Part I. Financial Information [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements for TPG RE Finance Trust, Inc. as of March 31, 2024, and for the three months then ended, including balance sheets, income statements, cash flows, and detailed notes [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) Total assets decreased to $3.83 billion from $4.21 billion, primarily due to reductions in loans held for investment, while total liabilities also decreased to $2.71 billion from $3.09 billion, mainly from repayments on secured financing Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $203,077 | $206,376 | | Loans held for investment, net | $3,296,232 | $3,409,684 | | Real estate owned | $169,267 | $174,057 | | **Total assets** | **$3,829,326** | **$4,214,312** | | **Liabilities** | | | | Collateralized loan obligations, net | $1,875,381 | $1,915,174 | | Secured financing agreements, net | $619,832 | $820,824 | | **Total liabilities** | **$2,708,434** | **$3,089,527** | | **Stockholders' equity** | | | | **Total stockholders' equity** | **$1,120,892** | **$1,124,785** | [Consolidated Statements of Income and Comprehensive Income](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Net income significantly increased to $16.7 million for Q1 2024 from $7.4 million in Q1 2023, driven by higher net interest income and revenue from real estate owned operations, resulting in $0.17 diluted earnings per share Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net interest income | $26,803 | $21,736 | | Total other revenue | $12,124 | $3,519 | | Credit loss expense, net | $(4,356) | $(7,784) | | **Net income** | **$16,744** | **$7,375** | | **Net income attributable to common stockholders** | **$13,055** | **$3,823** | | **Earnings per common share, diluted** | **$0.17** | **$0.05** | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated $37.4 million in cash, while investing activities provided $365.5 million, largely from loan repayments, offset by $406.5 million used in financing activities, resulting in a slight net decrease in cash Consolidated Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $37,371 | $23,473 | | Net cash provided by investing activities | $365,515 | $61,596 | | Net cash used in financing activities | $(406,542) | $(177,218) | | **Net change in cash, cash equivalents, and restricted cash** | **$(3,656)** | **$(92,149)** | [Notes to the Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) These notes detail the company's accounting policies, loan portfolio, real estate owned assets, financing arrangements, and other financial matters, including CECL methodology and VIE consolidation - The company's principal business is originating and acquiring a diversified portfolio of commercial real estate credit investments, primarily first mortgage loans in the U.S.[30](index=30&type=chunk) - The allowance for credit losses is determined using the Current Expected Credit Loss (CECL) model, which involves significant estimates regarding loan performance, collateral values, and macroeconomic forecasts[40](index=40&type=chunk)[45](index=45&type=chunk) - The company consolidates Variable Interest Entities (VIEs), primarily its Collateralized Loan Obligation (CLO) issuers, where it is determined to be the primary beneficiary[33](index=33&type=chunk)[130](index=130&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2024 financial condition and operations, covering business overview, loan activities, key financial metrics, investment portfolio, financing, liquidity, capital resources, and critical accounting estimates [First Quarter 2024 Activity and Key Financial Measures](index=52&type=section&id=First%20Quarter%202024%20Activity%20and%20Key%20Financial%20Measures) In Q1 2024, the company originated $116.3 million in loans and received $227.8 million in repayments, reporting $13.1 million in net income and $23.3 million in Distributable Earnings - Originated three first mortgage loans with total commitments of **$116.3 million**[237](index=237&type=chunk) - Received five full loan repayments and other principal payments totaling **$227.8 million**[237](index=237&type=chunk) Key Financial Metrics Q1 2024 | Metric | Value | | :--- | :--- | | Net Income (Common Stockholders) | $13.1 million | | Distributable Earnings | $23.3 million | | Distributable Earnings per Diluted Share | $0.30 | | Common Stock Dividend per Share | $0.24 | | Book Value per Common Share | $11.81 | - Available near-term liquidity as of March 31, 2024, was **$370.7 million**, comprised of cash-on-hand, cash in CRE CLOs, and undrawn capacity under various financing agreements[236](index=236&type=chunk) [Investment Portfolio Overview](index=55&type=section&id=Investment%20Portfolio%20Overview) As of March 31, 2024, the loan portfolio comprised 51 floating-rate first mortgage loans totaling $3.5 billion in commitments, with a weighted average risk rating of 3.0 and an increased allowance for credit losses of $74.1 million Loan Portfolio Statistics (as of March 31, 2024) | Metric | Value | | :--- | :--- | | Number of loans | 51 | | Total loan commitments | $3.54 billion | | Unpaid principal balance | $3.37 billion | | Floating rate loans | 100.0% | | Weighted average LTV | 67.4% | | Weighted average risk rating | 3.0 | - The allowance for credit losses increased to **$74.1 million**, or **210 bps** of total loan commitments, reflecting ongoing macroeconomic concerns[266](index=266&type=chunk)[268](index=268&type=chunk) - The company holds five Real Estate Owned (REO) properties with an aggregate carrying value of **$192.4 million**, consisting of four office properties and one multifamily property[252](index=252&type=chunk)[260](index=260&type=chunk) [Investment Portfolio Financing](index=60&type=section&id=Investment%20Portfolio%20Financing) The company's $2.7 billion portfolio is primarily financed by collateralized loan obligations and secured credit agreements, with non-mark-to-market financing accounting for 77.1% of total borrowings, ensuring compliance with all financial covenants Financing Breakdown (in billions) | Financing Type | Outstanding Principal Balance (Mar 31, 2024) | | :--- | :--- | | Collateralized loan obligations | $1.9 | | Secured credit agreements | $0.6 | | Asset-specific financing | $0.1 | | Other | $0.1 | | **Total** | **$2.7** | - Non-mark-to-market financing comprised **77.1%** of total loan portfolio borrowings, an increase from **73.5%** at year-end 2023, enhancing financial stability[273](index=273&type=chunk)[274](index=274&type=chunk) - The company was in compliance with all financial covenants as of March 31, 2024. A temporary waiver for the minimum interest coverage ratio expired, and the threshold reverted to **1.40 to 1.0** for Q1 2024[305](index=305&type=chunk)[306](index=306&type=chunk) [Results of Operations](index=70&type=section&id=Results%20of%20Operations) Net interest income increased quarter-over-quarter by $5.5 million and year-over-year by $5.1 million, driven by secured financing repayments and REO operations, while credit loss expense significantly decreased in both periods - **QoQ (vs. Q4 2023):** Net interest income increased by **$5.5 million**, primarily due to repayments on secured financing arrangements. Credit loss expense decreased by **$12.9 million**[320](index=320&type=chunk)[322](index=322&type=chunk)[326](index=326&type=chunk) - **YoY (vs. Q1 2023):** Net interest income increased by **$5.1 million**. Other revenue increased by **$8.6 million**, mainly from REO operations. Credit loss expense decreased by **$3.4 million**[330](index=330&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk)[334](index=334&type=chunk) [Liquidity and Capital Resources](index=74&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2024, the company maintained $370.7 million in near-term liquidity, including $203.1 million in cash, with its debt-to-equity ratio improving to 2.20x, and a $25.0 million share repurchase program approved post-quarter-end Sources of Liquidity (in thousands) | Source | March 31, 2024 | | :--- | :--- | | Cash and cash equivalents | $203,077 | | Secured credit agreements (undrawn) | $111,872 | | CLO proceeds held at trustee | $51,000 | | Other | $4,765 | | **Total** | **$370,714** | - The Debt-to-Equity ratio decreased to **2.20x** as of March 31, 2024, compared to **2.53x** as of December 31, 2023[340](index=340&type=chunk) - On April 25, 2024, the Board of Directors approved a share repurchase program authorizing up to **$25.0 million** of the company's common stock[227](index=227&type=chunk)[343](index=343&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=84&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages interest rate risk by matching floating-rate assets and liabilities, with a 75 basis point rate change impacting net interest income by approximately $5.6 million annually, while credit and liquidity risks are mitigated through active management and non-mark-to-market financing - The company's business model aims to minimize interest rate risk by matching the duration and indices of its assets and liabilities. As of March 31, 2024, **100%** of loan investments were floating rate[380](index=380&type=chunk) Interest Rate Sensitivity Analysis (Annual Impact, in thousands) | Basis Point Change | Impact on Net Interest Income | | :--- | :--- | | +75 bps | $5,555 | | +50 bps | $3,704 | | +25 bps | $1,852 | | -25 bps | $(1,852) | | -50 bps | $(3,704) | | -75 bps | $(5,555) | - Liquidity risk is a principal concern, particularly related to margin calls on secured credit agreements. This risk is mitigated as these agreements are subject only to credit-specific marks, not market-wide spread movements[391](index=391&type=chunk) [Item 4. Controls and Procedures](index=87&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2024[402](index=402&type=chunk) - No material changes to the internal control over financial reporting occurred during the quarter ended March 31, 2024[403](index=403&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=88&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no involvement in any material legal proceedings as of March 31, 2024 - As of March 31, 2024, the company was not involved in any material legal proceedings[406](index=406&type=chunk) [Item 1A. Risk Factors](index=88&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2023, were reported - No material changes to the risk factors disclosed in the 2023 Form 10-K were reported[407](index=407&type=chunk)

