KKR Real Estate Closes $265M in Loans for Seattle Office, Multifamily Properties

NEW YORK CITY—Locally-based KKR Real Estate Finance Trust Inc. reports it has closed two floating senior loans totaling $265 million on commercial and multifamily properties in Seattle. The two deals increase its total loan commitments in the third quarter to approximately $681 million.

KREF closed on a $172-million floating-rate senior loan secured by two class-A office buildings totaling 343,000 square feet in Seattle. The loan, which closed in September, has a two-year initial term with three one-year extension options, carries a coupon of LIBOR+3.7% and has an appraised loan-to-value of approximately 65%, KREF states.

KREF is externally managed and advised by an affiliate of KKR & Co. Inc.

KREF also closed last month on a $93-million floating-rate senior loan secured by an 18-story, 95% occupied, class-A multifamily property located in Seattle. The loan has a two-year initial term with three one-year extension options, carries a coupon of LIBOR+2.6% and has an appraised LTV of approximately 80%. The weighted average underwritten internal rate of return of these two loans is 12.8%.

Chris Lee and Matt Salem, co-CEOs of KREF, said in a joint statement, “The third quarter was the second most active origination quarter in KREF’s history, with four new loan originations totaling $681 million. In addition, we received $281 million of repayments during the quarter.”

Those repayments included a $125-million repayment of a senior loan secured by a retail property in Brooklyn, NY and a $17-million repayment of a mezzanine loan secured by a retail property in Chicago, reducing the retail exposure in the portfolio to 4% as of quarter end.

They add that in the first nine months of 2018, KREF originated $1.8 billion of loans, bringing its total originations for the last 12 months ended Sept. 30, 2018 to $2.2 billion of senior loans, a 76% increase over the same period in 2017.