TPG RE Finance Trust(TRTX) - 2025 Q2 - Quarterly Results

Forward-Looking Statements and Other Disclosures This section provides a standard disclaimer regarding forward-looking statements, highlighting inherent risks, uncertainties, and other factors that could cause actual results to differ materially from projections - The presentation contains forward-looking statements subject to risks, uncertainties, and other important factors that could cause actual results to differ materially from expectations[3][4] - Key risk factors include general economic and market conditions, interest rate fluctuations, real estate market changes, financing difficulties, and regulatory developments[4] Company Highlights (TRTX By the Numbers) This section provides a snapshot of TPG RE Finance Trust's key financial and operational metrics as of June 30, 2025, covering its loan portfolio, liquidity, capitalization, and dividend/earnings performance TRTX Key Metrics (2Q25) | Metric | Value | | :--- | :--- | | Loan Portfolio: | | | Loan Investment Portfolio | $3.9 billion | | Average Loan Size | $79.6 million | | Performing Portfolio | 100% | | Weighted Average Risk Rating | 3.0 | | Weighted Average All-in Yield | 8.04% | | Floating Rate Loans | 99.7% | | Weighted Average LTV | 66.1% | | Liquidity & Capitalization: | | | of Liquidity | $236.4 million | | Non-Mark-to-Market Financing | 94.8% | | Debt-to-Equity Ratio | 2.6x | | Available Financing Capacity | $1.7 billion | | Dividend & Earnings: | | | 2Q25 Common Stock Dividend Declared | $0.24 | | 2Q25 GAAP Income per Diluted Share | $0.21 | | 2Q25 Distributable Earnings per Diluted Share | $0.24 | | Annualized Dividend Yield | 12.4% | | Dividend Yield on Book Value per Share | 8.6% | | Book Value per Share at June 30, 2025 | $11.20 | 2Q25 Operating Results The company reported a GAAP income of $0.21 per diluted share and distributable earnings of $0.24 per diluted share for Q2 2025 Net Income and Distributable Earnings For Q2 2025, Net Income Attributable to Common Stockholders was $16.9 million ($0.21 per diluted share), while Distributable Earnings totaled $19.0 million ($0.24 per diluted share) 2Q25 Operating Results (in millions, except per share data) | Metric | Net Income Attributable to Common Stockholders | Adjustments | Distributable Earnings | Per Common Share, Diluted | | :--- | :--- | :--- | :--- | :--- | | Interest Income | $70.7 | $- | $70.7 | $0.88 | | Interest Expense | (45.5) | - | (45.5) | (0.57) | | Net Interest Income | $25.1 | $- | $25.1 | $0.31 | | Management and Incentive Fees | (5.2) | - | (5.2) | (0.06) | | Stock Compensation Expense | (2.0) | 2.0 | - | - | | Revenue and Expense from REO operations, net | (2.0) | 3.4 | 1.4 | 0.02 | | Other Income & Expenses | (0.5) | - | (0.5) | (0.01) | | Gain on Sale of Real Estate Owned, net | 7.0 | (5.1) | 1.9 | 0.02 | | Preferred Stock Dividends & Participating Securities' Share in Earnings | (3.8) | - | (3.8) | (0.05) | | Net Income Before Credit Loss Expense | $18.7 | $0.3 | $19.0 | $0.24 | | Credit Loss Expense | (1.8) | 1.8 | - | - | | Total | $16.9 | $2.1 | $19.0 | $0.24 | | Per Common Share, Diluted | $0.21 | $0.03 | $0.24 | | Quarter-over-Quarter Change in Book Value Book value per share remained stable at $11.20 at June 30, 2025, compared to $11.19 at March 31, 2025, influenced by net income, dividends, and equity compensation QoQ Change in Book Value per Share (3/31/25 to 6/30/25) | Metric | Value | | :--- | :--- | | Book Value 3/31/25 | $11.19 | | Retired Common Stock Shares | $0.08 | | Issuance of Common Stock | ($0.07) | | Net Income, Excluding Credit Loss Benefit | $0.28 | | Dividends on Common Shares | ($0.24) | | Dividends