Company Overview - TPG RE Finance Trust (TRTX) shares increased by 5.6% to $7.18, following a significant trading volume, contrasting with a 19.1% loss over the past four weeks [1] - The rise in investor optimism is linked to President Donald Trump's announcement of a 90-day pause on reciprocal tariffs for most countries [1] Earnings Expectations - TPG RE Finance Trust is projected to report quarterly earnings of $0.25 per share, reflecting a year-over-year decline of 16.7% [2] - Expected revenues for the upcoming report are $36.67 million, down 5.8% from the same quarter last year [2] Stock Performance and Trends - The consensus EPS estimate for TPG RE Finance Trust has remained unchanged over the last 30 days, indicating a potential lack of momentum in stock price movement without earnings estimate revisions [3] - The stock currently holds a Zacks Rank of 3 (Hold), suggesting a neutral outlook [3] Industry Comparison - TPG RE Finance Trust is part of the Zacks Real Estate - Operations industry, where Bridge Investment Group Holdings Inc. (BRDG) also operates [3] - BRDG shares closed 16.8% higher at $8.97, but have experienced a -16.3% return over the past month [3] - The consensus EPS estimate for Bridge Investment Group has remained unchanged at $0.17, with a Zacks Rank of 4 (Sell) [4]

Financial Data and Key Metrics Changes - The company reported a 3% increase in net earning assets in the second half of 2024, driven by $446 million in new loan commitments, primarily in multifamily and industrial loans [9][16] - Distributable earnings for the year fully covered the $0.96 per share annual dividend, with a prerealized loss basis generating $1.08 per share, covering the dividend at 1.1 times [7][8] - The company maintained a 100% performing loan portfolio at year-end, with a weighted-average risk rating of 3.0, consistent over four quarters [17][32] Business Line Data and Key Metrics Changes - In 2024, the company originated 8 loans totaling $562.3 million, with 2 loans amounting to $242 million originated in the fourth quarter [18][68] - The company has a substantial investment pipeline with over $300 million in live investment opportunities in various stages of pursuit and diligence [9][30] Market Data and Key Metrics Changes - The company noted strong liquidity of $320.8 million and leverage of only 2.14:1, indicating a solid financial position to support growth [16][30] - The company expects real estate investment activity to increase in 2025, driven by elevated interest rates and the deployment of capital into new acquisitions [6][31] Company Strategy and Development Direction - The company aims to continue providing acquisition and tailored financing to recapitalize broken capital structures at reset valuations [6][12] - The management emphasized a focus on thoughtful, assertive, value-oriented risk and asset management to maximize shareholder value [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, citing a favorable economic environment and a reduction in interest rate volatility, which is expected to drive real estate activity [5][49] - The company anticipates that existing loans are more likely to lengthen rather than prepay due to the current interest rate environment [70] Other Important Information - The company has a low share of REO and nonaccrual loans, with no nonaccrual loans for five consecutive quarters [32] - The company owns 8 REO properties with an aggregate carrying value of $275.8 million, representing 7.4% of total assets [22][24] Q&A Session Summary Question: Can you discuss the multifamily loans that went into foreclosure? - Management indicated that the decision to foreclose was made after it became clear that borrowers would not meet modification terms, and they are now stabilizing the properties for sale [36][39] Question: How do you expect leverage to scale through the year? - Management expects to deploy existing liquidity first and then back-leverage, with current leverage at 2.14:1, historically operating around 3x to 3.3x [41][45] Question: Can you provide an update on life sciences exposure? - The company currently has 3 life sciences transactions, all built out and focusing on high-quality borrowers, with a slight uptick in leasing activity noted [52][54] Question: How do you define "reasonably quickly" regarding REO sales? - Management expects to reduce the existing REO portfolio by about half by the end of 2025, with some properties already in the market [61][63] Question: What is the outlook for CECL reserves going forward? - Management anticipates that the CECL rate expressed in basis points will remain stable or decline, with the dollar amount of reserves expected to increase as the loan book grows [84][86]