Financial Data and Key Metrics Changes - GAAP net income attributable to common shareholders was $2.6 million for Q4 2023, compared to a loss of $64.6 million in Q3 2023 [9] - Net interest margin for the loan portfolio increased to $21.3 million from $19.5 million in the prior quarter, an increase of $1.8 million or $0.02 per common share [9] - CECL reserve decreased by $166.8 million or 70.5% to $69.8 million from $236.6 million as of September 30, 2023 [10] - Distributable earnings before realized credit losses were $24.4 million or $0.31 per common share, compared to $13.7 million or $0.18 per common share in the prior quarter [100] - Book value per share declined to $11.86, down $0.18 from $12.04 in Q3 [101] Business Line Data and Key Metrics Changes - Multifamily loans now represent 49.2% of the loan portfolio, while office loans have declined 68% over the past eight quarters to 19.9% [77] - The company resolved $466 million of identified credit challenge loans in Q4 and $951 million during the entire year [101] - The REO portfolio at year-end comprised five properties, with a total carrying value of $199.8 million and a blended current annualized yield of 6% [78] Market Data and Key Metrics Changes - The S&P 500 has rallied approximately 5% since the start of the year and 40% since October 2022, indicating a broad market recovery [3] - Credit spreads in the CMBS and Series CLO markets have tightened, with strong demand for multifamily and industrial property types [69] Company Strategy and Development Direction - The company aims to maintain elevated liquidity levels, resolve credit-challenged loans, and position itself to take advantage of investment opportunities in 2024 [70] - The strategy includes reducing exposure to the office market by approximately 70% since early 2022 [71] - The company is focused on the multifamily sector, which it believes has positive long-term tailwinds despite near-term pressures [72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current environment due to the substantial progress made in reshaping the loan portfolio and maintaining strong liquidity [73] - The pace of Fed rate cuts is seen as a key driver of credit performance, particularly for floating rate lenders [69] - Management acknowledged ongoing uncertainty in the real estate market but believes the company is well-positioned for 2024 and beyond [73] Other Important Information - The company has $480 million in available liquidity, a conservative leverage ratio of 2.5 to 1, and no material financing maturities until 2026 [98] - The company has utilized $71.2 million of its CLO reinvestment capacity and intends to fully utilize the remaining $176 million before mid-April [15] Q&A Session Summary Question: What is the earnings power now that the company has resolved non-performing loans? - Management indicated that the average distributable earnings before credit losses in 2023 was approximately $0.23 per quarter, providing a solid foundation for future growth [108] Question: How does the company view share buybacks given the stock's valuation? - Management acknowledged that share repurchase is a potential tool but emphasized the importance of evaluating new investments and capital deployment strategies [138] Question: What are the liquidity needs for the REO portfolio? - Management stated that properties generating less current cash may require more capital for investment and have a longer hold period to realize returns [119] Question: How does the company plan to manage its dividend policy moving forward? - Management is considering dividend policy in light of long-term earnings power and the realized losses in 2023, indicating a focus on preserving capital [126][147]

Maryland 001-38156 36-4796967 (State or Other Jurisdiction of Incorporation) (Commission File Number) (IRS Employer Identification No.) TPG RE Finance Trust, Inc. (Exact Name of Registrant as Specified in its Charter) ___________________________________________________________________ Securities registered pursuant to Section 12(b) of the Act: 99.1 Earnings Release, dated February 20, 2024 (d) Exhibits. TPG RE Finance Trust, Inc. February 20, 2024 • Recognized GAAP net income attributable to common stockhol ...

Fourth Quarter and Full Year : Supplemental Information February 20, 2024 Forward-Looking Statements and Other Disclosur This progentation contains from and looking stations within the meaning of Serient 72L of the Securities de of 1932 as annonded and Serieng 2F of the Seruition Ferhange (4r with respect to, anong other things, our operations and financial performance. You can itentfy these forward looking statements by the use of words such as "outlook," "beli roredict, ""intend," "will," "plon," "estimat ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________________________________________ FORM 10-K ____________________________________________________________________ (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Co ...

Financial Data and Key Metrics Changes - The company reported a GAAP net loss to common shareholders of $64.6 million for Q3 2023, compared to a loss of $72.7 million in Q2 2023, primarily due to the sale of two non-performing loans which generated losses of $109.3 million [27] - Distributable earnings declined to a loss of $103.7 million from a loss of $14.4 million in the previous quarter, largely due to realized losses from non-performing loans [16][27] - The CECL reserve decreased by $41.7 million, or 15%, to $236.6 million from $278.3 million in the prior quarter, reflecting progress in resolving credit-challenged loans [28][18] Business Line Data and Key Metrics Changes - The company received repayments totaling $297 million across multifamily, hotel, and office exposure, while funding a $144 million loan at a 63% LTV [14] - Non-accrual loans decreased by 42% to $318.1 million from $546.7 million at the end of Q2 2023, indicating improved asset quality [29][48] - The company maintained a high level of liquidity, with cash and near-term liquidity increasing by $27.7 million to $570.6 million [17] Market Data and Key Metrics Changes - The broader market experienced a negative shift, with the S&P 500 selling off nearly 10% and the 10-year treasury yield reaching over 5%, the highest since 2007 [12] - The company noted that elevated interest rates and widening credit spreads are expected to benefit its long-term investment strategy [14] Company Strategy and Development Direction - The company is focused on maintaining elevated liquidity levels and is patient regarding capital deployment, addressing credit challenges proactively [13][26] - A significant reduction in office exposure has been executed, with a decrease of nearly $1.2 billion, or approximately 53% in principal balance, reflecting a strategic shift in response to market conditions [46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the labor market and consumer spending, despite the Fed's restrictive policies [12] - The company is optimistic about future real estate lending opportunities, particularly in a challenging investment climate [14][26] Other Important Information - The company has a consistent record of resolving credit-challenged assets in line with its reserves, indicating effective asset management [14] - The company’s CECL reserve rate declined to 560 basis points from 572 basis points, reflecting improved asset management [28] Q&A Session Summary Question: Dividend sustainability amid realized losses - Management indicated that the decision regarding dividends is a Board-level decision, influenced by the company's earnings power and available investment opportunities [37] Question: Dynamics of five-rated loans and CECL reserves - Management clarified that the CECL reserve for five-rated loans remained stable, but the total principal balance decreased, indicating a need for careful assessment of loss assumptions [38] Question: Credit migration trends and future loan maturities - Management noted that credit migration has been stable, with proactive asset management strategies in place for upcoming loan maturities [44][63] Question: Capital allocation and buyback strategy - Management discussed the importance of liquidity preservation and the potential for future capital allocation decisions, including buybacks, as the company resolves credit-challenged loans [60][68]

