KKR Real Estate Finance Trust Inc.

Previous wording

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 16 to our condensed consolidated financial statements included in this Form 10-Q.

Current wording

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 50-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 16 to our condensed consolidated financial statements included in this Form 10-Q.

Previous wording

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, including as a result of the outbreak of a military conflict between the United States, Israel and Iran on February 28, 2026, 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.

Current wording

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, including as a result of an ongoing military conflict between the United States, Israel and Iran, 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.

Previous wording

We have established a $5,725.4 million portfolio of diversified investments, consisting primarily of senior commercial real estate loans as of March 31, 2026.

Current wording

We have established a $5,248.7 million portfolio of diversified investments, consisting primarily of senior commercial real estate loans as of June 30, 2026.

Previous wording

As of March 31, 2026, the average risk rating of our loan portfolio was 3.3, weighted by loan outstanding principal. As of March 31, 2026, the average loan commitment in our portfolio was $107.8 million and multifamily and industrial loans comprised 63% of our loan portfolio.

Current wording

As of June 30, 2026, the average risk rating of our loan portfolio was 3.3, weighted by loan outstanding principal. As of June 30, 2026, the average loan commitment in our portfolio was $101.3 million and multifamily and industrial loans comprised 60% of our loan portfolio.

Previous wording

In addition, we owned Real Estate Assets with an investment amount of $505.0 million, comprised of the acquired properties (directly or indirectly) and capitalized redevelopment costs, as of March 31, 2026. These properties are reflected on our Condensed Consolidated Balance Sheets.

Current wording

In addition, we owned Real Estate Assets with an investment amount of $648.3 million, comprised of the acquired properties (directly or indirectly) and capitalized redevelopment costs, as of June 30, 2026. These properties are reflected on our Condensed Consolidated Balance Sheets.

Previous wording

(C) "Other" property type includes Student Housing (2%) and Mixed Use (<1%).

Current wording

(C) "Other" property type includes Student Housing (3%) and Mixed Use (<1%).

Previous wording

For Senior Loan 5, the total whole loan is on non-accrual and has an outstanding principal balance of $194.4 million, including (i) a fully funded senior mortgage loan of $120.0 million, at an interest rate of S+2.25% and (ii) a mezzanine note with a commitment of $79.4 million, of which $74.4 million was funded as of March 31, 2026, at a fixed interest rate of 4.5% PIK.

Current wording

For Senior Loan 2, the total whole loan has an outstanding principal balance of $194.4 million, including (i) a fully funded senior mortgage loan of $120.0 million, at an interest rate of S+2.25% and (ii) a mezzanine note with a commitment of $79.4 million, of which $74.4 million was funded as of June 30, 2026, at a fixed interest rate of 4.5% PIK.

Previous wording

(G) Loan Per SF / Unit / Key is based on the current principal amount divided by the current SF / Unit / Key. For Senior Loans 1, 3, 10, 22 and 37, Loan Per SF / Unit / Key is calculated as the total commitment amount of the loan divided by the proposed SF / Unit / Key.

Current wording

(G) Loan Per SF / Unit / Key is based on the current principal amount divided by the current SF / Unit / Key. For Senior Loans 1, 8, 20 and 35, Loan Per SF / Unit / Key is calculated as the total commitment amount of the loan divided by the proposed SF / Unit / Key.

Previous wording

In March 2026, we modified a risk-rated 5 senior life science loan located in Cambridge, MA, with an outstanding principal balance of $100.4 million. The terms of the modification included a $20.2 million principal repayment, and a restructure of the $80.2 million senior loan (after the $20.2 million repayment) into (i) a $62.9 million committed senior mortgage loan (with $35.5 million in unfunded commitment), and (ii) a $17.3 million subordinated note which is subordinate to a new $14.4 million sponsor interest. The restructured senior loan earns a coupon rate of S+3.7% and has a new term of five years. The $17.3 million subordinated note was deemed uncollectible and written off in March 2026. The loan modification was accounted for as a new loan for GAAP purposes. The restructured senior loan with an outstanding principal balance of $64.1 million was risk-rated 3 as of March 31, 2026.

