TPG RE Finance Trust(US:TRTX)2020-05-12 17:55Financial Data and Key Metrics Changes - The company reported a GAAP net loss of $232.8 million or $3.05 per diluted share for Q1 2020, with core earnings of $168.3 million or $2.20 per diluted share [28] - Net interest income from the transitional lending business was $40.8 million, up 5.9% from the prior quarter [28] - The overall portfolio risk rating increased to 3.1 due to the impact of COVID-19, with many operating hotels downgraded [21] Business Line Data and Key Metrics Changes - In Q1, the company originated $437 million of loans, primarily in multi-family assets (90%) and office assets (10%) [16] - 68% of the portfolio is secured by bridge and light transitional assets, with one construction loan having future funding obligations of $15 million [13] - 99.5% of the loan portfolio paid interest in April, with only one loan late, which is senior to an institutionally owned mezzanine loan [14] Market Data and Key Metrics Changes - The company’s portfolio is primarily composed of office (49%) and multi-family loans (24%), with hotel and retail loans representing 13% and 0.6% respectively [12] - The weighted average loan-to-value (LTV) ratio is 65.7%, consistent with prior quarters, indicating a focus on quality properties in major markets [39] Company Strategy and Development Direction - The company is focusing on protecting the value of its portfolio and providing modifications to borrowers needing payment relief during the lockdown [17] - The company has retained Houlihan Lokey to help source new capital to navigate the current economic environment and prepare for future opportunities [26] - The management emphasized the importance of working with borrowers and lenders to manage the economic strain caused by COVID-19 [22] Management Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented challenges posed by the COVID-19 pandemic, stating that the economic strain on tenants and landlords will not disappear quickly [22] - The company expressed confidence in the long-term value of its portfolio, anticipating that cash flow disruptions will begin to ease as lockdowns are lifted [26] - Management noted that market conditions are too uncertain to originate new loans at this time [17] Other Important Information - The company recorded an impairment charge of $167.3 million against the $767.3 million face value of bonds owned at quarter-end [30] - The company has no margin calls and is in active discussions with lenders to implement re-margening holidays [22] - Liquidity at quarter-end was $168.8 million, primarily in cash and near-term availability under credit facilities [45] Q&A Session Summary Question: Can you provide more details on the five-rated loan in Houston? - The loan is a Class A multi-family property that has underperformed due to market conditions and rent concessions [51] Question: What is the timeline for the deed in lieu process? - The process is in early stages and could take several weeks to months, depending on negotiations [54][92] Question: Can you discuss the ongoing concern related to funding due in a year? - The company is comfortable with its plans and has successfully extended its facility with Morgan Stanley [60] Question: Are there any other loans on non-accrual? - Currently, there is only one loan that is late, and no other loans are on non-accrual [67] Question: How does the company view cash management going forward? - The company plans to hoard cash and prioritize paying down the most vulnerable loans, particularly those financing hotels [75] Question: What is the status of the dividend? - The company has not announced any suspension of dividends, but the first quarter dividend was deferred [116]