---



SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-K/A


(Amendment No. 1)





☒
            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                    ACT OF 1934





For the fiscal year ended December 31, 2018





☐
            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934





For the transition period from ________________ to ________________





Commission File Number: 001-38082











| | KKR Real Estate Finance Trust Inc.                     | 
| | ------------------------------------------------------ | 
| | (Exact name of registrant as specified in its charter) | 




| | Maryland                                                       |  | 47-2009094                           | 
| | -------------------------------------------------------------- |  | ------------------------------------ | 
| | (State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.) | 
| |                                                                |  |                                      | 
| | 9 West 57th Street, Suite 4200
          New York, NY          |  | 10019                                | 
| | (Address of principal executive offices)                       |  | (Zip Code)                           | 




(212) 750-8300





(Registrant’s telephone number, including area code)





Securities registered pursuant to Section 12(b) of the Act





| | Title of each class                     |  | Name of each exchange on which registered | 
| | --------------------------------------- |  | ----------------------------------------- | 
| | Common stock, par value $0.01 per share |  | New York Stock Exchange                   | 

Securities registered pursuant to Section 12(g) of the Act: None


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    ☐ Yes    ☒ No
 Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    ☐ Yes    ☒ No
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
        during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    ☒ Yes    ☐ No
 Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
        Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    ☒ Yes    ☐ No
 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S‐K is not contained herein, and will not be contained, to the
        best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10‐K or any amendment to this Form 10‐K. ☒
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an
        emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


|Large accelerated filer☐ | Accelerated filer    ☒        
|------------------------ | ------------------------------
|                         |                               
|Non-accelerated filer☐   | Smaller reporting company    ☐
|                         |                               
|                         | Emerging growth company    ☒  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
        revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☒
 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐ Yes    ☒ No


The aggregate market value of the registrant’s common stock held by non-affiliates was approximately $298.0 million as of June 30, 2018 (the last business day
      of the registrant’s most recently completed second fiscal quarter) based on the closing sale price on the New York Stock Exchange on that date.





The number of shares of the registrant’s common stock, par value $0.01 per
        share, outstanding as of February 20, 2019 was 57,383,408.





DOCUMENTS INCORPORATED BY REFERENCE


Portions of the definitive proxy statement to be filed with the Securities and Exchange Commission (“SEC”) pursuant to Regulation 14A relating to the
        registrant’s Annual Meeting of Shareholders, to be held on April 26, 2019, will be incorporated by reference in this Form 10-K in response to Items 10, 11, 12, 13 and 14 of Part III. The definitive proxy statement will be filed with the SEC no
        later than 120 after the registrant’s fiscal year end.





EXPLANATORY NOTE





KKR Real Estate Finance Trust Inc. (the “Company”) is filing this Amendment No. 1 (the “Amendment”) to its Annual Report on Form 10-K for the fiscal year ended
      December 31, 2018 (the “Initial Form 10-K,” and as amended by this Amendment, the “Annual Report on Form 10-K”), originally filed with the Securities and Exchange Commission on February 20, 2019.





This Amendment corrects the presentation of the Company’s non-GAAP financial measures Net Core Earnings and Core Earnings (and related per share amounts) for
      the year ended December 31, 2018, contained on pages 54 and 56 of “Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Initial Form 10-K.  These corrections do not impact any other areas of the
      Initial Form 10-K.  Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, as amended, we have included the entire text of Item 7 of the Initial Form 10-K as amended by this Amendment.





In addition, this Amendment attaches a currently dated version of the Consent of Deloitte & Touche LLP as Exhibit 23.1, which replaces Exhibit 23.1 to the
      Initial Form 10-K.





Except as expressly set forth above, this Amendment does not, and does not purport to, amend, update or restate the information in any other item of the Initial
      Form 10-K or reflect any events that have occurred after the filing of the Initial Form 10-K. Accordingly, this Amendment should be read in conjunction with the Initial Form 10-K.








PART II





ITEM 7.
          MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in
      this Annual Report on Form 10-K. The historical consolidated financial data discussed below reflects the historical results and financial position of KREF. In addition, this discussion and analysis contains forward-looking statements and involves
      numerous risks and uncertainties, including those described under “Cautionary Note Regarding Forward-Looking Statements,” and Part I, Item 1A. “Risk Factors” in this Annual Report on Form 10-K. Actual results may differ materially from those
      contained in any forward-looking statements.





Introduction





KKR Real Estate Finance Trust Inc. is a real estate finance company that focuses primarily on originating and acquiring senior loans secured by CRE assets. We
      are externally managed by KKR Real Estate Finance Manager LLC, an indirect subsidiary of KKR, and are a REIT traded on the NYSE under the symbol “KREF.” We are headquartered in New York City.





We conduct our operations as a REIT for U.S. federal income tax purposes. We generally will not be subject to U.S. federal income taxes on our taxable income to
      the extent that we annually distribute all of our net taxable income to stockholders and maintain our qualification as a REIT. We also operate our business in a manner that permits us to avoid registration under the Investment Company Act. We are
      organized as a holding company and conduct our business primarily through our various subsidiaries.





2018 Highlights





Operating Results:





•
            Net Income Attributable to Common Stockholders of $87.3 million, or $1.58 per basic and diluted share of common stock, increased 48% and $0.28, respectively, compared to
                  2017.


•
            Net Core Earnings of $100.0 million, or $1.81 per basic and diluted share of common stock, increased 80% and $0.59 respectively, compared to 2017.


•
            Declared dividends of $1.69 per common share. The fourth quarter dividend of $0.43 per common share produced an annualized yield of 8.75% on our December 31, 2018 book value.





Investment Activity:





•
            Originated 19 floating-rate senior loans totaling $2.7 billion of commitments, of which $2.4 billion was funded as of December 31, 2018. Average loan size increased by $20.1
                  million to $143.6 million, a 16% increase over 2017.


•
            Current portfolio of $4.1 billion is 100% performing and 98% floating-rate with a weighted average LTV of 68% as of December 31, 2018. Current portfolio increased 98% over
                  2017.


•
            Sold four CMBS B-piece investments and recognized a $13.0 million gain.





Portfolio Financing:





•
            Increased our borrowing capacity to $4.1 billion as of December 31, 2018, compared to $1.8 billion as of December 31, 2017.


•
            Increased our non-mark-to-market financing to $1.8 billion as of December 31, 2018, representing 60% of our total asset based financing.


•
            Entered into a $1.0 billion non-recourse term loan facility providing non-mark-to-market asset based financing.


•
            Issued a $1.0 billion managed collateralized loan obligation, providing $810.0 million of non-mark-to-market portfolio financing.


•
            Entered into a $200.0 million asset based financing facility providing non-mark-to-market financing.





4


Capital Markets Activity:





•
            Issued $143.8 million aggregate principal amount of 6.125% convertible senior notes due May 2023.


•
            Completed an underwritten public offering of 5.0 million primary shares of our common stock in August, providing $98.3 million in net proceeds.


•
            Completed an underwritten public offering of 4.5 million shares of our common stock, consisting of 0.5 million primary shares issued and sold by KREF and 4.0 million
                  secondary shares sold by certain of the Company’s shareholders in November, providing $9.4 million in net proceeds to KREF.


•
            Repurchased 1,623,482 shares of our common stock for approximately $31.3 million at a weighted average price of $19.30 per share.


•
            Our book value was $1.1 billion as of December 31, 2018, a 7% increase over 2017.





Key Financial Measures and Indicators





As a real estate finance company, we believe the key financial measures and indicators for our business are earnings per share, dividends declared, Core
      Earnings, Net Core Earnings and book value per share.





Earnings Per Share and Dividends Declared





The following table sets forth the calculation of basic and diluted net income per share and dividends declared per share (amounts in thousands, except share
      and per share data):





|                                                              |  | Three Months
          Ended December 31, |            |  | Year Ended December 31, |  
|------------------------------------------------------------- |  | ----------------------------------------- | ---------- |  | ----------------------- | -
|                                                              |  | 2018                                      |            |  | 2018                    |  
|Net income(A)                                                 |  | $                                         | 19,709     |  |                         | $
|Weighted-average number of shares of common stock outstanding |  |                                           |            |  |                         |  
|Basic                                                         |  |                                           | 58,178,944 |  |                         |  
|Diluted                                                       |  |                                           | 58,253,821 |  |                         |  
|Net income per share, basic                                   |  | $                                         | 0.34       |  |                         | $
|Net income per share, diluted                                 |  | $                                         | 0.34       |  |                         | $
|Dividends declared per share(B)                               |  | $                                         | 0.43       |  |                         | $




(A)
          Represents net income attributable to common stockholders.


(B)
            During February 2017, we declared a dividend of $0.35 per share of common stock paid on February 3, 2017 to shareholders of record on February 3, 2017 related to income
                  generated during the three months ended December 31, 2016.





Core Earnings and Net Core Earnings





We use Core Earnings and Net Core Earnings to evaluate our performance excluding the effects of certain transactions and GAAP adjustments we believe are not
      necessarily indicative of our current loan activity and operations. Core Earnings and Net Core Earnings are measures that are not prepared in accordance with GAAP. We define Core Earnings as net income (loss) attributable to our stockholders or,
      without duplication, owners of our subsidiaries, computed in accordance with GAAP, including realized losses not otherwise included in GAAP net income (loss) and excluding (i) non-cash equity compensation expense, (ii) the incentive compensation
      payable to our Manager, (iii) depreciation and amortization, (iv) any unrealized gains or losses or other similar non-cash items that are included in net income for the applicable reporting period, regardless of whether such items are included in
      other comprehensive income or loss, or in net income, and (v) one-time events pursuant to changes in GAAP and certain material non-cash income or expense items after discussions between our Manager and our board of directors (and subject to the
      approval by a majority of our independent directors). The exclusion of depreciation and amortization from the calculation of Core Earnings only applies to debt investments related to real estate to the extent we foreclose upon the property or
      properties underlying such debt investments. Net Core Earningsis Core Earningsless




      incentive compensation payable to our Manager.





5


We believe providing Core Earnings and Net Core Earnings on a supplemental basis to our net income as determined in accordance with GAAP is helpful to
      stockholders in assessing the overall performance of our business. Core Earnings and Net Core Earnings should not be considered as a substitute for GAAP net income. We caution readers that our methodology for calculating Core Earnings and Net Core
      Earnings may differ from the methodologies employed by other REITs to calculate the same or similar supplemental performance measures, and as a result, our Core Earnings and Net Core Earnings may not be comparable to similar measures presented by
      other REITs.





We also use Core Earnings to determine the management and incentive fees we pay our Manager. For its services to KREF, our Manager is entitled to a quarterly
      management fee equal to the greater of $62,500 or 0.375% of a weighted average adjusted equity and quarterly incentive compensation equal to 20.0% of the excess of (a) the trailing 12-month Core Earnings over (b) 7.0% of the trailing 12-month
      weighted average adjusted equity (“Hurdle Rate”), less incentive compensation KREF already paid to the Manager with respect to the first three calendar quarters of such trailing 12-month period.  The quarterly incentive compensation is calculated and
      paid in arrears with a three-month lag. During the year ended December 31, 2018, the Company incurred $4.8 million of incentive fees payable to the Manager, of which $2.4 million, or $0.04 per share, was related to the gain recognized as a result of
      the April 2018 CMBS sale, see Note 8 to our consolidated financial statements included in this Form 10-K.





