TPG RE Finance Trust, Inc. Reports Operating Results for the Quarter Ended September 30, 2024

Rhea-AI Summary

TPG RE Finance Trust (TRTX) reported strong Q3 2024 results with GAAP net income of $18.7 million ($0.23 per share) and Distributable Earnings of $23.0 million ($0.28 per share). The company originated three first mortgage loans totaling $204.0 million commitments with a weighted average interest rate of Term SOFR plus 3.17%. Book value per share was $11.41. The company maintained stable credit quality with an unchanged weighted average risk rating of 3.0 and reduced allowance for credit losses to $69.3 million. TRTX ended the quarter with $357.0 million in near-term liquidity and increased non-mark-to-market financings to 79.7% of total borrowings.

Positive

• Distributable Earnings of $23.0 million exceeded dividend by 115%
• Originated $204 million in new loans with 63.3% weighted average LTV
• Stable credit quality with unchanged risk rating of 3.0
• Strong liquidity position of $357.0 million
• Increased non-mark-to-market financings to 79.7% of total borrowings

Negative

• Slight decrease in allowance for credit losses coverage to 205 bps from 208 bps

Insights

Financial Analyst

Strong quarterly performance with $18.7 million GAAP net income and $23.0 million in Distributable Earnings, demonstrating robust operational execution. The dividend coverage ratio of 115% indicates healthy cash flow generation. Portfolio quality remains stable with an unchanged 3.0 risk rating and steady CECL reserves at $69.3 million.

New originations of $204 million at a conservative LTV of 63.3% show disciplined growth, while the increased non-mark-to-market financing at 79.7% of total borrowings enhances balance sheet stability. Strong liquidity position of $357 million provides ample dry powder for opportunistic lending.

Book value per share of $11.41 and stable credit metrics reflect resilient portfolio performance despite market volatility. The strategic focus on first mortgage loans and conservative underwriting positions TRTX well for sustainable returns.

NEW YORK--(BUSINESS WIRE)-- TPG RE Finance Trust, Inc. (NYSE: TRTX) (“TRTX” or the “Company”) reported its operating results for the quarter ended September 30, 2024.

Regarding third quarter results, Doug Bouquard, Chief Executive Officer of TRTX, said: “Over the past quarter, TRTX delivered strong operating earnings, outearned our dividend by more than 115% and had no risk rating migration while maintaining a stable CECL reserve. As we seek to continue to take advantage of the attractive opportunity set within real estate credit, TPG’s integrated global real estate investing platform team enabled us to originate $204 million of new investments. We believe that this capital deployment combined with our strong balance sheet and liquidity profile positions us well to continue to drive long-term shareholder value.”

THIRD QUARTER 2024 ACTIVITY

• Recognized GAAP net income attributable to common stockholders of $18.7 million, or $0.23 per common share, based on a diluted weighted average share count of 81.4 million common shares. Book value per common share was $11.41 as of September 30, 2024.
• Generated Distributable Earnings of $23.0 million, or $0.28 per common share, based on a diluted weighted average share count of 81.4 million common shares.
• Declared on September 13, 2024 a cash dividend of $0.24 per share of common stock which was paid on October 25, 2024 to common stockholders of record as of September 27, 2024. The Company paid on September 30, 2024 to stockholders of record as of September 20, 2024 a quarterly dividend on its 6.25% Series C Cumulative Redeemable Preferred Stock of $0.3906 per share.
• Originated three first mortgage loans with total loan commitments of $204.0 million, an initial aggregate unpaid principal balance of $199.8 million, a weighted average interest rate of Term SOFR plus 3.17%, a weighted average interest rate floor of 3.33% and a weighted average as-is loan-to-value ratio of 63.3%. Additionally, funded $7.6 million of future funding obligations associated with previously originated and acquired loans.
• Received loan repayments of $149.3 million, including three full loan repayments of $141.1 million, involving the following property types: 41.5% hotel; 35.8% multifamily; and 22.7% mixed-use.
• Weighted average risk rating of the Company’s loan portfolio was 3.0 as of September 30, 2024, unchanged from June 30, 2024.
• Carried at quarter-end an allowance for credit losses of $69.3 million, a decrease of $0.3 million from $69.6 million as of June 30, 2024. The quarter-end allowance equals 205 basis points of total loan commitments as of September 30, 2024 compared to 208 basis points as of June 30, 2024.
• Ended the quarter with $357.0 million of near-term liquidity: $211.3 million of cash-on-hand available for investment, net of $15.0 million held to satisfy liquidity covenants under the Company’s secured financing agreements; undrawn capacity under secured financing arrangements of $128.1 million; and undrawn capacity under asset-specific financing arrangements and secured revolving credit facility of $2.6 million.
• Increased non-recourse, non-mark-to-market asset specific financings by $72.0 million. Non-mark-to-market borrowings represented 79.7% of total borrowings at September 30, 2024.

