KKR Real Estate Finance Trust Results Presentation Deck
Key Definitions
"Core Earnings": Used by the Company to evaluate the Company's performance excluding the effects of certain transactions and GAAP adjustments
the Company believes are not necessarily indicative of the current loan activity and operations. Core Earnings is a measure that is not prepared in
accordance with GAAP. The Company defines Core Earnings for reporting purposes as net income (loss) attributable to stockholders or, without
duplication, owners of the Company's 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 after discussions between the Company's Manager and board of directors and after approval by a majority of the independent directors.
The exclusion of depreciation and amortization from the calculation of Core Earnings only applies to debt investments related to real estate to the
extent the Company forecloses upon the property or properties underlying such debt investments.
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The Company believes that providing Core Earnings on a supplemental basis to its net income as determined in accordance with GAAP is helpful to
stockholders in assessing the overall performance of the Company's business. Although pursuant to the Management Agreement with its Manager, the
Company calculates the incentive compensation and base management fees due to its Manager using Core Earnings before incentive compensation,
beginning with the first quarter of 2020, the Company revised its definition of Core Earnings for reporting purposes to be net of incentive
compensation, since the Company believes this is a more meaningful presentation of the economic performance of its common stock.
Core Earnings should not be considered as a substitute for GAAP net income. The Company cautions readers that its methodology for calculating Core
Earnings may differ from the methodologies employed by other REITS to calculate the same or similar supplemental performance measures, and as a
result, the Company's reported Core Earnings may not be comparable to similar measures presented by other REITs.
"IRR": IRR is the annualized effective compounded return rate that accounts for the time-value of money and represents the rate of return on an
investment over a holding period expressed as a percentage of the investment. It is the discount rate that makes the net present value of all cash
outflows (the costs of investment) equal to the net present value of cash inflows (returns on investment). It is derived from the negative and positive
cash flows resulting from or produced by each transaction (or for a transaction involving more than one investment, cash flows resulting from or
produced by each of the investments), whether positive, such as investment returns, or negative, such as transaction expenses or other costs of
investment, taking into account the dates on which such cash flows occurred or are expected to occur, and compounding interest accordingly. The
weighted average underwritten IRR for the investments shown reflects the returns underwritten by KKR Real Estate Finance Manager LLC, the
Company's external manager, taking into account certain assumptions around leverage up to no more than the maximum approved advance rate, and
calculated on a weighted average basis assuming no dispositions, early prepayments or defaults but assuming that extension options are exercised and
that the cost of borrowings remains constant over the remaining term. With respect to certain loans included in the weighted average underwritten IRR
shown, the calculation assumes certain estimates with respect to the timing and magnitude of the initial and future fundings for the total loan
commitment and associated loan repayments, and assumes no defaults. With respect to certain loans included in the weighted average underwritten
IRR shown, the calculation assumes the one-month spot USD LIBOR as of the date the loan was originated. There can be no assurance that the actual
weighted average IRRS will equal the weighted average underwritten IRRs shown.
KKR
REAL ESTATE
FINANCE TRUSTView entire presentation