KKR Real Estate Finance Trust Inc

Previous wording

The year ended December 31, 2023 and period ended June 30, 2024 were impacted by significant volatility in global markets, largely driven by rising inflation, rising interest rates, slowing economic growth, geopolitical uncertainty and instability in the banking sector following multiple bank failures. Central banks have responded to rapidly rising inflation with monetary policy tightening actions that are likely to create headwinds to economic growth. The Federal Reserve has raised interest rates eleven times since January 2022. Although our business model is such that rising interest rates will generally correlate to increases in our net income, increases in interest rates may adversely affect our existing borrowers. Higher interest rates imposed by the Federal Reserve to address inflation may 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, and may lead to decreased prepayments from our borrowers and an increase in the number of our borrowers who exercise extension options.

Current wording

Although the Federal Reserve lowered interest rates by 50 basis points on September 18, 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.

Previous wording

(B) Includes a combined $98.5 million write-off on two defaulted senior loans upon deeds-in-lieu of foreclosure and a $37.5 million write-off on a mezzanine loan that was deemed uncollectible during the three months ended June 30, 2024.

Current wording

(B) Includes (i) a $1.8 million write-off on a senior loan repaid during the three months ended September 30, 2024; and (ii) a combined $98.5 million write-off on two senior loans and a $37.5 million write-off of a mezzanine loan during the three months ended June 30, 2024.

Previous wording

(C) Includes $615 thousand loss on the sale of certain real estate owned assets during the three months ended June 30, 2024.

Current wording

(C) Includes a $615 thousand loss on the sale of certain real estate owned assets during the three months ended June 30, 2024.

Previous wording

Book value as of June 30, 2024 included the impact of an estimated CECL credit loss allowance of $114.5 million, or ($1.65) 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.

Current wording

Book value as of September 30, 2024 included the impact of an estimated CECL credit loss allowance of $150.9 million, or ($2.17) 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.

Previous wording

We have established a $6,946.7 million portfolio of diversified investments, consisting primarily of senior commercial real estate loans as of June 30, 2024.

Current wording

We have established a $6,710.7 million portfolio of diversified investments, consisting primarily of senior commercial real estate loans as of September 30, 2024.

Previous wording

During the six months ended June 30, 2024, we collected 95.7% of interest payments due on our loan portfolio. As of June 30, 2024, the average risk rating of our loan portfolio was 3.1, weighted by total loan exposure. As of June 30, 2024, the average loan commitment in our portfolio was $117.2 million and multifamily and industrial loans comprised 60% of our loan portfolio.

Current wording

During the three months ended September 30, 2024, we collected 100.0% of interest payments due on our loan portfolio. As of September 30, 2024, the average risk rating of our loan portfolio was 3.2, weighted by total loan exposure. As of September 30, 2024, the average loan commitment in our portfolio was $120.2 million and multifamily and industrial loans comprised 60% of our loan portfolio.

Previous wording

In addition, as a result of taking title to the collateral of defaulted senior loans, we owned Real Estate Assets with a net investment amount of $335.5 million, comprised of the fair value of the acquired properties and capitalized redevelopment costs, as of June 30, 2024. These properties are reflected on our Condensed Consolidated Balance Sheets.

Current wording

In addition, we owned Real Estate Assets with an investment amount of $335.6 million, comprised of the acquired properties and capitalized redevelopment costs, as of September 30, 2024. These properties are reflected on our Condensed Consolidated Balance Sheets.

Previous wording

Since our IPO, we have continued to execute 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 continue to be heavily weighted toward floating-rate loans. As of June 30, 2024, 99% of our loans by total loan exposure 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, with a secondary focus on originating floating-rate loans for which we syndicate a senior position and retain a subordinated interest for our portfolio. As of June 30, 2024, all of our investments were located in the United States.

Current wording

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 September 30, 2024, 99% of our loans by total loan exposure 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, with a secondary focus on originating floating-rate loans for which we syndicate a senior position and retain a subordinated interest for our portfolio. As of September 30, 2024, all of our investments were located in the United States.

Previous wording

(C)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.

Current wording

(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.

Previous wording

(D) "Other" property type includes Self-Storage (2%), Student Housing (2%), Single Family Rental (1%) and Mixed Use (<1%).

Current wording

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

Previous wording

(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 includes non-consolidated senior interests and excludes risk-rated 5 loans.

Current wording

(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.

Previous wording

(B) Includes $4.7 million of cost recovery interest applied as a reduction to loan principal during the three months ended December 31, 2023.

