TPG RE Finance Trust, Inc.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to TPG Real Estate Finance Trust first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. The 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. Please note this conference is being recorded. It is now my pleasure to turn the call over to management. Thank you. You may begin.

Good morning, and welcome to the TPGRE Finance Trust earnings call for the first quarter of 2025. Today's speakers are Doug Bukhard, Chief Executive Officer, and Bob Foley, Chief Financial Officer. Doug and Bob will provide commentary regarding the company, its performance, and the general economy, and will answer questions from call participants. Yesterday evening, we filed our Form 10-Q, issued a press release, and shared an earnings supplemental, all of which are available on the company's website in the investor relations section. This morning's call and webcast is being recorded. Information regarding the replay of this call is available in our earnings release and on the TRTX website. Recordings are the property of TRTX, and any unauthorized broadcast or reproduction in any form is strictly prohibited. This morning's call will include forward-looking statements which are uncertain and outside of the company's control. Actual results may differ materially. For a comprehensive discussion of risks that could affect results, please see the risk factors section of the company's latest Form 10-K. The company does not undertake any duty to update our forward-looking statements or projections unless required by law. We will refer during today's call to certain non-GAAP financial measures, which are reconciled to GAAP amounts in our earnings release and our earnings supplemental, both of which are available in the investor relations section of our website. Now, I'll turn the call over to Doug.

Over the past quarter, global markets continue to adjust to the new tariff regime as investors wrestle with the potential short and long-term effects of a protracted global trade. Initially, asset prices reacted violently with a sharp sell-off in equities and then accompanying widening of credit spreads across all parts of the market, including real estate credit. In general, real estate credit spreads have moved in sympathy with broader credit markets. However, investor sentiment at this stage indicates that real estate credit is considered somewhat of a safe haven relative to corporate credit and equity risk. Certain corporate borrowers have direct first-order risk to the new tariffs, which can drive defaults sooner. By contrast, real estate credit has more indirect exposure, hence we expect the effects of tariffs will likely lag on the basis of their real estate credits. Consequently, CRTX remains on offense, but with its usual cautious eye towards downside protection and tail risks. We continue to prefer the housing sector, particularly multifamily, given its resilient and stable NOI profile. However, our pipeline contains transactions across various property types and geographies driven by the thematic insights of TPG's integrated real estate debt and equity investment platform. Despite the broader market disruption, we made steady positive progress toward our strategic goals. From a balance sheet perspective, we maintain substantial liquidity, a 100% performing loan portfolio, and stable risk ratings. From a capital allocation perspective, We closed two multifamily loans after quarter end, totaling $131 million, and have executed term sheets on another $310 million of transactions. We also repurchased $9 million worth of TRTX common shares, which we continue to believe delivers value and liquidity to our shareholders. From a liability perspective, we priced and closed our sixth series CLO, FL6, which generated $191 million of cash to our balance sheet and provided another stable, long-term financing vehicle for our loan investment activity. This increased our non-mark-to-market financing exposure to 91% of total borrowings. Our capital markets team did an excellent job driving the execution of the transaction before bond spreads widened out dramatically beginning in late March. As a reminder, this series CLO financing provides us with match-term, non-mark-to-market, non-recourse financing with a 30-month reinvestment The attractiveness, tenor, and stability of this financing creates tremendous long-term value for TRTX shareholders. We've discussed for several quarters the many levers TRTX possesses to drive growth in distributable earnings, including, one, deployment of excess liquidity, two, utilizing untapped financing capacity, three, recycling equity currently invested in REO, and four, creating additional liquidity via capital markets activity. I am pleased to report that we've pulled each of the four levers toward advantage. Number one, we have closed or executed term sheets on approximately $441 million of new investments and repurchased approximately $9 million worth of shares. Number two, we expect to close shortly the sale of two office properties within our REO portfolio. Number three, we lowered our cost of funds from SOPR plus 200 to SOPR plus 194. And fourth, we redeemed FL3 and issued FL6, which generated net liquidity of $260 million for deployment in coming quarters.