares under the ATM and did not incur or pay any commissions to KCM during the three months ended March 31, 2025.

In connection with the BMO Facility, and in consideration for its services as the structuring agent, KREF is obligated to pay KCM a structuring fee equal to 0.35% of the respective committed loan advances under the agreement. Such fees are capitalized as deferred financing cost and amortized to interest expense over the draw period of the facility. No KCM structuring fees in connection with the facility were paid during the three months ended March 31, 2025.

In connection with the KREF Lending XII Facility entered into in 2022, and in consideration for structuring and sourcing this arrangement, KREF was obligated to pay KCM a structuring fee equal to 0.35% of the respective loan advances under the agreement. Such fees were capitalized as deferred financing cost and amortized to interest expense over the draw period of the facility. No KCM structuring fees in connection with the facility were paid during the three months ended March 31, 2025.

In connection with refinancing the secured term loan in March 2025, and in consideration for structuring and arranging the loan, KREF paid KCM a $1.3 million arrangement and structuring fee equal to 0.23% of the principal amount of the secured term loan. Such fees were capitalized as deferred financing costs and amortized to interest expense over the life of the facility.

In connection with the extension and upsize of the Revolver in March 2025, and in consideration for its services as arranger, KREF paid KCM a $2.8 million arranger fee equal to 0.375% of the aggregate amount of existing commitments plus 0.75% of the aggregate amount of new commitments. The arranger fee was capitalized as a deferred financing cost, included within "Other Assets" in the Condensed Consolidated Balance Sheets, and amortized to interest expense over the life of the Revolver.

In connection with the KREF Lending XV Facility entered into in March 2025, and in consideration for its services as the structuring agent, KREF is obligated to pay KCM a structuring fee equal to 0.35% of the respective committed loan advances under the agreement. Such fees are capitalized as deferred financing cost and amortized to interest expense over the draw period of the facility. KREF incurred $0.4 million KCM structuring fees in connection with the facility during the three months ended March 31, 2025. The fees were unpaid and included within "Due to affiliates" in the Condensed Consolidated Balance Sheets as of March 31, 2025.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Real Estate Owned and Equity Method Investment, Real Estate Asset

In June 2024, KREF and a KKR affiliate took title to a Mountain View, CA office property. The property was held in a joint venture where KREF and the KKR affiliate held a 68.9% and 31.1% interest, respectively, and shared decision-making (Note 9).

In June 2024, KREF along with a KKR affiliate, took title to a Seattle, WA life science property through a deed-in-lieu of foreclosure under a Tenant-in-Common ("TIC") agreement. Under the TIC agreement, KREF and the KKR affiliate held an economic interest of 74.6% and 25.4%, respectively, and shared decision-making (Note 9).

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 15. Fair Value of Financial Instruments

The carrying values and fair values of KREF’s financial assets and liabilities recorded at fair value on a recurring basis, as well as other financial instruments not carried at fair value, as of March 31, 2025, were as follows:


							Fair Value
	Principal Balance		Amortized Cost		Carrying Value		Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents	$	106,411	$	106,411	$	106,411	$	106,411	$	—	$	—	$	106,411
Commercial real estate loans, held-for-investment, net	6,122,636		6,108,987		5,966,650		—		—		5,973,069		5,973,069


Total	$	6,229,047	$	6,215,398	$	6,073,061	$	106,411	$	—	$	5,973,069	$	6,079,480
Liabilities
Secured financing agreements, net	$	3,031,281	$	3,024,168	$	3,024,168	$	—	$	—	$	3,024,168	$	3,024,168
Collateralized loan obligations, net	1,581,103		1,581,004		1,581,004		—		—		1,568,877		1,568,877
Secured term loan, net	550,000		535,923		535,923		—		551,375		—		551,375
Total	$	5,162,384	$	5,141,095	$	5,141,095	$	—	$	551,375	$	4,593,045	$	5,144,420

The carrying values and fair values of KREF’s financial assets recorded at fair value on a recurring basis, as well as other financial instruments for which fair value is disclosed, as of December 31, 2024, were as follows:


							Fair Value
	Principal Balance		Amortized Cost		Carrying Value		Level 1		Level 2		Level 3		Total
Assets
Cash and cash equivalents	$	104,933	$	104,933	$	104,933	$	104,933	$	—	$	—	$	104,933
Commercial real estate loans, held-for-investment, net	5,900,163		5,888,622		5,771,519		—		—		5,768,648		5,768,648
Total	$	6,005,096	$	5,993,555	$	5,876,452	$	104,933	$	—	$	5,768,648	$	5,873,581
Liabilities
Secured financing agreements, net	$	2,804,895	$	2,798,674	$	2,798,674	$	—	$	—	$	2,798,674	$	2,798,674
Collateralized loan obligations, net	1,766,231		1,766,104		1,766,104		—		—		1,745,561		1,745,561
Secured term loan, net	339,500		333,853		333,853		—		341,198		—		341,198
Total	$	4,910,626	$	4,898,631	$	4,898,631	$	—	$	341,198	$	4,544,235	$	4,885,433

The following table contains the Level 3 inputs used to value assets and liabilities on a recurring and nonrecurring basis or where KREF discloses fair value as of March 31, 2025:


	Fair Value		Valuation Methodologies	Unobservable Inputs	Weighted Average(A)	Range
Assets and Liabilities
Commercial real estate loans, held-for-investment	$	5,973,069	Discounted cash flow	Discount margin	4.0%	2.3% - 5.6%
				Discount rate	10.2%	9.5% - 11.0%
				Capitalization rate	8.4%	5.3% - 9.8%

(A) Represents the average of the input value, weighted by the unpaid principal balance of the financial instrument.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Certain assets not measured at fair value on an ongoing basis but subject to fair value adjustments only in certain circumstances, such as when there is evidence of impairment, are measured at fair value on a nonrecurring basis. KREF measures commercial real estate loans held-for-sale at the lower of cost or fair value and may be required, from time to time, to record a nonrecurring fair value adjustment. KREF measures commercial real estate loans held-for-investment at amortized cost, but may be required, from time to time, to record a nonrecurring fair value adjustment in the form of a CECL allowance.

Assets and Liabilities for Which Fair Value is Only Disclosed

KREF does not carry its secured financing agreements at fair value as management did not elect the fair value option for these liabilities. As of March 31, 2025, the fair value of KREF's financing facilities approximated their respective carrying value.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 16. Income Taxes

KREF has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with its taxable year ended December 31, 2014. A REIT is generally not subject to U.S. federal and state income tax on that portion of its income that is distributed to stockholders if it distributes at least 90% of its REIT taxable income, determined without regard to the deduction for dividends paid and excluding any net capital gains. A REIT will also be subject to a nondeductible excise tax to the extent certain percentages of its taxable income are not distributed within specified dates. While KREF expects to distribute at least 90% of its net taxable income for the foreseeable future, KREF will continue to evaluate its capital and liquidity needs in light of existing economic and market conditions.

KREF consolidates subsidiaries that incur U.S. federal, state and local income taxes, based on the tax jurisdiction in which each subsidiary operates. There were no material deferred tax assets or liabilities as of March 31, 2025 and December 31, 2024.

Table of Contents

KKR Real Estate Finance Trust Inc.

Notes to Condensed Consolidated Financial Statements

(amount in tables in thousands, except per share amounts)

Note 17. Subsequent Event

The following events occurred subsequent to March 31, 2025:

Dividends

In April 2025, KREF paid $17.0 million in dividends on its common stock, or $0.25 per share, with respect to the first quarter of 2025, to stockholders of record on March 31, 2025.

Investing Activities

In April 2025, KREF took title to a multifamily property located in West Hollywood, CA through an assignment-in-lieu of foreclosure. The associated loan was risk-rated 5 and had an outstanding principal balance of $112.2 million as of March 31, 2025.

Table of Contents

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto appearing elsewhere in this Form 10-Q. The historical consolidated financial data below reflects the historical results and financial position of KREF. In addition, this discussion and analysis contains forward-looking statements and involves numerous risks and uncertainties, including those described under Part I, Item 1A. "Risk Factors" in the Form 10-K and under "Cautionary Note Regarding Forward-Looking Statements." Actual results may differ materially from those contained in any forward-looking statements.