The following tables provide a reconciliation of GAAP net income attributable to common stockholders to Core Earnings and Net Core Earnings (amounts in
      thousands, except share and per share data):





|                                                              |  | Three Months
          Ended |            |  | Year Ended December 31, |  
|------------------------------------------------------------- |  | ---------------------------- | ---------- |  | ----------------------- | -
|                                                              |  | December 31, 2018            |            |  | 2018                    |  
|Net Income (Loss) Attributable to Common Stockholders         |  | $                            | 19,709     |  |                         | $
|Adjustments                                                   |  |                              |            |  |                         |  
|Non-cash equity compensation expense                          |  |                              | 387        |  |                         |  
|Incentive compensation to affiliate                           |  |                              | 1,470      |  |                         |  
|Depreciation and amortization                                 |  |                              | —          |  |                         |  
|Unrealized (gains) or losses(A)                               |  |                              | 1,980      |  |                         |  
|Non-cash convertible notes discount amortization              |  |                              | 91         |  |                         |  
|Reversal of previously unrealized gain now realized(B)        |  |                              | —          |  |                         |  
|Core Earnings(C)                                              |  |                              | 23,637     |  |                         |  
|Incentive compensation to affiliate                           |  |                              | 1,470      |  |                         |  
|Net Core Earnings                                             |  | $                            | 22,167     |  |                         | $
|Weighted average number of shares of common stock outstanding |  |                              |            |  |                         |  
|Basic                                                         |  |                              | 58,178,944 |  |                         |  
|Diluted                                                       |  |                              | 58,253,821 |  |                         |  
|Core Earnings per Diluted Weighted Average Share              |  | $                            | 0.41       |  |                         | $
|Net Core Earnings per Diluted Weighted Average Share          |  | $                            | 0.38       |  |                         | $




(A)
            Includes $1.6 million, $1.6 million and $0.0 million non-cash redemption value adjustment of our Special Non-Voting Preferred Stock for the three months ended December 31,
                  2018, the year ended December 31, 2018, and the year ended December 31, 2017, respectively.


(B)
            Includes $5.5 million and $6.4 million of unrealized gains related to the first quarter of 2018 and to prior periods, respectively, that were realized during the three months
                  ended June 30, 2018.


(C)
            Excludes $0.2 million, $1.8 million and $4.0 million, or $0.00, $0.03 and $0.09 per diluted weighted average share outstanding, of net original issue discount on CMBS
                  B-Pieces accreted as a component of taxable income during the three months ended December 31, 2018, year ended December 31, 2018 and 2017, respectively.





Book Value per Share





We believe that book value per share is helpful to stockholders in evaluating the growth of our company as we have scaled our equity capital base and continue
      to invest in our target assets. The following table calculates our book value per share of common stock (amounts in thousands, except share and per share data):





6


|                                                            |  | December 31, 2018 |            |  | December 31, 2017 |  
|----------------------------------------------------------- |  | ----------------- | ---------- |  | ----------------- | -
|KKR Real Estate Finance Trust Inc. stockholders’ equity     |  | $                 | 1,132,342  |  |                   | $
|Shares of common stock issued and outstanding at period end |  |                   | 57,596,217 |  |                   |  
|Book value per share of common stock                        |  | $                 | 19.66      |  |                   | $

Book value per share includes the impact of a $1.9 million non-cash redemption value adjustment to our redeemable Special Non-Voting Preferred Stock (“SNVPS”)
      and the initial value of the SNVPS of $0.9 million (collectively referred to as “SNVPS Cumulative Impact”), which reduced our book value per share by $0.05 as of December 31, 2018. Upon redemption of the SNVPS, our book value will increase as a
      result of a one-time gain, thus substantially eliminating the SNVPS Cumulative Impact on our book value. See Note 9 —Equity, to our consolidated financial statements included in this Form 10-K, for detailed discussion of the SNVPS.





Our Portfolio





We have established a portfolio of diversified investments, consisting of performing senior loans, mezzanine loans and CMBS B-Pieces, which had a value of
      $4,133.5 million as of December 31, 2018.





As we continue to scale our portfolio, we expect that our originations will continue to be heavily weighted toward floating-rate loans. As of December 31, 2018,
      99% of our loans by total loan exposure 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 term 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. As of December 31, 2018, our portfolio had experienced no impairments and did not
      contain any legacy assets that were originated prior to October 2014. As of December 31, 2018, all of our investments were located in the United States. The following charts illustrate the diversification of our portfolio, based on type of
      investment, interest rate, underlying property type and geographic location, as of December 31, 2018:











---

The charts above are based on total assets. Total assets reflect (i) the principal amount of our senior and mezzanine loans; and (ii) the cost basis of our CMBS
      B-Pieces, net of VIE liabilities. In accordance with GAAP, we carry our CMBS B-Piece investments at fair value. In April 2018, we sold our controlling beneficial interest in four of our five CMBS trusts for net proceeds of $112.7 million. During the
      year ended December 31, 2018, we had a $2.6 million unrealized loss on the remaining CMBS investment.





(A)
            Excludes CMBS B-Pieces. Our CMBS B-Piece portfolio diversification is as follows and is inclusive of our $29.6 million investment in RECOP:





7


•
            Property Type:Office (28.4%), Retail (24.8%) Hospitality (15.3%), and Other
                  (31.5%). As of December 31, 2018, no other individual property type comprised more than 10% of our total CMBS B‐Piece portfolio.





•
            Geography:California (23.0%), New York (12.5%)  Texas (8.5%) and Other (56.0%).
                  As of December 31, 2018, no other individual geography comprised more than 5% of our total CMBS B‐Piece portfolio.





•
            Vintage:2015 (19.6%), 2016 (10.2%), and 2017 (70.2%).





(B)
          LTV is generally based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated.





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





|                                 |  | Three Months Ended       |         |   | Year Ended    |  
|-------------------------------- |  | ------------------------ | ------- | - | ------------- | -
|                                 |  | March 31,
          2018 |         |   | June 30, 2018 |  
|Loan originations                |  | $                        | 411,425 |   |               | $
|Loan fundings(A)                 |  | $                        | 421,056 |   |               | $
|Loan repayments(B)               |  |                          | (35,000 | ) |               |  
|Net fundings                     |  |                          | 386,056 |   |               |  
|Loan participations sold         |  |                          | —       |   |               |  
|Non-consolidated senior interest |  |                          | —       |   |               |  
|Total activity                   |  | $                        | 386,056 |   |               | $




(A)
            Includes initial funding of new loans and additional fundings made under existing loans. Excludes fundings on loan participations sold.


(B)
            Includes 100.0% of the proceeds from the repayment of one of the mezannine loans held within our commercial mezzanine loan joint venture during the year ended December 31,
                  2018.





The following table details overall statistics for our loan portfolio as of December 31, 2018 (dollars in thousands):





|                                             |  |                                   |           |   | Total Loan Exposure(A)         |  
|-------------------------------------------- |  | --------------------------------- | --------- | - | ------------------------------ | -
|                                             |  | Balance Sheet
          Portfolio |           |   | Total Loan
          Portfolio |  
|Number of loans                              |  |                                   | 41        |   |                                |  
|Principal balance                            |  | $                                 | 4,026,713 |   |                                | $
|Carrying value                               |  | $                                 | 4,001,820 |   |                                | $
|Unfunded loan commitments(B)                 |  | $                                 | 419,485   |   |                                | $
|Weighted-average cash coupon(C)              |  |                                   | 6.0       | % |                                |  
|Weighted-average all-in yield(C)             |  |                                   | 6.5       | % |                                |  
|Weighted-average maximum maturity (years)(D) |  |                                   | 3.7       |   |                                |  
|LTV(E)                                       |  |                                   | 68        | % |                                |  




(A)
            In certain instances, we finance our loans through the non-recourse sale of a senior interest that is not included in our condensed consolidated financial statements. Total
                  loan exposure includes the entire loan we originated and financed, including $67.2 million of such non-consolidated interests that are not included within our balance sheet portfolio.


(B)
            Unfunded commitments will primarily be funded to finance property improvements or lease-related expenditures by the borrowers. These future commitments will be funded over
                  the term of each loan, subject in certain cases to an expiration date.


(C)
            As of December 31, 2018, 100.0% of floating rate loans by principal balance are indexed to one-month USD LIBOR. In addition to cash coupon, all-in yield includes the
                  amortization of deferred origination fees, loan origination costs and purchase discounts. Cash coupon and all-in yield for the total portfolio assume applicable floating benchmark rates as of December 31, 2018. L = one-month USD LIBOR
                  rate; spot rate of 2.50% included in portfolio-wide averages represented as fixed rates.


(D)
            Maximum maturity assumes all extension options are exercised by the borrower; however, our loans may be repaid prior to such date. As of December 31, 2018, based on total
                  loan exposure, 75.7% of our loans were subject to yield maintenance or other prepayment restrictions and 24.3% were open to repayment by the borrower without penalty.


(E)
          Based on LTV as of the dates loans were originated or acquired by us.





8


The table below sets forth additional information relating to our portfolio as of December 31, 2018 (dollars in millions):





