TPG RE Finance Trust, Inc.

Greetings and welcome to the TPGRE Finance Trust third quarter 2021 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Deborah Ginsburg, Vice President Secretary for TPGRE Finance Trust. Thank you. You may begin.

Thanks, Melissa. Good morning, and welcome to TPG Real Estate Finance Trust's conference call for the third 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 factors 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 to everyone for joining this morning's call. I'm pleased to report another strong quarter for TRTX. During the third quarter, we saw strong performance from all parts of our business, including originations, the loan portfolio, and capital markets. Starting with originations, we continued to execute our multifamily-focused investment strategy, targeting markets with strong employment, income, and education characteristics. For the quarter, we closed seven loans with a total commitment amount of $482.9 million. Two loans were in Tampa, a market that demonstrates the positive demographic trends we seek, including in-migration accelerated by COVID. As a result, the increased demand for multifamily products has led to strong rent growth, resulting in compelling lending opportunities for us. Life science is the other asset class where we focused our origination strategy and attention. While this is an asset class with newer heightened focus among many of our peers, this is a sector where our lending activity dates back almost to our inception when we closed our first life science loan in 2015. It's also an asset class where we have significant strategic advantages, including substantial lab space ownership through TPG's real estate private equity business, longstanding senior advisor and executive relationships, and substantial insights through TPG's healthcare group. During the third quarter, we closed one life science loan to a best-in-class sponsor in one of the best submarkets in San Diego. This loan is our sixth to this borrower, reflecting the value of longstanding direct relationships and repeat business. Following the end of the quarter, we had four additional closings, and we have four more loans in the closing process. Including that activity, year-to-date closed and in-closing originations now exceed $1.8 billion. One of the loans we closed after quarter end is our first post-COVID hospitality loan. While we're still carefully watching the lingering effects of the pandemic on the hospitality space, we chose this loan as our hotel reentry point because the asset's located in a very strong market. The loan is secured by a well-established property with a strong pre-COVID operating history. and the transaction was an acquisition with significant fresh sponsor equity. Although the lending market is competitive, we continue to source compelling risk-reward opportunities that deliver ROEs in line, generally, with pre-pandemic returns. The relationships, connectivity, and intellectual capital resident within TPG continue to provide us competitive advantages in sourcing, market selection, and asset-specific insights. Turning to the loan portfolio, interest collections continue to be very strong, in excess of 99%. The only loan in our portfolio that is not current is the defaulted retail loan in Southern California. We received full repayments during the quarter of $418 million across two multifamily loans and one office loan. Subsequent to quarter end, we received full repayment of $160 million loan secured by a mixed-use asset in Houston, which was sold by our borrower in a transaction that closed last week. We originated this loan in 2018 to refinance a construction loan and provide capital for lease up and stabilization. And while COVID may have slightly delayed the sponsor's completion of its business plan, this is a good example of the natural lifecycle of our transitional loans and the active investment sales market and capital markets for high-quality real estate. Finally, on October 4th, we sold one hotel loan for par less transaction costs, which will enable us to redeploy that capital into higher-yielding new loan investments. I'd now like to provide a brief update on the two assets we've covered on prior calls, our retail loan in Southern California and our land positions in Las Vegas. Regarding the retail loan, we continue to work with the sponsors to sell prior calls. our retail loan in Southern California, and our land positions in Las Vegas. Regarding the retail loan, we continue to work with the sponsors to sell the act with Clark County, Nevada, which owns and operates the adjoining McCarran International Airport, to sell the 17-acre south parcel for $55 million. We expect the sale to close before Thanksgiving. Simultaneously, we've launched a process to sell the 10-acre north parcel. Timing on that process remains a bit more fluid, but we're encouraged by the robust economic recovery in Las Vegas. Across the portfolio, we're seeing strong operating performance, and we're pleased with these individual loan and REO resolutions, which free up equity that can generate future earnings. In that vein, we continue to have substantial available liquidity with approximately $254 million of free cash on hand, combined with relatively low leverage which we can use to fuel future originations and portfolio growth. I want to now turn it over to Bob to cover our third quarter results in more detail.