KREF Q3 2026 Earnings Call: Liquidität steigt, da Rückzahlungen den Verschuldungsgrad senken

Wichtigste Erkenntnisse

• Der KKR Real Estate Finance Trust (KREF) wies für das 3. Quartal 2026 einen GAAP-Nettoverlust von 6 Mio. US-Dollar bzw. 0,11 US-Dollar je Aktie aus. Der Buchwert lag zum 30. September bei 10,14 US-Dollar je Aktie.
• Der ausschüttungsfähige Verlust belief sich auf 152 Mio. US-Dollar bzw. 2,64 US-Dollar je Aktie. Ohne Berücksichtigung realisierter Verluste und Aufwendungen für die strategische Überprüfung lag der ausschüttungsfähige Gewinn bei 5 Mio. US-Dollar bzw. 0,09 US-Dollar je Aktie.
• Seit Jahresbeginn erreichten die Kreditrückzahlungen 2,4 Mrd. US-Dollar und übertrafen damit die Ganzjahreserwartung des Managements von 2 Mrd. US-Dollar. Die Rückzahlungen im 3. Quartal summierten sich auf 1,2 Mrd. US-Dollar, wobei mehr als 80 % der Rückzahlungen des Jahres 2026 auf Kreditjahrgänge aus den Jahren 2021 und 2022 entfielen.
• Die Liquidität zum Quartalsende stieg auf rund 853 Mio. US-Dollar, während das Verschuldungsverhältnis (Debt-to-Equity) von 2,6x auf 2,2x sank und der Gesamtverschuldungsgrad (Total Leverage) von 4,3x auf 3,1x zurückging.
• Das Management warnte, dass höhere Zinssätze, geringere Erlöse aus Refinanzierungen und illiquide Immobilienmärkte den Zeitplan für die Abwicklung verlängern und kurzfristig zu zusätzlichen Rückstellungsbedarfen führen könnten.
• Die strategische Überprüfung durch den unabhängigen Vorstandsausschuss dauert an. Aktienrückkäufe verlangsamten sich nach Bekanntgabe der Überprüfung, da die Kapitalallokation – einschließlich Rückkäufen – Teil dieses Prozesses ist.

Wichtige Finanzdaten

Geschäfts- und operative Entwicklung

KREF setzte die Umschichtung weg von älteren Krediten fort, die im Marktumfeld von 2021 und 2022 vergeben wurden. Diese Jahrgänge machten mehr als 80 % der Rückzahlungen seit Jahresbeginn aus. Zudem bereinigte das Unternehmen im Quartalsverlauf drei weitere Kredite von der Beobachtungsliste (Watchlist).

Das Neugeschäft belief sich auf insgesamt 157 Mio. US-Dollar. Zu den Investitionen gehörten ein Portfolio hochwertiger Seniorenwohnanlagen (Klasse A), das durch vier Objekte in den USA besichert ist, sowie eine Klasse-A-Büroimmobilie in Texas. Das Management erklärte, dass der Kapitaleinsatz besonnen bleiben wird, da KREF der Flexibilität der Bilanz Vorrang einräumt, anstatt Rückzahlungen Eins zu Eins zu ersetzen.

Das Unternehmen übte seine optionalen Rückkaufrechte für seine beiden verbleibenden Gewerbeimmobilien-CLOs aus und schloss die Ablösung beider Transaktionen ab. Das Management gab an, dass erhebliche Rückzahlungen von Sicherheiten diese Strukturen weniger effizient gemacht hätten als andere Finanzierungsalternativen ohne Mark-to-Market-Bewertung.

KREF schloss das Quartal mit einer Liquidität von rund 853 Mio. US-Dollar ab, was einen der höchsten Stände in der Unternehmensgeschichte darstellt und über dem angegebenen historischen Durchschnitt von etwa 600 Mio. US-Dollar liegt. Die Gesamtsumme umfasste 166 Mio. US-Dollar an Barmitteln, 53 Mio. US-Dollar an Rückzahlungen, die nach einer Kredittilgung zum Quartalsende von einem Servicer gehalten wurden, sowie 600 Mio. US-Dollar an ungenutzter Unternehmens-Revolving-Kreditlinie.

