TPG RE Finance Trust, Inc.

Greetings and welcome to the TPG Real Estate Financial Trust third quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press store zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Deborah Ginsburg, General Counsel. Thank you, Debra. You may begin.

Good morning, and welcome to TPG Real Estate Finance Trust's conference call for the third quarter of 2022. I'm joined today by Doug Bucard, Chief Executive Officer, Matt Coleman, President, and Bob Foley, Chief Financial Officer. Doug and Bob will share some comments about the quarter, and then we'll end up the call for questions. Yesterday evening, we filed our Form 10-Q and issued a press release and earnings supplemental 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 Form 10-Q and our Form 10-K. 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 in our Form 10-Q. With that, I turn the call over to Doug Bucard, Chief Executive Officer of TPG Real Estate Finance Trust.

Thank you, Debra. And good morning, everyone. Thank you for joining the call. As I complete my second quarter as CEO, I'm excited about the opportunity ahead for TRTX. We find ourselves in the midst of an attractive time to be a lender. And given our liquidity position, the real-time information flow we see as part of the TPG real estate investing platform, I believe TRTX is well positioned to take advantage of the current macroeconomic and real estate investing landscape. Over the past quarter, the market continued further along the same trend lines, tightening financial conditions, slowed capital markets activity, reduced available liquidity, widened loan spreads, and reduced real estate values across nearly all property types. As we head into the end of the year, we anticipate an acceleration of these trends as risk appetite continues to weaken. Furthermore, transaction activity remains muted due to a widening gap between where buyers and sellers will transact. In the first two quarters of the year, TRTX deliberately reduced our investment activity and bolstered our liquidity as we anticipated the continued effects of tightening financial conditions on real estate debt and equity markets. As we conclude the third quarter, we have begun to opportunistically deploy capital on attractive terms while maintaining sufficient liquidity to mitigate the effects of further market deterioration and risk manage our current portfolio. Given the continued pressure on real estate values, particularly within the office sector, we have adjusted the risk rating on certain loans and increased our seasonal reserve. The very same conditions that foster an attractive lending environment do create challenges for our existing investments. Fortunately, our real estate platform has investing and asset management experience that spans multiple economic cycles and is well positioned to drive resolutions that will both maximize shareholder value and position us to redeploy capital into an opportunity-rich investing environment. From a liquidity perspective, we ended the quarter with $571 million of total liquidity. We continue to take the same measured approach in balancing the deployment of capital while maintaining ample liquidity in the context of the broader economic backdrop. As evidenced in our Q3 originations, which I'll speak about in a moment, We continue to diversify our funding away from the series CLO market while maintaining attractive blended cost of funds for the company at a spread of 200 basis points and an advance rate of 79%. Over the past quarter, we continue to grow the portfolio with an investment bias towards multifamily exposure. We made investments of $984 million across 10 loans with a weighted average credit spread of 352, a blended LTV of 65%, And worth noting that over 70% of these new investments were multifamily loans and 80% of the loans were acquisition financing. It is also worth noting that 100% of our QP investments were financed via non-mark-to-market structures and the spot ROE of these investments at closing exceeded 12%. Given the recent contraction in liquidity, the ability to execute newly funded non-mark-to-market financing last quarter is a testament to the depth and breadth of TPG's relationships with the bank community. In addition, in the past quarter, we received repayments totaling $371 million, 82% of which were office loans. So as a result, as you think about our current portfolio, over the past 12 months, we've nearly doubled our multifamily exposure to approximately 44% of the portfolio, while reducing our office exposure a third down to 28% of the total portfolio. Similar to the last few quarters, you should expect that TRTX will continue to focus on lending in sectors with attractive long-term fundamentals, such as multifamily and industrial. As real estate values reset lower and liquidity contracts across debt markets, TRTX can command more spread at a lower debt basis compared to prior vintages. Given our conservative liquidity profile, a lender-friendly environment combined with the depth and breadth of the TPG investing platform, We expect to take full advantage of this opportunity for the TRTX shareholders over the coming quarters. With that, I'll turn it over to Bob to provide more detail on our results.