KREF 10-K & 10-Q changes, risk factors and insider trading

We seek to invest primarily in debt investments in or relating to real estate assets. Deterioration of real estate fundamentals generally, and in the United States in particular, has increased the default risk applicable to borrowers, and made it relatively more difficult for us to generate attractive risk-adjusted returns and continue to negatively impact our performance. Changes in general economic conditions have affected the creditworthiness of borrowers and the value of underlying real estate collateral relating to our investments. Such changes and have included and/or may in the future include economic and/or market fluctuations, increases in remote working arrangements, changes in environmental, zoning and other laws, casualty or condemnation losses, regulatory limitations on rents, decreases in property values, changes in the appeal of properties to tenants, changes in supply and demand of real estate products, fluctuations in real estate fundamentals (including average occupancy and room rates for hotel properties), energy and supply shortages, various uninsured or uninsurable risks, natural disasters, terrorism, acts of war, outbreaks of pandemic or contagious diseases, changes in government regulations (such as rent control), political and legislative uncertainty, changes in monetary policy, changes in real property tax rates and operating expenses, changes in interest rates, changes in the availability of debt financing and/or mortgage funds which may render the sale or refinancing of properties difficult or impracticable, increased mortgage defaults, increases in borrowing rates, escalating global trade tensions,tensions the conflict between Russia and Ukraine, conflict and deteriorating geopolitical conditions in the Middle East,including the adoption or expansion of economic sanctions or trade restrictions, global conflicts, negative developments in the economy that depress travel activity, adverse changes in demand and/or real estate values generally and other factors that are beyond our control. In addition, our investments may be exposed to new or increased risks and liabilities associated with global climate change, such as increased frequency or intensity of adverse weather and natural disasters, which could negatively impact our and our borrowers' businesses and the value of the properties securing our investments.

Our primary interest rate exposures relate to the yield on our loans and other investments and the financing cost of our debt, as well as any interest rate swaps that we may utilize for hedging purposes. Changes in interest rates and credit spreads will affect our net income from loans and other investments, which is the difference between the interest and related income earned on interest-earning investments and the interest and related expense incurred in financing these investments. As of December 31, 2024,2025, our floating-rate loan portfolio and financing arrangements were all indexedbenchmarked to Term SOFR.SOFR, SONIA or EURIBOR. In a declining interest rate environment, our interest income generally decreases as indexbenchmark rates decrease. Also, in a declining interest rate environment, the value of our fixed-rate investments may increase and if interest rates were to increase, the value of these fixed-rate investments may fall; however, the interest income generated by these fixed-rate investments would not be affected by market interest rates. The interest rates we pay under our current financing facilities are floating-rate. Accordingly, our interest expense will generally increase as interest rates increase and decrease as interest rates decrease. Generally, the composition of our investments is such that rising interest rates will increase our net income, while declining interest rates will decrease our net income. However, rate floors relating to our floating-rate loans may offset some of the impact from declining rates. There can be no assurance that we will continue to utilize rate floors.

Notwithstanding the current period of relatively high interest rates, the U.S. Federal Reserve began decreasing rates in 2024 and 2025 and has indicated that it may further decrease interest rates in 2025.2026. In a period of declining interest rates, our interest income on floating-rate investments would generally decrease, while any decrease in the interest we are charged on our floating-rate debt may be subject to floors and may not compensate for such decrease in interest income. However, rate floors relating to our loan portfolio may offset some of the impact from declining rates. In addition, interest we are charged on our fixed-rate debt would not change. Any such scenario could adversely affect our results of operations and financial condition.

Prepayment and extension rates may adversely affect the value of our portfolio of assets.

Generally, our borrowers may repay their loans prior to their stated final maturities. In periods of declining interest rates and/or credit spreads, prepayment rates on loans generally increase. If general interest rates and credit spreads decline at the same time, the proceeds of such prepayments received during such periods are likely to be reinvested by us in assets yielding less than the yields on the assets that were prepaid. We may not be able to reinvest the principal repaid at the same or higher yield of the original investment. Conversely, in periods of rising interest rates,rates or worsening economic conditions, prepayment rates are likely to decrease and the number of our borrowers who exercise extension options,options or seek extensions from us, which could extend beyond the term of certain secured financing agreements we use to finance our loan investments, is likely to increase. This could have a negative impact on our results of operations, and in some situations, we may be forced to sell assets to maintain adequate liquidity, which could cause us to incur losses.

Prepayment rates on loans may be affected by a number of factors including, but not limited to, the then-current level of interest rates and credit spreads, fluctuations in asset values, the availability of mortgage credit, the relative economic vitality of the area in which the related properties are located, the servicing of the loans, possible changes in tax laws, other opportunities for investment, and other economic, social, geographic, demographic and legal factors and other factors beyond our control. Consequently, such prepayment rates cannot be predicted with certainty and no strategy can completely insulate us from prepayment or other such risks. If prepayment rates exceed our expectations, we may have greater difficulty in redeploying the proceeds into new investment opportunities, which may significantly increase our cash balance and exacerbate the risks related to our cash management strategy. Alternatively, if the rate of borrowers exercising extension options on our loans or the number of extensions we provide exceeds our expectations, our potential exposure to loan non-performance may increase and our ability to maintain adequate liquidity may be negatively impacted. For further discussion of the risks related to capital deployment, see “Difficulty in redeploying the proceeds from repayments of our existing loans and investments may cause our financial performance and returns to investors to suffer” below.

We invest in debt instruments (including, indirectly through RECOP I, in CMBS B-Pieces) and may invest in preferred equity that are subordinated or otherwise junior in an issuer’s capital structure and that involve privately negotiated structures. Our current and future investments in subordinated debt and mezzanine tranches of a borrower’s capital structure and our remedies with respect thereto, including the ability to foreclose on any collateral securing such investments, are subject to the rights of any senior creditors and, to the extent applicable, contractual intercreditor and/or participation agreement provisions. Significant losses related to such loans or investments could adversely affect our results of operations and financial condition.