|    |  | Investment(A)                                    |  | Investment Date |  | Committed
          Principal
          Amount |         |  | Current
          Principal
          Amount |   |         | Net
          Equity(B) |  | Location |         | Property Type |                         | Coupon(C)(D) |                     | Max
          Remaining
          Term
          (Years)(C)(E) |  |        | LTV(C)(F) | 
|--- |  | ------------------------------------------------ |  | --------------- |  | ---------------------------------------------- | ------- |  | -------------------------------------------- | - | ------- | ----------------------- |  | -------- | ------- | ------------- | ----------------------- | ------------ | ------------------- | -------------------------------------------------------------- |  | ------ | --------- | 
|    |  | Senior Loans(G)                                  |  |                 |  |                                                |         |  |                                              |   |         |                         |  |          |         |               |                         |              |                     |                                                                |  |        |           | 
|1   |  | Senior Loan                                      |  | 5/9/2018        |  | $                                              | 350.0   |  |                                              | $ | 255.2   |                         |  | $        | 151.5   |               | Queens, NY              |              | Office              |                                                                |  | L+3.3% |           | 
|2   |  | Senior Loan                                      |  | 7/31/2018       |  |                                                | 341.0   |  |                                              |   | 335.5   |                         |  |          | 82.0    |               | Atlanta, GA / Tampa, FL |              | Multifamily         |                                                                |  | L+3.2  |           | 
|3   |  | Senior Loan                                      |  | 8/4/2017        |  |                                                | 239.2   |  |                                              |   | 170.7   |                         |  |          | 59.4    |               | New York, NY            |              | Condo (Residential) |                                                                |  | L+4.8  |           | 
|4   |  | Senior Loan                                      |  | 12/20/2018      |  |                                                | 234.5   |  |                                              |   | 182.2   |                         |  |          | 43.2    |               | New York, NY            |              | Multifamily         |                                                                |  | L+3.6  |           | 
|5   |  | Senior Loan                                      |  | 5/23/2018       |  |                                                | 213.7   |  |                                              |   | 195.4   |                         |  |          | 32.3    |               | Boston, MA              |              | Office              |                                                                |  | L+2.4  |           | 
|6   |  | Senior Loan                                      |  | 11/13/2017      |  |                                                | 181.8   |  |                                              |   | 159.2   |                         |  |          | 41.1    |               | Minneapolis, MN         |              | Office              |                                                                |  | L+3.8  |           | 
|7   |  | Senior Loan                                      |  | 9/13/2018       |  |                                                | 172.0   |  |                                              |   | 162.1   |                         |  |          | 36.5    |               | Seattle, WA             |              | Office              |                                                                |  | L+3.7  |           | 
|8   |  | Senior Loan                                      |  | 9/9/2016        |  |                                                | 168.0   |  |                                              |   | 159.5   |                         |  |          | 41.7    |               | San Diego, CA           |              | Office              |                                                                |  | L+4.2  |           | 
|9   |  | Senior Loan                                      |  | 6/19/2018       |  |                                                | 165.0   |  |                                              |   | 143.1   |                         |  |          | 26.4    |               | Philadelphia, PA        |              | Office              |                                                                |  | L+2.5  |           | 
|10  |  | Senior Loan                                      |  | 12/5/2018       |  |                                                | 163.0   |  |                                              |   | 148.0   |                         |  |          | 20.6    |               | New York, NY            |              | Multifamily         |                                                                |  | L+2.6  |           | 
|11  |  | Senior Loan                                      |  | 4/11/2017       |  |                                                | 162.1   |  |                                              |   | 140.8   |                         |  |          | 40.7    |               | Irvine, CA              |              | Office              |                                                                |  | L+3.9  |           | 
|12  |  | Senior Loan                                      |  | 10/26/2015      |  |                                                | 155.0   |  |                                              |   | 125.0   |                         |  |          | 49.4    |               | Portland, OR            |              | Retail              |                                                                |  | L+5.5  |           | 
|13  |  | Senior Loan                                      |  | 10/23/2017      |  |                                                | 150.0   |  |                                              |   | 147.8   |                         |  |          | 39.7    |               | North Bergen, NJ        |              | Multifamily         |                                                                |  | L+4.3  |           | 
|14  |  | Senior Loan                                      |  | 11/9/2018       |  |                                                | 150.0   |  |                                              |   | 140.0   |                         |  |          | 27.3    |               | Fort Lauderdale, FL     |              | Hospitality         |                                                                |  | L+2.9  |           | 
|15  |  | Senior Loan                                      |  | 11/7/2018       |  |                                                | 135.0   |  |                                              |   | 122.0   |                         |  |          | 52.7    |               | West Palm Beach, FL     |              | Multifamily         |                                                                |  | L+2.9  |           | 
|16  |  | Senior Loan                                      |  | 3/30/2017       |  |                                                | 132.3   |  |                                              |   | 116.5   |                         |  |          | 35.2    |               | Brooklyn, NY            |              | Office              |                                                                |  | L+4.4  |           | 
|17  |  | Senior Loan                                      |  | 8/15/2017       |  |                                                | 119.0   |  |                                              |   | 99.8    |                         |  |          | 13.8    |               | Atlanta, GA             |              | Office              |                                                                |  | L+3.0  |           | 
|18  |  | Senior Loan                                      |  | 9/14/2016       |  |                                                | 103.5   |  |                                              |   | 96.8    |                         |  |          | 23.8    |               | Crystal City, VA        |              | Office              |                                                                |  | L+4.5  |           | 
|19  |  | Senior Loan                                      |  | 11/20/2018      |  |                                                | 103.5   |  |                                              |   | 81.8    |                         |  |          | 20.9    |               | San Diego, CA           |              | Multifamily         |                                                                |  | L+3.2  |           | 
|20  |  | Senior Loan                                      |  | 9/7/2018        |  |                                                | 93.0    |  |                                              |   | 93.0    |                         |  |          | 58.5    |               | Seattle, WA             |              | Multifamily         |                                                                |  | L+2.6  |           | 
|21  |  | Senior Loan                                      |  | 3/8/2018        |  |                                                | 89.0    |  |                                              |   | 87.1    |                         |  |          | 14.4    |               | Westbury, NY            |              | Multifamily         |                                                                |  | L+3.1  |           | 
|22  |  | Senior Loan                                      |  | 3/29/2018       |  |                                                | 86.0    |  |                                              |   | 86.0    |                         |  |          | 14.1    |               | New York, NY            |              | Multifamily         |                                                                |  | L+2.6  |           | 
|23  |  | Senior Loan                                      |  | 2/28/2017       |  |                                                | 85.9    |  |                                              |   | 82.9    |                         |  |          | 15.7    |               | Denver, CO              |              | Multifamily         |                                                                |  | L+3.8  |           | 
|24  |  | Senior Loan                                      |  | 8/4/2017        |  |                                                | 81.0    |  |                                              |   | 81.0    |                         |  |          | 17.3    |               | Denver, CO              |              | Multifamily         |                                                                |  | L+4.0  |           | 
|25  |  | Senior Loan                                      |  | 3/20/2018       |  |                                                | 80.7    |  |                                              |   | 80.7    |                         |  |          | 18.6    |               | Seattle, WA             |              | Office              |                                                                |  | L+3.6  |           | 
|26  |  | Senior Loan                                      |  | 3/28/2018       |  |                                                | 80.0    |  |                                              |   | 71.1    |                         |  |          | 12.0    |               | Orlando, FL             |              | Multifamily         |                                                                |  | L+2.8  |           | 
|27  |  | Senior Loan                                      |  | 10/30/2018      |  |                                                | 77.0    |  |                                              |   | 77.0    |                         |  |          | 12.5    |               | Philadelphia, PA        |              | Multifamily         |                                                                |  | L+2.7  |           | 
|28  |  | Senior Loan                                      |  | 1/16/2018       |  |                                                | 75.5    |  |                                              |   | 70.3    |                         |  |          | 14.9    |               | St Paul, MN             |              | Office              |                                                                |  | L+3.6  |           | 
|29  |  | Senior Loan                                      |  | 7/21/2017       |  |                                                | 75.1    |  |                                              |   | 62.3    |                         |  |          | 13.5    |               | Queens, NY              |              | Industrial          |                                                                |  | L+3.7  |           | 
|30  |  | Senior Loan                                      |  | 10/7/2016       |  |                                                | 74.5    |  |                                              |   | 73.2    |                         |  |          | 15.8    |               | New York, NY            |              | Multifamily         |                                                                |  | L+4.4  |           | 
|31  |  | Senior Loan                                      |  | 7/24/2018       |  |                                                | 74.5    |  |                                              |   | 69.3    |                         |  |          | 34.8    |               | Atlanta, GA             |              | Industrial          |                                                                |  | L+2.7  |           | 
|32  |  | Senior Loan                                      |  | 5/12/2017       |  |                                                | 61.9    |  |                                              |   | 56.3    |                         |  |          | 14.2    |               | Atlanta, GA             |              | Office              |                                                                |  | L+4.0  |           | 
|33  |  | Senior Loan                                      |  | 5/19/2016       |  |                                                | 55.0    |  |                                              |   | 53.9    |                         |  |          | 12.0    |               | Nashville, TN           |              | Office              |                                                                |  | L+4.3  |           | 
|34  |  | Senior Loan                                      |  | 10/9/2018       |  |                                                | 45.0    |  |                                              |   | 42.0    |                         |  |          | 7.8     |               | Queens, NY              |              | Multifamily         |                                                                |  | L+2.8  |           | 
|    |  | Total/Weighted Average Senior Loans Unlevered    |  |                 |  | $                                              | 4,572.7 |  |                                              | $ | 4,067.6 |                         |  | $        | 1,114.4 |               |                         |              |                     |                                                                |  | L+3.5  | %         | 
|    |  | Mezzanine Loans                                  |  |                 |  |                                                |         |  |                                              |   |         |                         |  |          |         |               |                         |              |                     |                                                                |  |        |           | 
|1-6 |  | Other Mezzanine Loans                            |  | Various(H)      |  |                                                | 26.2    |  |                                              |   | 26.2    |                         |  |          | 26.2    |               | Various                 |              | Various             |                                                                |  | 10.6   |           | 
|    |  | Total/Weighted Average Mezzanine Loans Unlevered |  |                 |  | $                                              | 26.2    |  |                                              | $ | 26.2    |                         |  | $        | 26.2    |               |                         |              |                     |                                                                |  | 10.6   | %         | 
|    |  | CMBS B-Pieces                                    |  |                 |  |                                                |         |  |                                              |   |         |                         |  |          |         |               |                         |              |                     |                                                                |  |        |           | 
|1   |  | CMBS B-Piece                                     |  | 2/10/2016       |  | $                                              | —       |  |                                              | $ | —       |                         |  | $        | 6.9     |               | Various                 |              | Various             |                                                                |  | 1.4    | %         | 
|2   |  | CMBS B-Piece                                     |  | 5/21/2015       |  |                                                | 34.9    |  |                                              |   | 34.9    |                         |  |          | 3.1     |               | Various                 |              | Various             |                                                                |  | 3.0    |           | 
|3   |  | RECOP(I)                                         |  | 2/13/2017       |  |                                                | 40.0    |  |                                              |   | 29.6    |                         |  |          | 29.6    |               | Various                 |              | Various             |                                                                |  | 4.6    |           | 
|    |  | Total/Weighted Average CMBS B-Pieces Unlevered   |  |                 |  | $                                              | 74.9    |  |                                              | $ | 64.6    |                         |  | $        | 39.6    |               |                         |              |                     |                                                                |  | 3.9    | %         | 




9


*
          Numbers presented may not foot due to rounding.


(A)
          Our total portfolio represents the current principal amount on senior and mezzanine loans and the net equity of our CMBS B-Piece investments.


(B)
            Net equity reflects (i) the amortized cost basis of our loans, net of borrowings; (ii) the cost basis of our CMBS B-Pieces, net of VIE liabilities; and (iii) the cost basis
                  of our investment in RECOP.


(C)
            Weighted average is weighted by current principal amount for our senior and mezzanine loans and by net equity for our CMBS B-Pieces. Weighted average coupon calculation
                  includes one-month USD LIBOR for floating-rate mezzanine loans.


(D)
          L = one-month USD LIBOR rate; spot rate of 2.50% included in portfolio-wide averages represented as fixed rates.


(E)
          Max remaining term (years) assumes all extension options are exercised, if applicable.


(F)
            For senior loans, loan-to-value ratio (“LTV”) is based on the initial loan amount divided by the as-is appraised value as of the date the loan was originated; for Senior Loan
                  3, LTV is based on the current principal amount divided by the adjusted appraised gross sellout value net of sales cost; for Senior Loan 4, LTV is based on the initial loan amount divided by the appraised bulk sale value assuming a
                  condo-conversion and no renovation; for mezzanine loans, LTV is based on the current balance of the whole loan dividend by the as-is appraised value as of the date the loan was originated; for CMBS B-Pieces, LTV is based on the weighted
                  average LTV of the underlying loan pool at issuance.


(G)
            Senior loans include senior mortgages and similar credit quality investments, including junior participations in our originated senior loans for which we have syndicated the
                  senior participations and retained the junior participations for our portfolio.


(H)
          Includes investments ranging from December 8, 2014 through November 30, 2015.


(I)
            Represents our investment in an aggregator vehicle alongside RECOP that invests in CMBS. Committed principal represents our total commitment to the aggregator vehicle whereas
                  current principal represents the current funded amount.





Portfolio Surveillance and Credit Quality





Senior and Mezzanine Loans





Our Manager actively manages our portfolio and assesses the risk of any loan impairment by quarterly evaluating the performance of the underlying property, the
      valuation of comparable assets as well as the financial wherewithal of the associated borrower. Our loan documents generally give us the right to receive regular property, borrower and guarantor financial statements; approve annual budgets and tenant
      leases; and enforce loan covenants and remedies. In addition, our Manager evaluates the macroeconomic environment, prevailing real estate fundamentals and micro-market dynamics where the underlying property is located. Through site inspections, local
      market experts and various data sources, as part of its risk assessment, our Manager monitors criteria such as new supply and tenant demand, market occupancy and rental rate trends, and capitalization rates and valuation trends.





In addition to ongoing asset management, our Manager performs a quarterly review of our portfolio whereby each loan is assigned a risk rating of 1 through 5,
      from lowest risk to highest risk. Our Manager is responsible for reviewing, assigning and updating the risk ratings for each loan on a quarterly basis. The risk ratings are based on many factors, including, but not limited to, underlying real estate
      performance and asset value, values of comparable properties, durability and quality of property cash flows, sponsor experience and financial wherewithal, and the existence of a risk-mitigating loan structure. Additional key considerations include
      LTVs, debt service coverage ratios, real estate and credit market dynamics, and risk of default or principal loss. Based on a five-point scale, our loans are rated “1” through “5,” from less risk to greater risk, which ratings are defined as follows:





1—Very Low Risk—The underlying property performance has surpassed underwritten expectations, and the sponsor’s business plan is generally complete. The property
      demonstrates stabilized occupancy and/or rental rates resulting in strong current cash flow and/or a very low LTV (<65%). At the level of performance, it is very likely that the underlying loan can be refinanced easily in the period’s prevailing
      capital market conditions.





2—Low Risk—The underlying property performance has matched or exceeded underwritten expectations, and the sponsor’s business plan may be ahead of schedule or
      has achieved some or many of the major milestones from a risk mitigation perspective. The property has achieved improving occupancy at market rents, resulting in sufficient current cash flow and/or a low LTV (65%-70%). Operating trends are favorable,
      and the underlying loan can be refinanced in today’s prevailing capital market conditions. The sponsor/manager is well capitalized or has demonstrated a history of success in owning or operating similar real estate.





3—Average Risk—The underlying property performance is in-line with underwritten expectations, or the sponsor may be in the early stages of executing its
      business plan. Current cash flow supports debt service payments, or there is an ample interest reserve or loan structure in place to provide the sponsor time to execute the value-improvement plan. The property exhibits a moderate LTV (<75%). Loan
      structure appropriately mitigates additional risks. The sponsor/manager has a stable credit history and experience owning or operating similar real estate.