SUBSEQUENT EVENTS

• Received full loan repayments of two multifamily first mortgage loans with aggregate total loan commitments and aggregate unpaid principal balances of $70.6 million and $70.6 million, respectively. The loans carried a risk rating of 3.0 as of September 30, 2024.

The Company issued a supplemental presentation detailing its third quarter 2024 operating results, which can be viewed at http://investors.tpgrefinance.com/.

CONFERENCE CALL AND WEBCAST INFORMATION

The Company will host a conference call and webcast to review its financial results with investors and other interested parties at 9:00 a.m. ET on Wednesday, October 30, 2024. To participate in the conference call, callers from the United States and Canada should dial +1 (877) 407-9716, and international callers should dial +1 (201) 493-6779, ten minutes prior to the scheduled call time. The webcast may also be accessed live by visiting the Company’s investor relations website at http://investors.tpgrefinance.com/event.

REPLAY INFORMATION

A replay of the conference call will be available after 12:00 p.m. ET on Wednesday, October 30, 2024 through 11:59 p.m. ET on Wednesday, November 13, 2024. To access the replay, listeners may use +1 (844) 512-2921 (domestic) or +1 (412) 317-6671 (international). The passcode for the replay is 13745416. The replay will be available on the Company’s website for one year after the call date.

ABOUT TRTX

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 located in primary and select secondary markets in the United States. The Company is externally managed by TPG RE Finance Trust Management, L.P., a part of TPG Real Estate, which is the real estate investment platform of global alternative asset management firm TPG Inc. (NASDAQ: TPG). For more information regarding TRTX, visit https://www.tpgrefinance.com/.

FORWARD-LOOKING STATEMENTS

This earnings release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements are subject to various risks and uncertainties, including, without limitation, statements relating to the performance of the investments of TPG RE Finance Trust, Inc. (the “Company” or “TRTX”); global economic trends and economic conditions, including heightened inflation, slower growth or recession, changes to fiscal and monetary policy, higher interest rates, stress to the commercial banking systems of the U.S. and Western Europe, labor shortages, currency fluctuations and challenges in global supply chains; the Company's ability to originate loans that are in the pipeline and under evaluation by the Company; financing needs and arrangements; and the risks, uncertainties and factors set forth under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as such risk factors may be updated from time to time in the Company’s periodic filings with the Securities and Exchange Commission (the “SEC”), which are accessible on the SEC’s website at www.sec.gov. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “believe,” “could,” “project,” “predict,” “continue” or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe existing or future plans and strategies, contain projections of results of operations, liquidity and/or financial condition or state other forward-looking information. Statements, among others, relating to the Company’s ability to take advantage of the attractive opportunity set within real estate credit and drive long-term shareholder value, are forward-looking statements, and the Company cannot assure you that it will achieve such results. The ability of TRTX to predict future events or conditions or their impact or the actual effect of existing or future plans or strategies is inherently uncertain. Although the Company believes that such forward-looking statements are based on reasonable assumptions, actual results and performance in the future could differ materially from those set forth in or implied by such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company’s views only as of the date of this earnings release. Except as required by law, neither the Company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements appearing in this earnings release. The Company does not undertake any obligation to update any forward-looking statements contained in this earnings release as a result of new information, future events or otherwise. Past performance is not indicative nor a guarantee of future returns. Yield data are shown for illustrative purposes only and have limitations when used for comparison or for other purposes due to, among other matters, volatility, credit or other factors.

