Tpg Re Finance Trust, Inc. · NYSE:TRTX
Tpg Re Finance Trust — Bank of America Merrill Lynch 2017 Global Real Estate Conference
25 slides from Tpg Re Finance Trust's conference presentation, Sep 13, 2017
Slide 1: Bank of America Merrill Lynch 2017 Global Real Estate Conference
Bank of America Merrill Lynch 2017 Global Real Estate Conference September 13, 2017
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains certain forward-looking statements, including, without limitation, statements concerning our operations, economic performance and financial condition. These forward-looking statements are made pursuant to the safe harbor provisions of the Private
Slide 3: TPG Real Estate Finance Trust Business Overview
TPG Real Estate Finance Trust Business Overview Originates and acquires large ($75—$200M) floating rate, commercial mortgage loans on assets in transition Focuses on high-quality CRE properties located in primary and select secondary U.S. markets Formed in December 2014; IPO in July 2017 Team has gr
Slide 4: TPG Real Estate Finance at a Glance
TPG Real Estate Finance at a Glance December 2014 Launched Operations July 20, 2017 Initial Public Offering $2.7B / 50 Loans Loan Portfolio 60.2% As-Is LTV 97.2% First Mortgage % of Portfolio 97.8% Floating Rate % of Portfolio 66.1% Loans in Top 10 Markets¹ 5.0% Weighted Average Credit Spread2 1. To
Slide 5: Investment Highlights
Investment Highlights Established Lending Platform in Major Markets Large Addressable Market Opportunity Intense Focus on Credit & Capital Preservation TPG Affiliation Enhances Platform Capabilities Senior Management are Career Lenders Consistent Financial Performance Well Capitalized Balance Sheet
Slide 6: Established Lending Platform in Major Markets
Established Lending Platform in Major Markets National, Major Market Footprint Lending Focused in Top 25 Markets Other 20.3% Top 11-25 Top 10 13.6% 66.1% Top 25 Markets Account for 79.7% of Total Loan Commitments¹ Property Diversity2 Geographic Diversity2 Mixed-Use Various Mixed-Use 12.4% Hotel Midw
Slide 7: Investment Approach: Credit & Capital Preservation
Investment Approach: Credit & Capital Preservation Major Markets with Positive Market Dynamics Institutional Quality Properties and Borrowers Significant Borrower Equity Basis at Discount to Replacement Cost / Value Short Transitional Business Plans (12-24 months) Loan Terms Consistent with Borrower
Slide 8: Rigorous Credit Review Process
Rigorous Credit Review Process Deal Screening, EWM and Underwriting Due Diligence and Closing Go / No Go Evaluate “Quick EvaluatedPrior toReview byTermBackground Professional Loan Look”by Head ofExecutedEWMCapital MarketsSheetSiteChecks onLegal Request Analysis OriginationsTerm SheetApproved& Compli
Slide 9: Superior Sourcing Provides Competitive Advantage
Superior Sourcing Provides Competitive Advantage Sourcing Channels Relationships with borrowers and brokers TPG and TPG RE equity investment group Repeat borrowers Responsiveness and flexibility in loan asset management TRTX Direct TPG RE / TPG Relationships With Borrowers and Brokers Existing Banks
Slide 10: Highly Experienced Management Team
Highly Experienced Management Team Seasoned Leadership Delivers CRE Credit Expertise and Public Company Management Experience Greta Guggenheim Chief Executive Officer 30+ years of experience Select Experience Co-Founder and CIO Ladder Capital Peter Smith Head of Originations 25+ years of experience
Slide 11: Consistent Financial Performance
Consistent Financial Performance $ in Millions GAAP Net Income¹ $48.8M $36.6M $33.4M 1H16 2H16 1H17 Source: Company audited and unaudited financial statements Portfolio Leverage² Debt-to-Equity Total Leverage 1.97x 1.83x 1.67x 1.62x 1.48x 1.35x 12/31/16 3/31/17 6/30/17 Source: Company audited and un
Slide 12: Recent Operating Performance
Recent Operating Performance GAAP Net Income and Core Earnings1 of $25.3 million, or $0.64 per diluted common share for the quarter ended June 30, 2017 Net Interest Income increased to $32.1 million, up $8.8 million, or 37.6%, from the three months ended June 30, 2016 Declared dividends of $0.51 per
