Strategic Diversification into European and CMBS Markets
The company is actively diversifying its portfolio geographically into Europe, with new originations expected by the end of 2025.
KREF has closed on a B-Piece investment in a diversified pool of 34 low leverage, fixed-rate first mortgage loans across property types and geographies.
Management highlighted the creation of more portfolio duration through CMBS investments, leveraging their K-Star platform, which is a rated special servicer.
This strategic move aims to enhance risk-adjusted returns and create a more resilient, diversified investment portfolio.
Management highlighted the stable macroeconomic environment with rates and spreads settling into ranges after initial shocks from fiscal debates and trade tensions.
The company maintains a focus on high carry production Agency MBS, with a portfolio concentrated in 30-year coupons, Ginnie Mae, and DUS pools, emphasizing positive convexity and short duration attributes.
Management sees current spreads as attractive, with potential for leverage increases as market stability improves, especially if the Fed resumes easing.
Dafinchi