TPG RE Finance Trust(US:TRTX)2026-02-18 15:02Financial Data and Key Metrics Changes - For Q4 2025, the company reported GAAP net income of $0.2 million and distributable earnings of $18.5 million, or $0.24 per common share [13] - For the full year 2025, GAAP net income was $45.5 million, or $0.57 per share, with distributable earnings of $76.8 million, or $0.97 per common share, achieving a coverage ratio of 1.01x for the annual dividend of $0.96 per share [13] - Book value per common share decreased from $11.25 to $11.07 quarter-over-quarter [13] Business Line Data and Key Metrics Changes - In Q4 2025, the company closed $927 million in new loans, with 62% in multifamily and 38% in industrial collateral [7] - The company originated 20 loans with total commitments of $1.9 billion at a weighted average credit spread of 2.82% for the full year [14] - The loan portfolio was 100% performing at year-end, with a weighted average risk rating unchanged at 3.0 [14][15] Market Data and Key Metrics Changes - The company observed a trend of capital allocation towards real estate credit due to dislocation in parts of the corporate credit market [5] - The company increased its exposure to multifamily and industrial collateral from 30% at the beginning of 2022 to over 72% of the current balance sheet [9] Company Strategy and Development Direction - The company plans to continue net asset growth through prudent investment and risk management, targeting a leverage ratio of 3.5-3.75x [10][29] - The company aims to maximize shareholder value and is focused on closing the value gap as indicated by the stock trading at a discount to book value [40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to deliver strong performance in 2026, supported by a robust pipeline and favorable market conditions [11][21] - The company noted that clarity around the path of interest rates and competitive credit spreads create a favorable environment for active origination [21] Other Important Information - The company ended the quarter with near-term liquidity of $143 million, including $72.6 million in cash available for investment [15] - The liability structure is 82% non-mark-to-market, with a year-over-year cost of funds decline of 18 basis points to 1.82% [17] Q&A Session Summary Question: Expectations for origination in Q1 2026 - Management indicated that origination volumes in Q4 2025 are expected to continue into Q1 2026, with a robust pipeline across all property types [19] Question: Loan spreads and market competition - Management noted that while loan spreads were tighter in Q4, the cost of funds moved in line, maintaining static ROEs relative to prior quarters [22][24] Question: Target leverage and REO assets - Management targets a leverage ratio of 3.5-3.75x and plans to continue selling down REO assets throughout the year [29][30] Question: Appropriate ROE target - Management stated that an ROE in excess of SOFR + 5% is achievable, reflecting the health of the back leverage market [35] Question: Closing the value gap - Management emphasized a focus on maximizing shareholder value and evaluating opportunities to close the value gap indicated by the stock's discount to book value [40]