Tpg Re Finance Trust, Inc. · NYSE:TRTX
Tpg Re Finance Trust — NAREIT REITweek 2020
33 slides from Tpg Re Finance Trust's conference presentation, Jun 3, 2020
Slide 1: NAREIT REITweek 2020 Investor Presentation
NAREIT REITweek 2020 Investor Presentation June 3, 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. $5.8 billion $5.1 billion $12.4 billion 99.6% Total Outstanding Unpaid Principal Balance Loan Commitments First Mortgage Loans Loan Commitments of Loans Originated or Acquired Since December 2014 66 Loans L+3.4% 100% 65.7% Weighted Average Floating Rate Weighted Average LT
Slide 4: Platform Highlights
Platform Highlights Balance sheet lender with $5.8 billion portfolio of floating rate loans, of which 99.6% are first mortgage loans Originated and acquired $12.4 billion of loan commitments since Scale December 2014 Harnesses TPG’s $87 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 Peter Smith Bob Foley Deborah Ginsberg Chief Executive Officer Chief Investment Officer Chief Financial and Risk Officer General Counsel 30+ years of experience 25+ years of experience 30+ years of experience 15+ years of experi
Slide 6: Business Update
Business Update Sold entire investment portfolio of CRE Debt Securities and retired all associated liabilities by April 30, 2020 Since April 30, 2020, investment portfolio is comprised entirely of loans, of which 99.6% are first mortgage loans Raised strategic capital and boosted liquidity via
Slide 7: 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 increases capital base and liquidity Series B Cumulative Redeemable Preferred Stock (“Series B Preferred Stock”, Recruits as strategic in
Slide 8: 1Q 2020 Recap
1Q 2020 Recap GAAP net loss1 and negative Core Earnings1 of $(3.05) and $(2.20) per share, respectively Net Interest Income of $43.3 million, up 4.6% over the three months ended December 31, 2019 Current Expected Credit Losses (CECL)2: Financial – Current provision of $63.3 million, or $0.83 p
Slide 9: 1Q 2020 Loan Portfolio
1Q 2020 Loan Portfolio Quarter Ended Quarter Ended Loan Investment Activity1 ($ in millions) March 31, 2020 December 31, 2019 QoQ Change Number of Loans Closed 5 7 (28.6%) Total Loan Commitments $437.4 $653.7 (33.1%) Loan Initial Unpaid Principal Balance $353.5 $561.1 (37.0%) Investment Average Loan
Slide 10: 1Q 2020 Operating Performance
1Q 2020 Operating Performance Performance Metric March 31, 2020 December 31, 2019 QoQ Change GAAP net income (loss) attributable $(233.1) million / $(3.05) per share $32.6 million / $0.44 per share (815.0%) / (793.2%) to common stockholders Core Earnings1 $(168.3) million / $(2.20) per share $33.2 m
Slide 11: 1Q 2020 Book Value Walk
1Q 2020 Book Value Walk 1Q CECL reserve reflects the macroeconomic impact of COVID-19 Aggregate loss from realized losses and impairment charge attributable to bond investments was $203.5M ($2.65 per share) Beg. Change in Book Value Per Share End. Book Value Book Value $19.78 $0.01 $0.44 ($0.43)
Slide 12: 1Q 2020 Loan Originations
1Q 2020 Loan Originations Loan Origination Activity QoQ Portfolio Composition, by Property Type Property Q4 2019 1Q 2020 1Q 2020 1Q 2020 1Q 2020 Closed 5 first mortgage loans Type3 Portfolio Orig. Repay. Portfolio Portfolio ($M) ($M) ($M) ($M) (%) Total commitments of $437.4 million Office 2,925
Slide 13: Select 1Q 2020 Loan Originations
Select 1Q 2020 Loan Originations Office Multifamily Multifamily Commitment $94.0M $200.7M $50.2M Location Washington, D.C. East Patchogue, NY Austin, TX 925-unit market-rate multifamily community Collateral 366-unit Class B multifamily 277K SF Class B office building comprised of 634 standard
Slide 14: Diversified Loan Portfolio
Diversified Loan Portfolio National, Major Market Footprint2 Property Diversity2 Geographic Diversity 2,4 Southwest MI PA NY Mixed-Use Hotel 13.8% 3.6% 8.2% 19.6% MA 2.5% 10.5% 13.1% Condominium3 Retail East 1.6% 0.6% 42.9% Southeast 11.5% Various Multifamily NJ 1.5% 3.3% 23.6% OH Midwest NV IL 1.0%