Prognose des Managements

Das Management rechnet damit, dass der Gesamtverschuldungsgrad im 4. Quartal 2026 unter der historischen Zielspanne von KREF bleiben wird. Auch das Tempo der Neugeschäfte dürfte moderat bleiben, da das Unternehmen Liquidität schont und nach der Neubewertung der Immobilienpreise Chancen prüft.

Einige Bereinigungen von Vermögenswerten, die zuvor vor Jahresende erwartet wurden, dürften sich nun bis in die erste Hälfte des Jahres 2027 hinziehen. Das Management erklärte, weiterhin Monetarisierungen anzustreben und gleichzeitig eine maximale Wiedererlangung von Kapital anzustreben.

Aufwendungen für die strategische Überprüfung – im Wesentlichen Finanz- und Rechtsberatungskosten – fielen schwerpunktmäßig gegen Ende des 3. Quartals an. CFO Kendra Decious erklärte, dass diese Kosten im 4. Quartal auf Vollquartalsbasis voraussichtlich steigen werden.

Risiken und Beobachtungsschwerpunkte

• Mögliche Aufstockungen der Rückstellungen: Das Management erklärte, dass die Rückstellungen steigen könnten, wenn die Prozesse zur Bereinigung von Vermögenswerten voranschreiten und sich die Marktliquidität sowie die Bewertungen verändern.
• Refinanzierungsrisiko bei Mehrfamilienhäusern: KREF überwacht Kredite für Mehrfamilienhäuser aus den Jahren 2021 und 2022 genau. Die durchschnittlichen Mietrenditen (Debt Yields) liegen gut im 6-Prozent-Bereich, aber Kredite am unteren Ende stehen unter höherem Refinanzierungsdruck.
• Höhere Fremdkapitalkosten: Jüngste Zinsanstiege erhöhen den Kapitaldienst und verringern die Refinanzierungserlöse, insbesondere bei Immobilien, die zu Höchstbewertungen finanziert wurden.
• Verzögerungen bei der Bereinigung: Illiquide Märkte und unsichere Bewertungen erschweren die Bestimmung des Zeitplans und der endgültigen Verwertungserlöse der verbleibenden Watchlist-Positionen.
• Begrenzter Ertragsvorteil durch höhere Zinsen: Die variabel verzinslichen Verbindlichkeiten entsprechen in etwa dem Volumen des variabel verzinslichen Kreditportfolios, während übernommene Immobilien (REO-Vermögenswerte) keine Zinserträge generieren.
• Unsicherheit bezüglich der strategischen Überprüfung: Der Vorstandsausschuss prüft weiterhin strategische Alternativen; das Management lehnte weitere Angaben ab, solange der Prozess läuft.

Highlights der Analysten-Fragerunde

Das Management gab an, dass die aktuellen CECL-Rückstellungen die verfügbaren Marktinformationen widerspiegeln, undurchsichtige und illiquide Märkte KREF jedoch daran hindern, für jede Objektbereinigung endgültige Ergebnisse festzulegen. Die Höhe der Rückstellungen wird angepasst, sobald Transaktionen voranschreiten und sich die Marktbedingungen ändern.

Bei Mehrfamilienhaus-Krediten mit Mietrenditen (Debt Yields) von etwa 5,5 % bis 6 % hängen die Refinanzierungsergebnisse vom Wachstum auf Marktebene, den Kapitalisierungszinsen (Cap Rates) und der Liquidität der Sponsoren ab. Das Management wies darauf hin, dass Renditen in wachstumsstärkeren Märkten andere Auswirkungen haben können als ähnliche Renditen in Märkten, die noch neues Angebot aufnehmen.

KREF könnte ausgewählte Mehrfamilienhaus-Objekte übernehmen, wenn das Halten und Stabilisieren der Immobilie den Verwertungserlös verbessern könnte. Das Management sieht derzeit jedoch keine breite Welle von Mehrfamilienhaus-Objekten, die diesen Ansatz erfordern.