[Cautionary Note Regarding Forward-Looking Statements](index=2&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section outlines the nature and risks of forward-looking statements, cautioning that actual results may differ [Forward-Looking Statements Disclosure](index=2&type=section&id=Forward-Looking%20Statements%20Disclosure) This section highlights that the Form 10-Q contains forward-looking statements, which are not historical facts and are subject to significant risks and uncertainties... - Forward-looking statements are identified by words like 'outlook,' 'believe,' 'expect,' 'potential,' and are not guarantees of future performance, subject to unpredictable risks and uncertainties[7](index=7&type=chunk) - **Key risks** include general political, economic, regulatory, and competitive conditions, interest rate volatility, adverse changes in real estate and capital markets, financing difficulties, and global economic trends like inflation and recession[8](index=8&type=chunk) - The Company cautions that the listed risks may not be exhaustive and undertakes no obligation to update forward-looking statements, except as required by law[11](index=11&type=chunk) [Part I. Financial Information](index=5&type=section&id=Part%20I.%20Financial%20Information) This part presents the unaudited consolidated financial statements and management's discussion for the period [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements of TPG RE Finance Trust, Inc. for the period ended September 30, 2023... [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20September%2030,%202023%20(unaudited)%20and%20December%2031,%202022) This section presents the Company's financial position, including assets, liabilities, and equity at specific dates Consolidated Balance Sheet Metrics | Metric (in thousands) | September 30, 2023 | December 31, 2022 | | :-------------------- | :----------------- | :------------------ | | Total Assets | $4,457,323 | $5,545,138 | | Total Liabilities | $3,319,868 | $4,223,142 | | Total Stockholders' Equity | $1,137,455 | $1,321,996 | - **Total assets** decreased by approximately **$1.09 billion** from December 31, 2022, to September 30, 2023, primarily driven by a reduction in loans held for investment[18](index=18&type=chunk) - **Total stockholders' equity** decreased by approximately **$184.5 million**, mainly due to an accumulated deficit of **$584.3 million** as of September 30, 2023, compared to **$395.0 million** at December 31, 2022[18](index=18&type=chunk) [Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20(Loss)%20and%20Comprehensive%20Income%20(Loss)%20(unaudited)%20for%20the%20Three%20and%20Nine%20Months%20ended%20September%2030,%202023%20and%20September%2030,%202022) This section details the Company's financial performance, including revenues, expenses, and net income (loss) Consolidated Income (Loss) Metrics | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net interest income | $19,549 | $30,425 | $67,431 | $106,954 | | Total other revenue | $7,467 | $1,362 | $17,474 | $2,009 | | Total other expenses | $12,419 | $9,603 | $35,064 | $34,346 | | Credit loss expense, net | $(75,805) | $(136,666) | $(172,658) | $(183,840) | | Net (loss) income | $(61,213) | $(114,607) | $(123,011) | $(96,260) | | Net (loss) income attributable to common stockholders | $(64,636) | $(117,914) | $(133,537) | $(106,286) | | (Loss) earnings per common share, basic | $(0.83) | $(1.52) | $(1.72) | $(1.38) | - **Net interest income** decreased by **$10.876 million** (**35.7%**) for the three months ended September 30, 2023, compared to the same period in 2022, and by **$39.523 million** (**36.9%**) for the nine months ended September 30, 2023, primarily due to increased interest expense[22](index=22&type=chunk) - **Credit loss expense, net**, significantly decreased by **$60.861 million** (**44.5%**) for the three months ended September 30, 2023, compared to the same period in 2022, contributing to a reduced net loss[22](index=22&type=chunk) [Consolidated Statements of Changes in Equity](index=7&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity%20(unaudited)%20for%20the%20Three%20and%20Nine%20Months%20ended%20September%2030,%202023%20and%20September%2030,%202022) This section outlines changes in the Company's equity, reflecting net income, dividends, and other adjustments Consolidated Equity Changes | Metric (in thousands) | January 1, 2023 | September 30, 2023 | | :-------------------- | :-------------- | :----------------- | | Total stockholders' equity | $1,321,996 | $1,137,455 | | Metric (in thousands) | January 1, 2022 | September 30, 2022 | | :-------------------- | :-------------- | :----------------- | | Total stockholders' equity | $1,464,706 | $1,306,394 | - **Total stockholders' equity** decreased by **$184.5 million** from January 1, 2023, to September 30, 2023, primarily due to net losses and common stock dividends, partially offset by amortization of stock compensation[24](index=24&type=chunk) - Accumulated deficit increased from **$(395.0) million** at January 1, 2023, to **$(584.3) million** at September 30, 2023, reflecting the net losses incurred during the period[24](index=24&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)%20for%20the%20Nine%20Months%20ended%20September%2030,%202023%20and%20September%2030,%202022) This section summarizes the Company's cash inflows and outflows from operating, investing, and financing activities Consolidated Cash Flow Summary | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $56,903 | $82,540 | | Net cash provided by (used in) investing activities | $982,534 | $(616,841) | | Net cash (used in) provided by financing activities | $(991,407) | $509,840 | | Net change in cash, cash equivalents, and restricted cash | $48,030 | $(24,461) | - **Cash flows from investing activities** significantly shifted from a net outflow of **$616.8 million** in 2022 to a net inflow of **$982.5 million** in 2023, driven by higher principal repayments and loan sales[27](index=27&type=chunk) - **Cash flows from financing activities** changed from a net inflow of **$509.8 million** in 2022 to a net outflow of **$991.4 million** in 2023, primarily due to increased payments on collateralized loan obligations and secured financing agreements[27](index=27&type=chunk) [Notes to the Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed explanations and disclosures supporting the consolidated financial statements [(1) Business and Organization](index=10&type=section&id=(1)%20Business%20and%20Organization) This note describes the Company's business, its structure as a REIT, and primary investment activities - TPG RE Finance Trust, Inc. operates as a REIT for U.S. federal income tax purposes, primarily originating and acquiring diversified commercial real estate credit investments, mainly first mortgage loans and senior participation interests[29](index=29&type=chunk)[30](index=30&type=chunk) [(2) Summary of Significant Accounting Policies](index=10&type=section&id=(2)%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the financial statements - The financial statements are prepared in accordance with GAAP, consolidating the Company's accounts, variable interest entities (VIEs) where it is the primary beneficiary, and wholly-owned subsidiaries[31](index=31&type=chunk)[33](index=33&type=chunk) - The Company uses the **Current Expected Credit Loss (CECL)** model for its **allowance for credit losses** on **loans held for investment**, recognizing periodic changes through net income[40](index=40&type=chunk) - Loans are risk-rated on a **5-point scale** (**1=least risk, 5=greatest risk**), with a general initial rating of '**3**' for new originations[43](index=43&type=chunk)[44](index=44&type=chunk) - The Company has successfully transitioned its loans and liabilities from LIBOR to Term SOFR, applying optional expedients under ASU 2020-04, which did not require contract remeasurement[89](index=89&type=chunk) [(3) Loans Held for Investment and the Allowance for Credit Losses](index=23&type=section&id=(3)%20Loans%20Held%20for%20Investment%20and%20the%20Allowance%20for%20Credit%20Losses) This note details the Company's loan portfolio, including originations, repayments, and credit loss provisions - During the nine months ended September 30, 2023, the Company originated three mortgage loans totaling **$167.4 million**, received **$803.9 million** in loan repayments, and sold three loans for **$221.8 million**, converting two loans to REO with an **unpaid principal balance** of **$132.1 million**[92](index=92&type=chunk) Loan Portfolio Statistics | Metric (in thousands) | September 30, 2023 | December 31, 2022 | | :-------------------- | :----------------- | :------------------ | | Number of loans | 59 | 70 | | Total loan commitment | $4,223,672 | $5,429,146 | | Unpaid principal balance | $3,970,164 | $5,004,798 | | Unfunded loan commitments | $247,568 | $426,061 | | Amortized cost | $3,952,102 | $4,978,674 | | Weighted average credit spread | 3.7 % | 3.4 % | | Weighted average all-in yield | 9.3 % | 8.1 % | | Weighted average term to extended maturity (in years) | 2.6 | 2.8 | Loan Risk Rating Distribution | Risk Rating | September 30, 2023 (Amortized Cost in thousands) | December 31, 2022 (Amortized Cost in thousands) | | :---------- | :--------------------------------------------- | :--------------------------------------------- | | 2 | $178,552 | $511,878 | | 3 | $3,135,811 | $3,231,324 | | 4 | $257,712 | $990,337 | | 5 | $380,027 | $245,135 | | Total | $3,952,102 | $4,978,674 | | Weighted average risk rating | 3.2 | 3.2 | - The **allowance for credit losses** increased by **$22.0 million** during the nine months ended September 30, 2023, reaching **$236.6 million**, primarily due to deterioration in office sector fundamentals and macroeconomic assumptions, partially offset by loan sales and REO conversions[111](index=111&type=chunk) - As of September 30, 2023, four first mortgage loans with an **amortized cost** of **$318.1 million** were on non-accrual status, compared to two loans with **$190.4 million** at December 31, 2022[115](index=115&type=chunk) [(4) Real Estate Owned](index=31&type=section&id=(4)%20Real%20Estate%20Owned) This note provides information on properties acquired through foreclosure and their operational results - As of September 30, 2023, REO assets included an office property in Houston, TX (acquired April 2023) and a multifamily property in Los Angeles, CA (acquired August 2023), with a total carrying value of **$111.96 million**[120](index=120&type=chunk)[121](index=121&type=chunk)[123](index=123&type=chunk)[126](index=126&type=chunk) - The Company obtained a **$31.2 million** first mortgage loan secured by the Houston office property in June 2023[125](index=125&type=chunk) Real Estate Owned Operations | REO Operations (in thousands) | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2023 | | :---------------------------- | :-------------------------- | :-------------------------- | | Revenue from real estate owned operations | $2,028 | $3,556 | | Expenses from real estate owned operations | $3,098 | $4,946 | | Net loss from REO | $(1,070) | $(1,390) | [(5) Variable Interest Entities and Collateralized Loan Obligations](index=35&type=section&id=(5)%20Variable%20Interest%20Entities%20and%20Collateralized%20Loan%20Obligations) This note explains the Company's involvement with VIEs and its collateralized loan obligation structures - The Company consolidates its CRE CLO Issuers as VIEs, recognizing them as primary beneficiaries due to control over significant activities and the obligation to absorb losses/receive benefits[143](index=143&type=chunk) VIE and CLO Metrics | Metric (in thousands) | September 30, 2023 | December 31, 2022 | | :-------------------- | :----------------- | :------------------ | | Total assets (VIEs) | $2,647,925 | $3,267,374 | | Total liabilities (VIEs) | $1,983,701 | $2,467,254 | | Collateralized loan obligations, net | $1,973,911 | $2,452,212 | - As of September 30, 2023, the Company had three consolidated CRE CLOs (TRTX 2019-FL3, TRTX 2021-FL4, TRTX 2022-FL5) with total collateral loan investments of **$2.55 billion** and financing provided of **$1.98 billion**, all indexed to Term SOFR[150](index=150&type=chunk) - The reinvestment period for TRTX 2021-FL4 ended on March 11, 2023, and the Company completed committed contributions by mid-May 2023[139](index=139&type=chunk) [(6) Investment Portfolio Financing](index=39&type=section&id=(6)%20Investment%20Portfolio%20Financing) This note details the Company's various financing arrangements for its investment portfolio Investment Portfolio Financing Overview | Financing Type (in thousands) | September 30, 2023 | December 31, 2022 | | :---------------------------- | :----------------- | :------------------ | | Collateralized loan obligations | $1,979,543 | $2,461,170 | | Secured credit agreements | $1,003,062 | $1,108,386 | | Asset-specific financing arrangements | $214,330 | $565,376 | | Secured revolving credit facility | $27,923 | $44,279 | | Mortgage loan payable | $31,200 | — | | Total | $3,256,058 | $4,179,211 | - The Company's **total investment portfolio financing** decreased by **$923.153 million** from December 31, 2022, to September 30, 2023[161](index=161&type=chunk) - **Secured credit agreements** are generally **25%** recourse to Holdco and include mark-to-market provisions based on credit marks, with one agreement also subject to spread marks[162](index=162&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) - The Company obtained a waiver for the **Interest Coverage ratio covenant**, reducing the minimum ratio to **1.30 to 1.0** for Q3 and Q4 2023, from **1.40 to 1.0**[186](index=186&type=chunk) [(7) Schedule of Maturities](index=43&type=section&id=(7)%20Schedule%20of%20Maturities) This note presents the maturity schedule for the Company's total indebtedness Indebtedness Maturity Schedule | Year | Total Indebtedness (in thousands) | | :--- | :-------------------------------- | | 2023 | $234,761 | | 2024 | $955,053 | | 2025 | $1,018,184 | | 2026 | $331,475 | | 2027 | $76,426 | | Thereafter | $640,159 | | Total | $3,256,058 | - The largest portion of **total indebtedness** matures in **2025** (**$1.018 billion**), followed by **2024** (**$955.053 million**)[187](index=187&type=chunk) - The Company plans to meet debt obligations through maturity extensions, new capital raises (equity/debt), structured finance vehicles, loan sales, and applying loan repayments[370](index=370&type=chunk) [(8) Fair Value Measurements](index=44&type=section&id=(8)%20Fair%20Value%20Measurements) This note describes the fair value hierarchy and measurements for the Company's financial instruments - The Company's financial assets and liabilities, including **loans held for investment**, CLOs, and secured financing, are primarily classified as **Level III fair value measurements** due to significant unobservable inputs[190](index=190&type=chunk)[193](index=193&type=chunk) Fair Value of Financial Instruments | Financial Instrument (in thousands) | September 30, 2023 Fair Value | | :-------------------------------- | :---------------------------- | | Loans held for investment | $3,933,425 | | Collateralized loan obligations | $1,937,693 | | Secured credit agreements | $982,835 | | Asset-specific financing arrangements | $213,691 | | Secured revolving credit facility | $27,369 | | Mortgage loan payable | $31,200 | - The estimated **fair value** of the **loans held for investment** portfolio was **$3.9 billion** as of September 30, 2023, approximating its carrying value[191](index=191&type=chunk) [(9) Income Taxes](index=45&type=section&id=(9)%20Income%20Taxes) This note explains the Company's REIT tax status and its income tax provisions - The Company qualifies and elects to be taxed as a REIT, generally avoiding U.S. federal income taxes on distributed REIT taxable income[194](index=194&type=chunk) - Excess Inclusion Income (EII) generated by CRE CLOs is allocated to a Taxable REIT Subsidiary (TRS) and not to common stockholders, with the TRS bearing a tax liability of approximately **21%**[197](index=197&type=chunk) Income Tax Metrics | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Income tax expense, net | $5 | $125 | $194 | $328 | | Effective tax rate | 0.4% | 0.6% | 0.4% | 0.6% | [(10) Related Party Transactions](index=46&type=section&id=(10)%20Related%20Party%20Transactions) This note discloses transactions and arrangements with related parties, including management fees - The Company is externally managed by TPG RE Finance Trust Management, L.P. (the 'Manager'), paying a base management fee and potential incentive compensation[202](index=202&type=chunk) Management Fees Incurred | Management Fees (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :----------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Management fees incurred | $5,545 | $5,906 | $17,513 | $17,471 | | Incentive management fee incurred | — | — | — | $5,183 | - No **incentive management fee incurred** was earned during the three and nine months ended September 30, 2023, compared to **$5.2 million** earned in the nine months ended September 30, 2022[205](index=205&type=chunk) [(11) Earnings per Share](index=48&type=section&id=(11)%20Earnings%20per%20Share) This note details the calculation of basic and diluted earnings per share for common stockholders - The Company calculates basic and diluted earnings per share using the two-class method, including unvested stock-based compensation awards as participating securities[210](index=210&type=chunk) Earnings Per Share Metrics | Metric (in thousands, except per share) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net (loss) income attributable to common stockholders | $(64,636) | $(117,914) | $(133,537) | $(106,286) | | (Loss) earnings per common share, basic | $(0.83) | $(1.52) | $(1.72) | $(1.38) | | (Loss) earnings per common share, diluted | $(0.83) | $(1.52) | $(1.72) | $(1.38) | - Warrants are excluded from diluted EPS calculation in periods of net losses as their effect would be anti-dilutive[211](index=211&type=chunk) [(12) Stockholders' Equity](index=49&type=section&id=(12)%20Stockholders'%20Equity) This note provides information on the Company's capital structure, including preferred stock and warrants - The Company issued **8,050,000** shares of