10


4—High Risk/Potential for Loss: A loan that has a risk of realizing a principal loss. The underlying property performance is behind underwritten expectations,
      or the sponsor is behind schedule in executing its business plan. The underlying market fundamentals may have deteriorated, comparable property valuations may be declining or property occupancy has been volatile, resulting in current cash flow that
      may not support debt service payments. The loan exhibits a high LTV (>80%), and the loan covenants are unlikely to fully mitigate some risks. Interest payments may come from an interest reserve or sponsor equity.





5—Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss. The underlying property
      performance is significantly behind underwritten expectations, the sponsor has failed to execute its business plan and/or the sponsor has missed interest payments. The market fundamentals have deteriorated, or property performance has unexpectedly
      declined or valuations for comparable properties have declined meaningfully since loan origination. Current cash flow does not support debt service payments. With the current capital structure, the sponsor might not be incentivized to protect its
      equity without a restructuring of the loan. The loan exhibits a very high LTV (>90%), and default may be imminent.





|(dollars in thousands) |  | December 31, 2018 |   
|---------------------- |  | ----------------- | --
|Risk Rating            |  | Number of Loans   |   
|1                      |  |                   | — 
|2                      |  |                   | 8 
|3                      |  |                   | 33
|4                      |  |                   | — 
|5                      |  |                   | — 
|                       |  |                   | 41




|(dollars in thousands) |  | September 30, 2018 |   
|---------------------- |  | ------------------ | --
|Risk Rating            |  | Number of Loans    |   
|1                      |  |                    | — 
|2                      |  |                    | 8 
|3                      |  |                    | 27
|4                      |  |                    | — 
|5                      |  |                    | — 
|                       |  |                    | 35




(A) In certain instances, we finance our loans through the
      non-recourse sale of a senior interest that is not included in our condensed consolidated financial statements. Total loan exposure includes the entire loan we originated and financed, including $67.2 million and $66.6 million of such
      non-consolidated interests as of December 31, 2018 and September 30, 2018, respectively.





As of December 31, 2018, the average risk rating of KREF’s portfolio was 2.9 (Average Risk), weighted by investment carrying value, with 100% of commercial
      mortgage loans held-for-investment, rated 3 (Average Risk) or better by our Manager as compared to 2.9 (Average Risk) as of December 31, 2017. As of December 31, 2018, September 30, 2018 and December 31, 2017, no investments were rated 5
      (Impaired/Loss Likely).





CMBS B-Piece Investments





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- 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.





11


Valuations for our CMBS B-Piece investments are prepared using inputs from an independent valuation firm and confirmed by our Manager via quotes from two or
      more broker-dealers that actively make markets in CMBS. As part of the quarterly valuation process, our Manager also reviews pricing indications for comparable CMBS and monitors the credit metrics of the loans that collateralize our CMBS B-Piece
      investments.





As of December 31, 2018, one underlying loan representing 1.89% of one of the CMBS pools was delinquent greater than 60 days.





Portfolio Financing





Our portfolio financing arrangements include master repurchase agreements, asset specific financing, term loan financing, revolving credit agreements,
      collateralized loan obligations, loan participations sold and non-consolidated senior interests.





In 2018, the Company significantly diversified its financing sources, especially those sources that provide non-mark-to-market financing, reducing our exposure
      to market volatility. Our non-mark-to-market financing as of December 31, 2018 represented 60% of our portfolio financing based on outstanding principal balance, primarily as a result of our asset based financing, term loan facility and
      collateralized loan obligations.





The following table summarizes our portfolio financing (dollars in thousands):





|                                  |  | Portfolio Financing Outstanding Principal Balance |          
|--------------------------------- |  | ------------------------------------------------- | ---------
|                                  |  | December 31, 2018                                 |          
|Master repurchase agreements      |  | $                                                 | 1,157,261
|Asset specific financing          |  |                                                   | 60,000   
|Term loan financing               |  |                                                   | 748,414  
|Revolving credit agreements       |  |                                                   | —        
|Collateralized loan obligations   |  |                                                   | 810,000  
|Loan participations sold          |  |                                                   | 85,880   
|Non-consolidated senior interests |  |                                                   | 67,155   
|Total portfolio financing         |  | $                                                 | 2,928,710




Secured Financing Agreements





The following table details our secured financing agreements (dollars in thousands):





|                             |  | December 31, 2018 |          
|---------------------------- |  | ----------------- | ---------
|                             |  | Maximum           |          
|Lender                       |  | Facility Size(A)  |          
|Master Repurchase Agreements |  |                   |          
|Wells Fargo                  |  | $                 | 1,000,000
|Goldman Sachs                |  |                   | 400,000  
|Morgan Stanley(D)            |  |                   | 600,000  
|Asset Specific Financing     |  |                   |          
|BMO Facility                 |  |                   | 200,000  
|Term Loan Facility           |  |                   | 1,000,000
|                             |  | $                 | 3,200,000




12


(A)
            Maximum facility size represents the largest amount of borrowings available under a given facility once sufficient collateral assets have been approved by the lender and
                  pledged by us.


(B)
          Represents the principal balance of the collateral assets.


(C)
            Potential borrowings represents the total amount we could draw under each facility based on collateral already approved and pledged. When undrawn, these amounts are available
                  to us under the terms of each credit facility.


(D)
          The maximum facility size can be further increased to $750.0 million upon our request and subject to customary conditions.





Master Repurchase Agreements





Currently, our primary source of financing is our master repurchase facilities, which we use to finance the origination of senior loans. After a mortgage asset
      is identified by us, the lender agrees to advance a certain percentage of the face value of the mortgage to us in exchange for a secured interest in the mortgage.





Repurchase agreements effectively allow us to borrow against loans, participations and securities that we own in an amount generally equal to (i) the market
      value of such loans, participations and/or securities multiplied by (ii) the applicable advance rate. Under these agreements, we sell our loans, participations and securities to a counterparty and agree to repurchase the same loans and securities
      from the counterparty at a price equal to the original sales price plus an interest factor. The transaction is treated as a secured loan from the financial institution for GAAP purposes. During the term of a repurchase agreement, we receive the
      principal and interest on the related loans, participations and securities and pay interest to the lender under the master repurchase agreement. At any point in time, the amounts and the cost of our repurchase borrowings will be based upon the assets
      being financed—higher risk assets will result in lower advance rates (i.e., levels of leverage) at higher borrowing costs and vice versa. In addition, these facilities include various financial covenants and limited recourse guarantees, including
      those described below.





Each of our existing master repurchase facilities includes “credit mark” features. “Credit mark” provisions in repurchase facilities are designed to keep the
      lenders’ credit exposure constant as a percentage of the underlying collateral value of the assets pledged as security to them. If the 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, 2018 and December 31, 2017, the weighted average haircut under our repurchase
      agreements was 25.8% and 32.9%, respectively (or 23.4% and 27.3%, respectively, 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.





Asset Specific Financing





In August 2018, KREF entered into a $200.0 million loan financing facility with BMO Harris Bank (“BMO Facility”). The facility provides asset-based financing on
      a non-mark-to-market basis with matched-term up to five years with partial recourse to KREF. As of December 31, 2018, there was $60.0 million outstanding on this facility. In connection with this facility, and in consideration for structuring and
      sourcing this arrangement, KREF will pay KKR Capital Markets (“KCM”), an affiliate of the Manager, a structuring fee equal to 0.35% of the respective committed loan advances under the agreement.





13


Term Loan Financing





In connection with our efforts to diversify our financing sources, further expand our non-mark-to-market borrowing base and reduce our exposure to market
      volatility, we entered into a term loan financing agreement in April 2018 with third party lenders for an initial borrowing capacity of $200.0 million that was increased to $1,000.0 million as of December 31, 2018 (“Term Loan Facility”). The facility
      provides us with asset-based financing on a non-mark-to-market basis with matched term up to five years and is non-recourse to the Company.  Borrowings under the facility are collateralized by senior loans, held-for-investment, and bear interest
      equal to one-month LIBOR plus a margin. As of December 31, 2018, the weighted average margin and interest rate on the facility were 1.4% and 3.9%, respectively. KREF will pay KCM a structuring fee equal to 0.75% of the respective committed loan
      advances.





The following table summarizes our borrowings under the Term Loan Facility (dollars in thousands):





|                   |  | December 31, 2018
|------------------ |  | -----------------
|Term Loan Facility |  | Count            
|Collateral assets  |  |                  
|Financing provided |  |                  

(A)
            Floating rate loans and related liabilities are indexed to one-month LIBOR. The Company’s net interest rate exposure is in direct proportion to its interest in the net assets
                  indexed to that rate. In addition to cash coupon, yield/cost includes the amortization of deferred origination/financing costs.


(B)
          Financing under the Term Loan Facility is non-recourse to the Company.


(C)
            The weighted-average term is determined using the maximum maturity date of the corresponding loans, assuming all extension options are exercised by the borrower.





Revolving Credit Agreement





In December 2018, the Company entered into a $100.0 million unsecured corporate revolving credit facility (“Revolver”) administered by Morgan Stanley Senior
      Funding, Inc. (“Morgan Stanley Senior Funding”). We may use our Revolver as a source of financing, which is designed to provide short-term liquidity to purchase loans or other eligible assets, pay operating expenses, and borrow amounts for general
      corporate purposes. Borrowings under the Revolver are full recourse to certain guarantor wholly-owned subsidiaries of the Company. Borrowings under the Revolver bear interest at a per annum rate equal to the sum of (i) a floating rate index and (ii)
      a fixed margin. There were no borrowings outstanding under the Revolver as of December 31, 2018.





Collateralized Loan Obligations





In November 2018, the Company financed a pool of loan participations (“Loan Participations”) from our existing loan portfolio through a managed collateralized
      loan obligation (“CLO” or “KREF 2018-FL1”). The CLO provides the Company with match-term financing on a non-mark-to-market and non-recourse basis. The CLO has a two-year reinvestment feature that allows principal proceeds of the collateral assets to
      be reinvested in qualifying replacement assets, subject to the satisfaction of certain conditions set forth in the indenture.





The following table outlines KREF 2018-FL1 collateral assets and respective borrowing as of December 31, 2018.





|                               |  | December 31, 2018
|------------------------------ |  | -----------------
|Collateralized Loan Obligation |  | Count            
|Collateral assets(A)           |  |                  
|Financing provided             |  |                  




(A)
            Represents 24.8% of the face amount of the Company’s senior loans as of December 31, 2018. As of December 31, 2018, 100% of the Company’s loans financed through the CLO are
                  floating rate loans.


(B)
            Yield is based on cash coupon. Financing cost includes amortization of deferred financing costs incurred in connection with the CLO.


(C)
            Loan term represents weighted-average final maturity, assuming extension options are exercised by the borrower. Repayments of CLO notes are dependent on timing of related
                  collateral loan asset repayments post reinvestment period. The term of the CLO notes represents the rated final distribution date.





14


Loan Participations Sold





In connection with our investments in senior loans, we finance certain investments through the syndication of a non-recourse, or limited-recourse, loan
      participation to an unaffiliated third party. Our presentation of the senior loan and related financing involved in the syndication depends upon whether GAAP recognized the transaction as a sale, though such differences in presentation do not
      generally impact our net stockholders’ equity or net income aside from timing differences in the recognition of certain transaction costs.





To the extent that GAAP recognizes a sale resulting from the syndication, we derecognize the participation in the senior loan that we sold and continue to carry
      the retained portion of the loan as an investment. While we do not generally expect to recognize a material gain or loss on these sales, we would realize a gain or loss in an amount equal to the difference between the net proceeds received from the
      third party purchaser and our carrying value of the loan participation we sold at time of sale.  Furthermore, we recognize interest income only on the portion of the senior loan that we retain as a result of the sale.





To the extent that GAAP does not recognize a sale resulting from the syndication, we do not derecognize the participation in the senior loan that we sold.
      Instead, we recognize a loan participation sold liability in an amount equal to the principal of the loan participation syndicated less any unamortized discounts or financing costs resulting from the syndication.  We continue to recognize interest
      income on the entire senior loan, including the interest attributable to the loan participation sold, as well as interest expense on the loan participation sold liability.





The following table details our loan participations sold (dollars in thousands):





|                         |  | December 31, 2018
|------------------------ |  | -----------------
|Loan Participations Sold |  | Count            
|Total loan               |  |                  
|Senior participation(C)  |  |                  




(A)
            Our floating rate loans and related liabilities were indexed to one-month LIBOR. Our net interest rate exposure is in direct proportion to our net assets.


