Tpg Re Finance Trust, Inc. · NYSE:TRTX
Tpg Re Finance Trust — BofA Securities 2020 Virtual Global Real Estate Conference
30 slides from Tpg Re Finance Trust's conference presentation, Sep 15, 2020
Slide 1: BofA Securities 2020 Virtual Global Real Estate Conference
BofA Securities 2020 Virtual Global Real Estate Conference September 15, 2020
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains, and our officers and representatives may make, “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, which reflect our curren
Slide 3: TPG RE Finance Trust, Inc.
TPG RE Finance Trust, Inc. $5.6 billion $5.1 billion $12.4 billion 99.4% Total Outstanding Unpaid Principal Balance Loan Commitments First Mortgage Loans Loan Commitments of Loans Originated or Acquired Since December 2014 65 Loans L+3.4% 100% 65.8% Weighted Average Floating Rate Weighted Average LT
Slide 4: Platform Highlights
Platform Highlights Balance sheet lender with $5.6 billion portfolio of floating rate loans, of which 99.4% are first mortgage loans Originated and acquired $12.4 billion of loan commitments since Scale December 2014 Harnesses TPG’s $79 billion AUM platform, informational advantages, and enhan
Slide 5: Career Balance Sheet Lenders Drive Investment Strategy
Career Balance Sheet Lenders Drive Investment Strategy Greta Guggenheim Matt Coleman Peter Smith Bob Foley Deborah Ginsberg Chief Executive Officer President Chief Investment Officer Chief Financial Officer General Counsel 30+ years of experience 20+ years of experience 25+ years of experience 30+ y
Slide 6: 2Q 2020 Recap
2Q 2020 Recap GAAP net income1 and Core Earnings1 of $0.52 and $0.23 per share, respectively Net Interest Income of $44.2 million, up 2.1% over the three months ended March 31, 2020 Current Expected Credit Loss (CECL)2: o 2Q loan loss benefit of $10.5 million Financial o Reserve at June 30, 20
Slide 7: 2Q 2020 Loan Portfolio
2Q 2020 Loan Portfolio As of As of Loan Investment Portfolio1 ($ in millions) June 30, 2020 March 31, 2020 QoQ Change Total Loan Commitments $5,635.3 $5,763.7 (2.2%) Loan Repayments $119.4 $300.6 (60.3%) Unpaid Principal Balance $5,055.9 $5,112.8 (1.1%) Weighted Average Loan Risk Rating2 3.1 3.2 ‐ A
Slide 8: 2Q 2020 Operating Performance
2Q 2020 Operating Performance Performance Metric June 30, 2020 March 31, 2020 QoQ Change GAAP net income (loss) attributable $40.1 million / $0.52 per share $(233.1) million / $(3.05) per share 117.2% / 117.0% to common stockholders Core Earnings1 $17.5 million / $0.23 per share $(168.3) million / $
Slide 9: Book Value Walk 2Q 2020
Book Value Walk 2Q 2020 Beg. Change in Book Value Per Share End. Book Value Book Value $16.06 ($0.03) $0.43 ($0.23) $0.02 $16.25 $0.32 ($0.01) $16.56 ($0.18) $0.17 $16.55 $1.08 $0.76 $0.76 $1.08 CECL Recurring Operations (104 bps at Non‐Recurring 6/30/2020)1 Book Value Common Stock Net Income, Divid
Slide 10: Diversified Loan Portfolio
Diversified Loan Portfolio National, Major Market Footprint2 Property Diversity2 Geographic Diversity 2,4 MI PA NY Mixed‐Use Hotel Southeast 3.7% 8.3% 20.1% MA 2.5% 10.7% 13.1% 11.6% Various Condominium3 Retail 1.6% 1.5% 0.6% Midwest 7.6% East Multifamily 43.5% NJ 22.2% 3.3% IL West NV 2.0% 1.6% MD
Slide 11: Risk Ratings Update
Risk Ratings Update Weighted average loan portfolio risk rating of 3.1 as of June 30, 2020 Risk Ratings Migration Risk Ratings – QoQ1,2 3.2 3.1 Risk Ratings – 6/30/2020 2.9 2.9 $ Millions Total: $5,042.1 Loan Count: 65 $3,398.5 Weighted Average Risk Rating of 3.1 June 30, Mar 31, Dec 31, Sep 30, 4
Slide 12: Financing Overview
Financing Overview Financing Arrangements Non‐recourse, non‐mark‐to‐market financings represent 52.4% of total loan portfolio financing1 Diverse set of 8 lenders providing committed secured financing arrangements Extended $0.7 billion of borrowings with GS, BOA, and MS Loan Financing² Leverage
Slide 13: Secured Financing Arrangements – Loan Investments
Secured Financing Arrangements – Loan Investments Extended Maximum Outstanding WA Approved WA As‐Is LTV Look‐through WA Cost of Maturity Capacity at 6/30/20 Advance Rate of Collateral LTV1 Funds Secured Repurchase Agreements 10/17/2022 $2,790.9 $1,718.7 69.2% 66.1% 45.2% 1.74% Credit Senior Secured
Slide 14: Interest Rate Sensitivity
Interest Rate Sensitivity 100% of the portfolio is indexed to one‐month USD LIBOR Portfolio benefits from decreasing rates given in‐place LIBOR floors on loans1 – 95% of the loan portfolio is subject to a LIBOR floor of at least 0.95% Approximately 5% of total outstanding financing is subject
Slide 15: Platform Highlights
Platform Highlights Balance sheet lender with $5.6 billion portfolio of floating rate loans, of which 99.4% are first mortgage loans Scale Harnesses TPG’s $79 billion platform, informational advantages, and enhanced access to the capital markets Experience Led by proven, cycle‐tested, career p