In Bezug auf einen Life-Science-Kredit in Boston gab KREF den Vermögenswert nach Wertveränderungen an den Regress-freien Kreditgeber (Non-Recourse-Kreditgeber) zurück. Das Unternehmen verbuchte auf seinen Anteil am Kredit einen Verlust, und die Position wurde nun aus dem Portfolio entfernt.

Das Management bestätigte, dass KREF trotz geringerer Verschuldung und hoher Liquidität weiterhin am Kreditmarkt aktiv bleibt. Als Gründe für das verhaltene Tempo im Neugeschäft nannte das Unternehmen hohe Rückzahlungen gegen Ende des Quartals, das frühere Ziel des Verschuldungsabbaus sowie den Wert einer bewahrten Flexibilität.

Vollständiges Transkript der Telefonkonferenz

Vollständiges Transkript der Telefonkonferenz

Ausführungen des Managements

Operator

Good morning, and welcome to the KKR Real Estate Finance Trust, Inc. Third Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Jack Switala. Please go ahead.

Jack Switala

Thanks, operator, and welcome to the KKR Real Estate Finance Trust earnings call for the third quarter of 2026. As the operator mentioned, this is Jack Switala. This morning, I am joined on the call by our CEO, Matt Salem; our President and COO, Patrick Mattson; and our CFO, Kendra Decious.

I would like to remind everyone that we will refer to certain non-GAAP financial measures on the call, which are reconciled to GAAP figures in our earnings release and in the supplementary presentation, both of which are available on the investor relations portion of our website. This call will also contain certain forward-looking statements, which do not guarantee future events or performance. Please refer to our most recently filed 10-Q for cautionary factors related to these statements.

Before I turn the call over to Matt, I will go through our results. For the third quarter of 2026, we reported GAAP net loss of $6 million, or negative $0.11 per share. Book value as of September 30th was $10.14 per share. We reported a distributable loss of $152 million, or negative $2.64 per share. Distributable earnings before realized losses and strategic review expenses were $5 million, or $0.09 per share. Lastly, we paid a $0.10 cash dividend with respect to the third quarter.

With that, I now like to turn the call over to Matt.

Matthew Salem

Thanks, Jack. Good morning, everyone, and thank you for joining us today. Let me begin with a brief update on the strategic review process. As we announced in July, KREF's Board established a strategic review committee composed solely of independent directors to evaluate potential strategic alternatives. Since that announcement, the committee has retained a financial advisor and legal counsel and continues to evaluate the company's strategic alternatives. Given the review is ongoing, we will not be providing any further commentary on the process during today's call.

Turning to the broader commercial real estate market, the recent increase in interest rates has created renewed pressure on property values, presenting both opportunities and challenges for real estate lenders. Existing borrowers will be impacted by higher debt service costs and lower refinancing proceeds, particularly for assets financed at peak valuations in 2021 and early 2022. We expect this environment to extend resolution timelines, and in some cases, result in additional credit losses. At the same time, these dynamics should drive increased demand for refinancing and recapitalization capital as borrowers work through upcoming maturities.

Importantly, underlying property fundamentals remain generally constructive across most sectors, supported by tenant demand and a meaningful slowdown in new construction activity. As we continue to reposition KREF's portfolio, we believe this environment provides an attractive opportunity to redeploy capital into new loans with compelling credit characteristics and risk-adjusted returns. Portfolio repayment activity has been particularly strong, with $2.4 billion of repayments year-to-date, surpassing our $2 billion expectation for the year. This quarter, repayments totaled $1.2 billion. This quarter's repayments nearly matched our annual repayments for each of 2024 and 2025.

Importantly, much of this activity has been concentrated in our older vintage loans, accelerating the natural rotation of the portfolio and reducing our exposure to loans originated during the 2021 and 2022 market environment. Those vintages accounted for over 80% of the repayments this year. We continue to make substantial progress executing the portfolio action plan we outlined at the beginning of the year. Our priorities have been to accelerate the resolution of watchlist and legacy office exposure, address our life science portfolio, and reposition the portfolio toward newer vintage loans with more attractive credit characteristics.

