Kwarkot
KKR Real Estate Finance Trust (KREF) stocks fell as the mortgage REIT swung to an attributable loss in Q3 from a year ago profit on higher provisions.
Q3 net income attributable to shareholders stood at -$48.42M, or -$0.70 per share, compared to $31.99M, or $0.57 in the year-ago quarter.
Net provision for credit losses came in at $80.60M, up 98.55% from $1.17M a year ago.
"The macro environment has continued to deteriorate, which has caused a corresponding negative impact to commercial real estate values. This was further accelerated by the September Federal Reserve Meeting," CEO Matt Salem said.
"Real estate values are declining in real-time as the market digests the higher cost of capital, combined with potential selling demand in a recession," Salem said.
Salem said that over the past quarter, they have witnessed a significant decrease in liquidity in the office sector, as well as capitulation by owners. In response, they have materially increased their reserves and added three loans to their watch list, for a total of five loans.
Meanwhile, Q3 non-GAAP EPS of $0.50 beats by $0.05 and revenue of $51.16M (+7.1% Y/Y) beats by $5.88M.