(B)
            As of December 31, 2018, our loan participation sold was subject to partial recourse of $10.0 million, which amount may be reduced to zero upon achievement of certain
                  property performance metrics.


(C)
            During the year ended December 31, 2018, we recorded $3.3 million of interest income and $3.3 million of interest expense related to the loan participation we sold, but
                  continue to consolidate under GAAP.





Non-Consolidated Senior Interests





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 for our net investments, which are reflected in the form of mezzanine loans or other subordinate interests on our balance sheets and in our statements of income.





The following table details the subordinate interests retained on our balance sheet and the related non-consolidated senior interests as of December 31, 2018
      (dollars in thousands):





|                                  |  | December 31, 2018
|--------------------------------- |  | -----------------
|Non-Consolidated Senior Interests |  | Count            
|Total loan                        |  |                  
|Senior participation              |  |                  




(A)
            Our floating rate loans and related liabilities were indexed to one-month LIBOR. Our net interest rate exposure is in direct proportion to our net assets.


15


Convertible Notes 
 We may issue convertible debt to take advantage of favorable market conditions. In May 2018, we issued $143.75 million of 6.125% Convertible Notes due on May
        15, 2023. The Notes bear interest at a rate of 6.125% per year, payable semi-annually in arrears on May 15 and November 15 of each year, beginning on November 15, 2018. The Convertible Notes mature on May 15, 2023, unless earlier repurchased or
        converted. Refer to Notes 2 and 6 to our consolidated financial statements for additional discussion of our Convertible Notes.
 
 Borrowing Activities
 
 The following tables provide additional information regarding our borrowings (dollars in thousands):
 
 Outstanding Face
            Amount at
            December 31, 2018
          
          
          Year Ended
              December 31, 2018Average Daily
            Amount
            Outstanding(A)
          
          
          Maximum Amount
            Outstanding
          
          
          Weighted Average
            Daily Interest RateWells Fargo
          
          $
          512,298
          
          
          $
          605,034
          
          
          $
          791,297
          
          
          
          3.9
          %Goldman Sachs
          
          
          342,368
          
          
          
          182,535
          
          
          
          342,368
          
          
          
          4.1Morgan Stanley
          
          
          302,595
          
          
          
          455,533
          
          
          
          564,525
          
          
          
          4.2BMO Facility
          
          
          60,000
          
          
          
          63,036
          
          
          
          115,040
          
          
          
          3.9Revolver
          
          
          —
          
          
          
          —
          
          
          
          —
          
          
          
          —Term Loan Facility
          
          
          748,414
          
          
          
          528,871
          
          
          
          782,483
          
          
          
          3.6Total/Weighted Average
          
          $
          1,965,675
          
          
          $
          1,639,377
          
          
          
          
          
          
          
          3.9
          % 
 (A)
                Represents the average for the period the debt was outstanding.
 
 Average Daily Amount Outstanding(A)Three Months EndedDecember 31, 2018
          
          
          September 30, 2018
          
          
          June 30, 2018
          
          
          March 31, 2018Wells Fargo
          
          $
          676,384
          
          
          $
          639,568
          
          
          $
          599,425
          
          
          $
          502,467Goldman Sachs
          
          
          263,936
          
          
          
          235,135
          
          
          
          160,091
          
          
          
          68,250Morgan Stanley
          
          
          446,823
          
          
          
          429,275
          
          
          
          498,467
          
          
          
          447,869BMO Facility
          
          
          63,036
          
          
          
          —
          
          
          
          —
          
          
          
          —Barclays
          
          
          —
          
          
          
          —
          
          
          
          —
          
          
          
          —Revolver
          
          
          —
          
          
          
          —
          
          
          
          —
          
          
          
          —Term Loan Facility
          
          
          681,673
          
          
          
          550,307
          
          
          
          325,961
          
          
          
          — 
 (A)
            Represents the average for the period the debt was outstanding.
 
 Covenants—Each of our repurchase facilities
        contains customary terms and conditions for repurchase facilities of this type, including, but not limited to, negative covenants relating to restrictions on our operations with respect to our status as a REIT, and financial covenants, such as:
 
 •
              an interest income to interest expense ratio covenant (1.5 to 1.0);
 •
              a minimum consolidated tangible net worth covenant (75.0% of the aggregate net cash proceeds of any equity issuances made and any capital contributions received by us and
                    KKR Real Estate Finance Holdings L.P. (our “Operating Partnership”) or approximately $800.0 million;
 •
              a cash liquidity covenant (the greater of $10.0 million or 5.0% of our recourse indebtedness);
 •
              a total indebtedness covenant (75.0% of our total assets, net of VIE liabilities);
 
 As of December 31, 2018, we were in compliance with the covenants of our repurchase facilities.
 
 16
 Guarantees—In connection with each master
        repurchase agreement, our Operating Partnership has entered into a limited guarantee in favor of each lender, under which our Operating Partnership guarantees the obligations of the borrower under the respective master repurchase agreement (i) in
        the case of certain defaults, up to a maximum liability of 25.0% of the then-outstanding repurchase price of the eligible loans, participations or securities, as applicable, or (ii) up to a maximum liability of 100.0% in the case of certain “bad
        boy” defaults. The borrower in each case is a special purpose subsidiary of the Company. With respect to our secured revolving credit facility, the amounts borrowed are full recourse to us.
 
 17
 Results of Operations
 
 The following table summarizes the changes in our results of operations for the year ended December 31, 2018, 2017 and 2016 (dollars in thousands, except per
        share data):
 
 For the Year Ended
            December 31,
          
          
          Increase (Decrease)
          
          
          For the Year Ended
            December 31,
          
          
          Increase (Decrease)2018
          
          
          2017
          
          
          Dollars
          
          
          Percentage
          
          
          2017
          
          
          2016
          
          
          Dollars
          
          
          PercentageNet Interest IncomeInterest income
          
          $
          183,575
          
          
          $
          83,145
          
          
          $
          100,430
          
          
          
          120.8
          %
          
          $
          83,145
          
          
          $
          32,659
          
          
          $
          50,486
          
          
          
          154.6
          %Interest expense
          
          
          85,017
          
          
          
          21,224
          
          
          
          63,793
          
          
          
          300.6
          
          
          
          21,224
          
          
          
          7,432
          
          
          
          13,792
          
          
          
          185.6Total net interest income
          
          
          98,558
          
          
          
          61,921
          
          
          
          36,637
          
          
          
          59.2
          
          
          
          61,921
          
          
          
          25,227
          
          
          
          36,694
          
          
          
          145.5Other IncomeRealized gain on sale of investments
          
          
          13,000
          
          
          
          —
          
          
          
          13,000
          
          
          
          100.0
          
          
          
          —
          
          
          
          285
          
          
          
          (285
          )
          
          
          (100.0
          )Change in net assets related to CMBS consolidated variable interest entities
          
          
          2,588
          
          
          
          15,845
          
          
          
          (13,257
          )
          
          
          (83.7
          )
          
          
          15,845
          
          
          
          15,461
          
          
          
          384
          
          
          
          2.5Income from equity method investments
          
          
          3,065
          
          
          
          875
          
          
          
          2,190
          
          
          
          250.3
          
          
          
          875
          
          
          
          —
          
          
          
          875
          
          
          
          100.0Other income
          
          
          1,440
          
          
          
          968
          
          
          
          472
          
          
          
          48.8
          
          
          
          968
          
          
          
          222
          
          
          
          746
          
          
          
          336.0Total other income (loss)
          
          
          20,093
          
          
          
          17,688
          
          
          
          2,405
          
          
          
          13.6
          
          
          
          17,688
          
          
          
          15,968
          
          
          
          1,720
          
          
          
          10.8Operating ExpensesGeneral and administrative
          
          
          7,812
          
          
          
          4,936
          
          
          
          2,876
          
          
          
          58.3
          
          
          
          4,936
          
          
          
          2,270
          
          
          
          2,666
          
          
          
          117.4Management fees to affiliate
          
          
          16,346
          
          
          
          13,492
          
          
          
          2,854
          
          
          
          21.2
          
          
          
          13,492
          
          
          
          5,934
          
          
          
          7,558
          
          
          
          127.4Incentive compensation to affiliate
          
          
          4,756
          
          
          
          —
          
          
          
          4,756
          
          
          
          100.0
          
          
          
          —
          
          
          
          365
          
          
          
          (365
          )
          
          
          (100.0
          )Total operating expenses
          
          
          28,914
          
          
          
          18,428
          
          
          
          10,486
          
          
          
          56.9
          
          
          
          18,428
          
          
          
          8,569
          
          
          
          9,859
          
          
          
          115.1Income (Loss) Before Income Taxes, Noncontrolling Interests and Preferred Dividends
          
          
          89,737
          
          
          
          61,181
          
          
          
          28,556
          
          
          
          46.7
          
          
          
          61,181
          
          
          
          32,626
          
          
          
          28,555
          
          
          
          87.5Income tax (benefit) expense
          
          
          (70
          )
          
          
          1,102
          
          
          
          (1,172
          )
          
          
          (106.4
          )
          
          
          1,102
          
          
          
          354
          
          
          
          748
          
          
          
          211.3Net Income (Loss)
          
          
          89,807
          
          
          
          60,079
          
          
          
          29,728
          
          
          
          49.5
          
          
          
          60,079
          
          
          
          32,272
          
          
          
          27,807
          
          
          
          86.2Redeemable Noncontrolling Interests in Income (Loss) of Consolidated Joint Venture
          
          
          63
          
          
          
          216
          
          
          
          (153
          )
          
          
          (70.8
          )
          
          
          216
          
          
          
          302
          
          
          
          (86
          )
          
          
          (28.5
          )Noncontrolling Interests in Income (Loss) of Consolidated Joint Venture
          
          
          —
          
          
          
          801
          
          
          
          (801
          )
          
          
          (100.0
          )
          
          
          801
          
          
          
          813
          
          
          
          (12
          )
          
          
          (1.5
          )Net Income (Loss) Attributable to KKR Real Estate Finance Trust Inc. and Subsidiaries
          
          
          89,744
          
          
          
          59,062
          
          
          
          30,682
          
          
          
          51.9
          
          
          
          59,062
          
          
          
          31,157
          
          
          
          27,905
          
          
          
          89.6Preferred Stock Dividends and Redemption Value Adjustment
          
          
          2,451
          
          
          
          244
          
          
          
          2,207
          
          
          
          904.5
          
          
          
          244
          
          
          
          16
          
          
          
          228
          
          
          
          1,425.0Net Income (Loss) Attributable to Common Stockholders
          
          $
          87,293
          
          
          $
          58,818
          
          
          $
          28,475
          
          
          
          48.4
          %
          
          $
          58,818
          
          
          $
          31,141
          
          
          $
          27,677
          
          
          
          88.9
          %Net Income (Loss) Per Share of Common StockBasic
          
          $
          1.58
          
          
          $
          1.30
          
          
          $
          0.28
          
          
          
          21.5
          %
          
          $
          1.30
          
          
          $
          1.61
          
          
          $
          (0.31
          )
          
          
          (19.3
          )%Diluted
          
          $
          1.58
          
          
          $
          1.30
          
          
          $
          0.28
          
          
          
          21.5
          %
          
          $
          1.30
          
          
          $
          1.61
          
          
          $
          (0.31
          )
          
          
          (19.3
          )%Dividends Declared per Share of Common Stock
          
          $
          1.69
          
          
          $
          1.62
          
          
          $
          0.07
          
          
          
          4.3
          %
          
          $
          1.62
          
          
          $
          1.22
          
          
          $
          0.40
          
          
          
          32.8
          % 
 18
 Year Ended December 31, 2018 Compared to Year Ended December 31, 2017
 
 Net Interest Income
 
 Net interest income increased $36.6 million during the year ended December 31, 2018, compared to the year ended December 31, 2017. The increase was primarily
        due to the increase in the weighted-average principal balance of our loan portfolio by $1.6 billion for the year ended December 31, 2018, compared to the year ended December 31, 2017, as a result of our continuing capital deployment and scaling our
        portfolio. We also recognized $3.0 million of nonrecurring prepayment fee income during the year ended December 31, 2018, compared to $1.1 million during the year ended December 31, 2017. Interest income also included $10.5 million in amortization
        of net deferred loan fees and origination discounts during the year ended December 31, 2018, compared to $3.6 million during the year ended December 31, 2017. The increase in interest income was partially offset by an increase in interest expense
        incurred on our secured financing agreements as we increased our financing sources and borrowings to fund loan originations, the weighted-average principal balance of our borrowings increased by $1.1 billion for the year ended December 31, 2018,
        compared to the year ended December 31, 2017.
 