Core Insights - TPG RE Finance Trust (TRTX) reported revenue of $34.74 million for the quarter ended December 2024, reflecting a year-over-year increase of 10.3% [1] - The earnings per share (EPS) for the quarter was $0.10, a significant improvement from -$2.05 in the same quarter last year [1] - The reported revenue fell short of the Zacks Consensus Estimate of $39.48 million, resulting in a revenue surprise of -12.00% [1] - The company experienced an EPS surprise of -64.29%, with the consensus EPS estimate being $0.28 [1] Financial Performance Metrics - Net Interest Income was reported at $24.68 million, below the average estimate of $28.21 million from two analysts [4] - Other income, net, was $2.53 million, also falling short of the average estimate of $3.60 million from two analysts [4] - Total other revenue amounted to $10.06 million, compared to the two-analyst average estimate of $11.28 million [4] - Revenue from real estate owned operations was $7.54 million, slightly below the estimated $7.68 million from two analysts [4] Stock Performance - TPG RE Finance Trust shares returned +2% over the past month, while the Zacks S&P 500 composite increased by +4.7% [3] - The stock currently holds a Zacks Rank 5 (Strong Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - TPG RE Finance Trust reported quarterly earnings of $0.10 per share, significantly missing the Zacks Consensus Estimate of $0.28 per share, representing an earnings surprise of -64.29% [1][2] Financial Performance - The company posted revenues of $34.74 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 12%, compared to revenues of $31.49 million a year ago [2] - Over the last four quarters, TPG RE Finance Trust has surpassed consensus EPS estimates only once [2] Stock Performance and Outlook - TPG RE Finance Trust shares have increased by approximately 2.1% since the beginning of the year, while the S&P 500 has gained 4% [3] - The current consensus EPS estimate for the upcoming quarter is $0.26 on revenues of $39.5 million, and for the current fiscal year, it is $1.07 on revenues of $161.12 million [7] Industry Context - The Real Estate - Operations industry, to which TPG RE Finance Trust belongs, is currently ranked in the bottom 14% of over 250 Zacks industries, indicating potential underperformance compared to higher-ranked industries [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which could impact TPG RE Finance Trust's stock performance [5][6]

Financial Performance - Net income attributable to common stockholders for Q4 2024 was $6.9 million, or $0.09 per diluted common share[7]. - Net income attributable to common stockholders for the year ended December 31, 2024, was $59,666,000, compared to $6,909,000 for the three months ended December 31, 2024[41]. - Distributable earnings before realized losses for Q4 2024 were $17.6 million, or $0.22 per diluted common share[7]. - Distributable earnings before realized losses from loan sales per common share, basic, was $1.08 for the year ended December 31, 2024, compared to $0.22 for the three months ended December 31, 2024[41]. - Interest income for the three months ended December 31, 2024, was $68,992,000, while interest expense was $44,312,000, resulting in a net interest income of $24,680,000[43]. - The company reported a net income of $10,682,000 for the three months ended December 31, 2024, compared to $6,381,000 for the same period in 2023[43]. - Total stockholders' equity as of December 31, 2024, was $1,114,041,000, down from $1,124,599,000 as of September 30, 2024[41]. - The book value per common share increased to $11.41 as of December 31, 2024, from $11.27 as of September 30, 2024[41]. - The weighted-average common shares outstanding, diluted, for the year ended December 31, 2024, was 79,888,044[41]. - The company declared dividends of $0.24 per common share for the three months ended December 31, 2024, consistent with the previous year[43]. Loan Portfolio and Performance - Total loan investment portfolio reached $3.4 billion with a weighted average all-in yield of 8.26%[7]. - The company originated two first mortgage loans with total loan commitments of $242.0 million during Q4 2024[7]. - Total loan repayments for the year ended December 31, 2024, amounted to $673.4 million, including $609.6 million of full repayments across 14 loans[7]. - Total loan originations for Q4 2024 reached $242.0 million, with a weighted average interest rate of Term SOFR + 3.33%[19]. - Total loan repayments in Q4 2024 amounted to $110.2 million, including full repayments of $94.7 million[19]. - The loan portfolio's weighted average loan-to-value (LTV) ratio was 63.1% as of December 31, 2024[18]. - The company reported an allowance for credit losses of $64.0 