Overview

Our Company and Our Investment Strategy

We are a real estate finance company that focuses primarily on originating and acquiring transitional senior loans secured by commercial real estate ("CRE") assets. We are a Maryland corporation that was formed and commenced operations on October 2, 2014, and we have elected to qualify as a REIT for U.S. federal income tax purposes. Our investment strategy is to originate or acquire transitional senior loans collateralized by institutional-quality CRE assets that are owned and operated by experienced and well-capitalized sponsors and located in top markets with strong underlying fundamentals. The assets in which we invest include senior loans, mezzanine loans, preferred equity and commercial mortgage-backed securities ("CMBS") and other real estate-related securities. Our investment allocation strategy is influenced by prevailing market conditions at the time we invest, including interest rate, economic and credit market conditions. In addition, we may invest in assets other than our target assets in the future, in each case subject to maintaining our qualification as a REIT for U.S. federal income tax purposes and our exclusion from registration under the Investment Company Act. Our investment objective is capital preservation and generating attractive risk-adjusted returns for our stockholders over the long term, primarily through dividends.

Our Manager

We are externally managed by our Manager, KKR Real Estate Finance Manager LLC, an indirect subsidiary of KKR & Co. Inc. KKR is a leading global investment firm with an over 45-year history of leadership, innovation, and investment excellence. KKR manages multiple alternative asset classes, including private equity, real estate, energy, infrastructure and credit, with strategic manager partnerships that manage hedge funds. Our Manager manages our investments and our day-to-day business and affairs in conformity with our investment guidelines and other policies that are approved and monitored by our board of directors. Our Manager is responsible for, among other matters, (i) the selection, origination or purchase and sale of our portfolio investments, (ii) our financing activities and (iii) providing us with investment advisory services. Our Manager is also responsible for our day-to-day operations and performs (or causes to be performed) such services and activities relating to our investments and business and affairs as may be appropriate. Our investment decisions are approved by an investment committee of our Manager that is comprised of senior investment professionals of KKR, including senior investment professionals of KKR's global real estate group. For a summary of certain terms of the management agreement, see Note 14 to our condensed consolidated financial statements included in this Form 10-Q.

Macroeconomic Environment

The last several quarters have been marked by significant volatility in global markets, driven by inflation, elevated interest rates, slowing economic growth, increased tariffs, trade tensions, geopolitical conditions, and political and regulatory uncertainty. These conditions have adversely impacted, and may continue to adversely impact, the U.S. and global economies, the real estate industry and our borrowers, and the performance of the properties securing our loans. Collectively, these market dynamics pose challenges to commercial real estate values and transaction activity, which have resulted in lower demand for office space and elevated levels of vacancy and default rates.

Although the Federal Reserve lowered interest rates by 50 basis points in September 2024, by 25 basis points in November 2024 and by 25 basis points in December 2024, interest rates remain elevated and the timing, direction and extent of any future interest rate changes remain uncertain. Although higher interest rates will generally correlate to increases in our net income, increases in interest rates may adversely affect our existing borrowers and the cost of financing their properties and lead to nonperformance. Higher interest rates may also adversely impact real estate asset values and increase our interest expense, which expense may not be fully offset by any resulting increase in interest income.

Table of Contents

Key Financial Measures and Indicators

As a real estate finance company, we believe the key financial measures and indicators for our business are earnings per share, dividends declared, Distributable Earnings and book value per share.

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
	March 31, 2025		December 31, 2024
Net income (loss) attributable to common stockholders	$	(10,550)	$	14,578
Weighted-average number of shares of common stock outstanding, basic and diluted	68,765,877		69,342,983
Net income (loss) per share, basic and diluted	$	(0.15)	$	0.21
Dividends declared per share	$	0.25	$	0.25

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. Accordingly, we believe providing Distributable Earnings on a supplemental basis to our net income as determined in accordance with GAAP is helpful to our stockholders in assessing the overall performance of our business.

We define Distributable Earnings as net income (loss) attributable to our stockholders or, without duplication, owners of our subsidiaries, computed in accordance with GAAP, including realized losses not otherwise included in GAAP net income (loss) and excluding (i) non-cash equity compensation expense, (ii) depreciation and amortization, (iii) any unrealized gains or losses or other similar non-cash items that are included in net income for the applicable reporting period, regardless of whether such items are included in other comprehensive income or loss, or in net income, and (iv) one-time events pursuant to changes in GAAP and certain material non-cash income or expense items agreed upon after discussions between our Manager and our board of directors and after approval by a majority of our independent directors. The exclusion of depreciation and amortization from the calculation of Distributable Earnings only applies to debt investments related to real estate to the extent we foreclose upon the property or properties underlying such debt investments.

While Distributable Earnings excludes the impact of our unrealized current provision for (reversal of) credit losses, any loan losses are charged off and realized through Distributable Earnings when deemed non-recoverable. Non-recoverability is generally determined (i) upon the resolution of a loan (i.e. when the loan is repaid, fully or partially, or, in the case of foreclosure, when the underlying asset is sold), or (ii) if, in our determination, it is nearly certain that all amounts due under a loan will not be collected.

Distributable Earnings should not be considered as a substitute for GAAP net income or taxable income. We caution readers that our methodology for calculating Distributable Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our reported Distributable Earnings may not be comparable to similar measures presented by other REITs.

We also use Distributable Earnings (before incentive compensation payable to our Manager) to determine the management and incentive compensation we pay our Manager. For its services to KREF, our Manager is entitled to a quarterly management fee equal to the greater of $62,500 or 0.375% of weighted average adjusted equity and quarterly incentive compensation equal to 20.0% of the excess of (a) the trailing 12-month Distributable Earnings (before incentive compensation payable to our Manager) over (b) 7.0% of the trailing 12-month weighted average adjusted equity (“Hurdle Rate”), less incentive compensation KREF already paid to the Manager with respect to the first three calendar quarters of such trailing 12-month period. For purposes of calculating incentive compensation under our Management Agreement, adjusted equity excludes: (i) the effects of equity issued that provides for fixed distributions or other debt characteristics and (ii) the unrealized provision for (reversal of) credit losses. The quarterly incentive compensation is calculated and paid in arrears with a three-month lag.

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					Three Months Ended
	March 31, 2025		Per Diluted Share(A)		December 31, 2024			Per Diluted Share(A)
Net Income (Loss) Attributable to Common Stockholders	$	(10,550)	$	(0.15)		$	14,578		$	0.21
Adjustments
Non-cash equity compensation expense	2,127		0.03			1,559			0.02
Depreciation and amortization	740		0.01			739			0.01
Unrealized (gains) or losses, net	(131)		—			(244)			—
Provision for credit losses, net	24,863		0.36			4,594			0.07


Distributable Earnings before realized loss	$	17,049	$	0.25		$	21,226		$	0.31
Realized loss on loan write-offs, net	—		—			(35,902)			(0.52)

Distributable Earnings (Loss)	$	17,049	$	0.25		$	(14,676)		$	(0.21)
Diluted weighted average common shares outstanding	68,765,877					69,342,983

(A) Numbers presented may not foot due to rounding.

Book Value per Share

We believe that book value per share is helpful to stockholders in evaluating the growth of our company as we have scaled our equity capital base and continue to invest in our target assets.

The following table calculates our book value per share (amounts in thousands, except share and per share data):


	March 31, 2025		December 31, 2024
KKR Real Estate Finance Trust Inc. stockholders' equity	$	1,309,820	$	1,345,030
Series A preferred stock (liquidation preference of $25.00 per share)	(327,750)		(327,750)
Common stockholders' equity	$	982,070	$	1,017,280

Shares of common stock issued and outstanding at period end	67,824,496		68,713,596
Add: Deferred stock units	206,112		206,112
Total shares outstanding at period end	68,030,608		68,919,708

Book value per share	$	14.44	$	14.76

Book value as of March 31, 2025 included the impact of an estimated CECL credit loss allowance of $144.4 million, or ($2.12) per share. See Note 2 — Summary of Significant Accounting Policies, to our condensed consolidated financial statements included in this Form 10-Q for detailed discussion of allowance for credit losses.

Table of Contents

Our Portfolio

We have established a $6,495.5 million portfolio of diversified investments, consisting primarily of senior commercial real estate loans as of March 31, 2025.

During the three months ended March 31, 2025, we collected 100% of interest payments due on our loan portfolio. As of March 31, 2025, the average risk rating of our loan portfolio was 3.1, weighted by loan outstanding principal. As of March 31, 2025, the average loan commitment in our portfolio was $121.1 million and multifamily and industrial loans comprised 61% of our loan portfolio.