 Other Income
 
 Total other income increased $2.4 million during the year ended December 31, 2018, compared to the year ended December 31, 2017, primarily attributable to a
        $2.1 million increase in income from equity method investment as we continued to fund the existing commitment to RECOP during 2018. Additionally, income on CMBS B- Pieces decreased by $13.3 million, partially offset by a $13.0 million realized gain
        from the sale of CMBS B-Pieces in May 2018.
 
 Operating Expenses
 
 Total operating expenses increased $10.5 million during the year ended December 31, 2018, compared to the year ended December 31, 2017.  This increase is
        primarily due to $4.8 million of incentive compensation recorded during year ended December 31, 2018, while the Company did not generate incentive fees during the year ended December 31, 2017. Additionally, the increase in total operating expenses
        is attributed to (i) increased management fees of $2.9 million during the year ended December 31, 2018, compared to the year ended December 31, 2017, primarily resulting from an increase in our equity from public offerings of 5.5 million of our
        common shares in 2018 (ii) increase in our stock-based compensation of $1.9 million during the year ended December 31, 2018, compared to the year ended December 31, 2017, and (iii) an additional $0.9 million of general and administrative expenses
        during the year ended December 31, 2018, primarily consisting of legal, audit, insurance, information technology, and other increased costs as we continue to scaled our portfolio operations.
 
 The following tables provide additional information regarding total operating expenses (dollars in thousands):
 
 Three Months EndedMarch 31, 2018
          
          
          June 30, 2018
          
          
          September 30, 2018
          
          
          December 31, 2018
          
          
          December 31, 2017Professional services
          
          $
          713
          
          
          $
          959
          
          
          $
          666
          
          
          $
          604
          
          
          $
          838Operating and other costs
          
          
          932
          
          
          
          454
          
          
          
          692
          
          
          
          819
          
          
          
          819Stock-based compensation
          
          
          1,018
          
          
          
          273
          
          
          
          295
          
          
          
          387
          
          
          
          25Total general and administrative expenses
          
          
          2,663
          
          
          
          1,686
          
          
          
          1,653
          
          
          
          1,810
          
          
          
          1,682Management fees to affiliate
          
          
          3,939
          
          
          
          3,913
          
          
          
          4,164
          
          
          
          4,330
          
          
          
          3,979Incentive compensation to affiliate
          
          
          —
          
          
          
          —
          
          
          
          3,286
          
          
          
          1,470
          
          
          
          —Total operating expenses
          
          $
          6,602
          
          
          $
          5,599
          
          
          $
          9,103
          
          
          $
          7,610
          
          
          $
          5,661 
 19
 Year Ended December 31, 2017 Compared to Year Ended December 31, 2016
 
 Net Interest Income
 
 Compared to the year ended December 31, 2016, net interest income increased $36.7 million during the year ended December 31, 2017. The increase was primarily
        due to the increase in the weighted-average principal balance of our loan portfolio by $0.7 billion for the year ended December 31, 2017, compared to the year ended December 31, 2016, as a result of our continuing capital deployment and scaling our
        portfolio. In addition, interest income included $3.6 million in amortization of net deferred loan fees and origination discounts during the year ended December 31, 2017, compared to $1.0 million during the year ended December 31, 2016. During the
        year ended December 31, 2017, loan and preferred interest repayments of $70.9 million partially offset the increase in interest income by $3.5 million compared to the year ended December 31, 2016. The increase in interest income in the year ended
        December 31, 2017 was partially offset by an increase in interest expense incurred on our secured financing agreements as we increased our borrowings to fund loan originations.
 
 Other Income
 
 Total other income increased $1.7 million during the year ended December 31, 2017 as compared to the year ended December 31, 2016, primarily attributable to a
        $0.9 million increase in income from equity method investments in which we entered during the year ended December 31, 2017, a $0.7 million increase in other income, and a $0.4 million increase from income on our purchase of a CMBS B-Piece during
        the year ended December 31, 2016. We realized a $0.3 million gain on the sale of an investment during the year ended December 31, 2016, but did not realize a gain or loss on the sale of investments in the year ended December 31, 2017, which
        partially offset the increase in other income.
 
 Operating Expenses
 
 Total operating expenses increased $9.9 million during the year ended December 31, 2017, as compared to the year ended December 31, 2016. This increase is
        primarily attributed to increased management fees of $7.6 million, resulting from an increase in our equity from the private placement of our common stock and our IPO, as well as an additional $2.7 million of general and administrative expenses
        during the year ended December 31, 2017, primarily consisting of legal, audit, insurance, information technology, and other increased costs as we scaled our portfolio and became a public company. This increase was partially offset by decreased
        incentive compensation expense payable to our Manager resulting from the time required to invest our proceeds received from equity issuances.
 
 Liquidity and Capital Resources
 
 Overview
 
 Our primary liquidity needs include: our ongoing commitments to repay the principal and interest on our borrowings and pay other financing costs; financing
        our assets; meeting future funding obligations; making distributions to our stockholders; funding our operations, which includes making payments to our Manager in accordance with the management agreement; and satisfying other general business
        needs.
 
 Our primary sources of liquidity and capital sources from our inception through December 31, 2018, have been derived from: $1,168.6 million in net proceeds
        from equity issuances; $1,217.3 million in net advances from our repurchase facilities; $800.3 million in net proceeds from collateralized loan obligations; $152.4 million in proceeds from syndicated financing; $138.7 million in net proceeds from
        issuance of convertible notes; and cash flows from operations. We may seek additional sources of liquidity from repurchase facilities, syndicated financing, other borrowings (including borrowings not related to a specific investment) and future
        offerings of equity and debt securities. In addition, we may apply our existing cash and cash equivalents and cash flows from operations to any liquidity needs. As of December 31, 2018, our cash and cash equivalents were $86.5 million.
 
 See Notes 4, 5, 6, 7 and 9 to our condensed consolidated financial statements for additional details regarding our secured financing agreements,
        collateralized loan obligations, convertible notes, loan participation sold and stock issuances.
 
 20
 Debt-to-Equity Ratio and Total Leverage Ratio
 
 The following table presents our debt-to-equity ratio and total leverage ratio:
 
 December 31, 2018
          
          
          December 31, 2017Debt-to-equity ratio(A)
          
          
          1.1
          x
          
          
          0.8
          xTotal leverage ratio(B)
          
          
          2.6
          x
          
          
          1.0
          x 
 (A)
              Represents (i) total outstanding secured debt agreements (excluding non-recourse term loan facility) and convertible notes, less cash to (ii) total stockholders’ equity, in
                    each case, at period end.
 (B)
              Represents (i) total outstanding secured debt agreements, convertible notes, loan participations sold, non-consolidated senior interests, and collateralized loan
                    obligation, less cash to (ii) total stockholders’ equity, in each case, at period end.
 
 Sources of Liquidity
 
 Our primary sources of liquidity include cash and cash equivalents and available borrowings under our secured financing agreements. Amounts available under
        these sources as of the date presented are summarized in the following table (dollars in thousands):
 December 31, 2018
          
          
          December 31, 2017Cash and cash equivalents
          
          $
          86,531
          
          
          $
          103,120Available borrowings under master repurchase agreements
          
          
          58,751
          
          
          
          65,555Available borrowings under asset specific financing
          
          
          5,423
          
          
          
          —Available borrowings under revolving credit agreements
          
          
          100,000
          
          
          
          75,000Available borrowings under term loan financing facility
          
          
          33,637
          
          
          
          —Loan principal payments receivable, net(A)
          
          
          —
          
          
          
          4,557$
          284,342
          
          
          $
          248,232 
 (A)
              Represents loan principal paid by the borrower to our third-party servicer, but not yet received by us as of December 31, 2018and December 31, 2017. We generally receive these loan principal repayments from our third-party servicer in the following month’s remittance, net of amounts we repay under our financing agreements.
 
 In addition to our primary sources of liquidity, we have access to further liquidity through 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.
 
 Cash Flows
 
 The following table sets forth changes in cash and cash equivalents for the years ended December 31, 2018, 2017, and 2016 (dollars in thousands):
 
 For the Year Ended December 31,2018
          
          
          2017
          
          
          2016Cash Flows From Operating Activities
          
          $
          76,830
          
          
          $
          53,801
          
          
          $
          25,406Cash Flows From Investing Activities
          
          
          (1,997,213
          )
          
          
          (1,083,677
          )
          
          
          (456,448
          )Cash Flows From Financing Activities
          
          
          1,903,394
          
          
          
          1,037,050
          
          
          
          500,602Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash
          
          $
          (16,989
          )
          
          $
          7,174
          
          
          $
          69,560 
 Cash Flows from Operating Activities
 
 Our cash flows from operating activities were primarily driven by our net interest income, which is driven by the income generated by our investments less
        financing costs. The following table sets forth interest received by, and paid for, our investments for the years ended December 31, 2018, 2017 and 2016 (dollars in thousands):
 
 21
 For the Year Ended December 31,2018
          
          
          2017
          
          
          2016Interest Received:Senior and mezzanine loans
          
          $
          157,626
          
          
          $
          69,835
          
          
          $
          25,327CMBS B-Pieces
          
          
          6,004
          
          
          
          12,660
          
          
          
          11,787Preferred equity interest
          
          
          —
          
          
          
          1,986
          
          
          
          2,182163,630
          
          
          
          84,481
          
          
          
          39,296Interest Paid:Borrowings secured by senior loans
          
          
          66,775
          
          
          
          17,322
          
          
          
          5,546Net interest collections
          
          $
          96,855
          
          
          $
          67,159
          
          
          $
          33,750 
 Our net interest collections were partially offset by cash used to pay management and incentive fees, as follows (dollars in thousands):
 
 For the Year Ended December 31,2018
          
          
          2017
          
          
          2016Management Fees to affiliate
          
          $
          15,773
          
          
          $
          11,317
          
          
          $
          5,082Incentive Fees to affiliate
          
          
          4,756
          
          
          
          —
          
          
          
          496Net decrease in cash and cash equivalents
          
          $
          20,529
          
          
          $
          11,317
          
          
          $
          5,578 
 Cash Flows from Investing Activities
 
 Our cash flows from investing activities were primarily driven by cash outflows to fund new loan originations and our commitments under existing loan
        investments. During the year ended December 31, 2018, we funded $2,540.7 million of senior loans and received $446.3 million of principal repayments on certain loans. We also made a net investment in CMBS, held through an equity method investee, of
        $15.6 million. In April 2018, we sold four of our five CMBS trusts for net proceeds of $112.7 million.  During the year ended December 31, 2017, we funded or purchased $1,201.8 million of senior and mezzanine loans, received $61.0 million from the
        sale of a commercial mortgage loan and received $70.9 million of principal repayments on certain mezzanine loans, and our preferred equity interests. We also made a net investment in CMBS, held through an equity method investee, of $13.8 million.
        During the year ended December 31, 2016, we funded or purchased $448.3 million, $36.4 million and $10.2 million of senior and mezzanine loans, CMBS and preferred equity interests, respectively, and we received $7.4 million and $31.5 million of
        principal repayments and sales proceeds on certain mezzanine loans, respectively.
 
