KKR Real Estate Finance Trust Inc. (NYSE:KREF) Q3 2022 Earnings Conference Call October 25, 2022 9:00 AM ET

Company Participants

Jack Switala - Investor Relations

Matt Salem - Chief Executive Officer

Patrick Mattson - President and Chief Operating Officer

Kendra Decious - Chief Financial Officer

Conference Call Participants

Jade Rahmani - KBW

Stephen Laws - Raymond James

Steve Delaney - JMP Securities

Eric Hagen - BTIG

Kaili Wang - Citi

Operator

Good morning and welcome to the KKR Real Estate Finance Trust Inc. Third Quarter 2022 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Jack Switala. Please, go ahead.

Jack Switala

Thanks, operator, and welcome to the KKR Real Estate Finance Trust earnings call for the third quarter of 2022. As the operator mentioned, this is Jack Switala. Today, I'm joined on the call by our CEO, Matt Salem; our President and COO, Patrick Mattson; and our CFO, Kendra Decious.

I would like to remind everyone that we will refer to certain non-GAAP financial measures on the call which are reconciled to GAAP figures in our earnings release and in the supplementary presentation, both of which are available on the Investor Relations portion of our Web site. This call will also contain certain forward-looking statements which do not guarantee future events or performance. Please refer to our most recently filed 10-Q for cautionary factors related to these statements.

Before I turn the call over to Matt, I'll provide a brief recap of our results. For the third quarter of 2022, we reported GAAP net income of negative $48.4 million or negative $0.70 per diluted share. Distributable earnings this quarter were $34.4 million or $0.50 per share. The rising interest rate environment served as the primary driver behind our strong distributable earnings, supporting a dividend coverage ratio of over 1.1 times relative to our $0.43 per share Q3 dividend. Book value per share, as of September 30th, 2022 was $18.28, a decline of 5.6% quarter-over-quarter. This was driven by an increase in our CECL allowance by $1.16 per share to $1.66 per share. This increase was primarily driven by higher reserves on watch list loans.

Finally, in September, we paid a cash dividend of $0.43 per common share with respect to the third quarter. And based on yesterday's closing price, the dividend reflects an annualized yield of 10.2%.