The following is a summary of the TPG RE Finance Trust, Inc. (TRTX) Q3 2024 Earnings Call Transcript:

Financial Performance:

• TRTX reported a third quarter GAAP net income attributable to common shareholders of $18.7 million, up from $21 million in the previous quarter. Net interest margin increased to $29.3 million this quarter from $27.5 million in Q2.

• The company has strong liquidity of $357 million, leverage of 2.02:1, and a stable CECL reserve of 205 basis points.

• Distributable earnings were $23 million, or $0.28 per share, with a dividend coverage ratio of 1.19 times for year-to-date 2024.

Business Progress:

• TRTX received $149 million of repayments concentrated primarily in hotel, multifamily, and mixed-use property types and made new investments totaling $204 million in sectors such as multifamily and hotels.

• The forward pipeline of potential new investments is robust, indicating strong future growth prospects.

• Key focus remains on multifamily and industrial sectors, consistent with the current market demand and transaction activity.

Opportunities:

• Positioned to benefit from the anticipated decline in short-term rates and the steepening yield curve, encouraging more borrowers to opt for floating rate loans.

• Capitalizing on the shift in bank lending behaviors, with banks moving away from direct lending and focusing on loan-on-loan opportunities, enhancing the prospects for non-bank lenders like TRTX.

• Real estate value recovery lagging behind corporate value growth presents an attractive entry point for real estate credit investments.

Risks:

• TRTX carries a risk of migration of 3-rated loans to 4-rated loans, however, a majority of such migrations historically resolve normally.

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