Tpg Re Finance Trust, Inc. · NYSE:TRTX
Tpg Re Finance Trust — REITweek: 2021 Virtual Investor Conference
44 slides from Tpg Re Finance Trust's conference presentation, Jun 9, 2021
Slide 1: TPG RE Finance Trust, Inc. REITweek 2021 Virtual Investor Conference
TPG RE Finance Trust, Inc. REITweek: 2021 Virtual Investor Conference June 9, 2021
Slide 2: Forward-Looking Statements and Other Disclosures
Forward-Looking Statements and Other Disclosures The information contained in this presentation 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
Slide 3: Business Update
Business Update
Slide 4: TPG RE Finance Trust, Inc.
TPG RE Finance Trust, Inc. $5.0 billion $4.6 billion $13 billion 83.6% Total Outstanding Unpaid Principal Loan Commitments 99.3% Ratio of Originated or Acquired First Mortgage Loans Non-MTM Debt to Loan Commitments Balance of Loans Since December 2014 Total Debt 4.83% 100% 65.9% LIBOR Floors 58 Loan
Slide 5: Platform Highlights
Platform Highlights Balance sheet lender with $5.0B in floating rate loan commitments, of which 99.3% are first mortgage loans Originated and acquired $13B of loan commitments since December Scale 2014 Harness TPG’s $91B AUM platform, informational and network advantages, and enhanced access t
Slide 6: Well Positioned for 2H 2021 and Beyond
Well Positioned for 2H 2021 and Beyond Increase earnings available to common shareholders to drive further increases in share price Clearly Defined Recycle existing capital into accretive loan originations as loan repayments allow Strategy Optimize loan portfolio through proactive asset manage
Slide 7: Established, Proven CRE Lending Platform
Established, Proven CRE Lending Platform Sourcing Credit and Investing Integrated business within TPG Real Estate ($11B1 AUM); coordinated approach to sourcing, Time-tested IRC process with demanding early relationships, market information, and data-driven warning hurdles investment decisions
Slide 8: Career Credit Investors Drive Investment Strategy
Career Credit Investors Drive Investment Strategy Matt Coleman Peter Smith Bob Foley Deborah Ginsberg President Chief Investment Officer Chief Financial Officer General Counsel 20+ years of experience 25+ years of experience 30+ years of experience 15+ years of experience Select Experience Select Ex
Slide 9: TPG Ecosystem
TPG Ecosystem $91B AUM across TPG ~265 portfolio companies Four US regional offices Extensive relationships with major banks and capital providers David Bonderman Jim Coulter Jon Winkelried Jonathan Coslet Chairman Executive CEO CIO Chairman Principal Private Equity Real Estate Public Equity
Slide 10: TPG Commitment to Diversity, Equity & Inclusion
TPG Commitment to Diversity, Equity & Inclusion Benefits & Use of our influence Gender Neutral and capital to advance Policies benefits, policies, and diversity and equality resources designed to support all employees and families Talent Management Advocacy & Development 100+ women directors & Impac
Slide 11: Financial Performance
Financial Performance
Slide 12: 1Q 2021 Highlights
1Q 2021 Highlights Operating Performance 1Q21 4Q20 Basic Earnings per Share1 $0.32 $0.09 Diluted Earnings per Share1 $0.30 $0.09 Distributable Earnings per Basic Share2 $0.28 $0.15 Distributable Earnings per Diluted Share2 $0.27 $0.15 Recurring Dividend on Common Shares $15.5M / $0.20 per share $15.