In addition, we owned Real Estate Assets with an investment amount of $337.1 million, comprised of the acquired properties (directly or indirectly) and capitalized redevelopment costs, as of March 31, 2025. These properties are reflected on our Condensed Consolidated Balance Sheets.

We have executed on our primary investment strategy of originating floating-rate transitional senior loans and, as we continue to scale our loan portfolio, we expect that our originations will be heavily weighted toward floating-rate loans. As of March 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. As of March 31, 2025, all of our investments were located in the United States.

The following charts illustrate the diversification and composition of our loan portfolio as of March 31, 2025, based on type of investment, interest rate, underlying property type, geographic location, vintage and LTV:

The charts above are based on outstanding principal of our commercial real estate loans.

(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.

(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.

Table of Contents

The following table details our quarterly loan activity (dollars in thousands):


	Three Months Ended
	March 31, 2025		December 31, 2024		September 30, 2024		June 30, 2024
Loan originations	$	376,270	$	—	$	—	$	83,700

Loan fundings	$	405,667	$	53,044	$	55,337	$	121,478
Loan repayments(A)	(183,595)		(457,033)		(290,044)		(384,483)
Net fundings	222,072		(403,989)		(234,707)		(263,005)
PIK interest	402		388		324		254
Net write-offs	—		(35,902)		(1,832)		(135,812)
Transfer to REO	—		—		—		(201,433)
Other(B)	—		—		—		(150,000)
Total activity	$	222,474	$	(439,503)	$	(236,215)	$	(749,996)

(A) Includes a repayment of $38.6 million of non-consolidated senior interests as our retained mezzanine loan was fully repaid during the three months ended September 30, 2024.

(B) Represents a removal of $150.0 million of non-consolidated senior interests as our retained mezzanine loan was written-off during the three months ended June 30, 2024.

The following table details overall statistics for our loan portfolio as of March 31, 2025 (dollars in thousands):


	Outstanding Principal
	Total Loan Portfolio			Floating Rate Loans			Fixed Rate Loans(A)
Number of loans(B)	54			54			—
Principal balance	$	6,122,636		$	6,038,036		$	84,600
Amortized cost	6,108,987			6,024,387			84,600
Unfunded loan commitments	418,500			413,500			5,000
Weighted average cash coupon(C)	7.5		%	S + 3.2%			*
Weighted average all-in yield(C)	7.6		%	S + 3.3%			*
Weighted average maximum maturity (years)(D)	2.0			2.0			0.5
Weighted average LTV(E)	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. $84.6 million of loan principal was funded and placed on nonaccrual status, as of March 31, 2025. Refer to Note 3 to our condensed consolidated financial statements for additional information.

(B) Excludes fully written off loans.

(C) In addition to cash coupon, all-in yield includes the amortization of deferred origination fees, loan origination costs and purchase discounts. Weighted average cash coupon and all-in yield excludes loans on nonaccrual status.

(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. Weighted average LTV excludes risk-rated 5 loans.

Table of Contents

The table below sets forth additional information relating to our portfolio as of March 31, 2025 (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	$	376.8	$	87.0	+	3.3%	1.5	$339,497 / unit	69	%	3
2	Senior Loan	Boston, MA	Life Science	8/3/2022	312.5		312.5		229.6		33.4		+	4.2	2.4	$747 / SF	56		3
3	Senior Loan	Bellevue, WA	Office	9/13/2021	520.8		260.4		224.5		56.1		+	3.7	2.0	$851 / SF	63		3
4	Senior Loan	Various	Industrial	4/28/2022	504.5		252.3		252.3		62.4		+	2.7	2.1	$98 / SF	64		3
5	Senior Loan	Bronx, NY	Industrial	8/27/2021	381.2		228.7		217.2		47.7		+	4.2	1.4	$277 / SF	52		3
6	Senior Loan	Los Angeles, CA	Multifamily	2/19/2021	220.0		220.0		220.0		40.3		+	2.9	0.9	$410,430 / unit	68		3
7	Senior Loan	Minneapolis, MN	Office	11/13/2017	199.4		199.4		194.4		94.6		+	2.3	0.3	$182 / SF	n.a.		5
8	Senior Loan	Various	Industrial	6/15/2022	375.5		187.8		173.5		42.4		+	2.9	2.3	$135 / SF	50		3
9	Senior Loan	The Woodlands, TX	Hospitality	9/15/2021	181.4		181.4		181.4		37.4		+	4.3	1.5	$199,513 / key	64		3
10	Senior Loan	Washington, D.C.	Office	11/9/2021	181.0		181.0		176.6		68.1		+	3.1	2.7	$495 / SF	55		3
11	Senior Loan	West Palm Beach, FL	Multifamily	12/29/2021	171.5		171.5		171.3		30.5		+	2.8	1.8	$210,914 / unit	73		2
12	Senior Loan	Boston, MA	Life Science	4/27/2021	332.3		166.2		163.2		40.1		+	3.7	1.1	$678 / SF	66		4
13	Senior Loan	Various	Self-Storage	12/21/2022	311.6		155.8		145.6		33.2		+	3.8	2.8	$21,894 / unit	65		3
14	Senior Loan	Various	Multifamily	1/31/2025	247.5		148.5		147.4		35.8		+	3.0	4.9	$256,664 / unit	71		3
15	Senior Loan	Redwood City, CA	Life Science	9/30/2022	580.7		145.2		73.1		14.1		+	4.5	2.5	$885 / SF	53		3
16	Senior Loan	Plano, TX	Office	2/6/2020	143.3		143.3		139.3		28.5		+	3.9	1.4	$192 / SF	64		3
17	Senior Loan	Boston, MA	Multifamily	3/29/2019	137.0		137.0		137.0		28.6		+	3.4	0.1	$351,282 / unit	63		3
18	Senior Loan	Various	Multifamily	5/31/2019	129.7		129.7		129.7		81.2		+	4.0	0.2	$186,388 / unit	61		3
19	Senior Loan	Arlington, VA	Multifamily	1/20/2022	119.3		119.3		119.3		25.4		+	2.9	1.9	$397,644 / unit	65		3
20	Senior Loan	Cambridge, MA	Life Science	12/22/2021	401.3		115.7		97.0		24.4		+	4.0	1.8	$1,072 / SF	51		3
21	Senior Loan	San Diego, CA	Multifamily	10/20/2021	114.6		114.6		110.5		38.1		+	3.4	1.6	$478,244 / unit	71		4
22	Senior Loan	Philadelphia, PA	Office	6/19/2018	114.3		114.3		114.3		24.4		+	2.8	1.9	$117 / SF	71		3
23	Senior Loan	Pittsburgh, PA	Student Housing	6/8/2021	112.5		112.5		112.5		20.8		+	3.0	1.2	$155,602 / unit	74		2
24	Senior Loan(I)	West Hollywood, CA	Multifamily	1/26/2022	112.2		112.2		112.2		112.5		+	3.1	1.9	$3,032,432 / unit	n.a.		5
25	Senior Loan	Chicago, IL	Office	7/15/2019	105.0		105.0		90.5		38.3		+	2.3	3.4	$87 / SF	59		3
26	Senior Loan	Las Vegas, NV	Multifamily	12/28/2021	101.1		101.1		101.1		18.4		+	2.8	1.8	$191,460 / unit	61		3
27	Senior Loan	Washington, D.C.	Office	1/13/2022	228.5		100.0		99.9		15.0		+	3.3	2.9	$365 / SF	55		3
28	Senior Loan	Cary, NC	Multifamily	11/21/2022	100.0		100.0		95.3		19.2		+	3.4	2.7	$244,275 / unit	63		3
29	Senior Loan	Boston, MA	Industrial	6/28/2022	273.2		95.7		95.0		20.0		+	3.0	2.3	$195 / SF	52		3
30	Senior Loan	Orlando, FL	Multifamily	12/14/2021	95.4		95.4		95.3		25.2		+	3.1	1.8	$251,381 / unit	74		3
31	Senior Loan	Brisbane, CA	Life Science	7/22/2021	92.8		92.8		85.3		24.2		+	3.4	3.4	$737 / SF	71		3
32	Senior Loan	Raleigh, NC	Multifamily	4/27/2022	91.7		91.7		85.2		45.2		+	3.2	2.1	$266,202 / unit	n.a.		5
33	Senior Loan	Brandon, FL	Multifamily	1/13/2022	90.3		90.3		70.4		19.4		+	3.1	1.9	$196,207 / unit	75		3
34	Senior Loan	San Carlos, CA	Life Science	2/1/2022	139.7		89.1		57.0		18.5		+	1.0	2.6	$389 / SF	68		3
35	Senior Loan	Dallas, TX	Office	1/22/2021	87.0		87.0		87.0		17.6		+	3.4	0.9	$294 / SF	65		3
36	Senior Loan	Miami, FL	Multifamily	10/14/2021	84.5		84.5		84.5		18.2		+	2.9	1.6	$287,415 / unit	76		3
37	Senior Loan	Phoenix, AZ	Multifamily	3/26/2025	79.0		79.0		79.0		15.0		+	2.3	5.0	$312,332 / unit	69		3

