KKR Real Estate Finance Trust Inc. Tax Treatment of 2023 Dividends

Rhea-AI Summary

KKR Real Estate Finance Trust Inc. (KREF) has announced the tax treatment of its 2023 common stock and 6.50% Series A Cumulative Redeemable Preferred Stock dividends. The company's common stock and Series A Preferred Stock dividend payments for the tax year ended December 31, 2023, are detailed in the press release.

Insights

Tax Advisor

The announcement from KKR Real Estate Finance Trust Inc. regarding the tax treatment of its dividends is a significant piece of information for shareholders. The distinction between ordinary dividends and return of capital is crucial for tax planning purposes. Ordinary dividends are typically taxed at the individual's income tax rate, whereas return of capital can reduce the shareholder's cost basis in the stock and defer taxation until the stock is sold.

For the common stock, the majority of the distribution is classified as ordinary dividends, which may be eligible for the 20% deduction under IRC Section 199A, potentially offering a tax advantage to certain investors. The adjustment for the split-year distribution also highlights the importance of understanding the timing of dividend allocations for tax purposes.

The Series A Preferred Stock dividends are entirely classified as ordinary dividends, with no return of capital or capital gain distributions, simplifying the tax treatment for investors. However, investors should note that preferred stock dividends are often taxed at a different rate than common stock dividends, depending on whether they meet the criteria for qualified dividend treatment.

Financial Analyst

From a financial analysis perspective, the dividend distribution details provided by KKR Real Estate Finance Trust Inc. can influence investor sentiment and stock performance. The stability of dividend payments is often seen as a sign of a company's financial health and can be a deciding factor for income-focused investors.

The cash distribution adjustments, particularly the split-year distribution for the common stock, reflect the company's strategic financial decisions and may impact the attractiveness of the stock. While the return of capital component is minimal, it does indicate that a portion of the dividend is not derived from current earnings but rather from the company's paid-in capital, which could be a point of interest for investors evaluating the company's earnings quality.

For the Series A Preferred Stock, the consistent dividend rate with no adjustments or return of capital suggests a straightforward income stream, which may be appealing to risk-averse investors seeking predictable returns.

Real Estate Investment Trust (REIT) Analyst

As a REIT, KKR Real Estate Finance Trust Inc. is required to distribute at least 90% of its taxable income to shareholders in the form of dividends. The tax treatment of these dividends is particularly relevant for REIT investors, as it affects the after-tax yield of their investment.

The absence of capital gain dividends in both common and preferred stock distributions indicates that the company did not realize significant gains from property sales during the year. This could suggest a focus on income-generating activities or a strategic decision to hold onto assets for longer-term appreciation.

The information provided on the tax treatment of dividends also serves as an indicator of the company's compliance with REIT distribution requirements and offers insights into the tax efficiency of the dividends received by shareholders.

NEW YORK--(BUSINESS WIRE)-- KKR Real Estate Finance Trust Inc. (the “Company” or “KREF”) (NYSE: KREF) today announced the tax treatment of its 2023 common stock and 6.50% Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”) dividends. The following table summarizes KKR Real Estate Finance Trust Inc.’s common stock and Series A Preferred Stock dividend payments for the tax year ended December 31, 2023:

Tax Treatment of 2023 Common Stock Dividends
Record Date		Payment Date		Cash Distribution		Adjustment		Total Distribution		Ordinary Dividends(1)		Qualified Dividends		Capital Gain Dividends		Return of Capital
December 30, 2022		January 13, 2023		$0.43		($0.25)	(2)	$0.18		$0.16463		$0.00000		$0.00000		$0.01537
March 31, 2023		April 14, 2023		$0.43		$0.00		$0.43		$0.39329		$0.00000		$0.00000		$0.03671
June 30, 2023		July 14, 2023		$0.43		$0.00		$0.43		$0.39329		$0.00000		$0.00000		$0.03671
September 29, 2023		October 13, 2023		$0.43		$0.00		$0.43		$0.39329		$0.00000		$0.00000		$0.03671
				$1.72		($0.25)		$1.47		$1.34450		$0.00000		$0.00000		$0.12550

(1)		Ordinary dividends may be eligible for the 20% deduction applicable to “qualified REIT dividends” under IRC Section 199A(b)(1)(B). Stockholders are encouraged to consult with their own tax advisors as to their specific tax treatment of the Company's distributions.
(2)		The cash distribution of $0.43 per share of common stock (with a record date of December 30, 2022, that was paid on January 13, 2023) is a split-year distribution, of which $0.25 was allocable to 2022 for federal income tax purposes and the remaining $0.18 is allocable to 2023 for federal income tax purposes.

Tax Treatment of 2023 Series A Preferred Stock Dividends
Record Date		Payment Date		Cash Distribution		Adjustment		Dividend		Ordinary Dividends(1)		Qualified Dividends		Capital Gain Dividends		Return of Capital
February 28, 2023		March 15, 2023		$0.41		$0.00		$0.41		$0.40625		$0.00000		$0.00000		$0.00000
May 31, 2023		June 15, 2023		$0.41		$0.00		$0.41		$0.40625		$0.00000		$0.00000		$0.00000
August 31, 2023		September 15, 2023		$0.41		$0.00		$0.41		$0.40625		$0.00000		$0.00000		$0.00000
November 30, 2023		December 15, 2023		$0.41		$0.00		$0.41		$0.40625		$0.00000		$0.00000		$0.00000
				$1.63		$0.00		$1.63		$1.62500		$0.00000		$0.00000		$0.00000

(1)

Ordinary dividends may be eligible for the 20% deduction applicable to “qualified REIT dividends” under IRC Section 199A(b)(1)(B). Stockholders are encouraged to consult with their own tax advisors as to their specific tax treatment of the Company's distributions.

About KKR Real Estate Finance Trust Inc.

KREF is a real estate finance company that focuses primarily on originating and acquiring senior loans secured by commercial real estate properties. KREF is externally managed and advised by an affiliate of KKR & Co. Inc. For additional information about KREF, please visit its website at www.kkrreit.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240131083110/en/

MEDIA:

Miles Radcliffe-Trenner

(212) 750-8300

media@kkr.com



INVESTOR RELATIONS:

Jack Switala

(212) 763-9048

kref-ir@kkr.com

Source: KKR Real Estate Finance Trust Inc.

FAQ

What is the ticker symbol of KKR Real Estate Finance Trust Inc.?

The ticker symbol of KKR Real Estate Finance Trust Inc. is KREF.

What dividends did KKR Real Estate Finance Trust Inc. announce for the tax year ended December 31, 2023?

KKR Real Estate Finance Trust Inc. announced the tax treatment of its 2023 common stock and 6.50% Series A Cumulative Redeemable Preferred Stock dividends.

What is the tax treatment of 2023 Common Stock Dividends by KKR Real Estate Finance Trust Inc.?

The tax treatment of 2023 Common Stock Dividends by KKR Real Estate Finance Trust Inc. is detailed in the press release. The dividends are categorized as Cash Distribution, Adjustment, Total Distribution, Ordinary Dividends, Qualified Dividends, Capital Gain Dividends, and Return of Capital.

What is the tax treatment of 2023 Series A Preferred Stock Dividends by KKR Real Estate Finance Trust Inc.?

The tax treatment of 2023 Series A Preferred Stock Dividends by KKR Real Estate Finance Trust Inc. is detailed in the press release. The dividends are categorized as Cash Distribution, Adjustment, Dividend, Ordinary Dividends, Qualified Dividends, Capital Gain Dividends, and Return of Capital.