Series C Cumulative Redeemable Preferred Stock in June 2021, with a liquidation preference of **$25.00** per share and a **6.25%** annual dividend rate[215](index=215&type=chunk)[216](index=216&type=chunk) - The Series C Preferred Stock is redeemable by the Company at its option on or after June 14, 2026, at **$25.00** per share plus accrued dividends[217](index=217&type=chunk) - Warrants to purchase common stock, initially issued in May 2020, had their exercise price reduced twice during the nine months ended September 30, 2023, to **$7.02** per share due to non-qualifying dividends[222](index=222&type=chunk) - Common stock dividends of **$0.24** per share were declared for Q3 2023 and Q3 2022, totaling **$56.9 million** and **$56.1 million** for the nine months ended September 30, 2023 and 2022, respectively[224](index=224&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) [(13) Stock-based Compensation](index=51&type=section&id=(13)%20Stock-based%20Compensation) This note describes the Company's stock-based compensation plans and related expenses - **Stock-based compensation** is granted to employees of the Manager's affiliates and Board members under the 2017 Equity Incentive Plan, with **1,149,064** common stock awards outstanding as of September 30, 2023[229](index=229&type=chunk)[230](index=230&type=chunk)[231](index=231&type=chunk) - Total unrecognized compensation costs were **$9.2 million** as of September 30, 2023, expected to be recognized over a weighted average period of **1.2 years**[233](index=233&type=chunk) Stock Compensation Expense | Stock Compensation Expense (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :---------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Stock compensation expense | $1,153 | $932 | $4,770 | $3,526 | [(14) Commitments and Contingencies](index=52&type=section&id=(14)%20Commitments%20and%20Contingencies) This note outlines the Company's unfunded loan commitments and potential legal contingencies - The Company had **$247.6 million** in **unrecognized unfunded loan commitments** as of September 30, 2023, down from **$426.1 million** at December 31, 2022[235](index=235&type=chunk) - An **allowance for credit losses on these unfunded commitments** was **$23.4 million** as of September 30, 2023, reflecting potential future losses[236](index=236&type=chunk) - The Company was not involved in any material legal proceedings as of September 30, 2023, and had not recorded any accrued liability for loss contingencies[238](index=238&type=chunk) [(15) Concentration of Credit Risk](index=53&type=section&id=(15)%20Concentration%20of%20Credit%20Risk) This note details the Company's credit risk concentrations by property type and geographic region Loan Portfolio by Property Type | Property Type | Sep 30, 2023 Loan UPB (in thousands) | Dec 31, 2022 Loan UPB (in thousands) | | :------------ | :----------------------------------- | :----------------------------------- | | Multifamily | $1,891,039 | $2,380,672 | | Office | $950,790 | $1,397,392 | | Hotel | $446,705 | $473,790 | | Life Science | $350,292 | $311,508 | | Mixed-Use | $131,084 | $268,279 | | Industrial | $98,957 | $87,057 | | Self Storage | $67,000 | $57,100 | | Other | $34,297 | $29,000 | | Total | $3,970,164 | $5,004,798 | Loan Portfolio by Geographic Region | Geographic Region | Sep 30, 2023 Loan UPB (in thousands) | Dec 31, 2022 Loan UPB (in thousands) | | :---------------- | :----------------------------------- | :----------------------------------- | | West | $1,414,792 | $1,450,623 | | East | $1,220,662 | $1,772,155 | | South | $981,311 | $1,358,087 | | Midwest | $220,441 | $302,820 | | Various | $132,958 | $121,113 | | Total | $3,970,164 | $5,004,798 | - Multifamily and Office properties represent the largest concentrations by property type, while the West and East regions hold the largest geographic concentrations[239](index=239&type=chunk)[241](index=241&type=chunk) [(16) Subsequent Events](index=55&type=section&id=(16)%20Subsequent%20Events) This note discloses significant events that occurred after the reporting period - Subsequent to September 30, 2023, the Company sold a defaulted first mortgage loan on an office property in Arlington, VA, with an **unpaid principal balance** of **$86.7 million** and a '**5**' risk rating[243](index=243&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=56&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion and analysis of the Company's financial condition, results of operations, and cash flows for the three and nine months ended September 30, 2023... [Overview](index=56&type=section&id=Overview) This section provides a high-level summary of the Company's business, strategy, and macroeconomic context - TPG RE Finance Trust, Inc. is a commercial real estate finance company externally managed by TPG, focusing on originating and acquiring floating rate first mortgage loans secured by transitional commercial real estate in North America[246](index=246&type=chunk) - The Company operates as a REIT and aims to provide attractive risk-adjusted returns through cash distributions and capital appreciation[246](index=246&type=chunk)[247](index=247&type=chunk) - Macroeconomic concerns, including rising interest rates, inflation, banking system stress, and geopolitical tensions, led the Company to curtail loan origination and increase liquidity in the first three quarters of 2023[248](index=248&type=chunk) [Third Quarter 2023 Activity](index=57&type=section&id=Third%20Quarter%202023%20Activity) This section summarizes key financial and operational activities during the third quarter of 2023 - **Net loss attributable to common stockholders** was **$(64.6) million**, an **$8.1 million** increase from Q2 2023, primarily due to a decrease in **credit loss expense**[252](index=252&type=chunk) - The Company originated one first mortgage loan with a **$43.6 million** commitment, received **$297.0 million** in total loan repayments, and sold two mortgage loans for **$174.0 million**, resulting in a **$109.3 million** loss on sale[252](index=252&type=chunk) - Available liquidity as of September 30, 2023, totaled **$570.6 million**, comprising cash-on-hand, cash in CRE CLOs, and undrawn capacity under financing agreements[252](index=252&type=chunk) [Key Financial Measures and Indicators](index=58&type=section&id=Key%20Financial%20Measures%20and%20Indicators) This section presents and discusses the Company's primary financial performance metrics and indicators Key Financial Metrics Comparison | Metric (in thousands, except per share) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Jun 30, 2023 | | :-------------------------------------- | :-------------------------- | :-------------------------- | | Net (loss) attributable to common stockholders | $(64,636) | $(72,724) | | (Loss) earnings per common share, diluted | $(0.83) | $(0.94) | | Dividends declared per common share | $0.24 | $0.24 | - **Distributable Earnings** (loss) per diluted common share was **$(1.33)** for Q3 2023, a decrease of **$1.15** from Q2 2023, primarily due to increased realized losses on loan sales and REO conversion[256](index=256&type=chunk) - **Book value per common share** decreased to **$12.04** as of September 30, 2023, from **$14.48** at December 31, 2022, mainly due to a **$172.7 million** increase in **credit loss expense**[257](index=257&type=chunk)[266](index=266&type=chunk) [Investment Portfolio Overview](index=60&type=section&id=Investment%20Portfolio%20Overview) This section provides a summary of the Company's investment portfolio composition and characteristics - As of September 30, 2023, the investment portfolio consisted of **59** first mortgage loans (or interests therein) with **$4.2 billion** in commitments and an **unpaid principal balance** of **$4.0 billion**, all floating rate[267](index=267&type=chunk) - The Company held **$247.6 million** in **unfunded loan commitments** and owned one multifamily and one office property (REO) with an aggregate carrying value of **$117.8 million**[267](index=267&type=chunk)[268](index=268&type=chunk) [Loan Portfolio](index=60&type=section&id=Loan%20Portfolio) This section details the Company's loan portfolio activities, including fundings, repayments, and sales - During Q3 2023, the Company funded **$21.4 million** in future funding obligations, received **$287.2 million** in loan repayments, and **$9.8 million** in cost-recovery proceeds from non-accrual loans[269](index=269&type=chunk) - Two mortgage loans were sold for **$174.0 million**, resulting in a **$109.3 million** loss on sale, and one multifamily property was acquired through foreclosure[269](index=269&type=chunk) Loan Portfolio Statistics | Loan Portfolio Statistics | September 30, 2023 | | :------------------------ | :----------------- | | Number of loans | 59 | | Floating rate loans | 100.0 % | | Total loan commitments | $4,223,672 | | Unpaid principal balance | $3,970,164 | | Weighted average credit spread | 3.7 % | | Weighted average all-in yield | 9.3 % | | Weighted average LTV | 67.2 % | - The weighted average interest rate floor for the **loan portfolio** was **1.06%** as of September 30, 2023[272](index=272&type=chunk) [Real Estate Owned](index=62&type=section&id=Real%20Estate%20Owned) This section describes the Company's real estate owned (REO) assets