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Operator: Greetings, and welcome to the TPG Real Estate Finance Trust Third Quarter 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Bob Foley. Thank you. You may begin.

Robert Foley: Good morning, and welcome to the TPG RE Finance Trust Earnings Call for the Third Quarter of 2025. Today’s speakers are Doug Bouquard, 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 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.

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 adviser to TPG Real Estate, which was announced via press release 6 weeks ago. As a senior adviser, 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 7 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 $25-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?

Doug Bouquard: 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 have 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 adviser 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 geographies. 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 $11-billion transaction represents our latest match term nonrecourse 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 2 vehicles will provide for the next 30 months, approximately $1.9 billion of financing capacity at a blended cost of funds of SOFR plus 1.75. 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 in a prudent manner. TRTX shares currently trade at a 20% discount to 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 prudently 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. With that, I’ll turn the call over to Brandon to discuss our results.

Brandon Fox: Thank you, Doug, and good morning. Before I review our third quarter operating results, I also want to recognize Bob and his impact on TRTX, TPG and my professional career. Through his tenacity and commitment, Bob’s reach and influence is felt across TRTX and TPG. His mentorship over our 7 years together has been invaluable to me, and I wish him all the best. Thank you, Bob. For the third quarter of 2025, TRTX reported GAAP net income of $18.4 million or $0.23 per common share and distributable earnings of $19.9 million or $0.25 per common share, covering our quarterly dividend of $0.24 per common share. Book value per common share increased quarter-over-quarter to $11.25 from $11.20 due to our share repurchase program and another solid quarter of operating results.

Our operating results reflect the continued execution of our investment strategy, which is supported by our nimble capital allocation approach and durable liability structure. During the third quarter, we originated 4 loans with total commitments of $279.2 million at a weighted average credit spread of 3.22%. We received loan repayments of $415.8 million, including 6 full loan repayments of $405.8 million across our loan portfolio. These repayments were primarily multifamily and hotel loans originated in 2021 and 2022. These par loan repayments continue to demonstrate the ability of our borrowers to execute their business plans and validate the credit performance of our loan portfolio. We repurchased 1.1 million common shares for total consideration of $9.3 million or $8.29 per common share, generating $0.04 per common share of book value accretion.

In total, the company repurchased 3.2 million shares of common stock at a weighted average price of $7.89 per share, resulting in $0.13 per share of book value accretion in the current year. We remain a market leader in optimizing our capital structure. On Monday, we announced the pricing of TRTX 2025 FL7, a $1.1 billion managed CRE CLO, which will settle on or about November 17. The company marketed to institutional investors approximately $957 million of investment-grade securities that will provide TRTX non-mark-to-market, nonrecourse term financing. FL7 includes a 30-month reinvestment period, an advance rate of 87% and a weighted average interest rate at issuance of term SOFR plus 1.67% before transaction costs. Simultaneously, with the issuance of FL7, we expect to redeem TRTX 2021 FL4.

The FL7 issuance and FL4 redemption are expected to produce roughly $100 million of liquidity to fund new loan investments. We ended the quarter with near-term liquidity of $216.4 million, consisting of $77.2 million of cash-on-hand available for investment, net of $16.4 million held to satisfy liquidity covenants under the company’s secured financing agreements; undrawn capacity under secured financing arrangements of $78.6 million and collateralized loan obligation reinvestment proceeds of $44.2 million. Our net earning assets have grown year-over-year by $377.3 million or 12%, driven by $1.2 billion of loan originations. At quarter end, our loan portfolio was again 100% performing with no negative credit migration. Our weighted average risk rating for the loan portfolio is 3.0, consistent with the prior 7 quarters.