Current wording

In March 2026, we modified a risk-rated 5 senior life science loan located in Cambridge, MA, with an outstanding principal balance of $100.4 million. The terms of the modification included a $20.2 million principal repayment, and a restructure of the $80.2 million senior loan (after the $20.2 million repayment) into (i) a $62.9 million committed senior mortgage loan (with $35.5 million in unfunded commitment), and (ii) a $17.3 million subordinated note which is subordinate to a new $14.4 million sponsor interest. The restructured senior loan earns a coupon rate of S+3.7% and has a new term of five years. The $17.3 million subordinated note was deemed uncollectible and written off in March 2026. The loan modification was accounted for as a new loan for GAAP purposes. The restructured senior loan with an outstanding principal balance of $65.8 million was risk-rated 3 as of June 30, 2026.

Previous wording

Our Non-Mark-to-Market Financing Sources, which accounted for 77% of our total financing as of March 31, 2026, are not subject to credit or capital markets mark-to-market provisions. The remaining 23% of our total financing, which is comprised of three master repurchase agreements, are only subject to credit marks.

Current wording

Our Non-Mark-to-Market Financing Sources, which accounted for 79% of our total financing as of June 30, 2026, are not subject to credit or capital markets mark-to-market provisions. The remaining 21% of our total financing, which is comprised of four master repurchase agreements, are only subject to credit marks.

Previous wording

Portland, OR Retail /Redevelopment—In December 2021, we took title a Portland retail property and 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. In June 2025, we sold a portion of the property for $6.0 million and recognized a realized gain of $0.7 million after closing costs. As of March 31, 2026, we have a priority of distributions up to $82.4 million before the JV Partner can participate in the economics of the REO JV.

Current wording

Portland, OR Retail /Redevelopment—In December 2021, we took title a Portland retail property and 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. In June 2025, we sold a portion of the property for $6.0 million and recognized a realized gain of

Previous wording

Real Estate Asset, Equity Method Investment

Current wording

Real Estate Asset, Equity Method Investments

Previous wording

Net interest income increased by $0.4 million during the three months ended March 31, 2026, as compared to the preceding three-month period. This increase was due to the decline in interest expense exceeding the decline in interest income, which both declined primarily due to lower index rates and a reduced loan portfolio size. We recorded $4.1 million of deferred loan fees and origination discounts accreted into interest income during the three months ended March 31, 2026, as compared to $4.8 million during the preceding period. In addition, we recorded $3.5 million of deferred financing costs amortization into interest expense during the three months ended March 31, 2026, as compared to $3.3 million for the preceding period.

Current wording

Net interest income decreased by $8.0 million during the three months ended June 30, 2026, as compared to the preceding three-month period. This decrease was due to a reduced loan portfolio size as a result of repayments or other resolutions and loans on nonaccrual status. We recorded $2.6 million of deferred loan fees and origination discounts accreted into interest income during the three months ended June 30, 2026, as compared to $4.1 million during the preceding period. In addition, we recorded $2.8 million of deferred financing costs amortization into interest expense during the three months ended June 30, 2026, as compared to $3.5 million for the preceding period.

Previous wording

Total other income increased by $1.6 million during the three months ended March 31, 2026, as compared to the preceding period. This increase was driven by current period gains on foreign currency forward contracts of $6.9 million partially offset by losses on foreign currency translation of $5.4 million.

Current wording

Total other income decreased by $5.6 million during the three months ended June 30, 2026, as compared to the preceding period. This decrease was driven by current period losses on foreign currency forward contracts of $4.2 million partially offset by gains on foreign currency translation of $1.5 million.

Previous wording

Total operating expenses increased by $32.0 million during the three months ended March 31, 2026, as compared to the preceding period. This increase was primarily due to a $29.9 million change in the provision for credit losses. The provision for credit losses during the three months ended March 31, 2026 was due primarily to additional reserves on risk-rated 5 office and life science loans.