During the quarter, we resolved 3 additional watchlist loans. While the pace of resolutions has been encouraging, the timing and ultimate valuations of remaining assets is challenging. We continue to actively pursue monetization strategies for these assets, although some transactions previously anticipated to close before year-end are now likely to extend into the first half of 2027. We remain focused on advancing these resolutions while maintaining a disciplined approach to maximizing recovery. Given the more challenging liquidity and valuation environment, we could see an increase in reserves in the near term as resolution processes advance and market conditions continue to evolve.

With that, I'll turn the call over to Patrick.

W. Mattson

Thanks, Matt. Good morning, everyone. I'll begin with origination activity. During the quarter, we originated $157 million of loans, including a Class A senior housing portfolio secured by 4 properties across the U.S. and a Class A Texas office property. From a broader market perspective, conditions for new investments remained constructive. Credit spreads have been relatively stable. Financing for loans remains readily available, and liquidity across markets remains healthy. We expect our pace of originations to remain measured. Given our focus on maintaining balance sheet flexibility, we have been deliberate in deploying capital rather than seeking to replace repayments with new loans on a dollar-for-dollar basis.

Turning next to balance sheet and liquidity. The combination of significant repayment activity and our disciplined approach to capital management has meaningfully strengthened KREF's financial position throughout the year. At quarter end, liquidity increased to approximately $853 million, including $166 million of cash, $53 million of loan principal repayments held by a servicer following a repayment on the last day of the quarter, and $600 million of undrawn capacity on our corporate revolver. This represents one of the highest liquidity positions for KREF's history, well above the historical average of approximately $600 million.

Importantly, this liquidity provides us with significant flexibility as we continue to execute our portfolio strategy. We also continue to further optimize our financing structure. During the quarter, we exercised optional redemptions on our 2 remaining CRE CLOs, completing the retirement of both transactions. Given the substantial repayment activity and reduction in the underlying collateral pools, these transactions have become less efficient financing structures relative to other non-mark-to-market financing alternatives available to KREF.

Strong repayment activity during the quarter also drove a meaningful reduction in leverage, with our debt-to-equity ratio declining from 2.6x to 2.2x, and total leverage declining from 4.3x to 3.1x below our historical target range, and we expect leverage to remain below the historical range for the fourth quarter. In summary, the third quarter represented another important step in executing the priorities established at the beginning of the year. We materially reduced the watchlist, advanced the resolution of legacy exposures, exceeded our full year repayment expectations ahead of schedule, and further strengthened our liquidity position.

With that, we are happy to take your questions.

Operator

[Operator Instructions] Your first question comes from Tom Catherwood with BTIG.

Fragen und Antworten

William Catherwood

Matt, I want to go back to something you said in your prepared remarks about that you could see or we could see more reserves in the near term as the resolution process advances. So the question that pops in my head is what is holding you back from getting ahead of that and taking worst-case scenario type marks right now? Is it that you don't have the market comps because transactions are slow, or is it something else that is holding you up from kind of getting ahead of that and kind of creating a worst-case baseline?

Matthew Salem

Tom, thanks for the question. I think if you think about what is on kind of the watchlist now and the kind of processes we are in, a lot of that is just a function of a little bit of opaqueness, and some of these markets are relatively illiquid. We obviously are marking even have CECL reserves appropriate for what we are seeing in the market today. But as we have seen over time, number one, markets can change, and number two, just given how the liquidity in some of these markets, we do not know exactly where these processes can end up. As we kind of continue to work through those, we will obviously adjust it in real time for what we are seeing. But just understanding kind of where the overall market is today, we wanted to obviously highlight that as we continue to work through the resolutions here.

William Catherwood

You mentioned resolutions on the watchlist. I assume, though, this applies to kind of the remaining legacy loans. Obviously, that amount came down in 3Q with the repayments, but are you expecting more modifications? Are you expecting more things that you think could have reserves or more migrations out of that legacy, but 3-rated or better portfolio?

