Good morning, ladies and gentlemen, and thank you for standing by. Welcome to TPG RE Finance Trust’s second quarter 2025 earnings conference call. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press *0 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.
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.
Before we discuss our results for the quarter, we wanted to share that our hearts are heavy in the wake of Monday’s senseless attack at 345 Park Avenue. We are grieving with our friends and neighbors at Blackstone and the NYPD, and our thoughts are with the teams at KPMG, the NFL, and all those impacted by this tragedy.
At this profoundly difficult moment, we are mourning with those who have lost loved ones and colleagues, and we stand in solidarity with all those affected.
During the second quarter, TRTX delivered a standout performance, decisively executing the plan we previously outlined to drive earnings growth and maximize shareholder value.
Our balance sheet is poised for further capital deployment with $236 million of available liquidity, a stable and 100% performing loan portfolio, a continued reduction in our REO portfolio, and a Debt-to-Equity Ratio now at 2.6 times that is still materially less than our peers.
In capital markets, we continue to take advantage of our industry-leading liquidity position in terms of Dry Powder and a 95% non-Mark-to-Market liability structure.
TRTX currently trades at a 25% discount to book value and an 11.5% dividend yield. We continue to believe our current share price presents a compelling investment opportunity, backed by a 100% performing loan book, a stable liability structure, an offensively oriented liquidity position, and led by the investment insights of TPG’s industry-leading integrated debt and equity real estate platform.
Thank you, Doug. Good morning, everyone, and thank you for joining us.
At quarter end, $9.3 million of repurchase capacity remained under existing board authorization.
We sold two REO properties, both at gains, which combined to a GAAP gain of $7 million and a contribution to Distributable Earnings of $1.9 million. Consequently, our REO carrying value declined by $32.5 million, or approximately 12%. We intend to launch sales processes for several more REO investments in the coming quarters. Refer to footnote 4 of our financial statements for additional information regarding our REO investment portfolio.
This 12% decline reflects our 100% performing loan book and 15% growth in our loan portfolio quarter over quarter. Portfolio composition is detailed on page 7 of our earnings supplemental, where you will note growth in Multifamily and Industrial exposure, accompanied by declines in Life Sciences, hotel, and office.
Quarter-end liquidity of $236.4 million, or 5.7% of total assets, included $165.9 million of cash, including $20.7 million to satisfy our covenant requirements, $66.1 million of undrawn capacity under our secured credit agreements and asset-specific financing arrangements, and $1.8 million of CRE/CLO investment cash.
TRTX’s share price performance continues to lead its peers, with a cumulative return of 68% since January 2023. We remain focused on sustaining that momentum to eliminate the gap between our share price and book value.
Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press *1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue.
Hi. Good morning, everyone. We were obviously excited to see almost $700 million of originations during the quarter, with $112 million already in the pipeline so far in July. Just curious how we should think about quarterly origination volumes going forward — that is to say, will volumes like that of the second quarter become the norm, or is that higher than what we’ll likely see the rest of this year? Thanks.
Speakers, I believe your line is on mute. Can you unmute your line? Please stand by.
Hello?
Yes, we can hear you. Please continue.
Thanks, Karen, and apologies for the technical difficulty.
Great, thanks so much, Doug. That’s super helpful. For my other question — similar lines — I wanted to ask about loan size. We noticed that two of your loans originated last quarter are now in your top five largest loans in your book. Was that an active decision by your team to target loans of that size, or did those opportunities just present themselves that way? Thanks a lot.
Yeah, sure. I think our scale and the size of loans that we’re investing in has generally remained somewhat consistent over the past number of years.
Awesome. Thank you so much, Doug. That's all for me. Thanks.
Thank you.
Our next question comes from Chris Miller with Citizens Capital Markets.
Hey, guys. Thanks for taking the question, and congrats on a really solid quarter. I wanted to hit on some of the REO. It’s great to see that gain you got on those sales there. I know you won’t be able to give any specifics or guidance on this, but given the timing of when you took back some of the other REO properties compared to current market valuations, could we see some other gains come through when those properties get sold?
Hey, Chris. Thanks for your question. You know, we’re always hesitant to provide forward guidance, but I’ll make a couple of general observations about our experience in REO.
Got it, that’s helpful. I guess, kind of following up on that a little bit — on the Multifamily REO you still have on the books, it looks like you don’t have any financing against those assets. Is that mainly due to expecting those properties to be listed for sale in the coming quarters?
You’re correct — we don’t have secured financing against them. The frictional cost of financing investments that we think will be relatively short term in nature is one of the principal reasons we haven’t financed those. We always have the option to finance them if we choose to do so, and they’re eminently financeable.
Got it. Thanks for taking the questions. Glad to see you guys firing on all cylinders over there.
Thanks very much.
Next question comes from Rick Shane with J.P. Morgan.
Hey, guys. Good morning, and thanks for taking my questions. When we consider activity in commercial real estate lending and property sales throughout the country, there’s really a pretty wide discrepancy both geographically and by property type.
Thanks, Rick. Yeah, it’s an important question. From what you’ve seen over the past quarter, we still remain, I’d say, concentrated within Multifamily and industrial. Those are two markets — or, I should say, property types — that are both liquid. There are still transactions occurring there, and they’re two sectors we prefer thematically across our integrated real estate debt and equity platform.
When we think about what we’re seeing in our pipeline, there’s another underlying trend that has remained consistent over the last two years — we’re still seeing primarily refinancings within our pipeline. That’s one trend we’re keeping an eye on.
Got it. One of the other big themes that’s emerging is that we’re approaching peak delivery in Multifamily. There’s going to be a bit of a lag as we reach peak lease-up. Are you starting to see the underlying economics in Multifamily — from a cash flow perspective — improve?
Yeah, look, I think that what we’ve seen — first of all, within our portfolio specifically — is generally very strong Multifamily fundamentals across nearly every market.
As it relates to multifamily starts, I’d say that we have a broad, integrated debt and equity platform that really has its finger on the pulse of new activity. We’re not seeing a large or growing wave of new construction deals across either debt or equity.
Got it. Okay, thank you very much. I really appreciate your thoughtful comments about everything that happened yesterday. I think everybody’s feeling it, and you articulated it so well for all of us. Thank you.
Thank you, Rick.
Our final question will come from Don Fandetti with Wells Fargo.
Yes. How are you thinking about credit risk migration from here? It’s been very stable. Let’s say the Fed does not cut — would that lead you to need some additional reserves, or do you feel like that scenario is already baked into your current reserves?
Thanks for your question, Don. Taking them in reverse order, under CECL, registrants’ reserves should always reflect their future expectations. We’ve incorporated into our current estimates forecasts about changing interest rates, inflation, GDP growth, and so on. I don’t think those factors in particular would directly weigh on the future direction of our CECL reserve.
Great. Thanks, Bob.
This concludes our question-and-answer session. I’d now like to turn the floor back over to management for closing comments.
Yes, I just want to thank everyone for joining the call today. We’re very proud of the team’s accomplishments this quarter and look forward to providing further updates to the market. Thank you.
Ladies and gentlemen, thank you for your participation.