Current wording

Total operating expenses increased by $46.5 million during the three months ended June 30, 2026, as compared to the preceding period. This increase was primarily due to a change in the provision for credit losses and change in fair value related primarily to office loans.

Previous wording

Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025

Current wording

Six Months Ended June 30, 2026 Compared to Six Months Ended June 30, 2025

Previous wording

The following table summarizes the changes in our results of operations for the three months ended March 31, 2026 and March 31, 2025 (amounts in thousands, except per share data):

Current wording

The following table summarizes the changes in our results of operations for the six months ended June 30, 2026 and June 30, 2025 (amounts in thousands, except per share data):

Previous wording

Net interest income decreased by $5.2 million during the three months ended March 31, 2026, 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 $4.1 million of deferred loan fees and origination discounts accreted into interest income during the three months ended March 31, 2026, as compared to $3.4 million during the prior year period. In addition, we recorded $3.5 million of deferred financing costs amortization into interest expense during the three months ended March 31, 2026, as compared to $3.1 million during the prior year period.

Current wording

Net interest income decreased by $17.1 million during the six months ended June 30, 2026, 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 $6.7 million of deferred loan fees and origination discounts accreted into interest income during the six months ended June 30, 2026, as compared to $7.8 million during the prior year period. In addition, we recorded $6.3 million of deferred financing costs amortization into interest expense during the six months ended June 30, 2026, as compared to $6.1 million during the prior year period.

Previous wording

Total other income increased by $4.5 million during the three months ended March 31, 2026, as compared to the prior year period. This decrease was due primarily to a $2.1 million increase in revenue from REO operations and gains on foreign currency forward contracts of $6.9 million partially offset by losses on foreign currency translation of $5.4 million

Current wording

Total other income increased by $1.6 million during the six months ended June 30, 2026, as compared to the prior year period. This increase was due primarily to a $2.4 million increase in revenue from REO operations and gains on foreign currency forward contracts of $2.7 million, partially offset by losses on foreign currency translation of $3.9 million.

Previous wording

Total operating expenses increased by $50.8 million during the three months ended March 31, 2026, as compared to the prior year period. The provision for credit losses during the three months ended March 31, 2026 was due primarily to additional reserves on risk-rated 5 office and life science loans.

Current wording

Total operating expenses increased by $122.6 million during the six months ended June 30, 2026, as compared to the prior year period. This increase was primarily due to a change in the provision for credit losses and change in fair value related primarily to office loans.

Previous wording

We have capitalized our business to date primarily through the issuance and sale of our common stock and preferred stock, borrowings from three master repurchase agreements, and borrowings from our Non-Mark-to-Market Financing Sources, which were comprised of collateralized loan obligations, term lending agreements, term loan facility, secured term loan, asset specific financing, warehouse facility, and Revolver. Our Non-Mark-to-Market Financing Sources, which accounted for 77% of our total financing as of March 31, 2026, are not subject to credit or capital markets mark-to-market provisions. The remaining 23% of our total financing, which are comprised of four master repurchase agreements, are only subject to credit marks.

Current wording

We have capitalized our business to date primarily through the issuance and sale of our common stock and preferred stock, borrowings from four master repurchase agreements, and borrowings from our Non-Mark-to-Market Financing Sources, which were comprised of collateralized loan obligations, term lending agreements, term loan facility, secured term loan, asset specific financing, warehouse facility, and Revolver. Our Non-Mark-to-Market Financing Sources, which accounted for 79% of our total financing as of June 30, 2026, are not subject to credit or capital markets mark-to-market provisions. The remaining 21% of our total financing, which are comprised of four master repurchase agreements, are only subject to credit marks.

Previous wording

Our primary sources of liquidity include $135.4 million of cash on our Condensed Consolidated Balance Sheets, $500.0 million of available capacity on our Revolver, $18.0 million of available borrowings under our financing arrangements based on existing collateral, and cash flows from operations. In addition, we had $535.0 million of total unencumbered assets, including $217.4 million of real estate owned assets, $86.5 million of CMBS investments and $231.1 million of unencumbered senior loans, that can be financed, as of March 31, 2026. Our 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.