Slide 13: Operating Performance
Operating Performance Operating Performance and Dividend Coverage Operating Performance¹ 2Q20 3Q20 4Q20 1Q21 ($ in millions) Net Income Attributable to Common Stockholders $40.1 $30.8 $6.6 $24.2 Distributable Earnings $17.5 $32.6 $11.7 $21.7 Cash Dividends Declared on Common Shares $15.4 $15.4 $15.5
Slide 14: Liquidity and Leverage
Liquidity and Leverage Available Liquidity Leverage Ratio Covenant Cash1 Debt-to-Equity 2 Total Leverage3 Cash $632.9 Undrawn Capacity 3.72x 3.61x CLO Reinvestment Cash FL-4 Ramp Cash $308.9 2.91x 2.81x 2.76x 2.83x 2.66x 2.72x 2.54x 2.44x $342.6 $333.6 $0.1 $22.8 $1.2 $286.2 $21.2 $81.3 $23.2 $37.4
Slide 15: Book Value Walk 1Q 2021
Book Value Walk 1Q 2021 Beg. Change in Book Value Per Share End. Book Value2 Book Value2 $16.50 ($0.03) $0.37 ($0.20) ($0.08) ($0.02) $0.01 $16.55 $0.06 $16.61 $0.82 $0.76 $0.82 CECL Recurring Operations (118 bps at 3/31/2021)1 Book Value Issuance of Common Net Income, Dividends on Dividends on Accr
Slide 16: Loan Portfolio & Capitalization
Loan Portfolio & Capitalization
Slide 17: Diversified Loan Portfolio
Diversified Loan Portfolio National, Major Market Footprint2 Property Diversity2 Geographic Diversity 2,3 MI PA NY Mixed-Use 4.2% 17.2% MA Hotel Southeast 7.3% 11.8% 2.8% 14.7% 13.5% Condominium 0.5% Retail 0.7% Midwest East 9.5% 41.2% Multifamily 17.1% NJ 3.3% IL IN 1.8% 0.9% MD West VA 1.6% 22.6%
Slide 18: Select Loan Originations
Select Loan Originations Multifamily Office (Life Science) Multifamily Commitment $47.0M $215.0M $122.5M Location St. Petersburg, FL Bay Area, CA Towson, MD 384K SF, 9-story Class A office One 15-story Class B 211-unit multifamily building, Collateral building and adjacent parking multifamily
Slide 19: Market Trends
Market Trends Over $2.3 Trillion of CRE Mortgages are Scheduled to Mature Over the Next Five Years2 Rising volumes of loan maturities and property sales Commercial Mortgage Maturities by Sector create opportunities for non-bank lenders 2021 2022 1Q21 Sale Transaction Volume is Consistent with Pre-CO
Slide 20: Office Overview
Office Overview TRTX Office Exposure Return to Work Timeline Tracker2 Office loans represented 55.2% of the Company’s total The majority of employers expect to begin phasing employee return to commitments at March 31, 2021 office by Labor Day and 3Q − 96.2% in Top 25 US MSAs / 69.4% in Top 10 − 65
Slide 21: Multifamily Overview
Multifamily Overview TRTX Multifamily Portfolio MFR – Limited COVID-19 Imapct2 Multifamily loans represented 17.1% of the Company’s total Office Retail Multifamily Hospitality commitments at March 31, 2021 10.0% − 74.7% in Top 25 US MSAs / 42.2% in Top 10 6.6% 5.5% − 74.5% Weighted Average LTV1 5.
Slide 22: Risk Ratings
Risk Ratings Risk Ratings Migration1 Stable Risk Ratings 1 By Amortized Cost 3.16 3.12 3.10 3.08 3.11 Risk Ratings – 3/31/2021 By Amortized Cost ($ in Millions) Loan Count: 58 Total: $4,580.2 $3,376.1 Weighted Average Risk Rating 3/31/2020 6/30/2020 9/30/2020 12/31/2020 3/31/2021 of 3.1 Start of Per
Slide 23: Non-Mark to Market Liabilities
Non-Mark to Market Liabilities Non-MTM 1 Securities Repo (MTM) Whole Loan Repo (MTM) 1 16% 36% 44% 46% 48% 13% 84% 64% 52% 54% 43% 1Q20 2Q20 3Q20 4Q20 1Q21 Non-MTM Liabilities are 84% of total loan portfolio debt 1. Includes CLOs and one hotel specific secured credit facility which may be re-margine
Slide 24: Loan Financing Overview
Loan Financing Overview Loan Financing Arrangements as of March 31, 2021 Total loan portfolio financing capacity of $6.1 billion with $2.4 billion of current availability Weighted average cost of funds of LIBOR plus 1.71%1 Financing Utilization Lengthened Maturity of Outstanding Borrowings2 Usag
Slide 25: Financing by Property Type
Financing by Property Type Office Multifamily Non-MTM High Share of Non-Mark-to-Market Collateralized Loan MTM Secured Credit Obligations Financing as Risk Mitigant 67% Facilities 33% 100% of hotel loans financed with Non-MTM non-MTM debt Collateralized Loan Obligations 100% 67% of office loans
Slide 26: Collateralized Loan Obligations
Collateralized Loan Obligations TRTX 2018-FL2 Established CRE CLO Issuer Closing Date: 11/29/2018 at Closing Date ($ in Millions) Total Deal Size: $1,000.2M Offered Bonds: $795.1M Outstanding Debt1: $790.9M Total Deal Advance Rate: 79.4% Total Deal $1,250.0 Cost of Funds: 1.45% $1,230.3 Collateral U
Slide 27: Capital Structure – Pro Forma for Series C
Capital Structure – Pro Forma for Series C Preferred Stock Issuance Capital Stack Composition – March 31, 2021 Capital Structure Detail – March 31, 2021 ($ in millions) Secured Credit $860.9 (17%) Agreements W.A. Approved Look- Maximum Advance Through W.A. Cost W.A. Outstanding ($ in millions) Capac
