Contrasting KKR Real Estate Finance Trust (NYSE:KREF) & BrightSpire Capital (NYSE:BRSP)

BrightSpire Capital (NYSE:BRSP) and KKR Real Estate Finance Trust (NYSE:KREF) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings for BrightSpire Capital and KKR Real Estate Finance Trust, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BrightSpire Capital	1	3	2	0	2.17
KKR Real Estate Finance Trust	0	0	6	0	3.00

BrightSpire Capital presently has a consensus target price of $7.50, indicating a potential upside of 32.04%. KKR Real Estate Finance Trust has a consensus target price of $12.75, indicating a potential upside of 27.12%. Given BrightSpire Capital’s higher possible upside, research analysts plainly believe BrightSpire Capital is more favorable than KKR Real Estate Finance Trust.

Insider and Institutional Ownership

56.6% of BrightSpire Capital shares are held by institutional investors. Comparatively, 70.2% of KKR Real Estate Finance Trust shares are held by institutional investors. 1.9% of BrightSpire Capital shares are held by company insiders. Comparatively, 1.2% of KKR Real Estate Finance Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares BrightSpire Capital and KKR Real Estate Finance Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BrightSpire Capital	-69.35%	9.44%	2.79%
KKR Real Estate Finance Trust	0.40%	9.46%	1.86%

Valuation & Earnings

This table compares BrightSpire Capital and KKR Real Estate Finance Trust”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BrightSpire Capital	$364.80 million	2.02	-$15.55 million	($1.02)	-5.57
KKR Real Estate Finance Trust	$164.97 million	4.23	-$30.85 million	($0.30)	-33.43

BrightSpire Capital has higher revenue and earnings than KKR Real Estate Finance Trust. KKR Real Estate Finance Trust is trading at a lower price-to-earnings ratio than BrightSpire Capital, indicating that it is currently the more affordable of the two stocks.

Dividends

BrightSpire Capital pays an annual dividend of $0.64 per share and has a dividend yield of 11.3%. KKR Real Estate Finance Trust pays an annual dividend of $1.00 per share and has a dividend yield of 10.0%. BrightSpire Capital pays out -62.7% of its earnings in the form of a dividend. KKR Real Estate Finance Trust pays out -333.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Risk & Volatility

BrightSpire Capital has a beta of 1.88, meaning that its share price is 88% more volatile than the S&P 500. Comparatively, KKR Real Estate Finance Trust has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.

About BrightSpire Capital

BrightSpire Capital, Inc. operates as a commercial real estate (CRE) credit real estate investment trust in the United States and Europe. The company operates through Senior and Mezzanine Loans and Preferred Equity; Net Leased and Other Real Estate; and Corporate and Other segments. It focuses on originating, acquiring, financing, and managing a diversified portfolio of CRE debt investments consisting of first mortgage loans, senior loans, debt securities, mezzanine loans, and preferred equity investments, as well as net leased properties. The company qualifies as a real estate investment trust for federal income tax purposes. It generally would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. The company was formerly known as Colony Credit Real Estate, Inc. and changed its name to BrightSpire Capital, Inc. in June 2021. BrightSpire Capital, Inc. was incorporated in 2017 and is headquartered in New York, New York.

About KKR Real Estate Finance Trust

KKR Real Estate Finance Trust Inc., a mortgage real estate investment trust, focuses primarily on originating and acquiring transitional senior loans secured by commercial real estate (CRE) assets. It engages in the origination and purchase of credit investments related to CRE, including leveraged and unleveraged commercial real estate loans. The company has elected to be taxed as a real estate investment trust and would not be subject to federal corporate income taxes if it distributes at least 90% of its taxable income to its stockholders. KKR Real Estate Finance Trust Inc. was incorporated in 2014 and is headquartered in New York, New York.