We currently have and expect to make our CMBS B-Piece investments directly through a consolidated CMBS trust and indirectly through our investment in an aggregator vehicle alongside RECOP I, a KKR-managed investment fund. See “Risks Related to Our Relationship with Our Manager and Its Affiliates—There are various conflicts of interest in our relationship with KKR, including with our Manager and in the allocation of investment opportunities to KKR investment vehicles and us, which could result in decisions that are not in the best interests of our stockholders” and Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Our Portfolio.”

Further, any downgrade of the Company’s credit ratings by any of the credit agencies that cover our debt may make it more difficult and costly for us to access capital. Our credit rating has been downgraded in the past and there can be no assurances that our credit ratings will not be downgraded in the future, whether as a result of deteriorating general economic conditions, failure to successfully implement our operating strategy or the adverse impact on our results of operations or liquidity position of any of the above, or otherwise.

We may also be subject to environmental liabilities arising from such properties acquired in the foreclosure process. Under various U.S. federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances. If we assume ownership of any properties underlying our loans, the presence of hazardous substances on a property may adversely affect our ability to sell the property and we may incur substantial remediation costs. As a result, the discovery of material environmental liabilities attached to such properties could materially and adversely affect us.

In certain limited cases (e.g., in connection with a workout, restructuring and/or foreclosing proceedings involving one or more of our debt investments), the success of our investment strategy with respect thereto will depend, in part, on our ability to effectuate loan modificationsmodifications, extensions and/or restructures and improve the operations of our borrower entities. The activity of identifying and implementing any such restructuring programs entails a high degree of uncertainty. There can be no assurance that we will be able to successfully identify and implement such restructuring programs. Further, such modificationsmodifications, extensions and/or restructuring may entail, among other things, a substantial reduction in the interest rate and substantial write-offs of the principal of such loan, debt securities or other interests. However, even if a restructuring were successfully accomplished, a risk exists that, upon maturity of such real estate loan, debt securities or other interests replacement “takeout” financing will not be available.

These financial difficulties may never be overcome and may cause borrowers to become subject to bankruptcy or other similar administrative and operating proceedings. There is a possibility that we may incur substantial or total losses on our investments and in certain circumstances, become subject to certain additional potential liabilities that may exceed the value of our original investment therein. For example, under certain circumstances, a lender who has inappropriately exercised control over the management and policies of a debtor may have its claims subordinated or disallowed or may be found liable for damages suffered by parties as a result of such actions. In any reorganization or liquidation proceeding relating to our investments, we may lose our entire investment, may be required to accept cash or securities with a value less than our original investment and/ or may be required to accept payment over an extended period of time. In addition, under certain circumstances, payments to us and distributions by us to the stockholders may be reclaimed if any such payment or distribution is later determined to have been a fraudulent conveyance, preferential payment or similar transaction under applicable bankruptcy and insolvency laws. Furthermore, bankruptcy laws and similar laws applicable to administrative proceedings may delay our ability to realize value on collateral for loan positions held by us or may adversely affect the priority of such loans through doctrines such as equitable subordination or may result in a restructure of the debt through principles such as the “cramdown” provisions of the bankruptcy laws.

Subject to maintaining our qualification as a REIT, we may also invest in, or use as part of our investment strategy, certain derivative instruments, including swaps, futures, forwards and options. Generally, a derivative is a financial contract the value of which depends upon, or is derived from, the value of an underlying asset, reference rate or indexbenchmark and may relate to individual debt or equity instruments, interest rates, currencies or currency exchange rates, commodities, related indices or other assets. The gross returns to be exchanged or swapped between the parties under a derivative instrument are generally calculated with respect to a “notional amount,” which may be significantly greater than the amount of cash or assets required to establish or maintain the derivative position. Accordingly, trading in derivative instruments can result in large amounts of leverage, which may magnify the gains and losses experienced by us in respect of derivative instruments and may result in a loss of capital that is more exaggerated than would have resulted from an investment that did not involve the use of leverage inherent in the derivative contract.

While the judicious use of derivative instruments can be beneficial, such instruments involve risks different from, and, in certain cases, greater than, the risks presented by more traditional investments. Many of the derivative instruments used by us will be privately negotiated in over-the-counter (“OTC”) markets. Such derivatives are highly specialized instruments that require investment techniques and risk analyses different from those associated with equities and bonds. The use of derivative instruments also requires an understanding not only of the underlying asset, reference rate or indexbenchmark but also of the derivative itself, without the benefit of observing the performance of the derivative under all possible market conditions. The use of derivative instruments may also require us to sell or purchase portfolio securities at inopportune times or for prices below or above the current market values, may limit the amount of appreciation we can realize on an investment or may cause us to hold a security that it might otherwise want to sell. We may also have to defer closing out certain derivative positions to avoid adverse tax consequences and there may be situations in which derivative instruments are not elected that result in losses greater than if such instruments had been used. Furthermore, amounts paid by us as premiums and cash or other assets held in margin accounts with respect to our derivative instruments would not be available to us for other investment purposes, which may result in lost opportunities for gain.

•Volatility: The prices of derivative instruments, including swaps, futures, forwards and options, are highly volatile and such instruments may subject us to significant losses. The value of such derivatives also depends upon the price of the underlying asset, reference rate or index,benchmark, which may also be subject to volatility. In addition, actual or implied daily limits on price fluctuations and speculative position limits on the exchanges or OTC markets in which we may conduct our transactions in derivative instruments may prevent prompt liquidation of positions, subjecting us to the potential of greater losses. Derivative instruments that may be purchased or sold by us may include instruments not traded on an exchange. The risk of nonperformance by the obligor on such an instrument may be greater and the ease with which we can dispose of or enter into closing transactions with respect to such an instrument may be less than in the case of an exchange-traded instrument. In addition, significant disparities may exist between “bid” and “asked” prices for derivative instruments that are traded OTC and not on an exchange. Such OTC derivatives are also typically not subject to the same type of investor protections or governmental regulation as exchange traded instruments.