 Cash Flows from Financing Activities
 
 Our cash flows from financing activities were primarily driven by proceeds from borrowings under repurchase agreements and other financing arrangements of
        $2,311.1 million and $810.0 million from the issuance of our collateralized loan obligation during the year ended December 31, 2018.  Additionally, we completed a $143.8 million Convertible Notes offering and two common stock public offerings which
        resulted in net proceeds of $139.4 million and $108.2 million, respectively, during the year ended December 31, 2018. These inflows were partially offset by principal repayments of $1,314.8 million on borrowings under secured financing agreements
        and payments of $89.2 million in dividends during the year ended December 31, 2018. During the years ended December 31, 2017 and 2016, our cash flows from financing activities were primarily driven by proceeds from borrowings under repurchase
        agreements of $984.2 million and $520.4 million, respectively, as well as net proceeds from the issuance of our common stock of $581.3 million and $210.0 million, respectively. During the years ended December 31, 2017 and 2016, we made principal
        payments on our repurchase agreements of $460.4 million and $198.7 million, respectively. As a result of the payment of common and preferred stock dividends, our cash flows from financing activities decreased by $50.7 million and $21.9 million
        during the years ended December 31, 2017 and 2016, respectively.
 
 22
 Contractual Obligations and Commitments
 
 The following table presents our contractual obligations and commitments (including interest payments) as of December 31, 2018 (dollars in thousands):
 
 Total
          
          
          Less than 1 year
          
          
          1 to 3 years
          
          
          3 to 5 years
          
          
          ThereafterRecourse Obligations:Master Repurchase Facilities(A)Wells Fargo
          
          $
          577,816
          
          
          $
          21,819
          
          
          $
          43,699
          
          
          $
          512,298
          
          
          $
          —Goldman Sachs
          
          
          387,304
          
          
          
          14,965
          
          
          
          372,339
          
          
          
          —
          
          
          
          —Morgan Stanley
          
          
          344,780
          
          
          
          14,049
          
          
          
          330,731
          
          
          
          —
          
          
          
          —Asset Specific FinancingBMO Facility
          
          
          67,357
          
          
          
          2,450
          
          
          
          64,907
          
          
          
          —
          
          
          
          —Total secured financing agreements
          
          
          1,377,257
          
          
          
          53,283
          
          
          
          811,676
          
          
          
          512,298
          
          
          
          —Convertible Notes
          
          
          178,993
          
          
          
          8,805
          
          
          
          17,633
          
          
          
          152,555
          
          
          
          —Future funding obligations(B)
          
          
          419,485
          
          
          
          218,132
          
          
          
          201,353
          
          
          
          —
          
          
          
          —RECOP commitment(C)
          
          
          10,389
          
          
          
          10,389
          
          
          
          —
          
          
          
          —
          
          
          
          —Revolver(D)
          
          
          —
          
          
          
          —
          
          
          
          —
          
          
          
          —
          
          
          
          —Total recourse obligations
          
          
          1,986,124
          
          
          
          290,609
          
          
          
          1,030,662
          
          
          
          664,853
          
          
          
          —Non-Recourse Obligations:Collateralized Loan Obligations
          
          
          970,267
          
          
          
          32,036
          
          
          
          64,159
          
          
          
          32,036
          
          
          
          842,036Term Loan Financing
          
          
          835,773
          
          
          
          29,093
          
          
          
          806,680
          
          
          
          —
          
          
          
          —CMBS(E)
          
          
          1,364,415
          
          
          
          59,386
          
          
          
          168,423
          
          
          
          121,858
          
          
          
          1,014,748Total
          
          $
          5,156,579
          
          
          $
          411,124
          
          
          $
          2,069,924
          
          
          $
          818,747
          
          
          $
          1,856,784 
 (A)
              The allocation of repurchase facilities is based on the current maturity date of each individual borrowing under the facilities. The amounts include the related future
                    interest payment obligations, which are estimated by assuming the amounts outstanding under our repurchase facilities and the interest rates in effect as of December 31, 2018 will remain constant into the future. This is only an
                    estimate, as actual amounts borrowed and rates may vary over time. Amounts borrowed are subject to a maximum 25.0% recourse limit.
 (B)
              We have future funding obligations related to our investments in senior loans. These future funding obligations primarily relate to construction projects, capital
                    improvements, tenant improvements and leasing commissions. Generally, funding obligations are subject to certain conditions that must be met, such as customary construction draw certifications, minimum debt service coverage ratios,
                    minimal debt yield tests, or executions of new leases before advances are made to the borrower. As such, the allocation of our future funding obligations is based on the earlier of the expected funding or commitment expiration date.
 (C)
            Amounts committed to invest in an aggregator vehicle alongside RECOP, which has a two-year investment period ending April 2019.
 (D)
            Any amounts borrowed unsecured and full recourse to certain subsidiaries of KREF.
 (E)
            Amounts relate to VIE liabilities that represent securities not beneficially owned by our stockholders.
 
 We are required to pay our Manager a base management fee, an incentive fee and reimbursements for certain expenses pursuant to our management agreement. The
        table above does not include the amounts payable to our Manager under our management agreement as they are not fixed and determinable. See Note 12 to our consolidated financial statements included in this Form 10-K for additional terms and details
        of the fees payable under our management agreement.
 
 As a REIT, we generally must distribute substantially all of our REIT taxable income, determined without regard to the deduction for dividends paid and
        excluding net capital gains, to stockholders in the form of dividends to comply with the REIT provisions of the Code. Our taxable income does not necessarily equal our net income as calculated in accordance with GAAP, or our Core Earnings as
        described above under ” — Key Financial Measures and Indicators — Core Earnings and Net Core Earnings.”
 
 Subsequent Events
 
 Our subsequent events are detailed in Note 15 to our consolidated financial statements
 
 23
 Off-Balance Sheet Arrangements
 
 As described in Note 7 to our consolidated financial statements, we have off-balance sheet arrangements related to VIEs that we account for using the equity
        method of accounting and in which 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 investment in the entity and any unfunded
        capital commitments. As of December 31, 2018, we held $30.7 million of interests in such entities, which does not include a remaining commitment of $10.4 million to RECOP that we are required to fund when called.
 
 Critical Accounting Policies and Use of Estimates
 
 Our consolidated financial statements are prepared in accordance with GAAP, which requires the use of estimates and assumptions that involve the exercise of
        judgment and use of assumptions as to future uncertainties. Accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to understanding our financial statements because they involve significant
        judgments and uncertainties that could affect our reported assets and liabilities, as well as our reported revenue and expenses. All of these estimates reflect our best judgment about current, and for some estimates, future economic and market
        conditions and their effects based on information available as of the date of the financial statements. If conditions change from those expected, it is possible that the judgments and estimates described below could change, which may result in a
        change in our interest income recognition, allowance for loan losses, tax liability, future impairment of our investments, and valuation of our investment portfolio, among other effects. We believe that the following accounting policies are among
        the most important to the portrayal of our financial condition and results of operations and require the most difficult, subjective or complex judgments:
 
 Interest Income Recognition
 
 In estimating interest income, we make a number of assumptions that are subject to uncertainties and contingencies, including interest rate and timing of
        principal payments. Loans where we expect to collect all contractually required principal and interest payments are considered performing loans. We accrue interest income on performing loans based on the outstanding principal amount and contractual
        terms of the loan. Interest income also includes origination discount and direct loan origination costs for loans that we originate, but where we did not elect the fair value option, as a yield adjustment using the effective interest method over
        the loan term. We expense origination discount and direct loan origination costs for loans acquired but not originated by us, as well as loans for which we elected the fair value option, as incurred. We also include income, including the
        amortization of premiums and discounts, arising from our preferred interests in joint ventures held-to-maturity.
 
 We consider loans to be past due when a monthly payment is due and unpaid for 60 days or more. Loans are placed on nonaccrual status and considered
        non-performing when full payment of principal and interest is in doubt, which generally occurs when principal or interest is 120 days or more past due unless the loan is both well secured and in the process of collection. We may return a loan to
        accrual status when repayment of principal and interest is reasonably assured under the terms of the restructured loan. We did not hold any loans that we placed on nonaccrual status or otherwise considered past due during the years ended December
        31, 2018, 2017 or 2016.
 
 Allowance for Loan Losses
 
 We originate and purchase CRE debt and related instruments generally to be held as long-term investments at amortized cost. We perform a quarterly evaluation
        of loans classified as held-for-investment for impairment on a loan-by-loan basis. If we deem that it is probable that we will be unable to collect all amounts owed according to the contractual terms of a loan, impairment of that loan is indicated.
        If we consider a loan to be impaired, we establish an allowance for loan losses, through a valuation provision in earnings that reduces carrying value of the loan to the present value of expected future cash flows discounted at the loan’s
        contractual effective rate or the fair value of the collateral, if repayment is expected solely from the collateral. Significant judgment is required in determining impairment and in estimating the resulting loss allowance, and actual losses, if
        any, could materially differ from those estimates.
 
 24
 We perform a quarterly review of our portfolio. In conjunction with this review, we assess the risk factors of each loan, including, without limitation, LTV,
        debt yield, property type, geographic and local market dynamics, physical condition, cash flow volatility, leasing and tenant profile, loan structure and exit plan, and project sponsorship. Considering these factors, we rate our loans based on a
        five-point scale, “1” though “5”, from less risk to greater risk, which ratings are defined as follows:
 
 1—Very Low Risk—The underlying property performance has surpassed underwritten expectations, and the sponsor’s business plan is generally complete. The
        property demonstrates stabilized occupancy and/or rental rates resulting in strong current cash flow and/or a very low LTV (<65%). At the level of performance, it is very likely that the underlying loan can be refinanced easily in the period’s
        prevailing capital market conditions.
 
 2—Low Risk—The underlying property performance has matched or exceeded underwritten expectations, and the sponsor’s business plan may be ahead of schedule or
        has achieved some or many of the major milestones from a risk mitigation perspective. The property has achieved improving occupancy at market rents, resulting in sufficient current cash flow and/or a low LTV (65%-70%). Operating trends are
        favorable, and the underlying loan can be refinanced in today’s prevailing capital market conditions. The sponsor/manager is well capitalized or has demonstrated a history of success in owning or operating similar real estate.
 
 3—Average Risk—The underlying property performance is in-line with underwritten expectations, or the sponsor may be in the early stages of executing its
        business plan. Current cash flow supports debt service payments, or there is an ample interest reserve or loan structure in place to provide the sponsor time to execute the value-improvement plan. The property exhibits a moderate LTV (<75%).
        Loan structure appropriately mitigates additional risks. The sponsor/manager has a stable credit history and experience owning or operating similar real estate.
 
 4—High Risk/Potential for Loss: A loan that has a risk of realizing a principal loss. The underlying property performance is behind underwritten expectations,
        or the sponsor is behind schedule in executing its business plan. The underlying market fundamentals may have deteriorated, comparable property valuations may be declining or property occupancy has been volatile, resulting in current cash flow that
        may not support debt service payments. The loan exhibits a high LTV (>80%), and the loan covenants are unlikely to fully mitigate some risks. Interest payments may come from an interest reserve or sponsor equity.
 
 5—Impaired/Loss Likely: A loan that has a very high risk of realizing a principal loss or has otherwise incurred a principal loss. The underlying property
        performance is significantly behind underwritten expectations, the sponsor has failed to execute its business plan and/or the sponsor has missed interest payments. The market fundamentals have deteriorated, or property performance has unexpectedly
        declined or valuations for comparable properties have declined meaningfully since loan origination. Current cash flow does not support debt service payments. With the current capital structure, the sponsor might not be incentivized to protect its
        equity without a restructuring of the loan. The loan exhibits a very high LTV (>90%), and default may be imminent.
 
 Income Taxes
 
 We elected to be taxed as a REIT under the U.S. federal income tax laws beginning with our taxable year ended December 31, 2014. We believe that we have
        operated in a manner qualifying us as a REIT since our election and intend to continue to do so. Accordingly, we do not believe we will be subject to U.S. federal income tax on the portion of our net taxable income that is distributed to our
        stockholders as long as certain asset, income and share ownership tests are met.
 
 If we fail to qualify as a REIT in any taxable year, we generally will not be permitted to qualify for treatment as a REIT for U.S. federal income tax
        purposes for the four taxable years following the year during which qualification is lost. We may also be subject to state or local income or franchise taxes as we consolidate subsidiaries that incur state and local income taxes, based on the tax
        jurisdiction in which each subsidiary operates.
 
 25
 As of December 31, 2018 and 2017, we did not have any material deferred tax assets or liabilities arising from future tax consequences attributable to
        differences between the carrying amounts of existing assets and liabilities in accordance with GAAP and their respective tax bases. In addition, we recognize tax benefits for uncertain tax positions only if it is more likely than not that the
        position is sustainable based on its technical merits. Interest and penalties on uncertain tax positions are included as a component of the provision for income taxes in our consolidated statements of income. As of December 31, 2018 and 2017, we
        did not have any material uncertain tax positions.
 