Our CECL reserve decreased by $2.6 million quarter-over-quarter, primarily due to loan repayments, while the reserve rate of 176 basis points is flat from June 30. The company’s liability structure is 87% non-mark-to-market, reflecting our long-held preference for liabilities that are stable, long-dated and low cost. Total leverage was flat quarter-over-quarter at 2.6x. At quarter end, we had $1.6 billion of financing capacity available to support loan investment activity, and we’re in compliance with all financial covenants. Our third quarter operating results again demonstrate that the company’s disciplined approach to capital allocation, asset management and capital markets execution will continue to deliver quality earnings growth and enhanced shareholder value.

We remain focused on sustaining our momentum to further narrow the current share price to book value discount. With that, we welcome your questions. Operator?

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Operator: [Operator Instructions] First question comes from Steve Delaney with Citizens JMP.

Steven Delaney: First, Bob, congratulations to you on a wonderful career and all the best in what I would call your semi retirement, given that you’re going to remain an adviser, a trusted adviser. So, this is a special call for just that reason. Brandon, I’m just curious, when you look at the portfolio, which is performing exceptionally well, but at $3.7 billion, when you look at that and you look at your 2.6 debt-to-equity, do you feel that the company has some amount of organic portfolio growth available to it with the current capital base?

Brandon Fox: Thank you for your question. And I do believe that, that is the case. We have previously discussed the potential growth of the balance sheet as it’s currently constructed. In June, we put out materials that show as you lever the company’s balance sheet to 2.5, 3, 3.5x that there’s incremental DE growth on a per share basis of $0.04 to $0.06 depending on the ROEs of the loans originated and timing of when that occurs during the quarter.

Steven Delaney: This afternoon, we’ll hopefully get a cut from the Fed. As you — and your partners there, as you talk to borrowers, do you feel that there are — there is CRE equity money for transitional properties that is sort of waiting for a more attractive rate environment? And would you expect not just this one 25 basis point cuts, but if we get 3 to 4 over the next year, like a lot of people are expecting, do you see a significant increase in demand for your primary bridge loan product?

Doug Bouquard: Yes. It’s an important question. This is Doug, by the way. I think that from an investment activity perspective, we’re already starting to see some of that acceleration. I mentioned that when you combine the loans that we closed this past quarter, what we have closed thus far in Q4 and what we have signed up, that totals about $1.1 billion just in Q1 and — sorry, just in Q3 and Q4 of this year. So we’re kind of starting to see some of that. As I look forward to the next year, I think there’s sort of a few things that I expect will increase the demand for our product. I think, one, SOFR actually going lower, I think, will be a big driver. That will probably on the margin push some of those acquisition dollars for transitional assets into our sector, one.

And then two, simply put is there’s more — as there’s a reduction in interest rate volatility is when you tend to see more appetite for real estate transactions, generally speaking. So I think when you think about our current pipeline and portfolio, I think as I’ve shared in prior quarters, it’s been, I’d say, predominantly refinance focused, typically, give or take, about 80%. And what we’re expecting, at least for next year is to have perhaps a little bit more balance between acquisition activity and refinance activity, driven again by part of what the Fed’s actions will be. But also, there’s just kind of to my earlier comments about broader asset classes, there is — there’s been a pretty dramatic rally across all asset classes globally.

I would say that real estate has not fully participated in that rally. And I think it does put our asset class at a particularly attractive spot in terms of risk appetite.

Operator: Next question, John Nickodemus with BTIG.

John Nickodemus: And before I start, I just want to congratulate you, Bob, on a fantastic career at TPG and elsewhere. Always was a pleasure working with you since we started picking up coverage. First off, similar question to what Steve led off with. Obviously, saw leverage stay flat quarter-over-quarter. Brandon, you just noted the sort of pickup in earnings power from raising that leverage. So I was curious, both headed into the end of this year as well as next year, given the new CLO, given what appears to be a ramp in origination volumes, sort of how you see the cadence of that leverage as we assume going up both at the end of 2025 and into 2026, just how you’re thinking about the timing there?