•Imperfect Correlation: When used for hedging purposes, an imperfect or variable degree of correlation between price movements of the derivative instrument and the underlying asset, reference rate or indexbenchmark sought to be hedged may prevent us from achieving the intended hedging effect or expose us to the risk of loss. The imperfect correlation between the value of a derivative and the underlying assets may result in losses on the derivative transaction that are greater than the gain in the value of the underlying assets in our portfolio.

•Valuation Risk: The derivative instruments used by us may be difficult to value or involve the risk of mispricing or improper valuation, especially where the markets for such derivatives instruments are illiquid and/or such derivatives involve complex structures, or where there is imperfect correlation between the value of the derivative instrument and the underlying asset, reference rate or index.benchmark.

AlthoughWe wehold havecertain notassets donedenominated soin British Pounds Sterling and Euros, which are secured by assets located outside of the United States and may continue to date, we may originate, invest in or acquire real estate-related assets denominated in foreign currencies, which may expose us to foreign currency risk. For example, our European loans denominated in British Pounds Sterling or Euros and secured by commercial real estate located in Europe, which generate cash flows in local currencies, may be affected by fluctuations in foreign currency exchange rates relative to the U.S. dollar. As a result, a change in foreign currency exchange rates may have an adverse impact on the valuation of our assets, as well as our income and distributions. While we have not experienced any adverse impacts during the year ended December 31, 2025, due to our use of derivative instruments, there can be no assurance that we will continue to utilize such measures or that such measures will be successful. Any such changes in foreign currency exchange rates may impact the measurement of such assets or income for the purposes of the REIT tests and may affect the amounts available for payment of dividends on our common stock. See “Risks Related to Our REIT Status and Certain Other Tax Considerations.”

Our investment guidelines permit investments in non-U.S. assets, subject to the same guidelines as investments in U.S. assets. To the extent that we investInvestments in non-U.S.foreign realassets estate-related assets, we may beare subject to certain risks associated with international investments generally, including, among others:

•currency exchange matters, including fluctuations in currency exchange rates and costs associated with conversion of investment principal and income from one currency to anotheranother, which may have an adverse impact on the valuation of our assets or income, including for purposes of our REIT requirements, regardless of any hedging activities we undertake, which may not be adequate;

•greater difficulty enforcing contractual obligations;

•potentially adverse tax consequences; or

In addition, the securitization of our portfolio might magnify our exposure to losses because any equity interest we retain in the issuing entity would be subordinate to the notes issued to investors and we would, therefore, absorb all of the losses sustained with respect to a securitized pool of assets before the owners of the notes experience any losses. The inability to securitize our portfolio may hurt our performance and our ability to grow our business. At the same time, the securitization of our loans or investments might expose us to losses, as the residual loans or investments in which we do not sell interests will tend to be riskier and more likely to generate losses. Moreover, the Dodd-Frank Act contains a risk retention requirement for all asset-backed securities, which requires both public and private securitizers to retain not less than 5% of the credit risk of the assets collateralizing any asset-backed security issuance. Significant restrictions exist, and additional restrictions may be added in the future, regarding who may hold risk retention interests, the structure of the entities that hold risk retention interests and when and how such risk retention interests may be transferred. ThereforeTherefore, such risk retention interests will generally be illiquid. As a result of the risk retention requirements, we have and may in the future be required to purchase and retain certain interests in a securitization into which we sell mortgage loans and/or when we act as issuer, may be required to sell certain interests in a securitization at prices below levels that such interests have historically yielded and/or may be required to enter into certain arrangements related to risk retention that we have not historically been required to enter into. Accordingly, the risk retention rules may increase our potential liabilities and/or reduce our potential profits in connection with securitization of mortgage loans. It is likely, therefore, that these risk retention rules will increase the administrative and operational costs of asset securitizations.

To the extent that our financing costs are determined by reference to floating rates, such as SOFR or a Treasury index, the amount of such costs will depend on the level and movement of interest rates. In recent years, interest rates had remained at relatively low levels on a historical basis. However, since January 2022, in light of increasing inflation, the U.S. Federal Reserve has increased interest rates eleven times. In a period of rising interest rates, our interest expense on floating-rate debt would increase, while any additional interest income we earn on our floating-rate investments may be subject to caps and may not compensate for such increase in interest expense. Specifically, in a rising interest environment, our interest income on our current portfolio is expected to increase. At the same time, the interest income we earn on our fixed-rate investments would not change, the duration and weighted average life of our fixed-rate investments would increase and the market value of our fixed-rate investments would decrease. Notwithstanding the current period of relatively high interest rates, the U.S. Federal Reserve began decreasing interest rates in 2024 and 2025 and has indicated that it may further decrease interest rates in 2025.2026. In a period of declining interest rates, our interest income on floating-rate investments would generally decrease, while any decrease in the interest we are charged on our floating-rate debt may be subject to floors and may not compensate for such decrease in interest income. However, rate floors relating to our loan portfolio may offset some of the impact from declining rates. In addition, interest we are charged on our fixed-rate debt would not change. Any such scenario could adversely affect our results of operations and financial condition.

•Other affiliaterelated party transactions. We may borrow money from multiple lenders, including KKR. Although our Manager will approve such transactions only on terms, including the consideration to be paid, that are determined by our Manager in good faith to be appropriate for us, it is possible that the interests of such affiliated lender could be in conflict with ours and the interests of our stockholders. KKR may also, on our behalf, effect transactions, including transactions in the secondary markets where KKR is also acting as a broker or other advisor on the other side of the same transaction. Notwithstanding that KKR may not receive commissions from such agency cross-transactions, it may nonetheless have a potential conflict of interest with respect to us and the other parties to those transactions to the extent it receives commissions or other compensation from such other parties.

