KKR Real Estate Finance Trust Reports $35.4 Million Net Loss in Q2 2025

KKR Real Estate Finance Trust Inc. (KREF) reported a significant decline in its financial performance for the second quarter of 2025, with a net loss attributable to common stockholders of $35.4 million, or $(0.53) per share, compared to a profit of $20.2 million, or $0.29 per share, in the same period last year. The company's total revenue for the quarter was $35.9 million, down from $47.7 million in the prior year, primarily due to a decrease in interest income, which fell to $112.3 million from $149.2 million. The decline in revenue was attributed to a reduced loan portfolio size and an increase in loans placed on nonaccrual status.

In comparison to the previous fiscal period, KREF's total assets increased to $6.76 billion as of June 30, 2025, up from $6.35 billion at the end of 2024. This growth was driven by an increase in commercial real estate loans held for investment, which totaled $5.78 billion, despite a rise in the allowance for credit losses, which reached $171.6 million, up from $117.1 million at the end of 2024. The company also reported a significant increase in operating expenses, which rose to $66.4 million from $22.1 million, largely due to a $49.8 million provision for credit losses.

Strategically, KREF has continued to focus on its core business of originating and acquiring transitional senior loans secured by commercial real estate assets. The company has maintained a diversified portfolio, with 62% of its loans in multifamily and industrial sectors. As of June 30, 2025, KREF's average risk rating for its loan portfolio was 3.1, indicating a moderate level of risk. The company also executed a share repurchase program, retiring 3.06 million shares at an average price of $9.74, leaving $60.2 million available for future repurchases.

Operationally, KREF reported that it collected 99.9% of interest payments due on its loan portfolio during the quarter. The company’s cash and cash equivalents stood at $107.7 million, with additional liquidity available through its corporate revolving credit agreement, which had a capacity of $620 million. KREF's financing strategy remains focused on non-mark-to-market sources, which accounted for 78% of its total financing as of June 30, 2025. The company is also exploring additional liquidity sources through future equity and debt offerings.

Looking ahead, KREF anticipates continued challenges in the commercial real estate market due to macroeconomic factors such as inflation and rising interest rates. The company remains committed to its investment strategy while monitoring the credit quality of its assets closely. KREF's management expressed confidence in its ability to navigate the current market conditions and maintain sufficient liquidity to meet its operational and financing needs.