Slide 16: Appendix
Appendix
Slide 17: Portfolio Construction
Portfolio Construction ($ in millions) Average Loan Size1 Geographic Region 120.0 70.0% 100.0 60.0% 80.0 60.0 50.0% 40.0 40.0% 20.0 0.0 30.0% FYE 2014 FYE 2015 FYE 2016 FYE 2017 FYE 2018 FYE 2019 1Q 2020 2Q 2020 20.0% Loan Portfolio Yearly Loan Originations 10.0% Portfolio‐Wide LTV 0.0% 70.0% FYE 20
Slide 18: Investment Approach and Process
Investment Approach and Process Investment Principles Rigorous Underwriting and Due Diligence Focus on credit quality and capital preservation Deal Screening and Early Target primary and select secondary Warning markets with positive economic dynamics Memo Institutional quality properties owne
Slide 19: Credit and Risk Management
Credit and Risk Management Credit Process Risk & Asset Management Senior management has an average of 25 years of Dedicated servicing and asset management team credit and underwriting experience Maintain updated tracking and evaluation system Bottom‐up, equity‐oriented approach to for vigila
Slide 20: Strategic Capital Raise
Strategic Capital Raise Key Terms1 Rationale and Benefits to TRTX Investor P.E. Holder, LLC, an affiliate of Starwood Capital Group Global II, L.P. Materially increased capital base and liquidity Series B Cumulative Redeemable Preferred Stock (“Series B Preferred Stock”, Recruited as strategic i
Slide 21: Per Share Calculations
Per Share Calculations Three Months Ended (unaudited) Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Net Income (Loss) Attributable to Common Earnings and Stockholders 1 $40,105 $(233,061) $32,618 $32,909 Dividends per Weighted‐Average Number of Common Shares Outstanding, Basic and Diluted 2 76
Slide 22: TRTX Loan Portfolio
TRTX Loan Portfolio $ Millions TRTX Loan TRTX Loan Extended Property Commitment Loan Name Commitment1 Balance2 Interest Rate Maturity Location Type Per Sq. ft. / Unit LTV3 Loan 1 $350.8 $322.9 L+ 2.9% 4.2 years New York, NY Office $692 Sq. ft. 72.8% Loan 2 $223.0 $169.6 L+ 3.4% 4.1 years Atlanta, GA
Slide 23: Consolidated Balance Sheets
Consolidated Balance Sheets All amounts in thousands except share and per share amounts June 30, 2020 ASSETS December 31, 2019 (unaudited) Cash and Cash Equivalents $196,237 $79,182 Restricted Cash 180 484 Accounts Receivable 36 2,344 Accounts Receivable from Servicer/Trustee 80,219 13,741 Accrued I
Slide 24: Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Income and Comprehensive Income All amounts in thousands except share and per share amounts (three months ended June 30 is unaudited) Three Months Ended June 30, INTEREST INCOME 2020 2019 Interest Income $70,051 $88,254 Interest Expense (25,865) (46,426) Net Interest Incom
Slide 25: Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows All amounts in thousands Six Months Ended (Unaudited) Cash Flows from Operating Activities: June 30, 2020 June 30, 2019 Net Income (Loss) $(189,862) $60,381 Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities: Amortization and Accreti
Slide 26: Definitions
Definitions TRTX defines Asset‐Level Estimated Return on Equity (ALEROE) as a non‐discounted estimate of a loan investment’s average annual return on equity during its initial term to maturity. ALEROE is determined for each loan, on a stand‐ alone basis, using the loan’s stated credit spread, spot
Slide 27: Definitions (cont.)
Definitions (cont.) Deferred Borrower fundings that are made under existing loan commitments after loan closing date Fundings TRTX provides herein additional detail by splitting the South region into separate Southeast and Southwest regions using definitions established by The National Council o
Slide 28: Definitions (cont.)
Definitions (cont.) Bridge/Stabilization Loan ‐ A loan with limited deferred fundings, generally less than 10% of the total loan commitment, which fundings are commonly conditioned on the borrower’s satisfaction of certain collateral performance tests. The related business plan generally involves
Slide 29: Definitions (cont.)
Definitions (cont.) Using on a 5‐point scale, TRTX’s loans are rated “1” through “5,” from least risk to greatest risk, respectively, on a quarterly basis. The loan risk ratings are defined as follows: – 1: Outperform—Exceeds performance metrics (for example, technical milestones, occupancy, rents
Slide 30: Company Information
Company Information TPG RE Finance Trust, Inc. (“TRTX” or the “Company”) is a commercial real estate finance company that focuses primarily on originating, acquiring, and managing first mortgage loans and other commercial real estate‐related debt instruments secured by institutional properties locat
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