million, a decrease of $5.3 million from the previous quarter[26]. - The average risk rating for the loan portfolio remained stable at 3.0 as of December 31, 2024[24]. - The company experienced a realized loss on loan write-offs related to loan sales of $9,729,000 for the year ended December 31, 2024[41]. - The company evaluates the risk of all loans quarterly and assigns a risk rating on a 5-point scale, with "1" being very low risk and "5" indicating default/loss likely[50]. - The company classifies loans based on property types, including mixed-use and life science, with specific criteria for each classification[50]. Financial Position and Liquidity - The company maintained substantial liquidity with $320.8 million available, including $190.2 million in cash[7]. - Debt-to-equity ratio improved to 2.20x as of December 31, 2024, down from 2.53x a year earlier[7]. - The total financing capacity of the company is $4.0 billion, with an outstanding principal balance of $2.5 billion[30]. - The expected debt maturities indicate a significant portion of financing is due in 2026 and 2027[31]. - The total leverage ratio includes total outstanding borrowings plus nonconsolidated senior interests sold or co-originated, divided by total stockholders' equity at period end[49]. - The debt-to-equity ratio is calculated as total outstanding borrowings less cash, divided by total stockholders' equity at period end[49]. Financing and Investment Strategy - The company increased non-recourse, non-mark-to-market financing by $72.0 million during the year[7]. - The weighted average credit spread for non-mark-to-market financing is 2.00%[30]. - The company offers various loan categories, including bridge loans, light transitional loans, moderate transitional loans, and construction loans, each with specific funding conditions[49]. - The company focuses on properties with diverse tenancy and stable cash flow to mitigate risks associated with loan performance[50]. Company Overview - TPG RE Finance Trust, Inc. is a commercial real estate finance company that originates and acquires mortgage loans secured by institutional properties located in primary and select secondary markets[51]. - The company is externally managed by TPG RE Finance Trust Management, L.P., part of TPG Real Estate investment platform of global alternative asset management firm TPG Inc.[51]. - TPG RE Finance Trust, Inc. is listed on the New York Stock Exchange under the symbol TRTX[53]. - For more information, the company can be contacted through its investor relations team[53].

Loan Portfolio and Investment Strategy - As of December 31, 2024, the company's loan portfolio consisted of 45 loans held for investment totaling $3.4 billion in commitments and an unpaid principal balance of $3.3 billion, with a weighted average credit spread of 3.7%[30]. - The weighted average all-in yield of the loan portfolio was 8.3%, with a weighted average term to extended maturity of 2.4 years[31]. - 99.7% of the loan commitments were floating rate, and 100% of these were first mortgage loans[31]. - The company's balance sheet loan portfolio had a weighted average loan-to-value (LTV) ratio of 66.1%[31]. - The investment strategy focuses on originating and acquiring a diversified portfolio of commercial real estate-related credit assets, primarily first mortgage loans and senior participation interests[26]. - The company may modify its investment strategy to target other assets with debt characteristics, such as subordinate mortgage loans and mezzanine loans, to capitalize on market opportunities[28]. - The total loan commitments across the top 25 Metropolitan Statistical Areas amounted to $3,412.0 million, with an unpaid principal balance of $3,284.5 million[40]. - As of December 31, 2024, 52.0% of the loan investments were secured by multifamily properties, and 17.8% were secured by office buildings[101]. Financial Management and Performance - The company aims to maintain its qualification as a real estate investment trust (REIT) for U.S. federal income tax purposes to avoid federal income taxes on its REIT taxable income[21]. - As of December 31, 2024, the allowance for credit losses for loans held for investment was $64.0 million, a decrease of $5.8 million from $69.8 million in the previous year[38]. - The total indebtedness as of December 31, 2024, was $2,540.5 million, with 77.0% being non-mark-to-market[47]. - The company expects its leverage, measured as the ratio of total debt to equity, to generally be less than 3.75:1[48]. - The company must distribute at least 90% of its net taxable income annually to maintain its REIT status[59]. - The company has multiple taxable REIT subsidiaries (TRSs) that pay U.S. federal, state, and