TPG RE Finance Trust, Inc. Q3 FY2024 earnings call

• Macro conditions: Fed rate cut and strong economic data fueled risk asset rally; real estate starting to find footing with increased transaction activity. - TRTX positioned well with offensive liquidity, active investment pipeline, and high-quality credit profile. - Financial results: GAAP net income $18.7M, distributable earnings $23M, CECL reserve $69.3M. - Portfolio composition: Multifamily 54.5%, Office 18.1%, etc. - REO properties: 5 properties comprising 5.1% of total assets, 3 targeted for sale. - Leverage: Total leverage 2.02:1, stable, with $4.1B financing capacity. - Liquidity: $357 million liquidity, 9.7% of total assets in liquidity.

During the third quarter, TPG Real Estate Finance Trust (TRTX) had GAAP net income attributable to common shareholders of $18.7 million. They received $149 million of repayments, primarily in hotel, multifamily, and mixed-use property types, and made new investments totaling $204 million. The loan portfolio composition at quarter end was: Multifamily 54.5%, Office 18.1%, Life Sciences 11.7%, Hotel 10.3%, etc. Distributable earnings were $23 million or $0.28 per share. Net interest margin for the loan portfolio was $29.3 million, an increase from the prior quarter due to new loan investments and liability structure optimization.

• Plan to deploy balance sheet cash for new investments. - Recycle capital from REO properties for reinvestment. - Utilize untapped existing financing capacity to support growth in earning assets. - Exploit TPG's capital markets platform to source new accretive financing for optimization of liability structure.

• Risk of loan migration from 3-rated to 4-rated; majority of such loans resolve normally but loan-specific. - REO sales outcomes depend on individual property; some REO yields above/below loan investment ROEs.

Q: Stephen Laws asked about leverage and REO recycling.

A: Doug Bouquard said they expect to increase leverage by deploying balance sheet cash, recycling REO capital, and utilizing financing capacity; Bob Foley noted REO recycling's accretive potential depending on property.

Q: Steve Delaney asked about portfolio growth and high-yield debt.

A: Doug Bouquard said they focus on multifamily and industrial, and will consider high-yield debt for balance sheet leverage.

Q: Don Fandetti asked about loan risk migration and book value.

A: Bob Foley said no migration in the quarter, CECL reserve stable; Doug Bouquard discussed REO accounting and CECL application.

Q: A.J. on for Rick Shane asked about origination pipeline.

A: Doug Bouquard said focus on multifamily and industrial, attractive LTVs, and back leverage appetite.