TPG RE Finance Trust, Inc.

today and welcome to the TPG RE Finance Trust second quarter 2021 earnings conference call. Today's call is being recorded. At this time, I'd like to turn the conference over to Deborah Ginsberg, General Counsel. Please go ahead.

Good morning and welcome to TPG Real Estate Finance Trust's conference call for the second quarter of 2021. I'm joined today by Matt Coleman, President, Bob Foley, Chief Financial Officer, and Peter Smith, Chief Investment Officer. Bob and Matt will share some comments about the quarter, and then we'll open up the call for questions. Yesterday evening, we filed our Form 10-Q and issued a press release with a presentation of our operating results, all of which are available on our website in the Investor Relations section. I'd like to remind everyone that today's call may include forward-looking statements, which are uncertain and outside of the company's control. Actual results may differ materially. For a discussion of some of the risks that could affect results, please see the Risk Factor section of our 10-Q. We do not undertake any duty to update these statements, and we will also refer to certain non-GAAP measures on this call. And for reconciliations, you should refer to the press release and our 10-Q. With that, I will turn the call over to Matt Coleman, President of TPG Real Estate Finance Trust.

Thank you, Debra, and thanks, everyone, for joining this second quarter earnings call for TRTX. I'm happy this morning to be covering another strong quarter for the company. As I've done over the last few quarters, I'll frame today's discussion along the dimensions of the three key strategic pillars that I first articulated at the beginning of the year. Capital structure optimization, renewed originations, and portfolio performance consistent with proving out our book value. But first, I will begin with a brief update on our CEO search. TRTX's board of directors and representatives of TPG have established a search committee and retained an executive search firm. The committee's work is ongoing, and we expect to have further updates for you over the coming quarters. Now, turning to our second quarter results and starting with capital markets. We redeemed in full all $225 million of the company's outstanding 11% Series B preferred stock using a combination of cash on hand and the proceeds of a new $201.3 million issuance of 6.25% Series C preferred stock. We were able to take advantage of very robust capital markets, lowering our preferred dividend rate by more than 43%. This issuance together with our one and a quarter billion dollars CRE CLO that closed on the last day of the first quarter puts us in a very competitive position with respect to our overall cost of capital available for new originations. As a result of the new second quarter originations that I'll cover momentarily, We've also fully utilized the nearly $309 million ramp feature of that CLO. Midway through the year, we're proud of our capital markets achievements, including the fact that now 82% of the company's debt obligations are non-mark to market. Moving now to new originations. Activity in the second quarter was robust. We closed nine loans representing more than $750 million of commitments, focused on multifamily, which was 45% of the total, and life sciences, approximately 44% of the total. Taking into account signed term sheets after quarter end, we're now at more than $1.1 billion of originations year to date, and our total loan portfolio grew 6.7% quarter over quarter to more than $5.3 billion. As always, the relationships, connectivity, and intellectual capital resident within PPG broadly and TPG Real Estate more specifically afford us competitive advantages in sourcing, market selection, and asset-specific insights. As of the end of the second quarter, we continued to have substantial additional available liquidity of nearly $400 million, which we can use to fuel future originations and portfolio growth. Finally, turning to our portfolio, we had interest collections of more than 99%, including 1.1% of PIC for the quarter, with the only non-payer being the defaulted retail asset in Southern California. We're in the process of marketing that asset for sale and hope to have a further update in the reasonably near future. With respect to our owned real estate in Las Vegas, we have selected a sales broker and are beginning to have discussions regarding the disposition of both land parcels. We expect to have updates with respect to Las Vegas over the coming quarters as well. During the second quarter, we had nearly $400 million of realizations, largely in the form of loan repayments, including more than $290 million of office exposure across three loans and an additional $32 million mixed-use loan consisting of both office and industrial. We also opportunistically sold one hotel loan, which reduces our hotel exposure by approximately $60 million. and will enable us to redeploy that capital into other assets more aligned with our current objectives. At quarter end, traditional office, excluding life science, represented approximately 44% of our portfolio. Life science represented 9% and hospitality was down to 12.7%. In general, we saw strong performance across asset classes, including improved hotel performance. Accordingly, risk ratings were stable quarter over quarter, and we released approximately $3.5 million of CECL Reserve, generally reflecting a continued improving macro environment. In the midst of this good performance, we are, of course, paying close attention to the spread of the Delta variant and the effects it may have on the U.S. economy. With that, I will turn it over to Bob to cover our financial results for the quarter.