acquired through foreclosure - In August 2023, the Company acquired a multifamily property in Los Angeles, CA, via foreclosure, with a carrying value of **$71.1 million** at foreclosure[274](index=274&type=chunk) - In April 2023, an office property in Houston, TX, was acquired via deed-in-lieu of foreclosure, with a carrying value of **$46.0 million** at acquisition. A **$31.2 million** mortgage loan was subsequently obtained on this property[275](index=275&type=chunk) [Asset Management](index=62&type=section&id=Asset%20Management) This section outlines the Company's approach to managing its portfolio assets - The Company actively manages its portfolio assets through a dedicated asset management team provided by Situs Asset Management, LLC, under the Manager's oversight, focusing on financial, legal, and quantitative analyses[276](index=276&type=chunk) [Loan Portfolio Review](index=62&type=section&id=Loan%20Portfolio%20Review) This section reviews the Company's loan portfolio by risk rating and changes in credit quality Loan Risk Rating Distribution | Risk Rating | Number of Loans (Sep 30, 2023) | Amortized Cost (Sep 30, 2023, in thousands) | Number of Loans (Dec 31, 2022) | Amortized Cost (Dec 31, 2022, in thousands) | | :---------- | :----------------------------- | :------------------------------------------ | :----------------------------- | :------------------------------------------ | | 2 | 4 | $178,552 | 8 | $511,878 | | 3 | 46 | $3,135,811 | 46 | $3,231,324 | | 4 | 4 | $257,712 | 12 | $990,337 | | 5 | 5 | $380,027 | 4 | $245,135 | | Total | 59 | $3,952,102 | 70 | $4,978,674 | | Weighted average risk rating | 3.2 | | 3.2 | | - The **weighted average risk rating** remained at **3.2** as of September 30, 2023, unchanged from December 31, 2022[281](index=281&type=chunk) - During Q3 2023, two multifamily loans and one office loan were downgraded from risk category '**4**' to '**5**' due to deteriorating operating results and tenant departures[282](index=282&type=chunk) [Loan Modification Activity](index=63&type=section&id=Loan%20Modification%20Activity) This section discusses the Company's loan modification practices and their impact - Loan modifications are common and may include extensions, waivers of performance tests, or deferral of principal payments, often in exchange for partial principal repayment, PIK interest, or increased loan coupon[285](index=285&type=chunk) - None of the loan modifications during the nine months ended September 30, 2023, resulted in significant modifications[285](index=285&type=chunk) [Allowance for Credit Losses](index=64&type=section&id=Allowance%20for%20Credit%20Losses) This section details the Company's allowance for credit losses and factors influencing its changes - The **allowance for credit losses** decreased by **$41.7 million** in Q3 2023 but increased by **$22.0 million** for the nine months ended September 30, 2023, reaching **$236.6 million**[287](index=287&type=chunk) - The increase reflects concerns over geopolitical tensions, market volatility, recession potential, limited capital market liquidity, banking sector distress, and declining office market fundamentals[287](index=287&type=chunk) Allowance for Credit Losses Breakdown | Allowance for Credit Losses (in thousands) | Loans held for investment | Unfunded loan commitments | Total | | :--------------------------------------- | :------------------------ | :------------------------ | :---- | | General reserve | $59,360 | $1,976 | $61,336 | | Specific reserve | $153,898 | $21,395 | $175,293 | | Total | $213,258 | $23,371 | $236,629 | | Total basis points | | | 560 bps | [Investment Portfolio Financing](index=65&type=section&id=Investment%20Portfolio%20Financing) This section describes the various financing sources used for the Company's investment portfolio Investment Portfolio Financing Overview | Financing Type (in thousands) | September 30, 2023 | December 31, 2022 | | :---------------------------- | :----------------- | :------------------ | | Collateralized loan obligations | $1,979,543 | $2,461,170 | | Secured credit agreements | $1,003,062 | $1,108,386 | | Secured revolving credit facility | $27,923 | $44,279 | | Asset-specific financing arrangements | $214,330 | $565,376 | | Mortgage loan payable | $31,200 | — | | Total | $3,256,058 | $4,179,211 | - **Non-mark-to-market financing sources** accounted for **68.9%** of total loan portfolio borrowings as of September 30, 2023[291](index=291&type=chunk) [Secured Credit Agreements](index=66&type=section&id=Secured%20Credit%20Agreements) This section provides details on the Company's secured credit agreements and their terms - As of September 30, 2023, aggregate borrowings under **secured credit agreements** totaled **$1.0 billion**, with a **weighted average interest rate** of Term SOFR plus **2.05%** and an advance rate of **76.8%**[293](index=293&type=chunk)[294](index=294&type=chunk) - These agreements are generally **25%** recourse to Holdco and include margin maintenance provisions based on credit marks, with one agreement also subject to spread marks[293](index=293&type=chunk)[303](index=303&type=chunk) - The weighted average haircut for **secured credit agreements** was **23.2%** as of September 30, 2023, compared to **21.9%** at December 31, 2022[305](index=305&type=chunk) [Secured Revolving Credit Facility](index=68&type=section&id=Secured%20Revolving%20Credit%20Facility) This section outlines the Company's secured revolving credit facility and its outstanding balance - The Company has a **$290.0 million** **secured revolving credit facility** with a **3-year** term, bearing interest at Term SOFR plus **2.00%**, and is **100%** recourse to Holdco[309](index=309&type=chunk) - As of September 30, 2023, **$27.9 million** was outstanding, secured by one loan investment with a collateral principal balance of **$37.2 million**[309](index=309&type=chunk) [Asset-Specific Financing Arrangements](index=68&type=section&id=Asset-Specific%20Financing%20Arrangements) This section describes the Company's asset-specific financing arrangements and their characteristics - As of September 30, 2023, the Company had four **asset-specific financing arrangements** totaling **$214.3 million** outstanding, providing non-mark-to-market, matched-term financing[310](index=310&type=chunk)[311](index=311&type=chunk) - These arrangements include facilities with Axos Bank (**15%** recourse), BMO Harris Bank (**25%** recourse), Institutional Lender 2 (non-recourse), and Customers Bank (non-recourse)[310](index=310&type=chunk) [Collateralized Loan Obligations](index=69&type=section&id=Collateralized%20Loan%20Obligations) This section details the Company's collateralized loan obligations (CLOs) and their financing terms - The Company had three CRE CLOs (TRTX 2022-FL5, TRTX 2021-FL4, TRTX 2019-FL3) totaling **$2.0 billion**, financing **64.3%** of its loan portfolio, and holding **$237.5 million** cash for reinvestment as of September 30, 2023[314](index=314&type=chunk) - These CLOs provide low-cost, non-mark-to-market, non-recourse financing with a **weighted average interest rate** of Term SOFR plus **1.94%** and an advance rate of **79.4%**[314](index=314&type=chunk) - All CLO borrowings and underlying mortgage assets are now indexed to Term SOFR, following conversions in May and September 2023 for TRTX 2021-FL4 and TRTX 2022-FL5, respectively[317](index=317&type=chunk) [Mortgage Loan Payable](index=70&type=section&id=Mortgage%20Loan%20Payable) This section provides information on the Company's mortgage loan payable secured by an REO asset - The Company has a **$31.2 million** non-recourse **mortgage loan**, secured by an REO asset, with an interest-only five-year term and a **7.7%** interest rate[320](index=320&type=chunk) [Non-Consolidated Senior Interests and Retained Mezzanine Loans](index=70&type=section&id=Non-Consolidated%20Senior%20Interests%20and%20Retained%20Mezzanine%20Loans) This section clarifies the status of non-consolidated senior interests and retained mezzanine loans - As of September 30, 2023, there were no non-consolidated senior interests or retained mezzanine loans outstanding[322](index=322&type=chunk) [Financial Covenants for Outstanding Borrowings](index=70&type=section&id=Financial%20Covenants%20for%20Outstanding%20Borrowings) This section confirms the Company's compliance with financial covenants for its borrowings - The Company was in compliance with all financial covenants for its **secured credit agreements** and revolving credit facility as of September 30, 2023[324](index=324&type=chunk) - A waiver was obtained for the **Interest Coverage ratio covenant**, reducing the minimum ratio to **1.30 to 1.0** for Q3 and Q4 2023, reverting to **1.40 to 1.0** thereafter[324](index=324&type=chunk) [Floating Rate Portfolio](index=71&type=section&id=Floating%20Rate%20Portfolio) This section discusses the Company's floating rate investment portfolio and interest rate exposure management - As of September 30, 2023, **100.0%** of the Company's loan investments earned a floating rate of interest and were financed with floating rate liabilities, resulting in a net floating rate exposure of **$745.3 million**[326](index=326&type=chunk)[327](index=327&type=chunk) - The business model aims to minimize interest rate exposure by match-indexing