Various laws and regulations currently exist that restrict the investment activities of banks and certain other financial institutions but do not apply to us, which we believe creates opportunities for us to participate in certain investments that are not available to these more regulated institutions. Any deregulation of the financial industry, including by amending the Dodd-Frank Act, may decrease the restrictions on banks and other financial institutions and would create more competition for investment opportunities that were previously not available to the financial industry. See “Risks Related to Our Lending and Investment Activities—We operate in a competitive market for lending and investment opportunities, and competition may limit our ability to originate or acquire desirable loans and investments or dispose of assets we target and could also affect the yields of these assets and have a material adverse effect on our business, financial condition and results of operations.” Efforts by the current administration could have further impacts on our industry if previously enacted laws are amended or if new legislative or regulatory reforms are adopted. In addition, the change in administration has led and will lead to leadership changes at a number of U.S. federal regulatory agencies with oversight over the U.S. financial services industry. This poses uncertainty with respect to such agencies’ policy priorities and may lead to increased regulatory enforcement activity in the financial services industry. Although there is a substantial lack of clarity regarding the likelihood, timing and details of potential changes or reforms by the newcurrent administration and U.S. Congress, such changes or reforms may impose additional costs on our current or future investments, require the attention of senior management or result in other limitations on our business or investments. We are unable to predict at this time the effect of any such reforms.

In order to qualify as a REIT, we must also ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets. The remainder of our investments in securities cannot include more than 10% of the outstanding voting securities of any one issuer or 10% of the total value of the outstanding securities of any one issuer unless we and such issuer jointly elect for such issuer to be treated as a taxable REIT subsidiary under the Code. The total value of all of our investments in taxable REIT subsidiaries cannot exceed 25% (20% for taxable years beginning before January 1, 2026) of the value of our total assets. In addition, no more than 5% of the value of our assets can consist of the securities of any one issuer other than a taxable REIT subsidiary, and no more than 25% of our assets can consist of debt of “publicly offered” REITs (i.e., REITs that are required to file annual and periodic reports with the SEC under the Exchange Act) that is not secured by real property or interests in real property. If we fail to comply with these requirements, we must dispose of a portion of our assets or otherwise come into compliance within 30 days after the end of the calendar quarter in order to avoid losing our REIT status and suffering adverse tax consequences. As a result, we may be required to liquidate or restructure otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

Under current law, the maximum U.S. federal income tax rate applicable to qualified dividend income payable to certain non-corporate U.S. holders is 20%. Dividends payable by REITs, however, generally are not eligible for the reduced qualified dividend rates. For taxable years beginning before January 1, 2026, however,However, non-corporate taxpayers may deduct up to 20% of certain pass-through business income, including “qualified REIT dividends” (generally, dividends received by a REIT shareholder that are not designated as capital gain dividends or qualified dividend income), subject to certain limitations, resulting in an effective maximum U.S. federal income tax rate of 29.6% on such income. Although the reduced U.S. federal income tax rate applicable to qualified dividend income does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividends and the reduced corporate tax rate could cause certain non-corporate investors to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock.

A REIT may own up to 100% of the stock of one or more taxable REIT subsidiaries. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a taxable REIT subsidiary. A corporation of which a taxable REIT subsidiary directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a taxable REIT subsidiary. Overall, no more than 25% (20% for taxable years beginning before January 1, 2026) of the gross value of a REIT’s assets may consist of stock or securities of one or more taxable REIT subsidiaries. The value of our interests in and, therefore, the amount of assets held in a taxable REIT subsidiary may also be restricted by our need to qualify for an exclusion from regulation as an investment company under the Investment Company Act. A taxable REIT subsidiary will pay U.S. federal, state and local income tax at regular corporate rates on any income that it earns.earns and could be subject to the 15% corporate alternative minimum tax on its adjusted financial statement income if certain income thresholds are met. In addition, the taxable REIT subsidiary rules limit the deductibility of amounts paid or accrued by a taxable REIT subsidiary to its parent REIT to assure that the taxable REIT subsidiary is subject to an appropriate level of corporate taxation. The rules also impose a 100% excise tax on certain transactions between a taxable REIT subsidiary and its parent REIT that are not conducted on an arm’s length basis.

Domestic taxable REIT subsidiaries that we own or may form will pay U.S. federal, state and local income tax on their taxable income, and their after-tax net income will be available for distribution to us but will not be required to be distributed to us, unless necessary to maintain our REIT qualification. In certain circumstances, the ability of our taxable REIT subsidiaries to deduct interest expenses for U.S. federal income tax purposes may be limited. While we plan to monitor the aggregate value of the securities of our taxable REIT subsidiaries and intend to conduct our affairs so that such securities will represent less than 25% (20% for taxable years beginning before January 1, 2026) of the value of our total assets, there can be no assurance that we will be able to comply with the taxable REIT subsidiary limitation or avoid the application of the 100% excise tax discussed above in all market conditions.

The costs related to cyber or other security threats or disruptions may not be fully insured or indemnified by other means. In addition, cybersecurity has become a top priority for regulators around the world. In addition, cybersecurity has become a top priority for regulators around the world. The SEC recently proposed amendments to its rules related to cybersecurity risk management, strategy, governance, and incident reporting, and many jurisdictions in which we and KKR operate have, or are considering adopting, laws and regulations relating to data privacy, cybersecurity and protection of personal information, including the General Data Protection Regulation in the European Union that went into effect in May 2018 and the California Consumer Privacy Act that became effective on January 1, 2020 and was amended by the California Privacy Rights Act, which became effective on January 1, 2023. Virginia, Colorado, Utah and Connecticut recently enacted similar data privacy legislation. Some jurisdictions have also enacted laws requiring companies to notify individuals of data security breaches involving certain types of personal data. Breaches in security, whether malicious in nature or through inadvertent transmittal or other loss of data, could potentially jeopardize our or KKR’s, its employees’, or our investors’ or counterparties’ confidential, proprietary and other information processed and stored in, and transmitted through, our or KKR’s computer systems and networks, or otherwise cause interruptions or malfunctions in our or KKR’s, its employees’, or our investors’, our counterparties’ or third parties’ operations, which could result in significant losses, increased costs, disruption of our business, liability to our investors and other counterparties, regulatory intervention or reputational damage.

