TPG RE Finance Trust, Inc.

Welcome to the TPG Real Estate Finance Trust Third Quarter 2025 Earnings Conference 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Bob Foley. Thank you. You may begin.

Good morning, and welcome to the TPG RE Finance Trust earnings call for the third quarter of 2025. Today's speakers are Doug Gucard, Chief Executive Officer, Brandon Fox, Interim Chief Financial Officer, and Ryan Roberto, Head of Capital Markets and Asset Management. Doug and Brandon will provide commentary regarding the company, its performance, and the general economy in which TRTX operates. Doug, Brandon, and Ryan 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 and 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. Today's earnings call is my last. After more than 12 years with TPG and 10 years as CFO of TRTX, my wife and I decided I will retire at year end to become a senior advisor to TPG Real Estate, which was announced via press release six weeks ago. As a senior advisor, I will remain a member of the investment review committees of TRTX, and our other real estate vehicles. Brandon Fox has assumed the role of interim CFO, and Ryan Roberto has assumed all duties regarding capital markets and portfolio management. The succession plan was in place prior to my decision to retire, and Brandon and Ryan have been growing into their new roles for several years. The final stages of this transition will be complete by the holiday season. I've worked with Brandon and Ryan for seven and 10 years respectively. and I have every confidence in their well-developed abilities and judgment. Brandon and Ryan have been strong teammates to Doug as he continues to drive TRTX's success. It's been a privilege to work with my TPG colleagues since 2015 to transform TRTX from a $2.5 billion loan portfolio purchased from a bank into a market-leading commercial mortgage REIT. Important memories for me include $17.9 billion of loan investments, TRTX's 2017 initial public offering, early entry into the CRE CLO market, and establishment of a strong brand as issuer and collateral manager. I'm also very proud of TRTX's deeply ingrained culture of disciplined credit investing, portfolio management and liability management, and the firm's transparent communication with its shareholders, lenders, bond investors, and borrowers. Like most of you on this call, I'm a shareholder, and I look forward to TRTX's continued growth and success. I have the utmost confidence in the TRTX team and its ability to execute its business plan under Doug's thoughtful and energetic leadership. I've known many of you on today's call for decades, during which the real estate credit market has developed impressive depth, breadth, and liquidity. I am appreciative of the confidence and support you have extended to TRTX, to my colleagues, and to me. And I am deeply grateful for the many professional relationships and personal friendships developed over the years. I will miss you. Doug?

First, I want to take a moment to thank you, Bob, for your dedicated service to our firm over the past 12 years. Your incredible work ethic and strategic vision have served TRTX shareholders incredibly well. Like many in our industry, you've served a variety of important roles in my life, a thoughtful client, a close mentor, a dedicated colleague, and a great friend. We are excited to have you remain as a senior advisor to the TPG real estate platform and congratulate you and your family on a well-earned retirement. Additionally, I look forward to continuing a close working relationship alongside Brandon as interim CFO and Ryan as head of capital markets and asset management. Over the past quarter, the equity market again hit multiple all-time highs while the 10-year treasury rallied nearly 40 bps to hover near 4%. Meanwhile, the real estate equity market continues to heal, albeit not at the ferocious pace of the broader asset market. As a result, the backdrop for real estate credit continues to remain attractive on an absolute and relative value basis. This market dynamic continues to be driven by a combination of reset valuations, reduced lending appetite from the banking sector, and elevated risk premium driven by the uneven recovery across real estate property types and geography. In the third quarter, TRTX's investment activity accelerated. We closed $279 million of new investments during the quarter, another $197 million subsequent to quarter end. And beyond that, we currently have over $670 million of loans expected to close in the fourth quarter. To dimension our investment momentum this year, when you combine our closed loans year to date of $1.1 billion, and the loans we expect to close in Q4. This totals over $1.8 billion of new investments during 2025. This steady growth in activity will drive TRTX earnings growth and demonstrates the offensive posture of our investment platform. We continue to lend primarily on multifamily and industrial assets, which represent approximately 91% of the $1.1 billion of our closed and in-process investments. For loans closed in the third quarter, we averaged 65% loan-to-value ratio and a credit spread of 3.22%, which speaks to the attractive credit risk profile we can source in the current investment environment. Our investment activity would not be possible without TRTX's stable credit profile and substantial liquidity coupled with the investment insights of TPG's integrated debt and equity investment platform. While we were very active on the investment side, We continue to enhance our liability structure as evidenced by last week's pricing of our latest series CLO, FL7. This $1.1 billion transaction represents our latest mass-term, non-recourse, non-mark-to-market financing with 30 months of reinvestment capacity. Since both FL6 and FL7 were issued in 2025 and have 30-month reinvestment periods, these two vehicles will provide for the next 30 months approximately $1.9 billion of financing capacity, at a blended cost of funds of SOFR plus 175. These stable, cost-effective, flexible financings will accelerate earnings growth and provide substantial ballast for years to come. This quarter's operating results and investment activity demonstrate TRTX's continued ability to deliver on its strategic goals. Year over year, our loan portfolio has grown by $1.2 billion, or 12% net. We intend to continue our growth and improve better TRTX shares currently traded at 20% discounted book value, which we believe offers substantial value. This value continues to be realized as we pull the many levers for growth, including deploying excess liquidity and currently increasing our debt-to-equity ratio to meet our full investment objectives. Combining these growth levers with the differentiated sourcing and investment capabilities of TPG's integrated real estate platform fuels our ability to create value for TRTX shareholders.