KKR Real Estate Finance Trust Inc. (NYSE: KREF)

Sector: Real Estate Industry: REIT - Mortgage CIK: 0001631596
Market Cap 564.30 Mn
P/B 0.46
P/E -24.20
P/S 3.97
ROIC (Qtr) -0.06
Div Yield % 11.81
Rev 1y % (Qtr) -33.19
Total Debt (Qtr) 5.15 Bn
Debt/Equity (Qtr) 4.19

About

KKR Real Estate Finance Trust Inc. (KREF), a company operating in the real estate finance industry, is primarily engaged in the origination and acquisition of transitional senior loans secured by institutional-quality commercial real estate properties. The company is an indirect subsidiary of KKR, a leading global investment firm, and is managed by its Manager. KREF's access to KKR's global network of property owners, managers, lenders, brokers, and advisors provides it with a competitive edge in the real estate market. KKR Real Estate Finance...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 73.87M provides 4.06x coverage of SG&A expenses 18.21M, showing efficient operational cost management.
  • Strong free cash flow of 101.24M provides 5.56x coverage of SG&A expenses 18.21M, indicating efficient cost management.
  • Free cash flow of 101.24M provides solid 0.79x coverage of operating expenses 128.03M, showing operational efficiency.
  • Cash position of 204.09M fully covers payables of 6.09M by 33.50x, showing strong vendor relationship management.
  • Free cash flow of 101.24M fully covers payables of 6.09M by 16.62x, indicating strong vendor payment capability.

Bear case

  • Operating cash flow of 73.87M barely covers its investment activities of 807.36M, with a coverage ratio of 0.09, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 73.87M provides thin coverage of dividend payments of (67.89M) with a -1.09 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 204.09M provide limited coverage of acquisition spending of (9.02M), which is -22.62x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 101.24M provides weak coverage of capital expenditures of (27.37M), with a -3.70 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of (509000) show weak coverage of depreciation charges of 2.21M, with a -0.23 ratio indicating high capital intensity and potential reinvestment needs.

Peer comparison

Companies in the REIT - Mortgage
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NLY Annaly Capital Management Inc 13.98 Bn 10.42 8.17 107.02 Bn
2 AGNC AGNC Investment Corp. 11.44 Bn 16.65 30.74 95.01 Bn
3 STWD Starwood Property Trust, Inc. 6.55 Bn 17.88 3.63 21.43 Bn
4 RITM Rithm Capital Corp. 5.78 Bn 7.43 1.16 34.97 Bn
5 BXMT Blackstone Mortgage Trust, Inc. 3.36 Bn 31.37 6.62 15.46 Bn
6 ARR Armour Residential REIT, Inc. 1.83 Bn 34.78 15.64 16.56 Bn
7 DX Dynex Capital Inc 1.59 Bn 9.04 6.88 11.75 Bn
8 ABR Arbor Realty Trust Inc 1.50 Bn 9.84 2.84 10.40 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.90 0.83
EV to Cash from Ops. EV/CFO 79.25 -102.96
EV to Debt EV to Debt 1.14 1.31
EV to EBIT EV/EBIT -11,501.06 -260.73
EV to EBITDA EV/EBITDA -3,358.60 -16.37
EV to Free Cash Flow [EV/FCF] EV/FCF 57.83 3.47
EV to Market Cap EV to Market Cap 10.69 9.18
EV to Revenue EV/Rev 41.14 26.77
Price to Book Value [P/B] P/B 0.45 0.68
Price to Earnings [P/E] P/E -23.49 -4.85
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) -0.26 -0.55
Dividend Payout Ratio % Div Payout % (Qtr) -285.70 29.47
Dividend per Basic Share Div per Share (Qtr) 1.00 1.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 65.06 57.60
Interest Coverage Interest Coverage 0.00 -0.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 383.56 37.60
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 87.60 24.22
Dividend Growth (1y) % Div 1y % (Qtr) -15.25 4.53
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -122.62 17.83
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -168.41 9.86
EBIT Growth (1y) % EBIT 1y % (Qtr) -117.85 20.98
EBT Growth (1y) % EBT 1y % (Qtr) -117.85 11.17
EPS Growth (1y) % EPS 1y % (Qtr) -16.67 59.25
FCF Growth (1y) % FCF 1y % (Qtr) -28.42 59.63
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -25.93 20.65
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.02 0.04
Cash Payout Ratio Cash Payout (Qtr) 2.86 0.83
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 4.19 5.05
Interest Cover Ratio Interest Cover Ratio 0.00 -0.17
Times Interest Earned Times Interest Earned 0.00 -0.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 1.20 137.11
EBIT Margin % EBIT Margin % (Qtr) -0.36 142.19
EBT Margin % EBT Margin % (Qtr) -0.36 129.16
Gross Margin % Gross Margin % (Qtr) 100.00 117.97
Net Profit Margin % Net Margin % (Qtr) -16.40 125.89