•Net IncomeLoss Attributable to Common Stockholders of $13.1$69.9 million, or $0.19($1.05) per diluted share of common stock

•Distributable LossEarnings of $70.7$26.3 million, or ($1.02)$0.39 per diluted share of common stock

•Took title to anmultifamily officeproperties propertyin West Hollywood, CA and aRaleigh, life science propertyNC through deed-in-lieu of foreclosure, and wrote off uncollectible mezzanine/subordinated loansforeclosures; these loan resolutions resulted in net realized losses of $173.5$34.8 million, or ($2.50$0.52) per diluted share of common stock Portfolio Financing:

•No final facility maturities until 20262027 and no corporate debt due until 20272030 (1) All-inLTV yieldis includesgenerally amortizationbased on the initial loan amount divided by the as-is appraised value as of deferredthe originationdate fees,the loan originationwas costs and purchase discounts.originated.

(A)* NumbersPer share amounts presented may not foot due to rounding.

Book value as of December 31, 20242025 included the impact of an estimated CECL credit loss allowance of $119.6$204.1 million, or ($1.74$3.15) per share and accumulated depreciation of $5.1 million, or ($0.08) per share. See Note 2 — Summary of Significant Accounting Policies, to our consolidated financial statements included in this Form 10-K for detailed discussion of allowance for credit losses.

During the year ended December 31, 2024,2025, we collected 98%100% of interest payments due on our loan portfolio. As of December 31, 2024,2025, the average risk rating of our loan portfolio was 3.1,3.2, weighted by total loan exposure.outstanding principal. As of December 31, 2024,2025, the average loan commitment in our portfolio was $124.6$109.0 million and multifamily and industrial loans comprised 60%58% of our loan portfolio.

We have executed on our primary investment strategy of originating floating-rate transitional senior loans and, as we continue to scale our loan portfolio, we expect that our originations will be heavily weighted toward floating-rate loans. As of December 31, 2024,2025, substantially all of our loans by totaloutstanding loan exposureprincipal earned a floating rate of interest. We expect the majority of our future investment activity to focus on originating floating-rate senior loans that we finance with our repurchase and other financing facilities, with a secondary focus on originating floating-rate loans for which we syndicate a senior position and retain a subordinated interest for our portfolio.facilities. As of December 31, 2024,2025, all of our investments were located in the United States.States and Europe.

(C) "Other" property type includes Self-Storage (2%), Student Housing (2%) and Mixed Use (<1%).

The following table details our quarterly loan activity (dollarsamounts in thousands):

(CA) Represents a removal of $150.0 million of non-consolidated senior interests as our retained mezzanine loan was written-off during the three monthsyear ended JuneDecember 30,31, 2024.

The following table details overall statistics for our loan portfolio as of December 31, 20242025 (dollarsamounts in thousands):

* Rounds to zero (A) Represents a mezzanine loansloan with commitmentsa commitment of $79.4 million and $10.2 million, respectively, accompanying twoa senior loans.loan. $83.7$74.4 million of loan principal was funded,funded of which $74.4 million was placedand on nonaccrual status,status as of December 31, 2024. The remaining $9.3 million funded principal earned a fixed interest rate of 10.0% as of December 31, 2024.2025. Refer to Note 3 to our consolidated financial statements for additional information.

(DC) In addition to cash coupon, all-in yield includes the amortization of deferred origination fees, loan origination costs and purchase discounts. Weighted average cash coupon and all-in yield excludes loans on nonaccrual status.

(ED) Maximum maturity assumes all extension options are exercised by the borrower; however, our loans may be repaid prior to such date.

(FE) LTV is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated. Weighted average LTV excludes risk-rated 5 loans.

The table below sets forth additional information relating to our portfolio as of December 31, 20242025 (dollarsamounts in millions):

(A) Our total portfolio represents the current principal amount or investment amount on senior and mezzanine loans, real estate assetsassets, CMBS investments and other investments. Excludes loans that were fully written off.

For Senior Loan 8,6, the total whole loan is $199.4on non-accrual and has an outstanding principal balance of $194.4 million, including (i) a fully funded senior mortgage loan of $120.0 million, at an interest rate of S+2.25% and (ii) a mezzanine note with a commitment of $79.4 million, of which $74.4 million was funded as of December 31, 2024,2025, at a fixed interest rate of 4.5%.4.5% The mezzanine note interest is payment-in-kind (“PIK Interest”), which is capitalized, compounded, and added to the outstanding principal balance of the respective loan.PIK.

(C) Net equity reflects (i) the amortized cost basis of our loans, net of borrowings; (ii) Realreal Estateestate Owned ("REO"),assets, net of borrowings and noncontrolling interests, and (iii) the investment amount of equity method investments, net of borrowings.

(D) Weighted average is weighted by the current principal amount forof our senior and mezzanine loans and by the investment amount of CMBS B-Pieces.investments. Risk-ratedWeighted average LTV excludes risk-rated 5 loans are excluded from theand weighted average LTV.coupon excludes loans on nonaccrual status.

(E) Coupon expressed as spread over Term SOFR.SOFR, SONIA or EURIBOR.

(G) Loan Per SF / Unit / Key is based on the current principal amount divided by the current SF / Unit / Key. For Senior Loans 1, 2, 3,4, 5,10, 16 and 19,39, Loan Per SF / Unit / Key is calculated as the total commitment amount of the loan divided by the proposed SF / Unit / Key.