Current wording

Our primary sources of liquidity include $83.1 million of cash on our Condensed Consolidated Balance Sheets, $350.0 million of available capacity on our Revolver, $33.8 million of available borrowings under our financing arrangements based on existing collateral, and cash flows from operations. In addition, we had $625.9 million of total unencumbered assets, including $359.9 million of real estate owned assets, $85.0 million of CMBS investments and $181.0 million of unencumbered senior loans, that can be financed, as of June 30, 2026. Our 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.

Previous wording

As described in Note 11 to our condensed consolidated financial statements, we have off-balance sheet arrangements related to VIEs that we account for by either consolidating or by using the equity method of accounting when we hold an economic interest or have a capital commitment. Our maximum risk of loss associated with our interests in these VIEs is limited to the carrying value of our net investment in such entities and any unfunded capital commitments. As of March 31, 2026, we held $24.1 million of net investments in consolidated CMBS trusts, and $35.4 million of interests in a CMBS equity method investment.

Current wording

As described in Note 11 to our condensed consolidated financial statements, we have off-balance sheet arrangements related to VIEs that we account for by either consolidating or by using the equity method of accounting when we hold an economic interest or have a capital commitment. Our maximum risk of loss associated with our interests in these VIEs is limited to the carrying value of our net investment in such entities and any unfunded capital commitments. As of June 30, 2026, we held $24.1 million of net investments in consolidated CMBS trusts, and $33.8 million of interests in a CMBS equity method investment.

Previous wording

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, 2026, we did not sell any shares of common stock under the ATM. As of March 31, 2026, $93.2 million remained available for issuance under the ATM.

Current wording

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 six months ended June 30, 2026, we did not sell any shares of common stock under the ATM. As of June 30, 2026, $93.2 million remained available for issuance under the ATM.

Previous wording

(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.

Current wording

(A) Represents (i) total outstanding debt agreements (excluding non-recourse facilities) and secured term loan, less cash (including loan principal repayments held by servicer); to (ii) KREF's stockholders' equity, in each case, at period end.

Previous wording

(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.

Current wording

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

Previous wording

We also had $535.0 million of total unencumbered assets, including $217.4 million of real estate owned assets, $86.5 million of CMBS investments and $231.1 million of unencumbered senior loans as of March 31, 2026. 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.

Current wording

We also had $625.9 million of total unencumbered assets, including $359.9 million of real estate owned assets, $85.0 million of CMBS investments and $181.0 million of unencumbered senior loans as of June 30, 2026. 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.

Previous wording

The following table sets forth changes in cash and cash equivalents for the three months ended March 31, 2026, and 2025 (amounts in thousands):

Current wording

The following table sets forth changes in cash and cash equivalents for the six months ended June 30, 2026, and 2025 (amounts in thousands):

Previous wording

During the three months ended March 31, 2025, our cash flows from investing activities were primarily driven by CRE loan fundings of $400.2 million and loan repayments of $182.1 million.

Current wording

During the six months ended June 30, 2026, our cash flows from investing activities were primarily driven by loan repayments of $1,041.5 million, partially offset by loan originations and loan fundings of $552.1 million.

Previous wording

During the three months ended March 31, 2026, our cash flows from financing activities were primarily driven by repayments of $300.1 million on our secured financing agreements and repayments of $132.2 million on our collateralized loan obligations, partially offset by borrowing proceeds of $239.7 million under our secured financing agreements.

Current wording

During the six months ended June 30, 2026, our cash flows from financing activities were primarily driven by repayments of $682.8 million on our secured financing agreements and repayments of $538.0 million on our collateralized loan obligations, partially offset by borrowing proceeds of $851.1 million under our secured financing agreements.

Previous wording

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.

Current wording

During the six months ended June 30, 2025, our cash flows from financing activities were primarily driven by borrowing proceeds of $1,003.3 million under our secured financing agreements and proceeds of $209.8 million issued under our secured term loan, partially offset by repayments of $853.2 million on our secured financing agreements and repayments of $318.4 million on our collateralized loan obligations.