assets and liabilities, with rising rates generally increasing **net interest income** due to interest rate floors on loans[326](index=326&type=chunk) [Interest-Earning Assets and Interest-Bearing Liabilities](index=72&type=section&id=Interest-Earning%20Assets%20and%20Interest-Bearing%20Liabilities) This section analyzes the Company's interest-earning assets and interest-bearing liabilities Interest-Earning Assets and Liabilities Analysis | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Jun 30, 2023 | | :-------------------- | :-------------------------- | :-------------------------- | | Average amortized cost (First mortgage loans) | $4,346,596 | $4,771,543 | | Interest income (First mortgage loans) | $90,046 | $96,716 | | Wtd. avg. yield (First mortgage loans) | 8.3 % | 8.1 % | | Total interest-bearing liabilities (Average amortized cost) | $3,558,563 | $3,910,487 | | Total interest-bearing liabilities (Interest expense) | $70,497 | $70,570 | | Total interest-bearing liabilities (Wtd. avg. financing cost) | 7.9 % | 7.3 % | | Net interest income | $19,549 | $26,146 | Interest-Earning Assets and Liabilities Analysis | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | | Average amortized cost (First mortgage loans) | $4,697,917 | $4,951,235 | | Interest income (First mortgage loans) | $278,488 | $199,132 | | Wtd. avg. yield (First mortgage loans) | 7.9 % | 5.4 % | | Total interest-bearing liabilities (Average amortized cost) | $3,841,737 | $4,006,725 | | Total interest-bearing liabilities (Interest expense) | $211,057 | $95,581 | | Total interest-bearing liabilities (Wtd. avg. financing cost) | 7.4 % | 3.2 % | | Net interest income | $67,431 | $106,954 | [Our Results of Operations](index=74&type=section&id=Our%20Results%20of%20Operations) This section provides a detailed analysis of the Company's financial performance and operational results [Comparison of the Three Months Ended September 30, 2023 and June 30, 2023](index=74&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20September%2030,%202023%20and%20June%2030,%202023) This section compares the Company's financial results for the third quarter of 2023 against the prior quarter Quarterly Results Comparison | Metric (in thousands) | Sep 30, 2023 | Jun 30, 2023 | Variance | | :-------------------- | :----------- | :----------- | :------- | | Net interest income | $19,549 | $26,146 | $(6,597) | | Total other revenue | $7,467 | $6,488 | $979 | | Total other expenses | $12,419 | $12,733 | $(314) | | Credit loss expense, net | $(75,805) | $(89,069) | $13,264 | | Net (loss) income | $(61,213) | $(69,173) | $7,960 | | Net (loss) income attributable to common stockholders | $(64,636) | $(72,724) | $8,088 | - **Net interest income** decreased by **$6.6 million** QoQ due to full loan repayments[339](index=339&type=chunk) - **Credit loss expense** decreased by **$13.3 million** QoQ, primarily due to realized losses on loan sales and REO conversion, partially offset by an increase in **allowance for credit losses**[342](index=342&type=chunk) [Comparison of the Nine Months Ended September 30, 2023 and September 30, 2022](index=76&type=section&id=Comparison%20of%20the%20Nine%20Months%20Ended%20September%2030,%202023%20and%20September%2030,%202022) This section compares the Company's financial results for the nine months ended September 30, 2023, against the prior year Year-to-Date Results Comparison | Metric (in thousands) | Sep 30, 2023 | Sep 30, 2022 | Variance | | :-------------------- | :----------- | :----------- | :------- | | Net interest income | $67,431 | $106,954 | $(39,523)| | Total other revenue | $17,474 | $2,009 | $15,465 | | Total other expenses | $35,064 | $34,346 | $718 | | Gain on sale of real estate owned, net | — | $13,291 | $(13,291)| | Credit loss expense, net | $(172,658) | $(183,840) | $11,182 | | Net (loss) income | $(123,011) | $(96,260) | $(26,751)| | Net (loss) income attributable to common stockholders | $(133,537) | $(106,286) | $(27,251)| | (Loss) earnings per common share, diluted | $(1.72) | $(1.38) | $(0.34) | - **Net interest income** decreased by **$39.5 million** YoY, primarily due to an increase in non-accrual loans[346](index=346&type=chunk) - **Total other revenue** increased by **$15.5 million** YoY, driven by higher interest rates on cash balances and revenue from REO operations[347](index=347&type=chunk) - **Credit loss expense** decreased by **$11.2 million** YoY, despite a **$172.7 million** increase to the **allowance for credit losses**, due to **$150.6 million** in realized losses from loan sales and REO conversions[350](index=350&type=chunk) [Liquidity and Capital Resources](index=78&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the Company's liquidity position, capital structure, and funding strategies Key Financial Ratios | Ratio | September 30, 2023 | December 31, 2022 | | :---------------- | :----------------- | :------------------ | | Debt-to-equity ratio | 2.60x | 2.97x | | Total leverage ratio | 2.60x | 2.97x | Sources of Liquidity | Source of Liquidity (in thousands) | September 30, 2023 | December 31, 2022 | | :--------------------------------- | :----------------- | :------------------ | | Cash and cash equivalents | $302,262 | $254,050 | | Secured credit agreements (available borrowings) | $30,536 | $38,380 | | Collateralized loan obligation proceeds held at trustee | $237,521 | $297,168 | | Total | $570,649 | $590,924 | - Primary liquidity needs include interest and principal payments on **$3.2 billion** of outstanding borrowings, funding **$247.6 million** in **unfunded loan commitments**, and dividend distributions[359](index=359&type=chunk) Cash Flow Summary | Cash Flow Activity (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $56,903 | $82,540 | | Net cash provided by (used in) investing activities | $982,534 | $(616,841) | | Net cash (used in) provided by financing activities | $(991,407) | $509,840 | | Net change in cash, cash equivalents, and restricted cash | $48,030 | $(24,461) | [Corporate Activities](index=81&type=section&id=Corporate%20Activities) This section outlines key corporate actions, including dividend declarations and REIT compliance - The Board of Directors declared a cash dividend of **$0.24** per common share for Q3 2023 and **$0.3906** per share for Series C Preferred Stock[375](index=375&type=chunk)[376](index=376&type=chunk) - The Company intends to distribute at least **90%** of its taxable income annually to maintain REIT qualification[374](index=374&type=chunk) [Critical Accounting Policies and Use of Estimates](index=82&type=section&id=Critical%20Accounting%20Policies%20and%20Use%20of%20Estimates) This section highlights the significant accounting policies and estimates critical to financial reporting - The preparation of financial statements requires significant management estimates and judgments, particularly for **allowance for credit losses** and valuation of financial instruments[381](index=381&type=chunk) - The Company adopted the **CECL model** on January 1, 2020, for credit losses, which estimates current expected losses for the loan portfolio[383](index=383&type=chunk) - **Key credit quality indicators** include borrower capitalization, collateral type, property market value, LTV ratio, and the Company's internal risk rating (**1-5 scale**)[384](index=384&type=chunk)[386](index=386&type=chunk) [Recent Accounting Pronouncements](index=83&type=section&id=Recent%20Accounting%20Pronouncements) This section refers to disclosures regarding recently issued accounting pronouncements - For a discussion of recently issued accounting pronouncements, refer to Note **2** to the Consolidated Financial Statements[391](index=391&type=chunk) [Subsequent Events](index=83&type=section&id=Subsequent%20Events) This section refers to disclosures regarding events occurring after the reporting period - For a discussion of subsequent events, refer to Note **16** to the Consolidated Financial Statements[392](index=392&type=chunk) [Loan Portfolio Details](index=84&type=section&id=Loan%20Portfolio%20Details) This section provides a detailed breakdown of individual loans within the Company's investment portfolio - The table provides a loan-by-loan breakdown of the Company's **loans held for investment** as of September 30, 2023, including origination date, **total loan commitment**, **principal balance**, **amortized cost**, interest rate, **all-in yield**, maturity, property type, LTV, and risk rating[393](index=393&type=chunk) - All loans are floating rate, with a **weighted average credit spread** of **3.7%** and a **weighted average LTV** of **67.2%**[395](index=395&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=87&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the Company's exposure to various market risks, including interest rate, credit, prepayment, extension, non-performance, real estate, liquidity, capital markets, counterparty, and currency risks... [Investment Portfolio Risks](index=87&type=section&id=Investment%20Portfolio%20Risks) This section details the various risks associated with the Company's investment portfolio, including interest rate and credit risks - The Company's business model aims to minimize interest rate exposure by match-indexing assets and liabilities, with rising rates generally increasing **net