Slide 28: Overview of Preferred Stock Issuance and Redemption
Overview of Preferred Stock Issuance and Redemption $175 Million Series C Preferred Stock1 Redemption of Series B Preferred Stock1 Issuer TPG RE Finance Trust Inc. (“TRTX” or the “Company”) Source of Funds Series C Cumulative Redeemable Perpetual Preferred – Net proceeds2 of $169.1 - $194.5 millio
Slide 29: Interest Rate Sensitivity
Interest Rate Sensitivity 100% of the loan portfolio is indexed to one-month USD LIBOR Loan portfolio benefits from low rates due to high in-place LIBOR floors on loans; weighted average LIBOR floor is 1.64% – 99% of the loan portfolio is subject to a LIBOR floor of 0.50% or greater Approximat
Slide 30: Appendix
Appendix
Slide 31: Investment Approach and Process
Investment Approach and Process Avi Banyasz Ken Murphy Matt Coleman Chairman of the Partner, President of TRTX | Investment Board of TRTX | Partner, Co-Chief Operating Officer of TPG Partner, TPG Real Estate COO Review TPG Real Estate Co- Head Committee Peter Smith Business Unit Partner Bob Foley De
Slide 32: Credit and Risk Management
Credit and Risk Management Credit Process Risk & Asset Management Senior management has an average of 25 years of Dedicated servicing and asset management team credit and underwriting experience Maintain updated tracking and evaluation system Bottom-up, equity-oriented approach to for vigila
Slide 33: Portfolio Migration
Portfolio Migration ($ 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 2016 FYE 2017 FYE 2018 FYE 2019 FYE 2020 1Q21 20.0% Loan Portfolio Yearly Loan Originations 10.0% Portfolio-Wide LTV 0.0% 70.0% FYE 2016 FYE 2017 FYE 2018 FY
Slide 34: Loan Payment Performance
Loan Payment Performance Interest Collections 4Q20 1Q21 PIK Interest PIK Interest 1.7% 1.2% Uncollected Uncollected Interest1 Interest2 99.4% interest 3.3% 0.6% collections during 1Q21, including PIK Cash Interest Cash Interest interest of 1.2% 95.0% 98.2% PIK Interest TTM ($ in Thousands) $816.4 $9
Slide 35: Loan Modifications
Loan Modifications Loan Modifications at 3/31/211 Economic modifications typically consist of one or more of the following: partial repayments of principal; equity contributions; repurposing of reserves; deferred PIK interest agreements; and adjustments to debt yield thresholds or other conditions
Slide 36: Per Share Calculations
Per Share Calculations Three Months Ended (unaudited) March 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Net Income (Loss) Attributable to Common 1 $24,233 $6,638 $30,782 $40,105 Stockholders Earnings and Weighted-Average Number of Common Shares 76,895,615 76,759,033 76,756,411 76,644,038 Dividen
Slide 37: Consolidated Balance Sheets
Consolidated Balance Sheets All amounts in thousands except share and per share amounts ASSETS March 31, 2021 December 31, 2020 Cash and Cash Equivalents $301,607 $319,669 Restricted Cash 813 — Accounts Receivable 755 785 Collateralized Loan Proceeds Held at Trustee 310,070 174 Accounts Receivable f
Slide 38: Consolidated Statements of 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 2021 2020 Interest Income $58,148 $81,749 Interest Expense (20,290) (38,457) Net Interest Inc
Slide 39: Consolidated Statements of Cash Flows
Consolidated Statements of Cash Flows All amounts in thousands Three Months Ended (Unaudited) Cash Flows from Operating Activities: March 31, 2021 March 31, 2020 Net Income (Loss) $31,955 ($232,790) Adjustment to Reconcile Net Income to Net Cash Provided by Operating Activities: Amortization and Acc
Slide 40: Definitions
Definitions We use Distributable Earnings to evaluate our performance excluding the effects of certain transactions and GAAP adjustments we believe are not necessarily indicative of our current loan activity and operations. Distributable Earnings is a non-GAAP measure, which we define as GAAP net
Slide 41: Definitions (cont.)
Definitions (cont.) Net Income Attributable to Represents GAAP net income attributable to our common and Class A common stockholders after deducting dividends Common attributable to participating securities Stockholders Deferred Fundings to borrowers that are made under existing loan commitments
Slide 42: 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 43: 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. Risk ratings are presented by amortized cost. The loan risk ratings are defined as follows: – 1: Outperform—Exceeds performance metrics (for e
Slide 44: Company Information
Company Information 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
TPG RE Finance Trust — REITweek: 2021 Virtual Investor Conference on 6ix