KKR Real Estate Finance Trust Inc. (NYSE:KREF) Files An 8-K Entry into a Material Definitive Agreement
Item1.01 Entry into a Material Definitive
Agreement.
Agreements Entered Into in Connection with the Initial Public
Offering
In connection with the initial public offering (the Offering) by
KKR Real Estate Finance Trust Inc. (the Company) of its common
stock, par value $0.01 per share (the Common Stock), described in
the Companys prospectus dated May4, 2017 (the Prospectus), filed
with the Securities and Exchange Commission on May8, 2017 to
Rule424(b)under the Securities Act of 1933, as amended (the
Securities Act), which is deemed to be part of the Companys
Registration Statement on FormS-11 (File No.333-217126) (as
amended, the Registration Statement), and the related
Registration Statement on FormS-11 (File No.333-217681) filed to
Rule462(b)under the Securities Act, the following agreements were
entered into on the dates indicated below:
(1) the Underwriting Agreement, dated as of May4, 2017 (the
Underwriting Agreement), among the Company, KKR Real Estate
Finance Manager LLC and Wells Fargo Securities, LLC and Morgan
Stanley Co. LLC as representatives of the several underwriters
named therein;
(2) the Trademark License Agreement (the Trademark License
Agreement), dated as of May4, 2017, between Kohlberg Kravis
Roberts Co. L.P. and the Company; and
(3) the Third Amended and Restated Management Agreement (the
Management Agreement), dated as of May5, 2017, between KKR Real
Estate Finance Trust Inc. and KKR Real Estate Finance Manager
LLC.
Each of Kohlberg Kravis Roberts Co. L.P. and KKR Real Estate
Finance Manager LLC are subsidiaries of KKR Co. L.P. (together
with its subsidiaries, KKR). KKR and its affiliates control a
majority of the voting power of shares eligible to vote in the
election of the directors of the Company and have various
relationships with the Company. For further information
concerning the other material relationships among the Company and
KKR and its affiliates, see Certain Relationships and Related
Party Transactions in the Prospectus.
The Underwriting Agreement, Trademark License Agreement and
Management Agreement are filed herewith as Exhibits 1.1, 10.1 and
10.2, respectively, and are each incorporated herein by
reference. The terms of these agreements are substantially the
same as the terms set forth in the forms of such agreements filed
as exhibits to the Registration Statement and described in the
Prospectus.
Revolving Credit Facility
On May4, 2017, KKR Real Estate Finance Holdings L.P., an indirect
wholly owned subsidiary of the Company (the Operating
Partnership), entered into a credit agreement (the Credit
Agreement), as parent guarantor, with KREF Holdings X LLC, a
direct wholly owned subsidiary of the Operating Partnership, as
initial borrower, and Barclays Bank PLC, as a lender, sole lead
arranger and bookrunner and administrative agent. Certain
subsidiaries of the Operating Partnership may be designated as
co-borrowers under the Credit Agreement from time to time. The
Credit Agreement provides for a secured revolving credit facility
with aggregate secured borrowing capacity of up to $75.0 million,
subject to borrowing base availability and certain other
conditions. The borrowers may, subject to certain conditions,
including obtaining additional commitments from lenders, request
additional commitments under the credit facility to increase the
aggregate commitments to up to $125.0 million. Borrowings under
the credit facility are expected to be used to purchase loans and
other eligible assets to the borrowers investment guidelines and
for operating expenses and general corporate purposes.
Availability of borrowings is based on a pool of eligible
unencumbered commercial real estate assets.
The Credit Agreement has an initial maturity of May 2019, which
may be extended for an additional year no more than two times
upon the payment of applicable fees and satisfaction of certain
other conditions. Borrowings under the Credit Agreement will bear
interest at a per annum rate equal to the sum of an applicable
base rate or Eurodollar rate and an applicable margin.
The obligations under the Credit Agreement are unconditionally
and irrevocably guaranteed by the Operating Partnership and
KREF Mezz Holdings LLC, an indirect wholly owned subsidiary of
the Operating Partnership. Any subsidiary of a borrower or the
Operating Partnership that is a direct owner of a borrowing
base asset (other than a co-borrower) will be required to
become a guarantor under the Credit Agreement. In addition, the
credit facility is collateralized by first-priority security
interests in all of the capital stock of certain wholly owned
subsidiaries of the Operating Partnership.