Current wording

(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. Includes $4.7 million of cost recovery interest applied as a reduction to loan principal during the three months ended December 31, 2023.

Previous wording

(C) Includes a combined $98.5 million write-off on two defaulted senior loans upon deed-in-lieu of foreclosure and a $37.5 million write-off on a mezzanine loan during the three months ended June 30, 2024. Includes a $58.7 million write-off on a defaulted senior loan upon deed-in-lieu of foreclosure during the three months ended December 31, 2023, and a $15.0 million write-off of a subordinated loan during the three months ended September 30, 2023.

Current wording

(B) Includes a $1.8 million write-off on a senior loan repaid during the three months ended September 30, 2024. Includes a combined $98.5 million write-off on two senior loans and a $37.5 million write-off of a mezzanine loan during the three months ended June 30, 2024. Includes a $58.7 million write-off on a senior loan during the three months ended December 31, 2023.

Previous wording

(B) Represents mezzanine loans with commitments of $79.4 million and $7.2 million, respectively, accompanying two senior loans. $80.4 million of loan principal was funded, of which $74.4 million was placed on nonaccrual status, as of June 30, 2024. The remaining $6.0 million funded principal earned a fixed interest rate of 10.0% as of June 30, 2024. Refer to Note 3 to our condensed consolidated financial statements for additional information.

Current wording

(A) Represents mezzanine loans with commitments of $79.4 million and $8.7 million, respectively, accompanying two senior loans. $82.4 million of loan principal was funded, of which $74.4 million was placed on nonaccrual status, as of September 30, 2024. The remaining $8.0 million funded principal earned a fixed interest rate of 10.0% as of September 30, 2024. Refer to Note 3 to our condensed consolidated financial statements for additional information.

Previous wording

(E)In addition to cash coupon, all-in yield includes the amortization of deferred origination fees, loan origination costs and purchase discounts. The calculations of weighted average cash coupon and all-in yield excludes loans accounted for under the cost recovery method.

Current wording

(D)In addition to cash coupon, all-in yield includes the amortization of deferred origination fees, loan origination costs and purchase discounts. The calculations of weighted average cash coupon and all-in yield excludes loans accounted for under the cost recovery method.

Previous wording

(G) 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 includes non-consolidated senior interests and excludes risk-rated 5 loans.

Current wording

(F) 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.

Previous wording

(A) Our total portfolio represents the current principal amount or investment amount on senior and mezzanine loans, real estate assets and other assets. Excludes loans that were fully written off.

Current wording

(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.

Previous wording

For Senior Loan 26, the total whole loan is $109.2 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 $5.3 million funded as of June 30, 2024, 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.

Current wording

For Senior Loan 26, the total whole loan is $110.7 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 $7.2 million funded as of September 30, 2024, 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.

Previous wording

(B) Total Whole Loan represents the total commitment of the entire whole loan originated. Committed Principal Amount includes participations by KKR affiliated entities and third parties that are syndicated/sold.

Current wording

(B) Total Whole Loan represents the total commitment of the entire loan originated, including participations by KKR affiliated entities.

Previous wording

(C) Net equity reflects (i) the amortized cost basis of our loans, net of borrowings; (ii) REO, net of borrowings and noncontrolling interests, and (iii) the investment amount of equity method investments.

Current wording

(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.

Previous wording

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

Current wording

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

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 2, 3, 5, 16, 20, 22, 44, 60, and 61, 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 2, 3, 5, 16, 20, 22, 56, and 57, Loan Per SF / Unit / Key is calculated as the total commitment amount of the loan divided by the proposed SF / Unit / Key.

Previous wording

For Senior Loans 2, 3, 5, 16, 20, 22, 44, 60, and 61, 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 15 (64%); Senior Loan 18 (64%); Senior Loan 19 (78%); Senior Loan 23 (64%); Senior Loan 27 (57%); Senior Loan 28 (75%); Senior Loan 32 (83%); Senior Loan 33 (70%), Senior Loan 38 (63%); and Senior Loan 61 (61%).

Current wording

For Senior Loans 2, 3, 5, 16, 20, 22, 56, and 57, 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 15 (64%); Senior Loan 18 (64%); Senior Loan 19 (78%); Senior Loan 23 (64%); Senior Loan 27 (57%); Senior Loan 28 (75%); Senior Loan 31 (83%); Senior Loan 33 (70%), Senior Loan 38 (63%); Senior Loan 42 (81%); and Senior Loan 57 (61%).

Previous wording

As of June 30, 2024, the average risk rating of our portfolio was 3.1, weig hted by total loan exposure, as compared to 3.2 as of March 31, 2024 and December 31, 2023.