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	Dallas, TX	Multifamily	12/23/2021	78.4		78.4		78.4		16.7		+	2.9	1.8	$241,164 / unit	67		3
39	Senior Loan	Philadelphia, PA	Mixed Use	6/28/2024	77.7		77.7		24.4		8.8		+	4.0	4.3	$48 / SF	72		3
40	Senior Loan	Nashville, TN	Hospitality	1/6/2025	75.8		75.8		75.0		14.3		+	3.3	4.8	$326,087 / key	64		3
41	Senior Loan	Charlotte, NC	Multifamily	12/14/2021	73.3		73.3		71.0		11.5		+	3.1	1.8	$192,864 / unit	74		3
42	Senior Loan	Delray Beach, FL	Multifamily	3/26/2025	73.0		73.0		73.0		13.9		+	2.3	5.0	$257,042 / unit	71		3
43	Senior Loan	Hollywood, FL	Multifamily	12/20/2021	71.0		71.0		71.0		13.9		+	2.8	1.8	$287,449 / unit	74		3
44	Senior Loan	Denver, CO	Multifamily	9/14/2021	70.3		70.3		70.3		11.4		+	2.8	1.5	$290,496 / unit	78		3
45	Senior Loan	Plano, TX	Multifamily	3/31/2022	63.3		63.3		63.3		23.5		+	0.9	2.4	$238,000 / unit	75		3
46	Senior Loan	Dallas, TX	Multifamily	8/18/2021	63.1		63.1		63.1		12.5		+	3.9	1.4	$175,278 / unit	70		3
47	Senior Loan	Durham, NC	Multifamily	12/15/2021	59.5		59.5		57.4		18.0		+	2.8	2.8	$166,413 / unit	67		3
48	Senior Loan	San Antonio, TX	Multifamily	4/20/2022	57.6		57.6		56.4		14.9		+	2.7	2.1	$164,950 / unit	79		3
49	Senior Loan	Sharon, MA	Multifamily	12/1/2021	51.9		51.9		51.9		8.4		+	2.9	1.7	$270,443 / unit	70		3
50	Senior Loan	Atlanta, GA	Multifamily	12/10/2021	51.4		51.4		51.4		13.0		+	3.0	1.8	$170,197 / unit	67		3
51	Senior Loan	Reno, NV	Industrial	4/28/2022	140.4		50.5		50.5		11.5		+	2.7	2.1	$117 / SF	74		3
52	Senior Loan	Dallas, TX	Multifamily	4/1/2022	43.7		43.7		42.4		11.7		+	2.9	0.7	$119,144 / unit	73		3
53	Senior Loan	Carrollton, TX	Multifamily	4/1/2022	43.7		43.7		43.7		13.7		+	0.9	2.4	$136,478 / unit	74		3
54	Senior Loan	Georgetown, TX	Multifamily	12/16/2021	35.2		35.2		35.2		8.8		+	3.4	1.8	$167,381 / unit	68		3
	Total/Weighted Average Senior Loans Unlevered				$	8,982.6	$	6,541.1	$	6,122.6	$	1,627.6	+	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.		89.4		89.4		89.4			n.a.	n.a.	n.a.	n.a.		n.a.
3	Equity Method Investment(J)	Seattle, WA	Life Science	6/28/2024	n.a.		81.8		81.8		40.7			n.a.	n.a.	$522 / 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.
	Total/Weighted Average Real Estate Assets						$	337.1	$	337.1	$	296.1
	Other Investments
1	CMBS B-Pieces(K)	Various	Various	2/13/2017	n.a.		40.0		35.7		35.7			4.7	4.2		58		n.a.
	Total/Weighted Average Other Investments						$	40.0	$	35.7	$	35.7		4.7%	4.2		58	%
	Grand Total / Weighted Average						$	6,918.2	$	6,495.5	$	1,959.5		7.5%	2.0		65	%	3.1

* Numbers presented may not foot due to rounding.

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. Excludes loans that were fully written off.

For Senior Loan 7, 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 March 31, 2025, at a fixed interest rate of 4.5%. The mezzanine note interest is payment-in-kind (“PIK Interest”), which is capitalized, compounded, and added to the outstanding principal balance of the respective loan.

For Senior Loan 24, the total whole loan is $112.2 million, including (i) a fully funded senior mortgage loan of $102.0 million, at an interest rate of S+3.06%, (ii) a senior mezzanine note with $9.5 million funded as of March 31, 2025, at a fixed interest rate of 10.0% and (iii) a fully funded junior mezzanine note of $0.8 million, at a fixed interest rate of 10.0% with certain profit share provisions, as defined in the loan agreement.

(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.

(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. 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.

(F) Maximum remaining term (years) assumes all extension options are exercised, if applicable.

(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, 15 and 20, Loan Per SF / Unit / Key is calculated as the total commitment amount of the loan divided by the proposed SF / Unit / Key.

(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. Weighted Average LTV excludes risk-rated 5 loans.

For Senior Loans 2, 3, 5, 15 and 20, 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. For senior loans where an appraisal has been obtained post origination, the LTV, presented as follows, is calculated based on the current principal amount divided by the as-is appraised value as of the new appraisal date: Senior Loan 16 (77%); Senior Loan 17 (64%); Senior Loan 19 (78%); Senior Loan 22 (64%); Senior Loan 25 (57%); Senior Loan 26 (75%); Senior Loan 30 (83%); Senior Loan 31 (70%); Senior Loan 34 (81%); Senior Loan 35 (63%); and Senior Loan 43 (81%).

(I) Senior Loan 24 assignment-in-lieu of foreclosure closed in April 2025.

(J) 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.

(K) 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.

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. Our loan documents generally give us the right to receive regular property, borrower and guarantor financial statements; approve annual budgets and tenant leases; and enforce loan covenants and remedies. In addition, our Manager evaluates the macroeconomic environment, prevailing real estate fundamentals and micro-market dynamics where the underlying property is located. Through site inspections, local market experts and various data sources, as part of its risk assessment, our Manager monitors criteria such as new supply and tenant demand, market occupancy and rental rate trends, and capitalization rates and valuation trends.

We maintain a robust asset management relationship with our borrowers and have utilized these relationships to maximize the performance of our portfolio, including during periods of volatility.

We believe our loan sponsors are generally committed to supporting assets collateralizing our loans through additional equity investments, and that we will benefit from our long-standing core business model of originating senior loans collateralized by large assets in major markets with experienced, well-capitalized institutional sponsors. While we believe the principal amounts of our loans are generally adequately protected by underlying collateral value, there is a risk that we will not realize the entire principal value of certain investments.

In addition to ongoing asset management, our Manager performs a quarterly review of our portfolio whereby each loan is assigned a risk rating of 1 through 5, from lowest risk to highest risk. Our Manager is responsible for reviewing, assigning and updating the risk ratings for each loan at least once per quarter. The risk ratings are based on many factors, including, but not limited to, underlying real estate performance, values of comparable properties, durability and quality of property cash flows, sponsor experience and financial wherewithal, and the existence of a risk-mitigating loan structure. Additional key considerations include debt service coverage ratios, real estate and credit market dynamics, and risk of default or principal loss. In performing this review and assigning a risk rating with respect to each loan, our Manager assesses these various factors holistically and considers these factors on a case-by-case basis, determining whether to give additional weight to any of these factors based upon the specific facts and circumstances of each loan. Based on a five-point scale, our loans are rated "1" through "5," from less risk to greater risk, which ratings are defined as follows: 1 (Very Low Risk); 2 (Low Risk); 3 (Medium Risk); 4 (High Risk/Potential for Loss); and 5 (Impaired/Loss Likely).