Matthew Salem

I think everybody, including ourselves, is looking at their portfolios in a new light now, clearly with adjusted values and the interest rate that we are living in today. And I think where we are seeing potential noise, I would say, is certainly on some of the multifamily. That feels like it has been the most impacted in the rate hike environment in those vintages we called out on the call in terms of the 2021 and 2022 vintages. So that is probably the area we are watching closely.

We have got a lot of repayments and a lot of those loans, like we said, this was a huge repayment quarter for us, equaling almost all of last year and the year before. 80% of that, as we highlighted, was in those vintages. So we are seeing real velocity there. But values are down a little bit and some of those loans are close to the line, and so we will have to continue to monitor those as they come up for refinance.

William Catherwood

Just quick follow-up on that one, Matt. Just do you have a sense of -- for those legacy multifamily loans you mentioned, do you have a sense of where those debt yields sit right now?

Matthew Salem

Obviously, there's a huge range. I think on average, we're well into the 6s. But it's the stuff at the lower end of that range that is going to be the most acute and have the most problems, obviously, refinancing. So those are the ones we're really focused on. But we'll continue to see how the market evolves from a value perspective. I think it's changing, I'd say, on a day-to-day basis as the market resets expectations around not only cap rates, but just growth profile as well.

Operator

Your next question comes from Jade Rahmani with KBW.

Jade Rahmani

Can you give any color on the Boston Life Science resolution? I didn't see clearly in the 10-Q what happened to that loan. Was that sold or acquired? Any color would be helpful.

W. Mattson

Jade. It's Patrick. Happy to take that. So on that loan, we had financing on that. That was non-recourse financing. As values have changed on that asset, we assigned that loan back to the lender. What you see reflected in this quarter was the loss on our portion of that loan, and it is obviously removed from the portfolio at this point.

Jade Rahmani

Okay. That is helpful. On the multifamily portfolio, can you comment as to what percentage is pre-2023 vintage and what the in-place debt yields are on that? Also, can you further comment if there is a property that has, say, a 5.5% to 6% debt yield, would that require KREF to absorb a loss because that would imply close to 100% LTV, so not necessarily a loss, but it depends on the friction points and what happens in such a situation?

Matthew Salem

Yes, I do not have the exact percentage of the 2021 and 2022 multifamily in front of me, so we can follow up on that. On the second part of your question, the 5.5% to 6% debt yield area, I think certainly we would be watching those very closely. It really comes down to 2 things. It is number one, what is the embedded growth in the market? Because the 5.5% in New York City or San Francisco or some of these markets that are experiencing real growth is very different than some of the Sun Belt markets that are still absorbing supply, as you well know. So there is going to be a range of cap rates depending on the market.

The second thing is really around sponsor. Number one, what is their liquidity level? What else is in their portfolio that they're dealing with, and what's their willingness to continue to play forward and try to continue to grow cash flows over time to enhance their outcomes on their equity? These are all in play, and we've seen it across the board. I certainly think having a portfolio outside of KREF as well, that we're seeing marginally more capitulation in the multifamily sector from borrowers, just given this latest rate hike. That speaks a little bit to the second point. I'm making that I think you are seeing a little bit more velocity, whereas before we were getting a lot more pay downs and playing it forward. I think there's been slightly more capitulation in the market today around some of that. But that corridor is certainly the ones that we're focused on in terms of their ability to refinance.

Jade Rahmani

A follow-up would be with multifamily as a more liquid asset class and fundamentals potentially nearing a trough. Could you devise an alternative strategy to fund REO with leverage and hold some of these assets more so than you've done with, say, office? Does that make any sense, or do you think the better outcome is to just work these out, share in some of the value reduction, and take hits to book value?

Matthew Salem

Well, I think similar to every time we have an issue in the portfolio, we're going to look at all the options available to us and how do we optimize the outcome and maximize recovery for the balance sheet. You think about what we did in Raleigh, North Carolina, on that multifamily deal. We felt like we could go in and stabilize cash flow and operations there and then sell it into kind of a better environment. I think we're proving that out on the operations side for sure, and we feel very good about the occupancy there and where we are on a cash flow basis.