 Recent Accounting Pronouncements
 
 For a discussion of recently issued accounting pronouncements, see Note 2 to our consolidated financial statements included in this Form 10-K.
 
 PART IV.
 
 ITEM 15.
            EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 
 (a)
            The following documents are filed as part of the Annual Report on Form 10-K.
 
 1.
            Financial Statements
 
 See Item 8 to the Annual Report on Form 10-K.
 
 2.
                Financial Statement Schedules:
 
 See Schedule IV — Mortgage Loans on Real Estate as of December 31, 2018 of the Annual Report on Form 10-K.
 
 3.
            Exhibits:
 
 Exhibit
            Number
          
          Exhibit Description3.1
          
          Articles of Restatement of KKR Real Estate Finance Trust Inc., dated as of May 10, 2017
                  (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (001-38082) filed on May 10, 2017).3.2
          
          Amended and Restated Bylaws of KKR Real Estate Finance Trust Inc. (incorporated by
                  reference to Exhibit 3.2 to the Company’s Registration on Form S-11/A (333-217126) filed on April 13, 2017).4.1
          
          Indenture (including form of Note), dated as of May 18, 2018, by and between KKR Real
                  Estate Finance Trust Inc. and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (001-38082) filed on May 18, 2018).4.2
          
          Indenture, dated as of November 28, 2018, among KREF 2018-FL1 Ltd., KREF 2018-FL1 LLC,
                  KREF CLO Loan Seller LLC, Wilmington Trust, National Association, and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (001-38082) filed on November 29, 2018).10.1
          
          Third Amended and Restated Management Agreement, dated as of May 5, 2017, between KKR
                  Real Estate Finance Trust Inc. and KKR Real Estate Finance Manager LLC (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (001-38082) filed on May 10, 2017).10.2
          
          Stockholders Agreement, dated as of March 29, 2016, among KKR Fund Holdings L.P., the
                  stockholders party thereto, KKR Real Estate Finance Trust Inc. and KKR Real Estate Finance Manager LLC (incorporated by reference to Exhibit 10.2 to the Company’s Registration on Form S-11 (333-217126) filed on April 3, 2017). 
 26
 10.3
          
          First Amendment to the Stockholders Agreement, dated as of September 29, 2016, among
                  KKR Real Estate Finance Trust Inc., KKR Real Estate Finance Manager LLC, KKR Fund Holdings L.P. and the stockholders party thereto (incorporated by reference to Exhibit 10.3 to the Company’s Registration on Form S-11 (333-217126) filed on
                  April 3, 2017).10.4
          
          Second Amendment to the Stockholders Agreement, dated as of January 9, 2017, among KKR
                  Real Estate Finance Trust Inc., KKR Real Estate Finance Manager LLC, KKR Fund Holdings L.P. and the stockholders party thereto (incorporated by reference to Exhibit 10.4 to the Company’s Registration on Form S-11 (333-217126) filed on
                  April 3, 2017).10.5
          
          Registration Rights Agreement, dated as of March 29, 2016, among KKR Real Estate
                  Finance Trust Inc., KKR Fund Holdings L.P. and the other investors party thereto (incorporated by reference to Exhibit 10.5 to the Company’s Registration on Form S-11 (333-217126) filed on April 3, 2017).10.6
          
          First Amendment to the Registration Rights Agreement, dated as of September 29, 2016,
                  among KKR Real Estate Finance Trust Inc., KKR Fund Holdings L.P. and the other investors party thereto (incorporated by reference to Exhibit 10.6 to the Company’s Registration on Form S-11 (333-217126) filed on April 3, 2017).10.7
          
          Loan and Servicing Agreement, dated as of April 11, 2018, among KREF Holdings VII LLC,
                  KREF Lending VII LLC, PNC Bank, National Association, Midland Loan Services, a division of PNC Bank, National Association, the Initial Lender, and KKR Capital Markets LLC (incorporated by reference to Exhibit 10.7 to the Company’s Annual
                  Report on Form 10-K for the year ended December 31, 2018 (001-38082)).10.8
          
          Master Repurchase and Securities Contract, dated as of October 21, 2015, between KREF
                  Lending I LLC and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.10 to the Company’s Registration on Form S-11 (333-217126) filed on April 3, 2017).10.9
          
          Amendment No. 1 to Master Repurchase and Securities Contract and Omnibus Amendment to
                  Repurchase Documents, dated as of February 4, 2016, between KREF Lending I LLC and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.11 to the Company’s Registration on Form S-11 (333-217126) filed on April
                  3, 2017).10.10
          
          Amendment No. 2 to Master Repurchase and Securities Contract, Guarantee Agreement,
                  Servicing Agreement and Custodial Agreement, dated as of September 9, 2016, among KREF Lending I LLC, Wells Fargo Bank, National Association, KKR Real Estate Finance Holdings, L.P. and Situs Asset Management LLC (incorporated by reference
                  to Exhibit 10.12 to the Company’s Registration on Form S-11 (333-217126) filed on April 3, 2017).10.11
          
          Guarantee Agreement, dated as of October 21, 2015, made by KKR Real Estate Finance
                  Holdings L.P. in favor of Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.13 to the Company’s Registration on Form S-11 (333-217126) filed on April 3, 2017).10.12
          
          Limited Guaranty, dated as of September 30, 2016, made by KKR Real Estate Finance
                  Holdings L.P. in favor of Goldman Sachs Bank USA (incorporated by reference to Exhibit 10.15 to the Company’s Registration on Form S-11 (333-217126) filed on April 3, 2017).10.13
          
          Amendment No. 1 to Master Repurchase and Securities Contract and Omnibus Amendment to
                  Repurchase Documents, dated as of February 4, 2016, between KREF Lending I LLC and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.11 to the Company’s Registration on Form S-11 (333-217126) filed on April
                  3, 2017).10.14
          
          Amended & Restated Master Purchaser Agreement, dated as of November 1, 2017, among
                  KREF Lending III LLC, KREF Lending III TRS LLC and Goldman Sachs Bank USA (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017 (001-38082)). 
 27
 10.15
          
          Reaffirmation of Guaranty, dated as of November 1, 2017, made by KKR Real Estate
                  Finance Holdings L.P. in favor of Goldman Sachs Bank USA (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017 (001-38082)).10.16
          
          Master Repurchase and Securities Contract Agreement, dated as of December 6, 2016,
                  between Morgan Stanley Bank, N.A. and KREF Lending IV LLC (incorporated by reference to Exhibit 10.16 to the Company’s Registration on Form S-11 (333-217126) filed on April 3, 2017).10.17
          
          Omnibus Amendment, dated as of November 10, 2017, to the Master Repurchase and
                  Securities Contract Agreement, dated as of December 6, 2016, between Morgan Stanley Bank, N.A. and KREF Lending IV LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (001-38082) filed on November
                  13, 2017).10.18
          
          Guaranty Agreement, dated as of December 6, 2016, made by KKR Real Estate Finance
                  Holdings L.P. in favor of Morgan Stanley Bank, N.A. (incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (001-38082)).10.19
          
          Amended and Restated Master Repurchase and Securities Contract, dated as of April 7,
                  2017, between KREF Lending I LLC and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.20 to the Company’s Registration on Form S-11/A (333-217126) filed on April 13, 2017).10.20
          
          Amendment No. 1 to Amended and Restated Master Repurchase and Securities Contract,
                  dated as of September 20, 2017, between KREF Lending I LLC and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30,
                  2017 (001-38082)).10.21
          
          Amendment No. 3 to Guarantee Agreement, dated as of April 7, 2017, between Wells Fargo
                  Bank, National Association and KKR Real Estate Finance Holdings L.P. (incorporated by reference to Exhibit 10.21 to the Company’s Registration on Form S-11/A (333-217126) filed on April 13, 2017).10.22
          
          Amendment No. 4 to Guarantee Agreement, dated as of December 28, 2018, between Wells
                  Fargo Bank, National Association and KKR Real Estate Finance Holdings L.P. (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (001-38082)).10.23
          
          Trademark License Agreement, dated as of May 4, 2017, between Kohlberg Kravis Roberts
                  & Co. L.P. and KKR Real Estate Finance Trust Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (001-38082) filed on May 10, 2017).10.24†
          
          Form of Director and Officer Indemnification Agreement (incorporated by reference to
                  Exhibit 10.19 to the Company’s Registration on Form S-11/A (333-217126) filed on April 26, 2017).10.25†
          
          Amended and Restated KKR Real Estate Finance Trust Inc. 2016 Omnibus Incentive Plan
                  (incorporated by reference to Exhibit 10.18 to the Company’s Registration on Form S-11/A (333-217126) filed on April 26, 2017).10.26†
          
          Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement for
                  Non-Employee Directors (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2018 (001-38082)).10.27†
          
          Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Agreement
                  (incorporated by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017 (001-38082)).21.1
          
          Subsidiaries of KKR Real Estate Finance Trust Inc. (incorporated by reference to
                  Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (001-38082)).23.1
          
          Consent of Deloitte & Touche LLP. 
 28
 31.1
          
          Certificate of Christen E.J. Lee, Co-President and Co-Chief Executive Officer, pursuant
                  to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
          
          Certificate of Matthew A. Salem, Co-President and Co-Chief Executive Officer, pursuant
                  to Section 302 of the Sarbanes-Oxley Act of 2002.31.3
          
          Certificate of Mostafa Nagaty, Chief Financial Officer, pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.32.1
          
          Certificate of Christen E.J. Lee, Co-President and Co-Chief Executive Officer, pursuant
                  to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).32.2
          
          Certificate of Matthew A. Salem, Co-President and Co-Chief Executive Officer, pursuant
                  to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).32.3
          
          Certificate of Mostafa Nagaty, Chief Financial Officer, pursuant to Section 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).101.INS
          
          XBRL Instance Document - the instance document does not appear in the Interactive Data
                  File because its XBRL tags are embedded within the Inline XBRL document(incorporated by reference to Exhibit 101.INS to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (001-38082)).101.SCH
          
          XBRL Taxonomy Extension Schema Document(incorporated by reference to Exhibit
                101.SCH to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (001-38082)).101.CAL
          
          XBRL Taxonomy Extension Calculation Linkbase Document(incorporated by
                reference to Exhibit 101.CAL to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (001-38082)).101.DEF
          
          XBRL Taxonomy Extension Definition Linkbase Document(incorporated by reference
                to Exhibit 101.DEF to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (001-38082)).101.LAB
          
          XBRL Taxonomy Extension Label Linkbase Document(incorporated by reference to
                Exhibit 101.LAB to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (001-38082)).101.PRE
          
          XBRL Taxonomy Extension Presentation Linkbase Document(incorporated by reference
                to Exhibit 101.PRE to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (001-38082)). 
 † Management contract or compensatory plan in which directors and/or executive officers are eligible to participate.
 
 Certain agreements and other documents filed as exhibits to this Annual Report on Form 10-K contain representations and warranties that the
        parties thereto made to each other. These representations and warranties have been made solely for the benefit of the other parties to such agreements and may have been qualified by certain information that has been disclosed to the other parties
        to such agreements and other documents and that may not be reflected in such agreements and other documents. In addition, these representations and warranties may be intended as a way of allocating risks among parties if the statements contained
        therein prove to be incorrect, rather than as actual statements of fact. Accordingly, there can be no reliance on any such representations and warranties as characterizations of the actual state of facts. Moreover, information concerning the
        subject matter of any such representations and warranties may have changed since the date of such agreements and other documents.
 
 29
 SIGNATURES
 
 Pursuant to requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
        by the undersigned, thereunto duly authorized.
 
 KKR REAL ESTATE FINANCE TRUST INC.Date:
          February 21, 2019
          By:
          /s/ Christen E.J. LeeName:
          Christen E.J. LeeTitle:
          Co-Chief Executive Officer and Co-President(Co-Principal Executive Officer)Date:
          February 21, 2019
          By:
          /s/  Matthew A. SalemName:
          Matthew A. SalemTitle:
          Co-Chief Executive Officer and Co-President(Co-Principal Executive Officer)