Slide 13: Book Value per Common Share
Book Value per Common Share TRTX Equity Issuances and Net Income Drive Book Value per Common Share Private Public $0.64 $24.83 $24.95 $0.00 ($0.51 ) ($0.37 ) $19.82 ($4.75 ) ($0.01 ) Book Net Capital Cash Book IPO Stock Greenshoe As-Value Income Call¹ Dividend Value 7/25/17 Dividend² Exercise Adjust
Slide 14: Loan Originations
Loan Originations Q2 2017 Investment Highlights Closed 3 first mortgage loans Total commitment of $332.4 million Average loan size of $110.8 million 100% Floating Rate Weighted average credit spread of LIBOR plus 3.9% Weighted average LTV of 66.8% Diversified by property type1: Mixed-Use2: 74.6% Mul
Slide 15: Recent Developments
Recent Developments Initial Public Offering Raised approximately $212 million of net proceeds via sale of 11.65 million shares, including 0.65 million shares sold pursuant to the underwriters’ greenshoe option Grew equity base to $1.2 billion with strong institutional support from IPO investors Q3 2
Slide 16: Diverse Financing Base
Diverse Financing Base Total commitments of $3.0 billion1 at a weighted average cost of funds of LIBOR plus 2.58% for the loan portfolio Diverse lending sources currently provide $1.4B of financing capacity Target leverage of 3:1 debt / equity LIBOR-based assets and liabilities Debt funding strategy
Slide 17: Capitalization as of June 30, 2017
Capitalization as of June 30, 2017 Equity base includes stockholders’ equity of $1.0 billion and $1.4 billion1 of available financing capacity Expanded post-IPO equity base and available financing capacity provides sufficient capital to support potential new loan investments of $1.7 billion Current
Slide 18: Interest Rate Sensitivity
Interest Rate Sensitivity 97.8% floating rate primarily first mortgage loan portfolio well positioned in a rising interest rate environment1 Net floating rate mortgage loan exposure of $697 million generates an annualized per diluted common share increase of $0.07 to Net Interest Income for every 50
Slide 19: Appendix
Appendix
Slide 20: Year-to-Date Loan Funding Activity
Year-to-Date Loan Funding Activity Strong origination momentum spurred by $1.1 billion of new loan commitments Accelerating pace of originations driven by larger average loan size: $110.8 million in 2Q vs. $68.7 million in 1Q Loan Funding Activity1 $ Millions Total Commitments2 UPB Unfunded Commitme
Slide 21: TRTX Loan Portfolio
TRTX Loan Portfolio $ Millions TRTX Loan TRTX Loan Extended Property Loan Name Commitment1 Balance2 Credit Spread Maturity Location Type Loan PSF LTV3 Loan 1 $188.0 $142.0 L + 4.1% 4.3 years Nashville, TN Mixed-Use4 $292 Sq ft 60.7% Loan 2 164.0 122.5 L + 4.5% 4.5 years Atlanta, GA Retail $462 Sq ft
Slide 22: Competitive Landscape
Competitive Landscape Total Senior Loan Portfolio $2,640 $12,062 $5,309 $1,311 $1,862 $2,038 ($ in M) % First 98% 97% 77% 71% 91% 57% Mortgages Non-Senior Assets / 8% 11% 36% 40% 19% 69% Total Equity Weighted Average Credit 4.9% 4.1% 6.3% 4.4% 4.4% N/A Spread1 Weighted 2 60% 61% 63% 66% 70% N/A Aver
Slide 23: Definitions
Definitions TRTX uses Core Earnings to evaluate its performance excluding the effects of certain transactions and GAAP adjustments it believes are not necessarily indicative of its current loan activity and operations. Core Earnings is a non-GAAP measure, which TRTX defines as GAAP net income (loss)
Slide 24: Definitions (cont.)
Definitions (cont.) Leverage Debt-to-Equity—Represents (i) total outstanding borrowings under secured debt agreements (collateralized loan obligation, net), secured financing/repurchase agreements (net) and notes payable (net), less cash, to (ii) total stockholders’ equity, at period end Total Lever
Slide 25: Definitions (cont.)
Definitions (cont.) Loan-to-Value (LTV) As-is-LTV is calculated as the total outstanding principal balance of the loan or participation interest in a loan plus any financing that is pari passu with or senior to such loan or participation interest at the time of origination or acquisition divided by
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