Commercial Real Estate Loans |
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| SEC Schedule, 12-29, Real Estate Companies, Investment in Mortgage Loans on Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial Real Estate Loans | Commercial Real Estate Loans The following table summarizes investments in commercial real estate loans as of September 30, 2026 and December 31, 2025:
(A) Amortized cost represents the outstanding loan principal, net of applicable unamortized discounts, loan origination fees, cost recovery interest and write-offs on uncollectible loan balances. (B) Carrying value represents the loan amortized cost, net of applicable allowance for credit losses for loans held-for-investment. (C) Average weighted by outstanding loan principal. (D) Weighted average coupon assumes the greater of the applicable benchmark rates, or the applicable contractual rate floor. Excludes loans on nonaccrual status. (E) The weighted average life assumes all extension options are exercised by the borrowers. (F) Excludes fully written off loans. Activity — The following table presents the loan portfolio held-for-investment activity for the nine months ended September 30, 2026:
(A) Net of applicable premiums, discounts and deferred loan origination costs. Includes fundings on previously originated loans. (B) Includes a $182.5 million loan assignment in full satisfaction of secured financing. As of September 30, 2026 and December 31, 2025, there were $9.7 million and $9.8 million, respectively, of unamortized origination discounts and deferred fees included in "Commercial real estate loans, held-for-investment, net" on the Condensed Consolidated Balance Sheets. KREF may enter into loan modifications that include, among other changes, incremental capital contributions or partial repayments from certain borrowers, repurposing of reserves, and a temporary partial deferral of coupon as payment-in-kind interest (“PIK Interest”), which is capitalized, compounded, and added to the outstanding principal balance of the respective loans. In March 2026, KREF 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 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 $66.4 million was risk-rated 3 as of September 30, 2026. Loan Risk Ratings — KREF evaluates its commercial real estate loan portfolio at least once per quarter and assesses the risk factors of each loan and assigns a risk rating based on a variety of factors. Loans are rated “1” (Very Low Risk) through “5” (Impaired/Loss Likely), which ratings are defined in Note 2. The following tables summarize the carrying value of the loan portfolio held-for-investment based on KREF's internal risk ratings:
* Numbers presented may not foot due to rounding. (A) Excludes fully written off loans. As of September 30, 2026, the average risk rating of KREF's portfolio was 3.2, weighted by outstanding loan principal, consistent with that as of December 31, 2025. Loan Vintage — The following tables present the amortized cost of the loan portfolio held-for-investment by KREF's internal risk rating and year of origination. The risk ratings are updated as of September 30, 2026 and December 31, 2025 in the corresponding table.
(A) Represents the date a loan was originated or acquired. Origination dates may be subsequently updated to reflect material loan modifications. (B) Excludes fully written off loans. Allowance for Credit Losses — The following tables present the changes to the allowance for credit losses for the nine months ended September 30, 2026 and 2025, respectively:
As of September 30, 2026, the allowance for credit losses was $188.5 million. The credit loss provision of $150.0 million for the nine months ended September 30, 2026 was due primarily to additional reserves for risk-rated 5 office loans. KREF had a risk-rated 5 senior office loan located in Minneapolis, MN, originated in November 2017. As of September 30, 2026, the loan had an outstanding principal balance of $194.4 million, an unfunded commitment of $5.0 million and an amortized cost of $190.1 million. Since June 2023, the loan has been on nonaccrual status. During the three and nine months ended September 30, 2026, KREF recognized $1.8 million and $5.4 million, respectively, of interest income on this loan. KREF had a risk-rated 5 senior office loan located in Chicago, IL, originated in September 2023. As of September 30, 2026, the loan had an outstanding principal balance and amortized cost of $90.7 million with an unfunded commitment of $14.3 million. The loan has a maximum maturity of August 2028. In June 2026, this loan was placed on nonaccrual status. During the three and nine months ended September 30, 2026, KREF recognized $1.4 million and $3.7 million, respectively, of interest income on this loan. KREF had a risk-rated 5 senior multifamily loan located in Carrollton, TX, originated in April 2022. As of September 30, 2026, the loan had an outstanding principal balance and amortized cost of $43.7 million. The loan has a maximum maturity of October 2026. In June 2026, this loan was placed on nonaccrual status. During the three and nine months ended September 30, 2026, KREF recognized $0.7 million and $2.2 million, respectively, of interest income on this loan. The 5-rated loans were determined to be collateral dependent as of September 30, 2026. KREF estimated expected losses based on the loan’s collateral fair value, which was determined by applying a capitalization rate between 5.7% and 13.3% and a discount rate between 13.0% and 13.6%. As of September 30, 2025, the allowance for credit losses was $160.4 million. The credit loss provision of $75.7 million for the nine months ended September 30, 2025 was due primarily to additional reserves for risk-rated 5 loans in the life science and office sectors. Concentration of Credit Risk — The following tables present the geographies and property types of collateral underlying KREF's commercial real estate loans as a percentage of the loans' principal amounts:
(A) Excludes fully written off loans
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