(H) For senior loans, LTV is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated; for mezzanine loans, LTV is based on the initial balance of the whole loan divided by the as-is appraised value as of the date the loan was originated; for CMBS B-Pieces,investments, LTV is based on the weighted average LTV of the underlying loan pool at issuance. Weighted Average LTV excludes risk-rated 5 loans.

As of December 31, 2024,2025, the average risk rating of ourKREF's portfolio was 3.1,3.2, weighted by totaloutstanding loan exposure,principal, as compared to 3.23.1 as of December 31, 2023.2024.

Our current CMBS exposure is through an equity method investment. Our Manager has processes and procedures in place to monitor and assess the credit quality of our CMBS B-Piece investments and promote the regular and active management of these investments. This includes reviewing the performance of the real estate assets underlying the loans that collateralize the investments and determining the impact of such performance on the credit and return profile of the investments. Our Manager holds monthly surveillance calls with the special servicer of our CMBS B-Piece investments to monitor the performance of our portfolio and discuss issues associated with the loans underlying our CMBS B-Piece investments. At each meeting, our Manager is provided with a due diligence submission for each loan underlying our CMBS B-Piece investments, which includes both property-level and loan-level information. These meetings assist our Manager in monitoring our portfolio, identifying any potential loan issues, determining if a re-underwriting of any loan is warranted and examining the timing and severity of any potential losses or impairments.

The following table summarizes our financing agreements (dollarsamounts in thousands):

Each of our existing master repurchase facilities includes "credit mark-to-market" features. "Credit mark-to-market" provisions in repurchase facilities are designed to keep the lenders' credit exposure generally constant as a percentage of the underlying collateral value of the assets pledged as security to them. If the credit underlying collateral value decreases, the gross amount of leverage available to us will be reduced as our assets are marked-to-market, which would reduce our liquidity. The lender under the applicable repurchase facility sets the valuation and any revaluation of the collateral assets in its sole, good faith discretion. As a contractual matter, the lender has the right to reset the value of the assets at any time based on then-current market conditions, but the market convention is to reassess valuations on a monthly, quarterly and annual basis using the financial information delivered pursuant to the facility documentation regarding the real property, borrower and guarantor under such underlying loans. Generally, if the lender determines (subject to certain conditions) that the market value of the collateral in a repurchase transaction has decreased by more than a defined minimum amount, the lender may require us to provide additional collateral or lead to margin calls that may require us to repay all or a portion of the funds advanced. We closely monitor our liquidity and intend to maintain sufficient liquidity on our balance sheet in order to meet any margin calls in the event of any significant decreases in asset values. As of December 31, 2024, the weighted average haircut under our repurchase agreements was 34.9% (or 32.1%, if we had borrowed the maximum amount approved by its repurchase agreement counterparties as of such dates). In addition, our existing master repurchase facilities are not entirely term-matched financings and may mature before our CRE debt investments that represent underlying collateral to those financings. As we negotiate renewals and extensions of these liabilities, we may experience lower advance rates and higher pricing under the renewed or extended agreements.

The last several quarters have been marked by significant volatility in global markets, driven by inflation, elevated interest rates, slowing economic growth, increased tariffs, trade tensions, geopolitical conditions, including as a result of thean outbreak of aongoing military conflict between the United States, Israel and Iran on February 28, 2026,Iran, and political and regulatory uncertainty. These conditions have adversely impacted, and may continue to adversely impact, the U.S. and global economies, the real estate industry and our borrowers, and the performance of the properties securing our loans. Collectively, these market dynamics pose challenges to commercial real estate values and transaction activity, which have resulted in lower demand for office space and elevated levels of vacancy and default rates.

Book value as of MarchJune 31,30, 2026 included the impact of anaccumulated estimated CECL allowancedepreciation of $260.3$8.0 million, or ($4.03) per share and accumulated depreciation of $6.5 million, or ($0.10$0.14) per share. See Note 2 — SummaryAs of SignificantJune Accounting30, Policies, to2026, our condensedundepreciated consolidatedbook financialvalue statementsper includedshare inwas this Form 10-Q for detailed discussion of allowance for credit losses.$10.38.

We have established a $5,725.4$5,248.7 million portfolio of diversified investments, consisting primarily of senior commercial real estate loans as of MarchJune 31,30, 2026.

As of MarchJune 31,30, 2026, the average risk rating of our loan portfolio was 3.3, weighted by loan outstanding principal. As of MarchJune 31,30, 2026, the average loan commitment in our portfolio was $107.8$101.3 million and multifamily and industrial loans comprised 63%60% of our loan portfolio.

In addition, we owned Real Estate Assets with an investment amount of $505.0$648.3 million, comprised of the acquired properties (directly or indirectly) and capitalized redevelopment costs, as of MarchJune 31,30, 2026. These properties are reflected on our Condensed Consolidated Balance Sheets.

We have executed on our primary investment strategy of originating floating-rate transitional senior loans and, as we continue to scale our loan portfolio, we expect that our originations will be heavily weighted toward floating-rate loans. As of MarchJune 31,30, 2026, substantially all of our loans by outstanding principal earned a floating rate of interest. We expect the majority of our future investment activity to focus on originating floating-rate senior loans that we finance with our repurchase and other financing facilities. As of MarchJune 31,30, 2026, all of our investments were located in the United States and Europe.

The following charts illustrate the diversification and composition of our loan portfolio as of MarchJune 31,30, 2026, based on type of investment, interest rate, underlying property type, geographic location, vintage and LTV:

The following table details overall statistics for our loan portfolio as of MarchJune 31,30, 2026 (amounts in thousands):

* Rounds to zero (A) Represents a mezzanine loan with a commitment of $79.4 million accompanying a senior loan. $74.4 million of loan principal was funded and on nonaccrual status as of MarchJune 31,30, 2026. Refer to Note 3 to our condensed consolidated financial statements for additional information.