Current wording

As of September 30, 2024, the average risk rating of our portfolio was 3.2, weig hted by total loan exposure, consistent with that as of December 31, 2023.

Previous wording

(B) In certain instances, we finances our loans through the non-recourse sale of a senior interest that is not included in the condensed consolidated financial statements. Total loan exposure includes the entire loan we originated and financed, including $38.6 million and $188.6 million of such non-consolidated interests as of June 30, 2024 and December 31, 2023, respectively.

Current wording

(B) In certain instances, we finance our loans through the non-recourse sale of a senior interest that is not included in the condensed consolidated financial statements. Total loan exposure includes the entire loan we originated and financed, including $188.6 million of such non-consolidated interests as of December 31, 2023.

Previous wording

In September 2023, we modified a risk-rated 4 senior office loan located in Chicago, IL, with an outstanding principal balance of $118.4 million. The terms of the modification included, among others, a $15.0 million principal repayment, a $15.0 million reduction in unfunded loan commitment, and a restructure of the $103.4 million senior loan (after the $15.0 million repayment) into (i) a $105.0 million committed senior mortgage loan (with $16.6 million in unfunded commitment) and (ii) a $15.0 million subordinated note which is subordinate to a new $18.5 million sponsor interest. The restructured senior loan earns a coupon rate of S+2.25% and has a new term of five years. The $15.0 million subordinated note was deemed uncollectible and written off. The loan modification was accounted for as a new loan for GAAP purposes. The restructured senior loan with an outstanding principal balance of $88.4 million was risk-rated 3 as of June 30, 2024.

Current wording

In September 2023, we modified a risk-rated 4 senior office loan located in Chicago, IL, with an outstanding principal balance of $118.4 million. The terms of the modification included, among others, a $15.0 million principal repayment, a $15.0 million reduction in unfunded loan commitment, and a restructure of the $103.4 million senior loan (after the $15.0 million repayment) into (i) a $105.0 million committed senior mortgage loan (with $16.6 million in unfunded commitment) and (ii) a $15.0 million subordinated note which is subordinate to a new $18.5 million sponsor interest. The restructured senior loan earns a coupon rate of S+2.25% and has a new term of five years. The $15.0 million subordinated note was deemed uncollectible and written off. The loan modification was accounted for as a new loan for GAAP purposes. The restructured senior loan with an outstanding principal balance of $90.1 million was risk-rated 3 as of September 30, 2024.

Previous wording

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- 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.

Current wording

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.

Previous wording

Our Non-Mark-to-Market Financing Sources, which accounted for 79% of our total financing as of June 30, 2024, are not subject to credit or capital markets mark-to-market provisions. The remaining 21% of our total financing, which is primarily 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 September 30, 2024, are not subject to credit or capital markets mark-to-market provisions. The remaining 21% of our total financing, which is comprised of three master repurchase agreements, are only subject to credit marks.

Previous wording

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

Current wording

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.

Previous wording

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 June 30, 2024, the weighted average haircut under our repurchase agreements was 30.9% (or 28.5%, 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.

Current wording

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 September 30, 2024, the weighted average haircut under our repurchase agreements was 32.5% (or 30.1%, 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.

Previous wording

In 2018, we entered into a $200.0 million loan financing facility with BMO Harris Bank (the "BMO Facility”); the borrowing capacity was increased to $300.0 million in 2019. The facility provides financing on a non-mark-to-market basis with match-term up to five years with partial recourse to us.

Current wording

In 2018, we entered into a loan financing facility with BMO Harris Bank ("BMO Facility”) with a current borrowing capacity of $300.0 million. The facility provides financing on a non-mark-to-market basis with match-term up to five years with partial recourse to us.

Previous wording

In 2019, we entered into a Master Repurchase and Securities Contract Agreement ("KREF Lending V Facility") with Morgan Stanley Mortgage Capital Holdings LLC ("Administrative Agent"), as administrative agent on behalf of Morgan Stanley Bank, N.A. ("Initial Buyer"), which provides non-mark-to-market financing. In 2023, the current stated maturity was extended to June 2024, subject to two additional one-year extension options, which we may exercise upon the satisfaction of certain customary conditions and thresholds. The Initial Buyer subsequently syndicated a portion of the facility to multiple financial institutions. As of June 30, 2024, the Initial Buyer held 22.7% of the total comm itment under the facility.

