Large diversified REIT KKR Real Estate Finance Trust (KREF) has announced a new issuance of preferred stock. The REIT is externally managed by KKR & Co. (KKR)
The issue will be cumulative and have an early redemption period starting in April, 2026. I don’t believe the issue will be rated by any of the large national ratings firms.
KREF has no other outstanding baby bonds or preferred stock so this will be their 1st shot at a preferred issue.
The preliminary prospectus can be read here.
EarlyBird was early on this one.
Sorry I was late getting this posted–some days are like that I guess.
KREFP
Trading right around 25.
Is this a K1 partnership issue?
Will the dividends be considered QDI?
No
This one has caught my eye because I did own a boatload of KKR+B. I did sell out of it a while back and put the money into TDS+U. The KKR+B will definitely be called on 9/15/2021 so I was glad to find something to replace it with. If its going to have a coupon of “6.5%” I would sure love it if some of you financial gurus and bankers would chime in as to just how much risk we are taking. The coupon surprises me. So obviously as the old saying goes: “Now for the rest of the story”.
This isn’t KKR. It’s a commercial MREIT externally managed by KKR for a non trivial fee. But KKR is probably as good as anyone out there.
6.5% puts it at the very low end of the MREIT ylds. Compare it to other MREITS, not KKR. I have not seen a rating on this new issue but S&P rating on senior secured debt in mid-2020 was BB- negative watch. This new issue is probably two notches below that. Not exactly KKR’s BBB+ rate pref.
This is not compelling to me. I like the 5% yld 2023 bonds more albeit an obviously short term play. Maybe even the 9% yld common.
Thank You Bob for your input. I think I’m going to take a pass on this one.
As Bob said, this is a commercial mREIT. Probably the best comp out there are the Ready Capital issues or maybe ABR’s preferreds.
Good comps. Own a good bit of ABR pref albeit on my closely watched list and have toe in RC.
Mtg REITS are not for the faint of heart.
Any thoughts about the chances of the ABR pref’s being called soon? I owned quite a bit of the A, B, and C’s but recently sold all but 300 shares (combined) because of their most recent equity raise which appears to generate the right amount of money to call all the preferreds. The CFO said he was going to look at this possibility in the last earnings conference call when a caller asked him why they have not yet called the preferreds. This is what prompted me to lighten up just in case they are about to call them.
Gridbird is the expert on the ABR call situation. Short story — analysts on earnings calls are questioning/pressuring them about calling them but company doesn’t seem that interested right now. They claim they could only refi at 7% but this KREF issue shows otherwise. I’m out due to call risk.
Priced earlier today. 6.50%. Expected close on 4.16
https://www.kkrreit.com/for-investors/news-and-events/press-releases/2021/04-09-2021-232713627
Thanks Josh–ever since the Covid hit the ‘official’ SEC documents have lagged badly–still not posted as of Saturday morning.