As of March 31, 2025, the average risk rating of our portfolio was 3.1, weighted by outstanding loan principal, consistent with that as of December 31, 2024.


	March 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	283,206		283,762		5		—	—		—		—
3	47	5,164,289		5,173,397		85		47	5,393,333		5,400,698		92
4	2	273,692		273,692		4		2	193,687		193,727		3
5	3	387,800		391,785		6		2	301,602		305,738		5
Total loan receivable	54	$	6,108,987	$	6,122,636	100	%	51	$	5,888,622	$	5,900,163	100	%
Allowance for credit losses		(142,337)							(117,103)
Loan receivable, net		$	5,966,650						$	5,771,519

* Numbers presented may not foot due to rounding.

(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. The terms of the modification included, among others, a restructure of the mezzanine loan into (i) a $12.5 million senior mezzanine note and (ii) a $25.0 million junior mezzanine note which is subordinate to a new $10.0 million sponsor interest. 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.

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. The terms of the modification included a $13.1 million principal repayment, and a restructure of the $90.1 million senior loan (after the $13.1 million repayment) into (i) a $89.1 million committed senior mortgage loan (with $34.9 million in unfunded commitment), and (ii) a $35.9 million subordinated note which is subordinate to a new $20.0 million sponsor interest. The restructured senior loan earns a coupon rate of S+1.00% and has a new term of three years. The $35.9 million subordinated note was deemed uncollectible and written off in December 2024. The loan modification was accounted for as a new loan for GAAP purposes. The restructured senior loan with an outstanding principal balance of $57.0 million was risk-rated 3 as of March 31, 2025.

CMBS B-Piece Investments

Our current CMBS exposure is through an equity method investment. 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. This includes reviewing the performance of the real estate assets underlying the loans that collateralize the investments and determining the impact of such performance on the credit and return profile of the investments. Our Manager holds monthly surveillance calls with the special servicer of our CMBS B-Piece investments to monitor the performance of our portfolio and discuss issues associated with the loans underlying our CMBS B-Piece investments. At each meeting, our Manager is provided with a due diligence submission for each loan underlying our CMBS B-Piece investments, which includes both property-level and loan-level information. 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.

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.

Our Non-Mark-to-Market Financing Sources, which accounted for 78% of our total financing as of March 31, 2025, are not subject to credit or capital markets mark-to-market provisions. The remaining 22% of our total financing, which is comprised of three master repurchase agreements, are only subject to credit marks.

We plan to expand and diversify our financing sources, especially those sources that provide non-mark-to-market financing, reducing our exposure to market volatility.

The following table summarizes our financing agreements (dollars in thousands):


		March 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	$	2,000,000	$	1,140,193	$	39,147	$	1,696,345	$	1,038,066
Collateralized Loan Obligations	Non-Mark-to-Market	1,581,103		1,581,103		—		1,938,353		1,766,231
Term Lending Agreements	Non-Mark-to-Market	1,511,597		834,289		4,758		1,216,728		789,647
Term Loan Facility	Non-Mark-to-Market	1,000,000		613,082		—		792,538		553,966
Warehouse Facility	Non-Mark-to-Market	500,000		—		—		—		—
Asset Specific Financing	Non-Mark-to-Market	490,625		353,717		—		427,792		343,216
Revolver	Non-Mark-to-Market	660,000		90,000		570,000		n.a.		80,000
Secured Term Loan	Non-Mark-to-Market	550,000		550,000		—		n.a.		339,500
Total leverage		$	8,293,325	$	5,162,384	$	613,905			$	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.

(B) Available borrowings represents the undrawn amount we could draw under the terms of each credit facility, based on collateral already approved and pledged.

Table of Contents

Master Repurchase Agreements

We utilize master repurchase facilities to finance the origination of senior loans. After a mortgage asset is identified by us, the lender agrees to advance a certain percentage of the principal of the mortgage to us in exchange for a secured interest in the mortgage. We have not received any margin calls on any of our master repurchase facilities to date.

Repurchase agreements effectively allow us to borrow against loans and participations that we own in an amount generally equal to (i) the market value of such loans and/or participations multiplied by (ii) the applicable advance rate. Under these agreements, we sell our loans and participations to a counterparty and agree to repurchase the same loans and participations from the counterparty at a price equal to the original sales price plus an interest factor. The transaction is treated as a secured loan from the financial institution for GAAP purposes. During the term of a repurchase agreement, we receive the principal and interest on the related loans and participations and pay interest to the lender under the master repurchase agreement. At any point in time, the amounts and the cost of our repurchase borrowings will be based upon the assets being financed—higher risk assets will result in lower advance rates (i.e., levels of leverage) at higher borrowing costs and vice versa. In addition, these facilities include various financial covenants and limited recourse guarantees, including those described below.

Each of our existing master repurchase facilities includes "credit mark-to-market" features. "Credit mark-to-market" provisions in repurchase facilities are designed to keep the lenders' credit exposure generally constant as a percentage of the underlying collateral value of the assets pledged as security to them. 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. 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. Generally, if the lender determines (subject to certain conditions) that the market value of the collateral in a repurchase transaction has decreased by more than a defined minimum amount, the lender may require us to provide additional collateral or lead to margin calls that may require us to repay all or a portion of the funds advanced. 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. As of March 31, 2025, the weighted average haircut under our repurchase agreements was 32.8% (or 30.5%, if we had borrowed the maximum amount approved by its repurchase agreement counterparties as of such dates). 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. As we negotiate renewals and extensions of these liabilities, we may experience lower advance rates and higher pricing under the renewed or extended agreements.

Term Lending Agreements

Our term lending agreements provide us with asset-based financing on a non-mark-to-market basis, are match-term to the underlying loans and are partial recourse.

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.

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.

Table of Contents

Revolving Credit Agreement

In March 2025, we upsized our corporate revolving credit agreement (“Revolver”), administered by Morgan Stanley Senior Funding, Inc., to $660.0 million and extended the maturity date to March 2030. 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.

Collateralized Loan Obligations

In 2021, we financed a pool of loan participations from our existing loan portfolio through a managed collateralized loan obligation ("CLO" or "KREF 2021-FL2") and, in 2022, we financed a pool of loan participations from our existing multifamily loan portfolio through a managed CLO ("KREF 2022-FL3"). The CLOs provide us with match-term financing on a non-mark-to-market and non-recourse basis.

Secured Term Loan

In March 2025, we refinanced our existing term loan of $339.5 million with a new $550.0 million secured term loan due March 2032. The secured term loan is partially amortizing, with an amount equal to 1.0% per annum of the principal balance due in quarterly installments starting June 30, 2025. 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.

Refer to Notes 2 and 7 to our condensed consolidated financial statements for additional discussion of our secured term loan.

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 $1.3 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. 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 March 31, 2025, we were in compliance with the covenants of our financing facilities.

Non-Consolidated Senior Interests

In certain instances, we finance our loans through the non-recourse sale of a senior loan interest that is not included in our condensed consolidated financial statements. 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 condensed consolidated balance sheets and in our condensed consolidated statement of income. We had no outstanding financing through non-consolidated senior interests as of March 31, 2025.

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 borrower in each case is a special purpose subsidiary of ours. In addition, some guarantees include certain full recourse insolvency-related trigger events.

With respect to our Revolver, amounts borrowed are full recourse to certain guarantor wholly-owned subsidiaries of ours.

Real Estate Assets

Portland, OR Retail / Redevelopment — In December 2021, we took title a Portland retail property and accounted for the property on a consolidated basis. The transaction was accounted for as an asset acquisition under Accounting Standards Codification ("ASC") 805. Accordingly, we recorded the property and its net assets on the Condensed Consolidated Balance Sheets based on the estimated fair value of acquired assets and assumed liabilities. 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 Condensed Consolidated Balance Sheets. As of March 31, 2025, we have a priority of distributions up to $80.9 million before the JV Partner can participate in the economics of the REO JV.

Philadelphia, PA Office / Garage — In December 2023, we took title to a Philadelphia office portfolio through a deed-in-lieu of foreclosure ("DIL"). The transaction was accounted for as an asset acquisition under ASC 805. Accordingly, we recorded the portfolio and its net assets on the Condensed Consolidated Balance Sheets based on the estimated fair value of acquired assets and assumed liabilities.