The Credit Agreement contains representations, warranties,
covenants, terms and conditions customary for transactions of
this type, including but not limited to:
a maximum debt to equity ratio of 3.50 to 1.00 (beginning with
the quarter ending June 30, 2017);
a minimum fixed charge coverage ratio of 1.50 to 1.00
(beginning with the quarter ending June 30, 2017);
at any time there are loans outstanding, a minimum borrowing
base interest charge coverage ratio of 1.50 to 1.00;
minimum tangible net worth and cash liquidity covenants
(beginning with the quarter ending June 30, 2017);
limitations on indebtedness, liens, fundamental changes,
borrowing base asset dispositions, restricted payments,
investments, negative pledges, lines of business and
transactions with affiliates; and
default provisions, including defaults for non-payment, breach
of representations and warranties, insolvency, non-performance
of covenants, cross-defaults and guarantor defaults.
The foregoing summary of the Credit Agreement is qualified in
its entirety by reference to the Credit Agreement, a copy of
which is filed herewith as Exhibit10.3 and incorporated herein
by reference.
Barclays Bank PLC is an affiliate of Barclays Capital Inc., an
underwriter in the Offering.
Item3.03 Material Modification to
Rights of Security Holders.
The information set forth under Item 5.03 below is incorporated
by reference into this Item 3.03.
Item5.02 Departure of Directors or
Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain
Officers.
On May5, 2017, the Company granted to each of Mr.Jonathan A.
Langer and Ms.Deborah H. McAneny, the Companys independent
directors, 2,439 restricted stock units under the Amended and
Restated KKR Real Estate Finance Trust Inc. 2016 Omnibus
Incentive Plan (the Omnibus Incentive Plan), representing the
amount of such directors annual equity award. For further
information regarding the Omnibus Incentive Plan, see
ManagementExecutive and Director Compensation2016 Omnibus
Incentive Plan in the Prospectus. For further information
regarding these equity grants, see ManagementExecutive and
Director CompensationDirector Compensation in the Prospectus.
Item5.03 Amendments to Articles of
Incorporation or Bylaws; Change in Fiscal Year.
On May10, 2017, in connection with the redemption of all of its
outstanding shares of 12.5% SeriesA Cumulative Non-Voting
Preferred Stock (the SeriesA Preferred Stock), the Company
filed Articles Supplementary with the State Department of
Assessments and Taxation of Maryland (SDAT) reclassifying all
shares of SeriesA Preferred Stock as shares of the Companys
preferred stock without designation. Upon the acceptance for
record by the SDAT of the Articles Supplementary, the Company
filed Articles of Restatement with the SDAT. The Articles of
Restatement were filed to consolidate all of the Companys
outstanding charter documents into a single instrument and did
not amend any other terms or provisions of the Companys
charter. The Articles of Restatement are filed herewith as
Exhibit3.1 and incorporated herein by reference.
Item8.01 Other Events.
On May10, 2017, the Company completed the Offering by issuing
11,787,500 shares of Common Stock, which included 1,537,500
shares of Common Stock issued in connection with the
underwriters exercise in full of their option to purchase
additional shares, for cash consideration of $20.50 per share
($19.1675 per share net of underwriting discounts and
commissions) to a syndicate of underwriters led by Wells Fargo
Securities, LLC, Morgan Stanley Co. LLC and KKR Capital Markets
LLC. The Company will receive approximately $220.4 million in
net proceeds, after deducting underwriting discounts and
commissions and estimated offering expenses payable by the
Company. The other underwriters in the syndicate were Barclays
Capital Inc., Goldman Sachs Co. LLC, J.P. Morgan Securities LLC
and Keefe, Bruyette Woods,Inc.
Item9.01 Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit No. |
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Description |
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1.1 |
Underwriting Agreement, dated May4, 2017, among KKR Real |
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3.1 |
Articles of Restatement of KKR Real Estate Finance Trust |
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10.1 |
Trademark License Agreement, dated as of May4, 2017, |
|
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10.2 |
Third Amended and Restated Management Agreement, dated as |
|
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10.3 |
Credit Agreement, dated as of May4, 2017, among KREF |
About KKR Real Estate Finance Trust Inc. (NYSE:KREF)
KKR Real Estate Finance Trust Inc is a real estate finance company that focuses primarily on originating and acquiring senior mortgage loans secured by commercial real estate assets (CRE). KKR manages investments across multiple asset classes, including private equity, real estate, energy, infrastructure, credit and hedge funds. The Company’s investment strategy is to originate or acquire senior mortgage loans collateralized by institutional-quality CRE assets. Its target assets also include mezzanine loans, preferred equity and other debt-oriented instruments. The Company’s investment objective is capital preservation and generating attractive risk-adjusted returns for its stockholders over the long term, primarily through dividends. KKR Real Estate Finance Trust Inc. (NYSE:KREF) Recent Trading Information
KKR Real Estate Finance Trust Inc. (NYSE:KREF) closed its last trading session down -0.10 at 21.81 with 114,263 shares trading hands.
