v3.26.1
Related Party Transactions
 6 Months Ended
Jun. 30, 2026
Related Party Transactions [Abstract]  
Related Party Transactions Related Party Transactions
Management Agreement

The Management Agreement between KREF and the Manager is subject to certain termination and nonrenewal rights, which in the case of KREF are exercisable by a two-thirds vote by the independent directors of KREF's board of directors. If the independent directors of KREF's board of directors decline to renew the Management Agreement other than for cause, KREF is required to pay the Manager a termination fee equal to three times the total 24-month trailing average annual management fee and incentive compensation earned by the Manager through the most recently completed calendar quarter.

Pursuant to the Management Agreement, the Manager, as agent to KREF and under the supervision of KREF's board of directors, manages the investments, subject to investment guidelines approved by KREF's board of directors; financing activities; and day-to-day business and affairs of KREF and its subsidiaries.

For its services to KREF, the Manager is entitled to a quarterly management fee equal to the greater of $62,500 or 0.375% of weighted average adjusted equity and quarterly incentive compensation equal to 20.0% of the excess of (a) the trailing 12-month distributable earnings (before incentive compensation payable to the Manager) over (b) 7.0% of the trailing 12-month weighted average adjusted equity (“Hurdle Rate”), less incentive compensation KREF already paid to the Manager with respect to the first three calendar quarters of such trailing 12-month period. The quarterly incentive compensation is calculated and paid in arrears with a one-quarter lag.

Adjusted equity generally represents the proceeds received by KREF and its subsidiaries from equity issuances, without duplication and net of offering costs, and distributable earnings, reduced by distributions, equity repurchases, and incentive compensation paid. Distributable earnings generally represent the net income, or loss, attributable to equity interests in KREF and its subsidiaries, without duplication, as well as realized losses not otherwise included in such net income, or loss, excluding non-cash equity compensation expense, incentive compensation, depreciation and amortization and unrealized gains or losses, from and after the effective date to the end of the most recently completed calendar quarter. KREF's board of directors, after majority approval by independent directors, may also exclude one-time events pursuant to changes in GAAP and certain material non-cash income or expense items from distributable earnings. For purposes of calculating incentive compensation, adjusted equity excludes: (i) the effects of equity issued by KREF and its subsidiaries that provides for fixed distributions or other debt characteristics and (ii) unrealized provision for (reversal of) credit losses.

KREF is also required to reimburse the Manager or its affiliates for documented costs and expenses incurred by it and its affiliates on behalf of KREF, except those specifically required to be borne by the Manager under the Management Agreement. The Manager is responsible for, and KREF does not reimburse the Manager or its affiliates for, the expenses related to investment personnel of the Manager and its affiliates who provide services to KREF. However, KREF does reimburse the Manager for KREF's allocable share of compensation paid to certain of the Manager’s non-investment personnel, based on the percentage of time devoted by such personnel to KREF's affairs.
Related Party Services

In connection with the ATM and various financing arrangements, and in consideration for its services as a structuring and placement agent, KKR Capital Markets LLC ("KCM"), an affiliate of KKR, is entitled to receive commissions for the shares of KREF common stock that KCM sells and structuring fees generally based on a contractual percentage of the respective financing provided under each facility.

KREF has entered into various agreements with K-Star Asset Management LLC (“K-Star”), an affiliate of KKR, in connection with KREF's investments, including but not limited to due diligence and value-add services. Under the agreements, K-Star is entitled to receive certain fees in consideration for its services.
The following table summarizes the fees incurred in connection with the Management Agreement and various related parties services:

Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
ManagerManagement fees$5,382 $5,737 $10,893 $11,534 
ManagerExpense reimbursements1,825 1,145 3,257 2,628 
KCMStructuring fees102 590 102 5,052 
K-StarDiligence and servicing fees80 104 135 195 
Total$7,389 $7,576 $14,387 $19,409 

Management fees are paid one quarter in arrears and, together with any accrued expense reimbursements, KCM and K-Star fees, are included within "Due to related parties" in the Condensed Consolidated Balance Sheets.

Real Estate Owned and Equity Method Investment, Real Estate Asset

In June 2024, KREF and a KKR affiliate took title to a Mountain View, CA office property. The property was held in a joint venture where KREF and the KKR affiliate held a 68.9% and 31.1% interest, respectively, and shared decision-making (Note 11).

In June 2024, KREF and a KKR affiliate took title to a Seattle, WA life science property through a DIL under a TIC agreement. Under the TIC agreement, KREF and the KKR affiliate held an economic interest of 74.6% and 25.4%, respectively, and shared decision-making (Note 11).

Equity Method Investment, Unconsolidated Entity

In October 2025, KREF acquired an economic interest in an affiliated company, which invested in a senior mortgage loan that is collateralized by industrial properties in France. KREF holds an economic interest of 50%, and does not have unilateral authority to direct the activities that most significantly impact the affiliated company's economic performance (Note 11).

Consolidated CMBS Trusts

KREF and a KKR affiliate invested in securities issued by CMBS trusts controlled and consolidated by KREF (Note 8). As of June 30, 2026, the CMBS securities held by the KKR affiliate had a fair value of $63.2 million and was presented within "Consolidated variable interest entities liabilities, CMBS trusts, at fair value" on the Condensed Consolidated Balance Sheets.

Co-Borrowing Financing Facility

In June 2025, KREF, through a wholly owned subsidiary ("KREF Borrower"), and a KKR affiliate, through a wholly owned subsidiary ("Other KKR Borrower"), entered into a term lending financing facility with a financial institution ("KREF Lending XVI Facility"). Currently the facility is collateralized by two loan investments, but could be expanded in the future to include more loan investments. In such event, all loan investments thereunder would be cross-collateralized. An affiliate of KREF Borrower ("KREF Guarantor") guarantees the obligations of KREF Borrower, and an affiliate of Other KKR Borrower guarantees the obligations of Other KKR Borrower, with each respective guarantor's liability capped at its respective borrower's share of the KREF Lending XVI Facility. As of June 30, 2026, KREF’s share of the outstanding financing principal was 50%, or $129.0 million.

In April 2026, KREF, through a wholly owned subsidiary, and a KKR affiliate, through a wholly owned subsidiary, entered into an asset specific loan-on-loan financing facility with a financial institution ("KREF Lending XX - EUR Facility"). The facility is secured by the borrowers' interests in a single underlying loan collateralized by a portfolio of multifamily properties. As of June 30, 2026, KREF’s share of the outstanding financing principal was 26.7%, or $114.5 million.