Citi lowered the firm’s price target on KKR Real Estate Finance to $11 from $16 and keeps a Neutral rating on the shares. The analyst does not see the level of losses that markets are implying in the near-term for commercial mortgage real estate investment trusts, but is concerned about the longer-term secular trends from work from home impacting office demand and cash flows. Near-term, potential defaults should arise from loan maturities as existing property borrowers assess adding additional capital with lower property values, the analyst tells investors in a research note. Cash flows for office properties will likely worsen over time, and with the potential for liquidity challenges, the shares "will remain challenged for a while," contends Citi.
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