Slide 15: Risk Ratings
Risk Ratings Loan commitments and UPB increased to $5.8 billion, or 2.4% QoQ, and $5.1 billion, or 2.3% QoQ, respectively Weighted average loan portfolio risk rating of 3.1 as of March 31, 2020 9 hotel loans moved to a 4 risk rating, reflecting the immediate effects of COVID-19 Updated to Refl
Slide 16: Financing Overview
Financing Overview Financing Arrangements Non-recourse, non-mark-to-market financings represent 49.9% of total loan portfolio financing Diverse set of 8 lenders providing committed secured financing arrangements Loan Financing Utilization1 Leverage Ratio / Total TRTX3 $ Millions Debt-to-Equity 4
Slide 17: Secured Financing Arrangements – Loan Investments
Secured Financing Arrangements – Loan Investments Maximum Outstanding at WA Approved WA As-Is LTV of Look-through WA Cost of Capacity 3/31/20 Advance Rate Collateral LTV1 Funds Secured Repurchase Agreements $3,339.5 $1,834.6 78.7% 65.9% 51.9% 1.70% Senior Credit Secured Facilities Facility $500.0 $1
Slide 18: Interest Rate Sensitivity
Interest Rate Sensitivity 100% floating rate loan portfolio benefits from contractual interest rate floors on our loans with a weighted average strike LIBOR rate of 1.66% portfolio-wide, and the absence of non-zero LIBOR floors on 95.4% of our liabilities Net floating rate mortgage loan exposure
Slide 19: Platform Highlights
Platform Highlights Balance sheet lender with $5.8 billion portfolio of floating rate loans, of which 99.6% are first mortgage loans Scale Harnesses TPG’s $87 billion platform, informational advantages, and enhanced access to the capital markets Experience Led by proven, cycle-tested, career p
Slide 20: Appendix
Appendix
Slide 21: Portfolio Construction
Portfolio Construction ($ 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 20.0% Loan Portfolio Yearly Loan Originations 10.0% Portfolio-Wide LTV 0.0% 70.0% FYE 2014 FYE 2
Slide 22: 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 23: 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 24: Per Share Calculations
Per Share Calculations Three Months Ended (unaudited) Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Earnings and Net Income (Loss) Attributable to Common Stockholders 1 $(233,061) $32,618 $32,909 $31,827 Dividends per Weighted-Average Number of Common Shares Outstanding, Basic and Diluted 2 76
Slide 25: 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 $318.8 L+ 2.9% 4.4 years New York, NY Office $692 Sq. ft. 72.8% Loan 2 $223.0 $169.0 L+ 3.4% 4.4 years Atlanta, GA
Slide 26: Consolidated Balance Sheets
Consolidated Balance Sheets All amounts in thousands except share and per share amounts March 31, 2020 ASSETS December 31, 2019 (unaudited) Cash and Cash Equivalents $103,622 $79,182 Restricted Cash 910 484 Accounts Receivable 6 2,344 Accounts Receivable from Servicer/Trustee 35,448 13,741 Accrued I
Slide 27: 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 March 31 is unaudited) Three Months Ended March 31, INTEREST INCOME 2020 2019 Interest Income $81,749 $76,601 Interest Expense (38,457) (39,367) Net Interest Inc
Slide 28: Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows All amounts in thousands Three Months Ended (Unaudited) Cash Flows from Operating Activities: Mar 31, 2020 March 31, 2019 Net Income (Loss) $(232,790) $28,412 Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities: Amortization and Accre
Slide 29: 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 30: 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 31: 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 32: 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 33: 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