v3.26.3
Real Estate Owned
 9 Months Ended
Sep. 30, 2026
Real Estate [Abstract]  
Real Estate Owned Real Estate Owned
Real Estate Owned, Held-For-Investment

Portland, OR Retail / Redevelopment — In December 2021, KREF took title to a Portland retail property and accounted for the property on a consolidated basis (Note 11). The transaction was accounted for as an asset acquisition under ASC 805. Accordingly, KREF 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. KREF contributed a portion of the REO asset to a joint venture (the "REO JV") with a third party local developer (“JV Partner”), whereby KREF 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, KREF sold a portion of the property for $6.0 million and recognized a realized gain of $0.7 million after closing costs. In September 2025, to support the ongoing redevelopment of the property, the REO JV acquired an adjacent parcel for $9.1 million.

Mountain View, CA Office — In June 2024, KREF and a KKR affiliate took title to a Mountain View office property through a deed-in-lieu of foreclosure ("DIL") and KREF accounted for the property on a consolidated basis (Note 11). KREF and the KKR affiliate's interest in the property was 68.9% and 31.1%, respectively. The transaction was accounted for as an asset acquisition under ASC 805. Accordingly, KREF 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. The KKR affiliate's interest in the property was presented within "Noncontrolling interests in equity of consolidated joint ventures" on the Condensed Consolidated Balance Sheets.

Raleigh, NC Multifamily — In August 2025, KREF took title to a Raleigh multifamily property and accounted for the property through an assignment-in-lieu of foreclosure ("AIL"). The transaction was accounted for as an asset acquisition under ASC 805. Accordingly, KREF 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. As a result, KREF recognized a $14.4 million loan write-off for the difference between the loan amortized cost of $85.5 million and the fair value of the REO’s net assets of $71.8 million, less closing costs.

Real Estate Owned, Held-For-Sale

Philadelphia, PA Office — In December 2023, KREF took title to a Philadelphia office portfolio through a DIL. The transaction was accounted for as an asset acquisition under ASC 805. Accordingly, KREF recorded the portfolio and its net assets on the Condensed Consolidated Balance Sheets based on the estimated fair value of acquired assets and assumed liabilities. Portions of the portfolio were sold in June 2024 and May 2025. The May 2025 sale resulted in a realized gain of $0.5 million. As of September 30, 2026, there was one office property remaining.

West Hollywood, CA Condo — In April 2025, KREF took title to a West Hollywood multifamily property consisting of condo units through an AIL. The transaction was accounted for as an asset acquisition under ASC 805. Accordingly, KREF 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. As a result, KREF recognized a $20.4 million loan write-off for the difference between the loan amortized cost of $112.5 million and the fair value of the REO’s net assets of $92.9 million, less closing costs. The sale of one condo unit during the three months ended September 30, 2026, resulted in a realized gain of $0.2 million.

As of September 30, 2026, the Philadelphia, PA Office and West Hollywood, CA Condo properties met the criteria to be classified as held-for-sale under ASC 360. As such, depreciation and amortization on the properties and related lease intangibles were suspended.

Leases — KREF assumed certain legacy lease arrangements upon the acquisition of the REO assets and subsequently entered into lease arrangements. These arrangements entitle KREF to receive contractual rent payments during the lease periods and tenant reimbursements for certain property operating expenses, including common area costs, insurance, utilities and real estate taxes. KREF elects the practical expedient to not separate the lease and non-lease components of the rent payments and accounts for these lease arrangements as operating leases.
The following table presents the REO assets and liabilities included on KREF's Condensed Consolidated Balance Sheets:

September 30, 2026December 31, 2025
Real estate owned, held-for-investment
Assets
Real estate owned - land$207,191 $207,191 
Real estate owned - land improvements11,501 10,932 
Real estate owned - buildings117,317 117,317 
Real estate owned - building improvements36,911 5,280 
Real estate owned - furniture and fixtures1,776 1,462 
Real estate owned374,696 342,182 
Less: Accumulated depreciation(6,563)(3,587)
Real estate owned, net368,133 338,595 
Cash(A)
4,070 2,546 
In-place lease intangibles(B)
1767
Tenant receivables(B)
224 152 
Other assets(B)
8,351 2,501 
Total$380,795 $343,861 
Liabilities
Unfavorable lease intangibles(C)
91 365 
Other liabilities(C)
9,520 4,977 
Total$9,611 $5,342 
Real estate owned, held-for-sale
Assets
Real estate owned, held-for-sale117,940 118,220 
In-place lease intangibles7,678 7,678 
Favorable lease intangibles
2,663 2,663 
Tenant receivables227 543 
Other assets2,381 1,084 
Total$130,889 $130,188 
Liabilities
Unfavorable lease intangibles167 167 
Other liabilities
3,099 3,700 
Total$3,266 $3,867 

(A)     Included in “Cash and cash equivalents” on the Condensed Consolidated Balance Sheets.
(B)    Included in “Other assets” on the Condensed Consolidated Balance Sheets.
(C)    Included in “Other liabilities” on the Condensed Consolidated Balance Sheets.

The following table presents the REO operations and related income (loss) included in KREF’s Condensed Consolidated Statements of Income:
Three Months Ended September 30,Nine Months Ended September 30,
2026202520262025
Rental income$6,913 $4,343 $14,932 $9,467 
Other operating income182 399 1,478 2,189 
Revenue from REO operations7,095 4,742 16,410 11,656 
Operating expense(6,592)(6,572)(21,149)(17,243)
Depreciation expense(1,004)(730)(2,975)(1,711)
Expenses from REO operations(7,596)(7,302)(24,124)(18,954)
Total
$(501)$(2,560)$(7,714)$(7,298)
The following table presents the amortization of REO, held-for-investment lease intangibles included on KREF’s Condensed Consolidated Statements of Income:

Three Months Ended September 30,Nine Months Ended September 30,
Income Statement Location2026202520262025
Asset
In-place lease intangiblesExpenses from real estate owned operations$17 $17 $51 $51 
Liability
Unfavorable lease intangibles
Revenue from real estate owned operations91 91 274 274 

The following table presents the amortization of lease intangibles related to REO, held-for-investment through the remainder of the year:

YearIn-place Lease
Intangible Assets		Unfavorable Lease
Intangible Liabilities
202617 91 

Future Minimum Lease Payments — The following table presents the future minimum lease payments to be collected under non-cancelable operating leases, excluding tenant reimbursements of expenses:

YearContractual
Lease Payments
2026$2,714 
20278,713 
202819,925 
202932,377 
203032,710 
Thereafter216,654