In June 2024, we sold a portion of the portfolio and provided financing to the buyer through a senior loan. The senior loan had an outstanding principal balance of $24.4 million ($77.7 million total commitment) as of March 31, 2025 and earned a coupon rate of S+4.0% with a maximum maturity of July 2029, assuming all extension options are exercised. The senior loan is presented within “Commercial real estate loans, held-for-investment, net” on the Condensed Consolidated Balance Sheets.

Mountain View, CA Office — In June 2024, we and the KKR affiliate took title to a Mountain View office property through a 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. The transaction was accounted for as an asset acquisition under ASC 805. Accordingly, we recorded the property and its net assets on the Condensed Consolidated Balance Sheets based on the estimated fair value of acquired assets and assumed liabilities. The KKR affiliate's interest in the property was presented within "Noncontrolling interests in equity of consolidated joint ventures" on the Condensed Consolidated Balance Sheets.

Seattle, WA Life Science (Equity Method Investment) — In June 2024, we and the KKR affiliates took title to a Seattle life science property through a DIL under a Tenant-in-Common ("TIC") agreement. 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.

Table of Contents

Results of Operations

Three Months Ended March 31, 2025 Compared to Three Months Ended December 31, 2024

The following table summarizes the changes in our results of operations for three months ended March 31, 2025 and December 31, 2024 (dollars in thousands, except per share data):


	Three Months Ended				Increase (Decrease)
	March 31, 2025		December 31, 2024		Dollars		Percentage
Net Interest Income
Interest income	$	113,967	$	123,610	$	(9,643)	(8)	%
Interest expense	82,626		88,476		(5,850)		(7)
Total net interest income	31,341		35,134		(3,793)		(11)
Other Income
Income (loss) from equity method investments	(201)		(101)		(100)		99
Other miscellaneous income	1,187		1,194		(7)		(1)
Revenue from real estate owned operations	2,889		3,564		(675)		(19)

Total other income	3,875		4,657		(782)		(17)
Operating Expenses
Provision for (reversal of ) credit losses, net	24,863		4,594		20,269		441
Management fee to affiliate	5,797		5,919		(122)		(2)
General and administrative	4,831		3,955		876		22

Expenses from real estate owned operations	5,474		5,722		(248)		(4)
Total operating expenses	40,965		20,190		20,775		103
Income (Loss) Before Income Taxes	(5,749)		19,601		(25,350)		(129)
Income tax expense	—		45		(45)		(100)
Net Income (Loss)	(5,749)		19,556		(25,305)		(129)
Net income (loss) attributable to noncontrolling interests	(888)		(699)		(189)		(27)
Net Income (Loss) Attributable to KKR Real Estate Finance Trust Inc. and Subsidiaries	(4,861)		20,255		(25,116)		(124)
Preferred stock dividends	5,326		5,326		—		—
Participating securities' share in earnings	363		351		12		3
Net Income (Loss) Attributable to Common Stockholders	$	(10,550)	$	14,578	$	(25,128)	(172)

Net Income (Loss) Per Share of Common Stock
Basic and Diluted	$	(0.15)	$	0.21	$	(0.36)	(171)

Weighted Average Number of Shares of Common Stock Outstanding
Basic and Diluted	68,765,877		69,342,983		(577,106)		(1)

Dividends Declared per Share of Common Stock	$	0.25	$	0.25	$	—	—

Table of Contents

Net Interest Income

Net interest income decreased by $3.8 million during the three months ended March 31, 2025, as compared to the preceding three-month period. This decrease was due primarily to a decrease in index rates and fewer calendar days compared to the preceding three month period. We recorded $3.4 million of deferred loan fees and origination discounts accreted into interest income during the three months ended March 31, 2025, as compared to $3.7 million during the preceding period. In addition, we recorded $3.1 million of deferred financing costs amortization into interest expense during the three months ended March 31, 2025, as compared to $1.3 million for the preceding period.

Other Income

Total other income decreased by $0.8 million during the three months ended March 31, 2025, as compared to the preceding period. This decrease was due primarily to a $0.7 million decrease in revenue from REO operations.

Operating Expenses

Total operating expenses increased by $20.8 million during the three months ended March 31, 2025, as compared to the preceding period. This increase was primarily due to a $20.3 million change in the provision for credit losses. The provision for credit losses during the three months ended March 31, 2025 was due primarily to additional reserves for risk-rated 5 and risk-rated 4 loans in the multifamily and life science sectors.

Table of Contents

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

The following table summarizes the changes in our results of operations for the three months ended March 31, 2025 and 2024 (dollars in thousands, except per share data):


	Three Months Ended March 31,				Increase (Decrease)
	2025		2024		Dollars		Percentage
Net Interest Income
Interest income	$	113,967	$	151,620	$	(37,653)	(25)	%
Interest expense	82,626		112,476		(29,850)		(27)
Total net interest income	31,341		39,144		(7,803)		(20)
Other Income
Income (loss) from equity method investments	(201)		845		(1,046)		(124)
Other miscellaneous income	1,187		1,792		(605)		(34)
Revenue from real estate owned operations	2,889		4,978		(2,089)		(42)

Total other income (loss)	3,875		7,615		(3,740)		(49)
Operating Expenses
Provision for (reversal of ) credit losses, net	24,863		33,266		(8,403)		(25)
Management fee to affiliate	5,797		6,340		(543)		(9)

General and administrative	4,831		4,992		(161)		(3)
Expenses from real estate owned operations	5,474		5,549		(75)		(1)
Total operating expenses	40,965		50,147		(9,182)		(18)
Income (Loss) Before Income Taxes	(5,749)		(3,388)		(2,361)		70
Income tax expense	—		41		(41)		(100)
Net Income (Loss)	(5,749)		(3,429)		(2,320)		68
Net income (loss) attributable to noncontrolling interests	(888)		(321)		(567)		(177)
Net Income (Loss) Attributable to KKR Real Estate Finance Trust Inc. and Subsidiaries	(4,861)		(3,108)		(1,753)		56
Preferred stock dividends	5,326		5,326		—		—
Participating securities' share in earnings	363		305		58		19
Net Income (Loss) Attributable to Common Stockholders	$	(10,550)	$	(8,739)	$	(1,811)	21

Net Income (Loss) Per Share of Common Stock
Basic and Diluted	$	(0.15)	$	(0.13)	$	(0.02)	15

Weighted Average Number of Shares of Common Stock Outstanding
Basic and Diluted	68,765,877		69,386,568		(620,691)		(1)

Dividends Declared per Share of Common Stock	$	0.25	$	0.25	$	—	—

Table of Contents

Net Interest Income

Net interest income decreased by $7.8 million during the three months ended March 31, 2025, as compared to the corresponding period in the prior year. This decrease was due primarily to a reduced loan portfolio size as a result of repayments or other resolutions and lower index rates. We recorded $3.4 million of deferred loan fees and origination discounts accreted into interest income during the three months ended March 31, 2025, as compared to $4.7 million during the prior year period. In addition, we recorded $3.1 million of deferred financing costs amortization into interest expense during the three months ended March 31, 2025, as compared to $5.0 million during the prior year period.

Other Income

Total other income decreased by $3.7 million during the three months ended March 31, 2025, as compared to the prior year period. This decrease was due primarily to a $2.1 million decrease in revenue from REO operations and a $1.0 million operating loss related to our real estate asset equity method investment.

Operating Expenses

Total operating expenses decreased by $9.2 million during the three months ended March 31, 2025, as compared to the prior year period. This decrease was due primarily to a $8.4 million change in the provision for credit losses. This change was due primarily to a higher provision for credit losses of $33.3 million on risk-rated 5 loans in the office sector during the prior year period compared to the provision for credit losses of $24.9 million on risk-rated 5 and risk-rated 4 loans in the multifamily and life science sectors during the three months ended March 31, 2025 .

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. Our Non-Mark-to-Market Financing Sources, which accounted for 78% of our total financing as of March 31, 2025, are not subject to credit or capital markets mark-to-market provisions. The remaining 22% of our total financing, which are comprised of three master repurchase agreements, are only subject to credit marks.