on Preferred Shares | ($0.04) | | Equity Compensation | $0.02 | | Credit Loss Expense | ($0.02) | | Book Value 6/30/25 | $11.20 | Liquidity and Leverage The company maintained $236.4 million in available liquidity as of June 30, 2025, with its Debt-to-Equity ratio at 2.63x, showing a slight increase from the previous quarter Available Liquidity Available liquidity decreased to $236.4 million at June 30, 2025, from $457.6 million at March 31, 2025, primarily due to a reduction in undrawn capacity Available Liquidity ($ in millions) | Metric | 9/30/2024 | 12/31/2024 | 3/31/2025 | 6/30/2025 | | :--- | :--- | :--- | :--- | :--- | | Covenant Cash | $15.0 | $15.0 | $15.0 | $20.7 | | Cash | $211.3 | $175.2 | $348.0 | $145.1 | | Undrawn Capacity | $130.7 | $130.6 | $25.4 | $68.8 | | CLO Reinvestment Cash | $0.0 | $0.0 | $69.2 | $1.8 | | Total Available Liquidity | $357.0 | $320.8 | $457.6 | $236.4 | Leverage Ratios The Debt-to-Equity Ratio increased to 2.63x at June 30, 2025, from 2.23x in the prior quarter, while the Total Leverage Ratio also rose to 2.63x Leverage Ratios | Metric | 9/30/2024 | 12/31/2024 | 3/31/2025 | 6/30/2025 | | :--- | :--- | :--- | :--- | :--- | | Debt-to-Equity Ratio | 2.02x | 2.14x | 2.23x | 2.63x | | Total Leverage Ratio | 2.02x | 2.14x | 2.23x | 2.63x | Loan Portfolio Analysis The loan portfolio totaled $3.9 billion in commitments, with 99.7% floating rate loans and a weighted average LTV of 66.1%, alongside a stable weighted average risk rating of 3.0 Portfolio Metrics and Composition The total loan commitments stood at $3.9 billion, with an outstanding principal balance of $3.8 billion, predominantly floating rate (99.7%) with an 8.04% weighted average all-in yield and 66.1% LTV Loan Portfolio Metrics (as of June 30, 2025) | Metric | Value | | :--- | :--- | | Total Loan Commitments | $3.9 billion | | Outstanding Principal Balance | $3.8 billion | | MSA Concentrations (Top 25 / Top 10) | 58.5% / 34.3% | | Weighted Average All-in Yield | 8.04% | | Weighted Average Credit Spread | 3.48% | | Weighted Average Interest Rate Floor | 2.19% | | Weighted Average Borrower Interest Rate Cap | 4.28% | | % Floating Rate Loans | 99.7% | | Weighted Average LTV | 66.1% | Loan Category and Geographic Exposure The loan portfolio is primarily composed of Bridge (51.7%), Moderate Transitional (24.8%), and Light Transitional (23.5%) loans, with largest geographic exposures in the Southwest (38.3%), East (29.9%), and Southeast (15.2%) regions Loan Category Distribution (by total loan commitment) | Loan Category | Percentage | | :--- | :--- | | Bridge | 51.7% | | Moderate Transitional | 24.8% | | Light Transitional | 23.5% | Loan Exposure by Region (by total loan commitment) | Region | Percentage | | :--- | :--- | | Southwest | 38.3% | | East | 29.9% | | Southeast | 15.2% | | West | 11.6% | | Midwest | 5.1% | Loan Portfolio Activity and Migration Q2 2025 saw $695.6 million in loan originations and $172.3 million in repayments, with portfolio migration showing increased multifamily exposure and decreased office and life science exposure - 2Q25 total loan originations of $695.6 million, with a weighted average interest rate of Term SOFR + 2.86% and as-is LTV of 67.6%[27] - 2Q25 total loan repayments of $172.3 million, including full repayments of $147.4 million and partial repayments of $24.9 million[27] - Portfolio migration shows an increase in Multifamily exposure (18%) and a decrease in Office (18.4% to 15.0%) and Life Science exposure (10.4% to 8.9%) from Jun 30, 2024 to Jun 30, 2025[26][28] Loan Portfolio Walk Over the trailing twelve months, total loan commitments increased to $3,899.3 million at June 30, 2025, driven by $1.1 billion in originations, partially offset by repayments and REO conversions - TTM loan originations totaled $1.1 billion, driving net asset growth[31] Loan Commitments Evolution (in millions) | Date | Total Loan Commitments | Deferred Fundings and New Loan Originations | Repayments/Sales/REO Conversion | | :--- | :--- | :--- | :--- | | 6/30/2024 | $3,205.9 | $127.9 | ($99.2) | | 9/30/2024 | $3,284.5 | $139.6 | ($21.5) | | 12/31/2024 | $3,276.6 | $109.8 | ($149.3) | | 3/31/2025 | $3,385.9 | $116.4 | ($172.3) | | 6/30/2025 | $3,899.3 | | | Risk Ratings The weighted average risk rating for the loan portfolio remained stable at 3.0 as of June 30, 2025, consistent with previous quarters, with 95% of loans rated 3 (Medium Risk) - Weighted Average Risk Rating remained stable at 3.0 for 2Q25, consistent with the trailing four-quarter average[34][37] Dispersion of Risk Ratings by Amortized Cost (June 30, 2025) | Risk Rating | Percentage | | :--- | :--- | | 1 (Very Low Risk) | 0% | | 2 (Low Risk) | 2% | | 3 (Medium Risk) | 95% | | 4 (High Risk/Potential for Loss) | 3% | | 5 (Default/Loss Likely) | 0% | CECL Reserve The allowance for credit losses increased to $68.8 million at June 30, 2025, up $1.6 million from $67.2 million as of March 31, 2025, representing 199 bps of total loan commitments - Allowance for credit losses increased by $1.6 million to $68.8 million at June 30, 2025, from $67.2 million at March 31, 2025[38][39] QoQ CECL Reserve (in millions) | Metric | 9/30/2024 | 12/31/2024 | 3/31/2025 | 6/30/2025 | | :--- | :--- | :--- | :--- | :--- | | Reserve as $M | $64.0 | $67.2 | $69.3 | $68.8 | | Reserve as bps of Total Loan Commitments | 176 | 187 | 205 | 199 | Loan Financing The company utilizes diverse financing sources, with 94.8% being non-mark-to-market financing, a total capacity of $4.7 billion, and debt maturities spread across 2025-2029 and thereafter Diverse Financing Sources TPG RE Finance Trust relies heavily on non-mark-to-market financing, constituting 94.8% of its financing sources, with a total capacity of $4.7 billion and an outstanding principal balance of $3.0 billion - 94.8% of financing is Non-Mark-to-Market (Non-MTM) financing[42] Financing Capacity and Metrics | Metric | Value | | :--- | :--- | | Total Financing Capacity | $4.7 billion | | Outstanding Principal Balance | $3.0 billion | | Weighted Average Credit Spread | 1.94% | | Weighted Average Approved Advance Rate | 81.7% | Expected Debt Maturities The company's debt maturities are distributed over several years, with significant amounts in 2025 and 2026, and a substantial portion thereafter Expected Debt Maturities ($ in millions) | Year | MTM Financing (credit only) | Non-MTM Financing | | :--- | :--- | :--- | | 2025 | $0 | ~$400 | | 2026 | $0 | ~$800 | | 2027 | $0 | ~$600 | | 2028 | $0 | ~$400 | | 2029 | $0 | ~$200 | | Thereafter | $0 | ~$600 | Real Estate Owned (REO) The REO portfolio had an acquisition date fair value of $247.9 million and a current carrying value of $237.1 million as of June 30, 2025, following the sale of two office properties for $39.4 million in net proceeds and a $7.0 million gain - REO portfolio had a total acquisition date fair value of $247.9 million and a current carrying value of $237.1 million as of June 30, 2025[48] - Sold two office properties during 2Q25 for net proceeds of $39.4 million, resulting in a gain on sale of real estate, net of $7.0 million[48] Real Estate Owned Portfolio Summary (as of June 30, 2025, in thousands) | Metric | Total Office | Total Multifamily | Total Portfolio | | :--- | :--- | :--- | :--- | | Fair Value at Acquisition | $86,041 | $161,904 | $247,945 | | Carrying Value | $84,243 | $152,906 | $237,149 | | Mortgage Debt Outstanding | $31,200 | $- | $31,200 | | Net Book Equity | $53,043 | $152,906 | $205,949 | Impact of Changing Rates A static analysis indicates that a +1.00% change in the index rate (Term SOFR at 4.32% as of June 30, 2025) would result in a $0.02 per share per quarter increase in net interest income, while a -1.00% change would result in a $0.02 per share per quarter decrease - A +1.00% change in the index rate (Term SOFR: 4.32% at June 30, 2025) would result in a $0.02 per share per quarter increase in Net Interest Income[51][52] - A -1.00% change in the index rate would result in a ($0.02) per share per quarter decrease in Net Interest Income[51][52] Appendix This section provides supplementary information, including detailed definitions of key financial terms, a comprehensive list of the TRTX loan portfolio, reconciliations for per share calculations, and the consolidated financial statements TRTX Loan Portfolio Details The appendix lists individual loans within the TRTX portfolio, detailing commitment, balance, interest rate, maturity, location, property type, LTV, and risk rating for each, with a total loan commitment of $3,899.3 million, weighted average LTV of 66.1%, and risk rating of 3.0 Top 10 TRTX Loan Portfolio Details (as of June 30, 2025) | Loan Name | Commitment ($M) | Balance ($M) | Interest Rate | Extended Maturity | Location | Property Type | LTV | Risk Rating | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Loan 1 | $256.3 | $253.4 | S + 3.6% | 2.1 years | San Jose, CA | Multifamily | 72.6% | 3 | | Loan 2 | $227.1 | $227.1 | S + 3.0% | 1.2 years | New York, NY | Office | 65.2% | 3 | | Loan 3 | $200.0 | $194.5 | S + 3.2% | 5.0 years | Various, Various | Industrial | 62.8% | 3 | | Loan 4 | $194.5 | $194.5 | S + 4.0% | 2.9 years | Daly City, CA | Life Science | 63.1% | 3 | | Loan 5 | $173.0 | $161.0 | S + 2.7% | 5.0 years | Los Angeles, CA | Multifamily | 72.1% | 3 | | Loan 6 | $130.5 | $130.5 | S + 3.5% | 2.6 years | New York, NY | Office | 65.2% | 3 | | Loan 7 | $129.0 | $115.5 | S + 3.4% | 4.5 years | Various, Various | Industrial | 55.3% | 3 | | Loan 8 | $113.0 | $113.0 | S + 3.5% | 0.9 years | Towson, MD | Multifamily | 70.2% | 3 | | Loan 9 | $113.0 | $110.0 | S + 3.3% | 4.4 years | Various, Various | Multifamily | 64.6% | 3 | | Loan 10 | $106.0 | $106.0 | S + 3.5% | 1.1 years | Various, NJ | Multifamily | 71.3% | 3 | | Total Loans (53) | $3,899.3 | $3,783.6 | S +3.5% | 2.7 years | | | 66.1% | 3.0 | Per Share Calculations This section provides a reconciliation of GAAP net income to GAAP Net Income Attributable to Common Stockholders and Distributable Earnings, along with detailed per share metrics for basic and diluted shares Per Share Data (Three Months Ended June 30, 2025) | Metric | Value | | :--- | :--- | | Net Income Attributable to Common Stockholders | $16,881 thousand | | Earnings Per Common Share, Basic | $0.21 | | Earnings Per Common Share, Diluted | $0.21 | | Distributable Earnings | $18,978 thousand | | Distributable Earnings per Common Share, Basic | $0.24 | | Distributable Earnings per Common Share, Diluted | $0.24 | | Book Value per Common Share (June 30, 2025) | $11.20 | Consolidated Financial Statements This sub-section presents the company's consolidated balance sheets, statements of income and comprehensive income, and statements of cash flows for the reported periods, providing a detailed view of its financial position, performance, and liquidity Consolidated Balance Sheets As of June 30, 2025, total assets increased to $4.16 billion from $3.73 billion at December 31, 2024, primarily driven by an increase in loans held for investment, with total