interest income** due to interest rate floors[400](index=400&type=chunk) Interest Rate Sensitivity Analysis | Interest Rate Sensitivity (in thousands) | 25 Basis Point Increase | 25 Basis Point Decrease | | :------------------------------------- | :---------------------- | :---------------------- | | Total change in net interest income | $1,863 | $(1,863) | | Interest Rate Sensitivity (in thousands) | 50 Basis Point Increase | 50 Basis Point Decrease | | :------------------------------------- | :---------------------- | :---------------------- | | Total change in net interest income | $3,727 | $(3,716) | | Interest Rate Sensitivity (in thousands) | 75 Basis Point Increase | 75 Basis Point Decrease | | :------------------------------------- | :---------------------- | :---------------------- | | Total change in net interest income | $5,590 | $(5,329) | - The Company is exposed to credit risk, prepayment risk (accelerated amortization of premiums/discounts), extension risk (loan life extending beyond debt terms), and non-performance risk (borrower default due to high interest rates)[403](index=403&type=chunk)[405](index=405&type=chunk)[407](index=407&type=chunk)[408](index=408&type=chunk) [Operating and Capital Market Risks](index=88&type=section&id=Operating%20and%20Capital%20Market%20Risks) This section discusses risks related to the Company's operations and access to capital markets - Liquidity risk is associated with financing longer-maturity investments with shorter-term borrowings, exposing the Company to margin calls if collateral values decline[411](index=411&type=chunk) - Capital markets risk stems from the need to raise capital through equity and debt issuances due to REIT distribution requirements, with global macroeconomic conditions impacting funding costs and availability[413](index=413&type=chunk)[414](index=414&type=chunk) - Counterparty risk exists with financial institutions for cash holdings and financing, and with borrowers for loan payments. Currency risk may arise from foreign currency denominated assets, which the Company intends to hedge[415](index=415&type=chunk)[416](index=416&type=chunk)[417](index=417&type=chunk)[418](index=418&type=chunk) [Item 4. Controls and Procedures](index=81&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the Company's disclosure controls and procedures as of September 30, 2023, and states that there were no material changes in internal control over financial reporting during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2023[421](index=421&type=chunk) - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[422](index=422&type=chunk) [Part II. Other Information](index=82&type=section&id=Part%20II.%20Other%20Information) This part covers legal proceedings, risk factors, equity sales, defaults, and other required disclosures [Item 1. Legal Proceedings](index=82&type=section&id=Item%201.%20Legal%20Proceedings) This section confirms the absence of material legal proceedings involving the Company - As of September 30, 2023, the Company was not involved in any material legal proceedings[425](index=425&type=chunk) [Item 1A. Risk Factors](index=82&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to previously disclosed risk factors - There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2022[426](index=426&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=82&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports no unregistered sales of equity securities or use of proceeds - No unregistered sales of equity securities or use of proceeds to report[427](index=427&type=chunk) [Item 3. Defaults Upon Senior Securities](index=82&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section reports no defaults upon senior securities - No defaults upon senior securities to report[428](index=428&type=chunk) [Item 4. Mine Safety Disclosures](index=82&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section states that mine safety disclosures are not applicable to the Company - Mine safety disclosures are not applicable[429](index=429&type=chunk) [Item 5. Other Information](index=82&type=section&id=Item%205.%20Other%20Information) This section indicates no other information to report for the period - No other information to report[430](index=430&type=chunk) [Item 6. Exhibits](index=83&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q - The exhibits include Articles of Amendment and Restatement, Bylaws, Articles Supplementary for preferred stock, specimen common stock certificate, CEO and CFO certifications (Sarbanes-Oxley Act), and Inline XBRL taxonomy documents[432](index=432&type=chunk) [Signatures](index=84&type=section&id=SIGNATURES) This section contains the required certifications and signatures for the report filing - The report is signed by Doug Bouquard, Chief Executive Officer, and Robert Foley, Chief Financial Officer, on October 31, 2023[435](index=435&type=chunk)[436](index=436&type=chunk)

Financial Data and Key Metrics Changes - The GAAP net loss to common shareholders for Q2 2023 was $72.7 million, a significant decline from a net income of $3.8 million in the previous quarter, primarily due to an increase in CECL expense of $81.3 million [9][10] - Distributable earnings fell to a loss of $14 million from earnings of $13.4 million in the prior quarter, largely due to realized losses of $33.2 million related to two office loans [9][10] - The CECL reserve increased by $55.9 million to $278.3 million, with the CECL reserve rate rising to 572 basis points from 420 basis points, reflecting further weakening in the office market [10][14] Business Line Data and Key Metrics Changes - The company did not fund any new investments in the quarter but received $279 million in repayments, primarily from multifamily refinancing activity [7] - The net interest margin for the loan portfolio increased to $26.1 million from $21.7 million in the prior quarter, an increase of $4.4 million [9] Market Data and Key Metrics Changes - The commercial real estate market continues to underperform, driven by value pressures and reduced liquidity for debt and equity, particularly in the office market [5] - Despite broader positive shifts in risk sentiment across various asset classes, the commercial real estate sector faces ongoing challenges [5] Company Strategy and Development Direction - The company maintains a strategic posture of cautiously deploying capital, maintaining a strong liquidity position, and proactively managing investment risks [5] - The focus remains on maximizing long-term shareholder value while navigating the current challenges in the commercial real estate market [8] Management's Comments on Operating Environment and Future Outlook - Management noted that the labor market remains strong, and the residential housing market has shown resilience despite high mortgage rates [4] - There is an expectation that pressure within the commercial real estate space may persist for an extended period, leading to continued volatility in valuations and investment activity [5] Other Important Information - The company has reduced its cumulative office exposure by approximately $1 billion over the past 15 months [6] - Total liquidity at the end of the quarter exceeded $542 million, comprising $307 million in cash, $206 million in CLO reinvestment capacity, and $28 million in undrawn capacity on secured credit facilities [7][11] Q&A Session Summary Question: Impact of the sale of the mixed-use loan on Q3 results - Management confirmed that the transaction will be reported in Q3 results and will impact distributable earnings, but the loss is expected to be covered by the existing CECL reserve [18][19] Question: Reinvestment capacity in FL5 and its timing - Management indicated that they expect to deploy the reinvestment capacity over the next 3 to 6 months, with potential interest savings of $0.04 to $0.05 per share [20][21] Question: Buyouts from CLOs during Q2 - Management stated that no loans were bought out of CLOs in Q2, and future buyouts will depend on loan performance [23] Question: Watch list migration and specific loss reserves - Management acknowledged ongoing management of credit-challenged loans and indicated that they are actively pursuing resolution paths for loans on the watch list [27][28] Question: Sustainability of the dividend - Management emphasized that the dividend level should match sustainable earnings power, and they are focused on resolving credit-challenged loans to rebuild earnings [40][41]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________________________________________________________________ _______________________________________________________________________ FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 2023 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ___ ...

TPG RE Finance Trust, Inc. (NYSE:TRTX) Q1 2023 Earnings Conference Call May 3, 2023 10:00 AM ET Company Participants Deborah Ginsberg - General Counsel, Vice President and Secretary Doug Bouquard - Chief Executive Officer Bob Foley - Chief Financial Officer Conference Call Participants Stephen Laws - Raymond James Steve DeLaney - JMP Securities Rick Shane - J.P. Morgan Operator Good morning, and welcome to the TPG RE Finance Trust First Quarter 2023 Earnings Conference Call. All participants will be in a li ...