Our primary sources of liquidity include $106.4 million of cash on our Condensed Consolidated Balance Sheets, $570.0 million of available capacity on our corporate Revolver, $43.9 million of available borrowings under our financing arrangements based on existing collateral, and cash flows from operations. In addition, we had $349.9 million of total unencumbered assets, including $210.2 million of real estate owned assets, $35.7 million of investments in CMBS B-Pieces and $104.0 million of unencumbered senior loans, that can be financed, as of March 31, 2025. 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.

Our primary liquidity needs include our ongoing commitments to repay the principal and interest on our borrowings and to pay other financing costs, financing our assets, meeting future funding obligations, making distributions to our stockholders, funding our operations that includes making payments to our Manager in accordance with the management agreement, and other general business needs. We believe that our cash position and sources of liquidity will be sufficient to meet anticipated requirements for financing, operating and other expenditures in both the short- and long-term, based on current conditions.

As described in Note 9 to our condensed 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. 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. As of March 31, 2025, we held $35.7 million of interests in such entities, which does not include a remaining commitment of $4.3 million to our CMBS B-Piece investment that we are required to fund if called.

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 to be issued pursuant to this Shelf was not specified when it was filed and there is no specific dollar limit on the amount of securities we may issue. The securities covered by this Shelf include: (i) common stock, (ii) preferred stock, (iii) depository shares, (iv) debt securities, (v) warrants, (vi) subscription rights, (vii) purchase contracts, and (viii) units. The specifics of any future offerings, along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering material, at the time of any offering.

We have also entered into an equity distribution agreement with certain sales agents, pursuant to which we may sell, from time to time, up to an aggregate sales price of $100.0 million of our common stock, pursuant to a continuous offering program (the “ATM”), under the Shelf. 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 three months ended March 31, 2025, we did not sell any shares of common stock under the ATM. As of March 31, 2025, $93.2 million remained available for issuance under the ATM.

See Notes 5, 6, 7 and 10 to our condensed consolidated financial statements for additional details regarding our secured financing agreements, collateralized loan obligations, secured term loan and stock activity.

Table of Contents

Debt-to-Equity Ratio and Total Leverage Ratio

The following table presents our debt-to-equity ratio and total leverage ratio:

March 31, 2025

December 31, 2024

Debt-to-equity ratio(A)

1.9x

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.

(B) Represents (i) total outstanding debt agreements, secured term loan, and collateralized loan obligations, less cash to (ii) KREF's stockholders' equity, in each case, at period end.

Sources of Liquidity

Our primary sources of liquidity include cash and cash equivalents and available borrowings under our secured financing agreements, inclusive of our Revolver. Amounts available under these sources as of the date presented are summarized in the following table (dollars in thousands):


	March 31, 2025		December 31, 2024
Cash and cash equivalents	$	106,411	$	104,933
Available borrowings under revolving credit agreement	570,000		530,000
Available borrowings under master repurchase agreements	39,147		46,121

Available borrowings under term lending agreements	4,758		3,234


Available borrowings under term loan agreements	—		524
Total	$	720,316	$	684,812

We also had $349.9 million of total unencumbered assets, including $210.2 million of real estate owned assets, $35.7 million of investments in CMBS B-Pieces and $104.0 million of unencumbered senior loans as of March 31, 2025. In addition to our primary sources of liquidity, we have the ability to access further liquidity through our ATM program and public offerings of debt and equity securities. Our existing loan portfolio also provides us with liquidity as loans are repaid or sold, in whole or in part, and the proceeds from repayment become available for us to invest.

Cash Flows

The following table sets forth changes in cash and cash equivalents for the three months ended March 31, 2025 and 2024 (dollars in thousands):


	Three Months Ended March 31,
	2025		2024
Cash Flows From Operating Activities	$	15,916	$	34,488
Cash Flows From Investing Activities	(220,466)		236,756
Cash Flows From Financing Activities	205,347		(300,770)
Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash	$	797	$	(29,526)

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. The following table sets forth interest received from, and paid for, our investments (dollars in thousands):


	Three Months Ended March 31,
	2025		2024
Interest received	$	110,907	$	147,237
Interest paid	84,721		108,407
Net interest collections	$	26,186	$	38,830

Our net interest collections were partially offset by cash used to pay management fees, as follows (dollars in thousands):


	Three Months Ended March 31,
	2025		2024
Management Fees to affiliate	$	5,919	$	6,523

Cash Flows from Investing Activities

Our cash flows from investing activities primarily consisted of cash outflows for loan originations and funding commitments under existing loan investments, partially offset by cash inflows from loan repayments during the quarter. During the three months ended March 31, 2025, we funded $400.2 million of CRE loans and received $182.1 million from the repayments and sale of CRE loans.

During the three months ended March 31, 2024, we funded $95.8 million of CRE loans and received $334.7 million from the repayments of CRE loans.

Cash Flows from Financing Activities

During the three months ended March 31, 2025, our cash flows from financing activities were primarily driven by borrowing proceeds of $603.4 million under our secured financing agreements and proceeds of $209.8 million issued under our secured term loan, partially offset by repayments of $377.0 million on our secured financing agreements and repayments of $185.1 million on our collateralized loan obligations.

During the three months ended March 31, 2024, our cash flows from financing activities were primarily driven by (i) repayments of $382.1 million under our secured financing agreements and (ii) payment of $35.1 million in dividends, partially offset by borrowing proceeds of $118.8 million under our secured financing agreements.

Table of Contents

Contractual Obligations and Commitments

The following table presents our contractual obligations and commitments (including interest payments) as of March 31, 2025 (dollars in thousands):


	Total		Less than 1 year		1 to 3 years		3 to 5 years		Thereafter
Master Repurchase Facilities(A)	$	1,140,194	$	270,397	$	718,770	$	151,027	$	—
Term Lending Agreements(A)	834,289		79,250		633,423		—		121,616
Warehouse Facility	—		—		—		—		—
Term Loan Facility	613,082		—		533,082		80,000		—
Asset Specific Facility	353,716		—		353,716		—		—
Revolver(B)	90,000		90,000		—		—		—
Total secured financing agreements	3,031,281		439,647		2,238,991		231,027		121,616
Collateralized Loan Obligations	1,581,102		—		—		—		1,581,102
Secured Term Loan	550,000		5,500		11,000		11,000		522,500
Interest payable(C)	1,165,545		322,481		460,022		303,339		79,703
Future funding obligations(D)	418,442		289,163		122,182		7,097		—
RECOP I commitment	4,324		4,324		—		—		—
Total	$	6,750,694	$	1,061,115	$	2,832,195	$	552,463	$	2,304,921

(A) The allocation of repurchase facilities and term lending agreements is based on the earlier of (i) the maximum maturity of the underlying loans pledged as collateral or (ii) the maximum maturity of the respective financing agreements. 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 March 31, 2025. 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 March 31, 2025 will remain constant into the future. The actual amounts borrowed and rates may vary over time.

(D) We have future funding obligations related to our investments in senior loans. These future funding obligations primarily relate to construction projects, capital improvements, tenant improvements and leasing commissions. Generally, funding obligations are subject to certain conditions that must be met, such as customary construction draw certifications, minimum debt service coverage ratios, minimal debt yield tests, or executions of new leases before advances are made to the borrower. As such, the allocation of our future funding obligations is based on the earlier of the expected funding or commitment expiration date.

We are required to pay our Manager a base management fee, an incentive fee and reimbursements for certain expenses pursuant to 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 14 to our condensed consolidated financial statements included in this Form 10-Q for additional terms and details of the fees payable under our management agreement.

As a REIT, we generally must distribute at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, to stockholders in the form of dividends to comply with the REIT provisions of the Code. 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 condensed consolidated financial statements.

Critical Accounting Policies and Use of Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires our Manager to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. Actual results could differ from these estimates. There have been no material changes to our Critical Accounting Policies and Use of Estimates described in our Annual Report on Form 10-K.

Table of Contents

Allowance for Credit Losses

We originate and purchase CRE debt and related instruments generally to be held as long-term investments at amortized cost. We recognize and measure the allowance for credit losses under the Current Expected Credit Loss ("CECL") model, which requires us to estimate expected credit losses, not only based on historical experience and current conditions, but also by including reasonable and supportable forecasts incorporating forward-looking information. The measurement of expected credit losses under CECL is applicable to financial assets measured at amortized cost, and off-balance sheet credit exposures such as unfunded loan commitments. The allowance for credit losses is deducted from the respective loans’ amortized cost basis on our Condensed Consolidated Balance Sheets. The allowance for credit losses attributed to unfunded loan commitments is included in “Other liabilities” on the Condensed 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”). In estimating a CECL reserve using the WARM method, we reference historical loan loss data across a comparable data set and apply such loss rate to each loan over its expected remaining term, taking into consideration expected economic conditions over the relevant timeframe. In certain instances, we might use other acceptable alternative approaches in the future depending on, among other factors, the type of loan, underlying collateral and availability of relevant historical market loan loss data.