liabilities also increasing to $3.07 billion from $2.62 billion due to higher collateralized loan obligations Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | ASSETS: | | | | Cash and cash equivalents | $165,850 | $190,160 | | Loans held for investment, net | $3,707,729 | $3,217,030 | | Real estate owned, net | $223,235 | $256,404 | | Total Assets | $4,162,066 | $3,731,429 | | LIABILITIES: | | | | Collateralized loan obligations, net | $2,442,868 | $1,681,660 | | Secured financing agreements, net | $520,987 | $670,727 | | Total Liabilities | $3,071,229 | $2,617,388 | | EQUITY: | | | | Total Stockholders' Equity | $1,090,837 | $1,114,041 | Consolidated Statements of Income and Comprehensive Income For the three months ended June 30, 2025, net income was $20.6 million, down from $24.7 million in the prior year, with net interest income decreasing to $25.1 million from $27.5 million, partially offset by a $7.0 million gain on sale of real estate owned Consolidated Statements of Income (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Interest income | $70,668 | $78,115 | | Interest expense | (45,524) | (50,588) | | Net interest income | $25,144 | $27,527 | | Total other revenue | $11,055 | $11,775 | | Total other expenses | $20,632 | $19,024 | | Gain on sale of real estate owned, net | $6,970 | $- | | Credit loss (expense) benefit, net | (1,778) | $4,537 | | Net income | $20,631 | $24,715 | | Net Income Attributable to Common Stockholders | $16,881 | $21,026 | | Earnings per Common Share, Diluted | $0.21 | $0.26 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities was $43.9 million, a decrease from $62.9 million in the prior year, with investing activities resulting in a net cash outflow of $457.7 million and financing activities providing $389.8 million Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $43,859 | $62,924 | | Net cash (used in) provided by investing activities | ($457,730) | $554,984 | | Net cash provided by (used in) financing activities | $389,810 | ($565,190) | | Net change in cash, cash equivalents, and restricted cash | ($24,061) | $52,718 | | Cash, cash equivalents and restricted cash at end of period | $166,422 | $259,736 | Definitions This section provides detailed definitions for key financial and operational terms used throughout the report, including Distributable Earnings, financial covenants, geographic diversity classifications, leverage ratios, Loan-to-Value (LTV), various loan categories, property types, and the Loan Risk Ratings scale - Distributable Earnings is a non-GAAP measure, defined as GAAP net income (loss) attributable to common stockholders, adjusted for realized gains/losses from loan resolutions, non-cash stock compensation, depreciation/amortization, unrealized gains/losses (including credit loss expense), and certain other non-cash items[70] - Loan Risk Ratings are assigned on a 5-point scale (1-Very Low Risk to 5-Default/Loss Likely) based on factors like loan/credit structure, real estate value/cash flow, business plan performance, loan modifications, capital market changes, and sponsor quality[76] Company Information TPG RE Finance Trust, Inc. is a commercial real estate finance company focused on first mortgage loans secured by institutional properties in the U.S., externally managed by TPG RE Finance Trust Management, L.P - TPG RE Finance Trust, Inc. is a commercial real estate finance company that originates, acquires, and manages primarily first mortgage loans secured by institutional properties in primary and select secondary markets in the United States[79] - The company is externally managed by TPG RE Finance Trust Management, L.P., part of TPG Real Estate[79]