local income tax on their net taxable income[60]. - The company expects overall leverage to be less than 3.75:1, subject to compliance with financial covenants under secured credit agreements[151]. Market Risks and Economic Conditions - The company is exposed to risks associated with commercial mortgage loans and real estate investments, including economic fluctuations and changes in market conditions[80]. - Recent concerns about the real estate market and elevated interest rates have contributed to increased volatility and diminished expectations for the economy[82]. - Elevated interest rates have increased the company's interest expense and borrowers' interest payments, leading to defaults and losses[94]. - Changes in interest rates have affected the company's net interest income, which is the difference between interest income earned and interest expense incurred[93]. - The U.S. Federal Reserve increased the target federal funds rate by 525 basis points from March 2022 to December 2023, followed by a decrease of 75 basis points between December 2023 and December 2024[94]. Investment Risks and Challenges - The company faces challenges in redeploying proceeds from loan repayments into new investments that match the yield and risk profile of previous assets[88]. - The company is exposed to risks associated with transitional loans, which involve greater risk of loss compared to stabilized commercial mortgage loans[85]. - The company may experience losses if the due diligence process does not reveal all relevant facts about investment opportunities[91]. - The company may not successfully integrate new assets into its existing portfolio, which could adversely affect its financial condition[89]. - The company is exposed to risks of default due to concentration in certain property types and geographic locations, which could adversely affect net income[101]. - Illiquidity of certain loans may hinder the company's ability to sell investments during turbulent market conditions, potentially leading to significant losses[103]. - Most commercial mortgage loans are nonrecourse, meaning the company bears the risk of loss if the collateral value is insufficient to cover the loan[105]. Management and Operational Risks - The company is externally managed by TPG RE Finance Trust Management, L.P., which is an affiliate of TPG, a leading global alternative asset manager with $246 billion in assets under management as of December 31, 2024[22]. - The company is externally managed and does not have any employees, relying on the expertise of TPG and its affiliates[55]. - The company relies on its external manager, TPG, for operational success, with potential risks if key personnel become unavailable[182]. - There is no guarantee that TPG personnel will remain with the company, which could adversely affect investment objectives[185]. - The Manager operates under broad investment guidelines, allowing for riskier loans and investments without prior board approval, potentially leading to lower-than-expected returns[188]. Regulatory and Compliance Risks - The company operates to avoid registration as an investment company under the Investment Company Act, which may limit investment opportunities and operational flexibility[61]. - Less than 40% of the value of the company's total assets consists of "investment securities," allowing it to maintain its non-investment company status[63]. - The company aims to maintain its status as a non-investment company under the Investment Company Act, with less than 40% of total assets in "investment securities" to avoid registration[208]. - The company monitors its holdings to ensure compliance with the 40% test, which limits the types of businesses it can engage in through subsidiaries[210]. - If the company fails to maintain its non-investment company status, it may face significant operational restrictions and financial penalties[217]. Conflicts of Interest and Strategic Relationships - Conflicts of interest may arise due to overlapping investment objectives with TPG Funds, potentially limiting investment opportunities for the company[191]. - The company may co-invest with TPG Funds, which could lead to less favorable economic terms and potential conflicts in voting or control rights[195]. - The company may provide debt financing for acquisitions involving TPG Funds, which could influence the terms of such transactions and create conflicts of interest[196]. - TPG's allocation policy may result in fewer investment opportunities for the company compared to TPG Funds, affecting overall investment strategy[192]. - Material non-public information may restrict the company's ability to act on investment decisions, potentially leading to missed opportunities[200].