To arrive at a CECL reserve using the WARM method, we considered various factors including (i) historical loss experience in the commercial real estate lending market, (ii) timing of expected repayments and expected loan future funding, (iii) and our current and future view of the macroeconomic environment for a reasonable and supportable forecast period. We derive a historical loss rate predominately based on a commercial mortgage-backed securities (“CMBS”) database with historical losses since 1998 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. 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. 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.

For collateral dependent loans that we determine foreclosure of the collateral is probable, we measure the expected losses based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. For collateral dependent loans where we determine foreclosure is not probable, we apply a practical expedient to estimate expected losses using the difference between the collateral’s fair value (less costs to sell the asset if repayment is expected through the sale of the collateral) and the amortized cost basis of the loan. A loan is determined to be collateral dependent if (i) a borrower or sponsor is experiencing financial difficulty, and (ii) the loan is expected to be substantially repaid through the sale of the underlying collateral; such determination requires the use of significant judgment and can be based on several factors subject to uncertainty. Considerations used in determination of financial difficulty may include, but are not limited to, whether the borrower's operating cash flow is sufficient to cover the current and future debt service requirements, the borrower’s ability to refinance the loan, market liquidity and other circumstances that can affect the borrower’s ability to satisfy its contractual obligations under the loan agreement.

Refer to Note 2 to our condensed consolidated financial statements for the description of our significant accounting policies.

Recent Accounting Pronouncements

In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires a public business entity to provide disaggregated disclosures, in the notes to the financial statements, of certain categories of expenses that are included in expense line items on the face of the income statement. The guidance is effective for our 2027 annual reporting. The guidance is applied prospectively and may be applied retrospectively. We are evaluating the impact of ASU 2024-03.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We seek to manage our risks related to the credit quality of our assets, interest rates, liquidity, prepayment rates and market value, while at the same time seeking to provide an opportunity to stockholders to realize attractive risk-adjusted returns. While risks are inherent in any business enterprise, we seek to quantify and justify risks in light of available returns and to maintain capital levels consistent with the risks we undertake.

Credit Risk

Our investments are subject to credit risk, including the risk of default. The performance and value of our investments depend upon the sponsors' ability to operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. To monitor this risk, we review our investment portfolio and are in regular contact with the sponsors, monitoring performance of the collateral and enforcing our rights as necessary.

Inflation, rising interest rates and increasing costs may dampen consumer spending and slow corporate profit growth, which may negatively impact the value of underlying real estate collateral relating to our investments and impair our borrowers’ ability to execute on their business plans and potentially their ability to perform under the terms of their loan obligations. 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. 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.

Interest Rate Risk

The composition of our investments is such that rising interest rates will increase our net income, while declining interest rates will generally decrease our net income. Rate floors relating to our loan portfolio may offset some of the impact from declining rates. There can be no assurance that we will continue to utilize rate floors. There can be no assurance of how our net income may be affected in future quarters, which will depend on, among other things, the interest rate environment and our then-current portfolio.

In addition to the risks related to fluctuations in cash flows and asset values associated with movements in interest rates, there is also the risk of non-performance on floating-rate assets. In the case of a significant increase in interest rates, the cash flows of the collateral real estate assets may not be sufficient to pay debt service due under our loans, which may contribute to non-performance or, in severe cases, default.

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. 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. However, rate floors relating to our loan portfolio may offset some of the impact from declining rates. In addition, interest we are charged on fixed-rate debt would not change.

As of March 31, 2025, our accruing loan portfolio and related portfolio financing earned or paid a floating rate of interest indexed to Term SOFR. 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. As of March 31, 2025, a 50 basis point and a 100 basis point decrease in the index rates would decrease our expected cash flows by approximately $1.1 million and $1.9 million, or ($0.02) and ($0.03) per common share, respectively, for the following three-month period. Conversely, 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.

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 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 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.

Higher interest rates imposed by the Federal Reserve may lead to a decrease in prepayment speeds and an increase in the number of our borrowers who exercise extension options, which could extend beyond the term of certain secured financing agreements we use to finance our loan investments. This could have a negative impact on our results of operations, and in some situations, we may be forced to sell assets to maintain adequate liquidity, which could cause us to incur losses.

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. Over time, as market conditions change, we may use other forms of leverage in addition to these methods of financing. Weakness or volatility in the financial markets, the CRE and mortgage markets or the economy generally could adversely affect one or more of our lenders or potential lenders and could cause one or more of our lenders or potential lenders to be unwilling or unable to provide us with financing, or to decrease the amount of our available financing through a market to market, or to increase the costs of that financing.

Real Estate Risk

The market values of commercial real estate assets are subject to volatility and may be adversely affected by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. 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.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that the information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurances of achieving the desired controls.

As of March 31, 2025, we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2025, our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act) occurred during the quarter ended March 31, 2025 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The section entitled “Litigation” appearing in Note 13 of our condensed consolidated financial statements included in this Form 10-Q is incorporated herein by reference.

ITEM 1A. RISK FACTORS

For information regarding the risk factors that could affect the Company’s business, results of operations, financial condition and liquidity, see the information under Part I, Item 1A. “Risk Factors” in the Form 10-K, which is accessible on the SEC’s website at www.sec.gov. There have been no material changes to the risk factors previously disclosed in the Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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 timing, manner, price and amount of any common stock repurchases will be determined by us in our discretion and will depend on a variety of factors, including legal requirements, price and economic considerations, and market conditions. The program does not require us to repurchase any specific number of shares of common stock. The program does not have an expiration date and may be suspended, modified or discontinued at any time.

During the three months ended March 31, 2025, we repurchased and retired 889,100 shares of our common stock under the repurchase program at an average price per share of $11.03 for a total of $9.8 million. As of March 31, 2025, we had $80.2 million of remaining capacity to repurchase shares under the program.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS


						Exhibit Description

10.1						Term Loan Credit Agreement, dated as of March 5, 2025, by and among KREF Holdings X LLC, KKR Real Estate Financing Holdings L.P., the guarantors from time to time party thereto, the lenders from time to time party thereto and Goldman Sachs USA, as administrative agent.

10.2*						Tenth Amendment, dated as of March 5, 2025, to the Credit Agreement among KREF Holdings X LLC, KKR Real Estate Finance Holdings L.P., the lenders party thereto and Morgan Stanley Senior Funding Inc., as administrative agent.

10.3						Amendment No. 8 to Guarantee Agreement, dated as of March 6, 2025 between Wells Fargo Bank, National Association and KKR Real Estate Finance Holdings L.P.

10.4						Fourth Amendment to Guaranty Agreement, effective as of March 6, 2025, between KKR Real Estate Finance Holdings L.P. and Morgan Stanley Bank, N.A.

10.5						Third Amendment to Guaranty Agreement, effective as of March 6, 2025, between KKR Real Estate Finance Holdings L.P. and Morgan Stanley Bank, N.A. (as the assignee of all the rights and obligations of MUFG Bank Ltd. under the Program Documents).

31.1						Certificate of Matthew A. Salem, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certificate of Kendra L. Decious, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1						Certificate of Matthew A. Salem, Chief Executive Officer, pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

32.2						Certificate of Kendra L. Decious, Chief Financial Officer, pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

101.INS						Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH						Inline XBRL Taxonomy Extension Schema Document

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104						Cover Page Interactive Data File, formatted in Inline XBRL and contained in Exhibit 101.

_____________________

* Certain information contained in this agreement has been omitted because it is not material and is the type that the registrant treats as private or confidential.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		KKR REAL ESTATE FINANCE TRUST INC.

Date:	April 23, 2025	By:	/s/ Matthew A. Salem
			Name: Matthew A. Salem
			Title: Chief Executive Officer
			(Principal Executive Officer)

Date:	April 23, 2025	By:	/s/ Kendra L. Decious
			Name: Kendra L. Decious
			Title: Chief Financial Officer and Treasurer
			(Principal Financial and Accounting Officer)