Doug Bouquard: Sure. Yes. I think what Brandon alluded to back to that kind of path to growth chart, does map out, again, a bit of as we lever up and frankly, how that can flow into DE. I think that what you’re seeing within, let’s call it, this quarter, and I think thus far, what we’ve seen so far in Q4 is the — you’re not really seeing that kind of full earn-in of our new investment activity because even in Q4, exactly what we’re seeing is that the repayments for Q4 have largely happened within the sort of first half of the quarter. And the bulk of the new investments, we expect will close towards the end of the quarter. So as we’re — I think one of those players in the market who is pretty meaningfully growing our balance sheet.

We will have that lag that can be 45 to 60 days in between when loans pay off and when we make new investments. And we continue to want to kind of keep that day count as short as possible. But that’s a little bit of what you’re seeing, I’d say, Q3 earnings, and I think that will be a dynamic over the kind of coming quarter or 2 as we continue to kind of scale and grow our balance sheet.

John Nickodemus: Great. That’s really helpful for us. And then my other question, a little more minute here, but noticed that your largest new loan of the quarter was actually on the Nashville hotel. This has been in recent quarters, an area that you’ve been reducing exposure. Obviously, you have been more focused on multifamily and industrial. So just curious what went into this loan, if it was just sort of a unique opportunity, just kind of something that caught our eye when we were looking through the new loans for the quarter.

Ryan Roberto: Sure. This is Ryan. As you know, as you said, we have been reducing some exposure to hospitality over time as we’ve seen repayments accelerate in that sector for us. And this was just an unique opportunity to lend on a very high-quality asset to a high-quality borrower where the business plan has largely been completed at that point in time. So a good ROE for the company and an interesting investment per se.

Operator: [Operator Instructions] Next question comes from Rick Shane with JPMorgan.

Richard Shane: Bob, I’m sure we’ll catch up afterwards. But I think we’ve followed your companies for approaching 20 years, and it has truly been a pleasure. Really appreciate all of the wisdom and consideration over the years in terms of thoughtfulness, so thank you. As we think about the levers that are available, you’ve had questions today about whether or not you can take operating leverage up. You’ve done a great job managing down nonaccruals. So the portfolio is accruing. Is the opportunity at this point to enhance ROE a function of taking down that REO portfolio, having more leverageable capital there and obviously having a portfolio that no longer drags earnings. Is that the next leg as we move forward in terms of enhancing ROE?

Doug Bouquard: Yes. No, I think that’s really not the path specifically. I think that it really is just net balance sheet growth is the single most important driver. I think unlike many of our competitors, our REO portfolio is really not a material drag in terms of our DE. I think more of what really will frankly drive our growth is just the growth in our net balance sheet over time. Our liquidity position continues to get further buttressed even by this recent series CLO. So I think for us, the next kind of coming quarters will be focusing on just frankly growing our balance sheet and really moving our debt-to-equity ratio up from — we’ve kind of been in the mid-2s recently. And I think getting closer to 3, 3.5 over time is really — that’s the important driver, frankly, less so in terms of REO dispositions.

Richard Shane: Got it. Okay. And that’s helpful. I appreciate the specificity. I wasn’t — perhaps I misunderstood the earlier answers, but I wasn’t as confident about increasing that leverage until the specificity of answers. That seems to me to be where the opportunity is. And is part of this a function of the CLO market is going to, given the efficiency there, give you incremental leverage based on sort of recent transactions?

Doug Bouquard: Yes. No, that definitely does give us more leverage, one, and also that it both gives us more leverage, but also it lowers the cost of capital of the company. And the deal has priced but has not closed yet. So these are all things that you’ll start to see flowing through in coming quarters.

Richard Shane: And Bob, like I said, we’ll catch up later, but thank you for everything over the years.

Robert Foley: Thank you.

Operator: I would like to turn the floor over to management for closing remarks.

Doug Bouquard: Thank you, everyone, for taking the time this morning, and we look forward to updating you on further progress in the future. Thank you very much.

Operator: This concludes today’s teleconference. You may disconnect your lines at this time, and thank you for your participation.

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