Obviously, they carry a lot easier, to your point, I think is what you might be suggesting, than some of the life science we have, for instance, where you just don't have the tenants there, and so there's a kind of a net cost on an ongoing basis. That certainly will factor into the analysis. Hard to predict the future. Obviously, the market's very dynamic right now. But when I look at our portfolio, I don't see a wave of opportunities to do that, if that's part of the question. I think we could have isolated situations where the loan is closed, and we ultimately have to take some reserves on it. But, I don't think we're looking at it like, wow, this is going to be a big portfolio of multi that we have to make decisions on. That may help you think through it a little bit.

Operator

Your next question comes from Rick Shane with J.P. Morgan.

Richard Shane

Look, you guys, I know you won't comment per se on the strategic review process, but at the same time, you have 2 other things going on. One is resolution of the existing portfolio. And then the real question is, how are you sort of approaching the market in terms of additional investment? You guys did originate loans this quarter, but leverage is now below target ratio. You are sitting on a lot of liquidity. Do you see yourselves as active participants in the market? And more importantly, from sort of a management perspective, how do you sort of motivate employees in the context of this sort of potential uncertainty?

Matthew Salem

Right. Thank you for the question. I guess just to be direct, 100% we are active participants in the market. We originated 2 loans this quarter. I will come back to that piece of the question here in a second. Let me answer your final piece of the question. Keep in mind that the team that invests on behalf of KREF invests for other pools of capital within KKR as well. This is a smaller piece of our overall business, and that business is continuing to grow, and we have lots of different types of capital that we invest there. We invest bank capital, we invest insurance capital, we invest debt fund capital. So there is lots of capital, and we are actively originating loans across our $43 billion of AUM within real estate credit at KKR.

There is lots going on, and so the motivation question you had, I don't think is particularly relevant for our team and our situation. When we just think about how we are positioned in the market, I think you are right to kind of put a few things in there. When I look at this quarter, in particular, let us just understand, last quarter, we were above our target leverage ratio, and we had talked about wanting to bring that down. So we were able to accomplish that.

The second thing which I highlighted earlier was we got a ton of repayments this quarter. You never quite know, especially in a market where the Fed starts hiking again, like, okay, what is going to come through? What is not? Do things get extended? Some of those were actually pretty back-ended in the quarter. So you have this moment in time where certainly that contributed to it, where there is a lot coming through in the quarter, a lot coming through towards the end. We weren't leaning in to originations either because we were trying to bring down leverage and trying to understand kind of where we were in the quarter.

So some of it is just the complexity around that. I would say the last piece of it is creating some more flexibility right now and optionality for ourselves, I do not think is a bad thing either, where we start to look at what is going on in the market. Values are resetting. Perhaps the loan you are going to make tomorrow is better than the loan you could have made 60 days ago. I think there is also a reason to just be prudent as we kind of think about what is going on in the market today. None of those factors are the single determinant of where we snap the line at the end of September, but they are all kind of factoring into it, of how we kind of think about the go forward here. But certainly closed loans in the quarter and are active.

Richard Shane

Look, it's a very fair point, and you linked up something that I didn't that I heard but didn't link up, which is how heavy the repayments were at the very end of the quarter and given the uncertainty that the third quarter events created, the macro events created, and the potential sort of extension of timelines on anything in the meeting of the minds makes sense to sort of be careful until all of that stuff closes. I don't know if you covered this, I apologize, but it looks like the cadence of the buyback really was just in July and then slowed down. Is that related to the strategic review or how should we think about that going forward, particularly given the leverage, et cetera?

Matthew Salem

Yes, I think you're right to call that out. I think we mentioned this on the last call. The buybacks is all. Think about that. Strategic review is one of the key things they're looking at, of course, is capital allocation. And so, share buybacks will be part of that, and that really effectively impacted, if you will, our participation in that investing piece of the business after that announcement.

