TPG RE Finance Trust(US:TRTX)2020-02-19 00:38Interest Rate Risk - As of December 31, 2019, 100% of the company's loans by unpaid principal balance earned a floating rate of interest, positively correlating net equity to rising interest rates [400]. - The weighted average LIBOR floor for the loan portfolio was 1.63% as of December 31, 2019 [400]. - An immediate increase of 25 basis points in the benchmark interest rate could result in a total change in net interest income of $3.334 million, while a decrease of 25 basis points could decrease net interest income by $9.161 million [401]. Credit Risk - The company is exposed to credit risk, with performance dependent on the ability of property sponsors to generate adequate cash flows to meet interest and principal payments [404]. - The company monitors risks associated with the commercial real estate market, including occupancy rates and macroeconomic factors, through its underwriting and asset management processes [405]. Prepayment and Extension Risk - Prepayment risk could lead to reduced interest income if principal is repaid at a different rate than anticipated, affecting the amortization of purchase premiums [406]. - The company faces extension risk, where a decrease in prepayment rates could extend the life of fixed-rate assets beyond the term of secured debt agreements, potentially impacting operations [408]. Capital Market Risk - Capital market risks include the ability to raise capital through equity or debt instruments, constrained by the requirement to distribute a significant portion of taxable income annually [409]. Counterparty Risk - Counterparty risk arises from reliance on financial institutions for cash and financing, mitigated by working with high credit-quality institutions [410]. Foreign Currency Risk - The company intends to hedge foreign currency exposure through forward contracts to manage risks associated with foreign currency-denominated assets [417].