Core Insights - TPG RE Finance Trust (TRTX) is currently more attractive to value investors compared to WillScot (WSC) based on various financial metrics and outlooks [1][7]. Valuation Metrics - TRTX has a forward P/E ratio of 7.54, significantly lower than WSC's forward P/E of 19.61 [5]. - The PEG ratio for TRTX is 0.23, indicating a favorable valuation relative to its expected earnings growth, while WSC has a PEG ratio of 1.82 [5]. - TRTX's P/B ratio stands at 0.60, contrasting sharply with WSC's P/B ratio of 6.14, suggesting TRTX is undervalued compared to its book value [6]. Earnings Outlook - TRTX holds a Zacks Rank of 2 (Buy), indicating a positive earnings estimate revision trend, while WSC has a Zacks Rank of 4 (Sell), suggesting a less favorable earnings outlook [3]. - The solid earnings outlook for TRTX further supports its position as the superior value option in comparison to WSC [7]. Value Grades - TRTX has been assigned a Value grade of B, while WSC has a Value grade of C, reflecting TRTX's stronger valuation metrics [6].

Core Insights - TPG RE Finance Trust (TRTX) is currently more attractive to value investors compared to WillScot (WSC) based on various financial metrics and rankings [1][4][8] Valuation Metrics - TRTX holds a Value grade of B, while WSC has a Value grade of D, indicating TRTX is considered more undervalued [3] - TRTX has a P/B ratio of 0.60, significantly lower than WSC's P/B ratio of 5.91, suggesting TRTX is more undervalued relative to its book value [5] - The forward P/E ratio for TRTX is 7.37, while WSC's forward P/E is 21.95, further indicating TRTX's superior valuation [9] - TRTX has a PEG ratio of 0.22, compared to WSC's PEG ratio of 2.04, highlighting TRTX's better earnings growth potential relative to its price [9] Earnings Outlook - TRTX has a Zacks Rank of 1 (Strong Buy), indicating a strong earnings outlook, while WSC has a Zacks Rank of 5 (Strong Sell), suggesting a weaker earnings outlook [4][8] - The combination of a strong Zacks Rank and favorable Value grade positions TRTX as a superior investment opportunity [6]

Core Viewpoint - TPG RE Finance Trust (TRTX) is currently viewed as a better value opportunity compared to WillScot (WSC) based on various financial metrics and rankings [1]. Valuation Metrics - TRTX has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while WSC has a Zacks Rank of 5 (Strong Sell) [3]. - The forward P/E ratio for TRTX is 7.89, significantly lower than WSC's forward P/E of 23.36 [5]. - TRTX has a PEG ratio of 0.24, while WSC's PEG ratio is 2.17, suggesting TRTX is more favorably valued in terms of expected earnings growth [5]. - TRTX's P/B ratio stands at 0.65, compared to WSC's P/B of 6.29, indicating TRTX is trading at a lower market value relative to its book value [6]. - Based on these metrics, TRTX has earned a Value grade of B, while WSC has a Value grade of D [6]. Earnings Outlook - TRTX is experiencing an improving earnings outlook, which enhances its attractiveness as a value investment [7].

TPG RE Finance Trust, Inc. (NYSE:TRTX) Q3 2024 Earnings Conference Call October 30, 2024 9:00 AM ET Company Participants Doug Bouquard - Chief Executive Officer Bob Foley - Chief Financial Officer Conference Call Participants Stephen Laws - Raymond James Steve Delaney - JMP Securities Don Fandetti - Wells Fargo Operator Good morning, ladies and gentlemen, and thank you for standing by. Welcome to TPG Real Estate Finance Trust Third Quarter 2024 Earnings Conference Call. At this time, all participants are in ...