Richard Shane

Got it. Okay. Actually, when I really think about that from a legal perspective, it totally makes sense. Thank you for pointing it out and answering that question timely, but totally. At the end of the day, it doesn't really make sense to be buying back stock when you're doing that, because you've got information. Anyway, I get it.

Matthew Salem

Thank you. Appreciate you joining.

Operator

[Operator Instructions] Your next question comes from Chris Muller with Citizens.

Christopher Muller

Looking at your slide deck, the interest sensitivity slide stands out. Can you just talk through why higher rates are not a more meaningful benefit to the bottom line?

W. Mattson

Chris, it's Patrick. I'll take that. Yes, it's a good sort of highlight. We would expect normally, right, that you would get some benefit from higher rates. A couple of factors here. One, we're at the point where we've got some floors that are effectively pretty close. As we think about going up a little bit higher, it's not changing that much. We're not getting the additional benefit on the asset side.

The other factor is just that if you look at our debt outstanding that's subject to a floating rate and look at our loan assets outstanding that are subject to a floating rate, they're fairly close to each other. We're not obviously levered one to one. We've got a lot of value tied up, for example, in the REO assets. But the REO assets aren't producing income, right? So they're not subject to the benefit of higher interest rates. So it's really the fact that the secured debt outstanding, the term loan B outstanding is fairly close to the loan portfolio size.

Christopher Muller

Got it. That makes sense. And then, looking at the strategic review expenses, I heard you guys mention the legal counsel and financial advisor. Is that all that is going into that bucket there? Is that an ongoing expense or was it more one-time in nature?

Kendra Decious

Chris, it's Kendra. Thanks for the question. So I would say that the strategic review costs predominantly include financial advisors and legal advisors. I would point out that it is ongoing, as you asked, and also consider that the timing of when the strategic review committee was formed. So the expenses were back ended in Q3. So I think you can assume from that in Q4, those expenses will grow on a full quarter basis.

Operator

Your next question comes from Gabe Poggi with Raymond James.

Gabriel Poggi

Matt, Patrick, I've got kind of a top of the house question. What is KKR doing holistically? I mean, Matt, you alluded to all the different buckets of capital that the team works on, right? What's KKR looking at across commercial real estate in this environment? What activity do they find is interesting? I noticed the life science JV with Alexandria that was publicly announced a few days ago. But any color you can provide as to kind of the opportunity to KKR or that you're seeing and doing in other pockets of capital away from the REIT, I think would be helpful.

Matthew Salem

Thank you for the question, Gabe. I guess you could break it down between equity and debt. I'd say on the debt side, we remain active with all of our pools of capital and think it's an attractive lending environment for all the reasons we talk about on this call and for our peers talk about ability to lend on reset basis with supply coming down in a higher interest rate environment. I think it's a good credit story. We're seeing that demand from our insurance company. But also on the private debt fund side, I think there's a lot of capital kind of getting allocated to the sector. I'd say there we're continuing to invest in what you would expect in terms of on-theme assets from a property type, so nothing too new there.

You saw in this quarter we did originate a loan within KREF on senior housing. So that's an area we certainly have a lot of experience and positive experience on the equity side of our business, and have been involved on the debt side. But in terms of new things we're looking at, that's probably one area that we're slightly more active. Otherwise, it continues to be heavily focused on multifamily and industrial lending for the most part. I think when you put the equity hat on, the market's probably opening up a little bit for us in terms of investing kind of the value add opportunistic funds. It's early days, but I think there's going to be a lot of investors, ourselves included, spending time in the multifamily segment of the market.

I think Jade was pointing out the fact that supply's coming down, yet now you have another kind of pressure point on value, and this could be an interesting entry point. Not to call the bottom, but certainly as you think about investing capital, it looks like an attractive place to go, and a lot of capital structures are coming due, like we talked about in our portfolio and in our peers. I think that's an area in particular we'll spend more time on.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Jack Switala for any closing remarks.

Jack Switala

Great. Thanks, operator, and thanks, everyone, for joining today. Please reach out to me or the team here if you have any questions. Take care.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.