Non-GAAP Financial Measures Reconciliation

Distributable Earnings

Distributable Earnings is a non-GAAP measure, which we define as GAAP net income (loss) attributable to our common stockholders, including realized gains and losses from loan write-offs, loan sales and other loan resolutions (including conversions to real estate owned (“REO”)), regardless of whether such items are included in other comprehensive income or loss, or in GAAP net income (loss), and excluding (i) non-cash stock compensation expense, (ii) depreciation and amortization expense, (iii) unrealized gains (losses) (including credit loss expense (benefit), net), and (iv) certain non-cash or income and expense items. The exclusion of depreciation and amortization expense from the calculation of Distributable Earnings only applies to debt investments related to real estate to the extent we foreclose upon the property or properties underlying such debt investments.

We believe that Distributable Earnings provides meaningful information to consider in addition to our net income (loss) and cash flow from operating activities determined in accordance with GAAP. We generally must distribute at least 90% of our net taxable income annually, subject to certain adjustments and excluding any net capital gains, for us to continue to qualify as a real estate investment trust for U.S. federal income tax purposes. We believe that one of the primary reasons investors purchase our common stock is to receive our dividends. Because of our investors’ continued focus on our ability to pay dividends, Distributable Earnings is an important measure for us to consider when determining our distribution policy and dividends per common share. Further, Distributable Earnings helps us to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan investment and operating activities.

Distributable Earnings excludes the impact of our credit loss provision or reversals of our credit loss provision, but only to the extent that our credit loss provision exceeds any realized credit losses during the applicable reporting period.

A loan will be written off as a realized loss when it is deemed non-recoverable or upon a realization event. Such a realized loss would generally be recognized at the time the loan receivable is settled, transferred or exchanged, or in the case of foreclosure, when the underlying property is foreclosed upon or sold. Non-recoverability may also be concluded by us if, in our determination, it is nearly certain that all amounts due will not be collected. A realized loss may equal the difference between the cash or consideration received or expected to be received, and the net book value of the loan, reflecting our economics as it relates to the ultimate realization of the asset.

Distributable Earnings does not represent net income (loss) or cash generated from operating activities and should not be considered as an alternative to GAAP net income (loss), an indication of our GAAP cash flows from operations, a measure of our liquidity, or an indication of funds available for our cash needs. In addition, our methodology for calculating Distributable Earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, our reported Distributable Earnings may not be comparable to the Distributable Earnings reported by other companies.

Reconciliation of GAAP Net Income Attributable to Common Stockholders to Distributable Earnings

The table below reconciles GAAP net income attributable to common stockholders and related diluted per share amounts to Distributable Earnings and related diluted per share amounts ($ in thousands, except per share data):

		Three Months Ended,
		September 30, 2024				Per Diluted Share(1)
Net income attributable to common stockholders		$	18,676			$	0.23
Depreciation and amortization			3,453				0.04
Non-cash stock compensation expense			1,141				0.01
Credit loss (benefit), net			(301	)			—
Distributable earnings before realized losses from loan sales and other loan resolutions		$	22,969			$	0.28
Realized loss on loan write-offs, loan sales and REO conversions			—				—
Distributable earnings		$	22,969			$	0.28
Weighted average common shares outstanding, diluted			81,365,205

_______________________________
(1)		Numbers presented may not foot due to rounding.

 

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INVESTOR RELATIONS

+1 (212) 405-8500

IR@tpgrefinance.com

MEDIA

TPG RE Finance Trust, Inc.

Courtney Power

+1 (415) 743-1550

media@tpg.com

Source: TPG RE Finance Trust, Inc.

FAQ

What was TRTX's earnings per share in Q3 2024?

TRTX reported GAAP earnings of $0.23 per share and Distributable Earnings of $0.28 per share in Q3 2024.

How much did TRTX originate in new loans during Q3 2024?

TRTX originated three first mortgage loans with total commitments of $204.0 million during Q3 2024.

What was TRTX's book value per share as of September 30, 2024?

TRTX's book value per share was $11.41 as of September 30, 2024.

What dividend did TRTX declare for Q3 2024?

TRTX declared a cash dividend of $0.24 per share of common stock for Q3 2024.