The table below sets forth additional information relating to our portfolio as of MarchJune 31,30, 2026 (amounts in millions):

For Senior Loan 5,2, the total whole loan is on non-accrual and has an outstanding principal balance of $194.4 million, including (i) a fully funded senior mortgage loan of $120.0 million, at an interest rate of S+2.25% and (ii) a mezzanine note with a commitment of $79.4 million, of which $74.4 million was funded as of MarchJune 31,30, 2026, at a fixed interest rate of 4.5% PIK.

(B) Total Whole Loan represents the total commitment of the entire loan originated, including participations by KKR affiliated entities. KREF has been the sole or lead investor across all of its originations since its 2015 inception. As of DecemberMarch 31, 2025,2026, KKR's investment portfolio has less than 0.5% overlap with KREF's portfolio on a KKR AUM basis. Global Atlantic’s investment portfolio has less than 1% overlap with KREF's portfolio on a Global Atlantic AUM basis.

(G) Loan Per SF / Unit / Key is based on the current principal amount divided by the current SF / Unit / Key. For Senior Loans 1, 3,8, 10, 2220 and 37,35, Loan Per SF / Unit / Key is calculated as the total commitment amount of the loan divided by the proposed SF / Unit / Key.

(IJ) Represents real estate assets held through a Tenant-in-Common ("TIC")JV agreement between us and aan KKRunaffiliated affiliate.third party. We hold a 74.6%50% economic interest in the real estate assets and share decision-makingdecision making with the KKRthird affiliateparty under the TICJV agreement.

(JL) Represents our investment in an aggregator vehicle that invests in CMBS B-Pieces. Committed principal represents our total commitment to the aggregator vehicle whereas current principal represents the current funded amount.

(KM) Represents our 50% economic interest in an affiliated company, which is invested in a senior mortgage loan that is collateralized by industrial properties located in France. The underlying senior mortgage loan with an outstanding principal balance of €65.2 million, has a coupon of 2.8%, term to maturity of 2.8 years and LTV of 69%. The affiliated company's investment in the underlying senior mortgage loan is 80% financed with a funding cost of EURIBOR + 1.6%. KREF does not have unilateral authority to direct the activities that most significantly impact the affiliated company's economic performance.

In March 2026, we 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 committed 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 $64.1$65.8 million was risk-rated 3 as of MarchJune 31,30, 2026.

Our Non-Mark-to-Market Financing Sources, which accounted for 77%79% of our total financing as of MarchJune 31,30, 2026, are not subject to credit or capital markets mark-to-market provisions. The remaining 23%21% of our total financing, which is comprised of threefour master repurchase agreements, are only subject to credit marks.

As of MarchJune 31,30, 2026, we were in compliance with the covenants of our financing facilities.

In certain instances, we finance our loans through the non-recourse sale of a senior loan interest that is not included in our condensed consolidated financial statements. These non-consolidated senior interests provide structural leverage on a non-mark-to-market, match-term basis for our net investments, which are typically reflected in the form of mezzanine loans or other subordinate interests on our condensed consolidated balance sheets and in our condensed consolidated statement of income. We had no outstanding financing through non-consolidated senior interests as of MarchJune 31,30, 2026.

Real Estate Assets, Held For InvestmentHeld-For-Investment

Portland, OR Retail / Redevelopment — In December 2021, we took title a Portland retail property and 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. We contributed a portion of the REO asset to a joint venture (the "REO JV") with a third party local developer (“JV Partner”), whereby we 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, we sold a portion of the property for $6.0 million and recognized a realized gain of $0.7 million after closing costs. As of MarchJune 31,30, 2026, we have a priority of distributions up to $82.4$83.6 million before the JV Partner can participate in the economics of the REO JV.

Real Estate Assets, Held For SaleHeld-For-Sale

Philadelphia, PA Office — In December 2023, we took title to a Philadelphia office portfolio through a DIL and 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 MarchJune 31,30, 2026, there was one office property remaining.

As of MarchJune 31,30, 2026, the Philadelphia, PA Office and West Hollywood, CA Condo properties met the criteria to be classified as held for saleheld-for-sale under ASC 360. As such, depreciation and amortization on the properties and related lease intangibles were suspended.

Real Estate Asset, Equity Method InvestmentInvestments

As of MarchJune 31,30, 2026, we held a 3.5% interest in RECOP I, an unconsolidated VIE of which we were not the primary beneficiary. The aggregator vehicle in which we invested is controlled and advised by affiliates of our Manager. RECOP I primarily acquired junior tranches of CMBS newly issued by third parties. We do not pay any fees to RECOP I, but we bear the pro rata share of RECOP I's expenses. We reported our share of the net asset value of RECOP I in our Condensed Consolidated Balance Sheets, presented as “Equity method investments” and our share of net income, presented as “Income (loss) from equity method investments” on the Condensed Consolidated Statements of Income.

In connection with our investments in CMBS B-Pieces, we consolidated the CMBS trusts that hold the pools of senior loans underlying the CMBS because we determined such trusts are VIEs and we are the primary beneficiary of such VIEs. As a result of the consolidations, our financial statements include the liabilities of the consolidated CMBS trusts. However, the liabilities are not recourse to us, and our risk of loss is limited to the value of our investment in the related CMBS B-Pieces. See Note 8 to the consolidated financial statements for additional information on these liabilities as of MarchJune 31,30, 2026.