Current wording

In 2019, we entered into a Master Repurchase and Securities Contract Agreement ("KREF Lending V Facility") with Morgan Stanley Mortgage Capital Holdings LLC ("Administrative Agent"), as administrative agent on behalf of Morgan Stanley Bank, N.A. ("Initial Buyer"), which provides non-mark-to-market financing. The facility has a current maturity of June 2025, subject to an additional one-year extension option. The Initial Buyer subsequently syndicated a portion of the facility to multiple financial institutions and held 22.7% of the total commitment as of September 30, 2024.

Previous wording

In 2021, we entered into a $500.0 million Master Repurchase and Securities Contract Agreement with a financial institution (“KREF Lending IX Facility”) and subsequently increased the borrowing capacity to $1.0 billion. The facility, which provides financing on a non-mark-to-market basis with partial recourse to us, has a three-year draw period and match- term to the underlying loans. In May 2024, the lender assigned its rights and obligations under the KREF Lending IX Facility to another financial institution and our borrowing capacity under the facility was amended to $701.1 million.

Current wording

In 2021, we entered into a Master Repurchase and Securities Contract Agreement with a financial institution (“KREF Lending IX Facility”) with a current borrowing capacity of $568.1 million. The facility, which provides financing on a non-mark-to-market basis with partial recourse to us, has a three-year draw period and match-term to the underlying loans. In May 2024, the lender assigned its rights and obligations under the KREF Lending IX Facility to another financial institution.

Previous wording

In 2018, we entered into a term loan financing agreement with third party lenders for an initial borrowing capacity of $200.0 million that was increased to $1.0 billion (“Term Loan Facility”). The facility provides us with asset-based financing on a non-mark-to-market basis with match-term up to five years, with additional two-year extension available, and is non-recourse to us.

Current wording

In 2018, we entered into a term loan financing agreement with third party lenders with a current borrowing capacity of $1.0 billion (“Term Loan Facility”). The facility provides us with asset-based financing on a non-mark-to-market basis with match-term up to five years, with additional two-year extension available, and is non-recourse to us.

Previous wording

In 2020, we entered into a $500.0 million Loan and Security Agreement with HSBC Bank USA, National Association (“HSBC Facility”). In 2023, we extended the facility maturity date to March 2026. The facility provides warehouse financing on a non-mark-to-market basis with partial recourse to us.

Current wording

In 2020, we entered into a $500.0 million Loan and Security Agreement with HSBC Bank USA, National Association (“HSBC Facility”) with a current facility maturity date of March 2026. The facility provides warehouse financing on a non-mark-to-market basis with partial recourse to us.

Previous wording

In 2022, we entered into a $100.0 million loan financing facility with a financial institution ("KREF Lending XI Facility"). The facility provides non-recourse match-term asset-based financing on a non-mark-to-market basis.

Current wording

In 2022, we entered into a $100.0 million loan financing facility with a financial institution ("KREF Lending XI Facility"), a $265.6 million loan financing facility with a financial institution ("KREF Lending XIII Facility") and a $125.0 million loan financing facility with a financial institution ("KREF Lending XIV Facility"). The facilities provide non-recourse match-term asset-based financing on a non-mark-to-market basis.

Previous wording

(B) 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.

Current wording

(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 the reinvestment period.

Previous wording

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.

Current wording

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 September 30, 2024.

Previous wording

In 2020, we entered into a $300.0 million secured term loan at a price of 97.5%. The secured term loan is partially amortizing, with an amount equal to 1.0% per annum of the principal balance due in quarterly installments. In 2021, we completed a $52.2 million add-on, for an aggregate principal amount of $350.0 million, which was issued at par. In 2023, the secured term loan was amended to transition the benchmark rate from LIBOR to SOFR. Post amendment, the secured term loan bears coupon interest at Adjusted Term SOFR, as defined in the secured term loan agreements, plus a 3.50% margin, and is subject to a 0.50% SOFR floor.

Current wording

In 2020, we entered into a $300.0 million secured term loan at a price of 97.5%. The secured term loan is partially amortizing, with an amount equal to 1.0% per annum of the principal balance due in quarterly installments. In 2021, we completed a $52.2 million add-on, which was issued at par, for an aggregate principal amount of $350.0 million. The secured term loan bears coupon interest at Adjusted Term SOFR, as defined in the secured term loan agreements, plus a 3.50% margin, and is subject to a 0.50% SOFR floor.

Previous wording

•a trailing four quarter interest income to interest expense ratio covenant (1.4 to 1.0);

Current wording

•a trailing four quarter interest income to interest expense ratio covenant (1.3 to 1.0 beginning September 30, 2024 through June 30, 2025, then 1.4 to 1.0 thereafter);