Three Months Ended MarchJune 31,30, 2026 Compared to Three Months Ended March 31, 20252026

The following table summarizes the changes in our results of operations for the three months ended MarchJune 31,30, 2026 and March 31, 20252026 (amounts in thousands, except per share data):

Net interest income decreased by $5.2$8.0 million during the three months ended MarchJune 31,30, 2026, as compared to the correspondingpreceding periodthree-month in the prior year.period. This decrease was due primarily to a reduced loan portfolio size as a result of repayments or other resolutions and lowerloans indexon rates.nonaccrual status. We recorded $4.1$2.6 million of deferred loan fees and origination discounts accreted into interest income during the three months ended MarchJune 31,30, 2026, as compared to $3.4$4.1 million during the prior yearpreceding period. In addition, we recorded $3.5$2.8 million of deferred financing costs amortization into interest expense during the three months ended MarchJune 31,30, 2026, as compared to $3.1$3.5 million duringfor the prior yearpreceding period.

Total other income increaseddecreased by $4.5$5.6 million during the three months ended MarchJune 31,30, 2026, as compared to the prior yearpreceding period. This decrease was duedriven primarilyby tocurrent aperiod $2.1 million increase in revenue from REO operations and gainslosses on foreign currency forward contracts of $6.9$4.2 million partially offset by lossesgains on foreign currency translation of $5.4$1.5 million Total operating expenses increased by $50.8 million during the three months ended March 31, 2026, as compared to the prior year period. The provision for credit losses during the three months ended March 31, 2026 was due primarily to additional reserves on risk-rated 5 office and life science loans.million.

We have capitalized our business to date primarily through the issuance and sale of our common stock and preferred stock, borrowings from threefour master repurchase agreements, and borrowings from our Non-Mark-to-Market Financing Sources, which were comprised of collateralized loan obligations, term lending agreements, term loan facility, secured term loan, asset specific financing, warehouse facility, and Revolver. Our Non-Mark-to-Market Financing Sources, which accounted for 77%79% of our total financing as of MarchJune 31,30, 2026, are not subject to credit or capital markets mark-to-market provisions. The remaining 23%21% of our total financing, which are comprised of four master repurchase agreements, are only subject to credit marks.

Our primary sources of liquidity include $135.4$83.1 million of cash on our Condensed Consolidated Balance Sheets, $500.0$350.0 million of available capacity on our Revolver, $18.0$33.8 million of available borrowings under our financing arrangements based on existing collateral, and cash flows from operations. In addition, we had $535.0$625.9 million of total unencumbered assets, including $217.4$359.9 million of real estate owned assets, $86.5$85.0 million of CMBS investments and $231.1$181.0 million of unencumbered senior loans, that can be financed, as of MarchJune 31,30, 2026. Our Revolver and secured term loan are secured by corporate level guarantees and include net equity interests in the investment portfolio. We may seek additional sources of liquidity from syndicated financing, other borrowings (including borrowings not related to a specific investment) and future offerings of equity and debt securities.

As described in Note 11 to our condensed consolidated financial statements, we have off-balance sheet arrangements related to VIEs that we account for by either consolidating or by using the equity method of accounting when we hold an economic interest or have a capital commitment. Our maximum risk of loss associated with our interests in these VIEs is limited to the carrying value of our net investment in such entities and any unfunded capital commitments. As of MarchJune 31,30, 2026, we held $24.1 million of net investments in consolidated CMBS trusts, and $35.4$33.8 million of interests in a CMBS equity method investment.

We have also entered into an equity distribution agreement with certain sales agents, pursuant to which we may sell, from time to time, up to an aggregate sales price of $100.0 million of our common stock, pursuant to a continuous offering program (the “ATM”), under the Shelf. Sales of our common stock made pursuant to the ATM may be made in negotiated transactions or transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act. During the threesix months ended MarchJune 31,30, 2026, we did not sell any shares of common stock under the ATM. As of MarchJune 31,30, 2026, $93.2 million remained available for issuance under the ATM.

(A) Represents (i) total outstanding debt agreements (excluding non-recourse facilities) and secured term loan, less cash (including loan principal repayments held by servicer); to (ii) KREF's stockholders' equity, in each case, at period end.

(B) Represents (i) total outstanding debt agreements, secured term loan,loan and collateralized loan obligations, less cash (including loan principal repayments held by servicer); to (ii) KREF's stockholders' equity, in each case, at period end.

We also had $535.0$625.9 million of total unencumbered assets, including $217.4$359.9 million of real estate owned assets, $86.5$85.0 million of CMBS investments and $231.1$181.0 million of unencumbered senior loans as of MarchJune 31,30, 2026. In addition to our primary sources of liquidity, we have the ability to access further liquidity through our ATM program and public offerings of debt and equity securities. Our existing loan portfolio also provides us with liquidity as loans are repaid or sold, in whole or in part, and the proceeds from repayment become available for us to invest.

The following table sets forth changes in cash and cash equivalents for the threesix months ended MarchJune 31,30, 2026, and 2025 (amounts in thousands):

During the threesix months ended MarchJune 31,30, 2026, our cash flows from investing activities were primarily driven by CRE loan repayments of $489.7$1,041.5 million, apartially CREoffset by loan originationoriginations and loan fundings of $194.7 million, and purchases of CMBS investments of $41.8$552.1 million.

During the threesix months ended MarchJune 31,30, 2025, our cash flows from investing activities were primarily driven by CREloan repayments and the sale of loans of $629.8 million, and net proceeds received of $30.3 million from the sale of REO investments, partially offset by loan fundings of $400.2 million and loan repayments of $182.1$626.5 million.

During the threesix months ended MarchJune 31,30, 2026, our cash flows from financing activities were primarily driven by repayments of $300.1$682.8 million on our secured financing agreements and repayments of $132.2$538.0 million on our collateralized loan obligations, partially offset by borrowing proceeds of $239.7$851.1 million under our secured financing agreements.

During the threesix months ended MarchJune 31,30, 2025, our cash flows from financing activities were primarily driven by borrowing proceeds of $603.4$1,003.3 million under our secured financing agreements and proceeds of $209.8 million issued under our secured term loan, partially offset by repayments of $377.0$853.2 million on our secured financing agreements and repayments of $185.1$318.4 million on our collateralized loan obligations.