TPG RE Finance Trust Inc

Previous wording

We continue to evaluate the effects of macroeconomic concerns, including, without limitation, a period of sustained high interest rates, inflation, stress to the commercial banking systems of the U.S. and Western Europe, geopolitical tensions, concerns of an economic recession in the near term, and changes to the way commercial tenants use real estate. Rising interest rates, stress to the commercial banking systems of the U.S. and Western Europe, increased volatility in debt and equity markets, declining commercial property values, and elevated geopolitical risk led us to continue to curtail our loan origination volume and maintain high levels of liquidity during 2023 and continuing through 2024. From January 1, 2024 through June 30, 2024, we originated three first mortgage transitional loans, with total commitments of $116.3 million, an initial unpaid principal balance of $107.0 million, and unfunded commitments at closing of $9.3 million.

Current wording

We continue to evaluate the effects of macroeconomic concerns, including, without limitation: a period of sustained high interest rates; indications that short-term interest rates may decline; inflation; structural shifts and regulatory changes to the commercial banking systems of the U.S. and Western Europe; geopolitical tensions; concerns of an economic recession in the near term; and changes to the way commercial tenants use real estate, specifically office buildings. Rising interest rates, structural shifts and regulatory changes to the commercial banking systems of the U.S. and Western Europe, increased volatility in debt and equity markets, declines in commercial property values, and elevated geopolitical risk led us to continue to curtail our loan origination volume and maintain high levels of liquidity during 2023 and continuing through 2024. From January 1, 2024 through September 30, 2024, we originated six first mortgage transitional loans, with total commitments of $320.3 million, an initial unpaid principal balance of $306.8 million, and unfunded commitments at closing of $13.5 million.

Previous wording

We are externally managed by our Manager, TPG RE Finance Trust Management, L.P., an affiliate of TPG. TPG is a leading global, alternative asset management firm, founded in San Francisco in 1992, with $223.6 billion of assets under management (as of March 31, 2024) and investment and operational teams around the world. TPG invests across a broadly diversified set of strategies, including private equity, impact, credit, real estate, and market solutions. Our Manager manages our investments and our day-to-day business and affairs in conformity with our investment guidelines and other policies that are approved and monitored by our board of directors. Our Manager is responsible for, among other matters, the selection, origination or purchase and sale of our portfolio investments, our financing activities and providing us with investment advisory services. Our Manager is also responsible for our day-to-day operations and performs (or causes to be performed) such services and activities relating to our investments and business and affairs as may be appropriate. Our investment decisions are approved by an investment committee of our Manager that is comprised of senior investment professionals of TPG, including senior investment professionals of TPG's real estate investment group and TPG’s management committee.

Current wording

We are externally managed by our Manager, TPG RE Finance Trust Management, L.P., an affiliate of TPG. TPG is a leading global, alternative asset management firm, founded in San Francisco in 1992, with $229.0 billion of assets under management (as of June 30, 2024) and investment and operational teams around the world. TPG invests across a broadly diversified set of strategies, including private equity, impact, credit, real estate, and market solutions. Our Manager manages our investments and our day-to-day business and affairs in conformity with our investment guidelines and other policies that are approved and monitored by our Board of Directors. Our Manager is responsible for, among other matters, the selection, origination or purchase and sale of our portfolio investments, our financing activities and providing us with investment advisory services. Our Manager is also responsible for our day-to-day operations and performs (or causes to be performed) such services and activities relating to our investments and business and affairs as may be appropriate. Our investment decisions are approved by an investment committee of our Manager that is comprised of senior investment professionals of TPG, including senior investment professionals of TPG's real estate investment group and TPG’s management committee.

Previous wording

Global economic trends and economic conditions, including heightened inflation, slower growth or recession, changes to fiscal and monetary policy, increased interest rates, currency fluctuations and challenges in the supply chain, political unrest and economic uncertainty due to terrorism or war, stress to the commercial banking systems of the U.S. and Western Europe, and the lingering aftereffects of the COVID-19 pandemic have had, and may in the future have, an adverse impact on our business, the U.S. and global economies, the real estate industry and our borrowers, and the performance of the properties securing our loans.

Current wording

Global economic trends and economic conditions, including heightened inflation, slower growth or recession, changes to fiscal and monetary policy, sustained higher interest rates, indications of a future decline in short-term interest rates, currency fluctuations and challenges in the supply chain, political unrest and economic uncertainty due to terrorism or war, structural shifts and regulatory changes to the commercial banking systems of the U.S. and Western Europe, and the lingering aftereffects of the COVID-19 pandemic have had, and may in the future have, an adverse impact on our business, the U.S. and global economies, the real estate industry and our borrowers, and the performance of the properties securing our loans.

Previous wording

•Recognized Net income attributable to common stockholders of $21.0 million, compared to $13.1 million for the three months ended March 31, 2024, an increase of $8.0 million.

Current wording

•Recognized Net income attributable to common stockholders of $18.7 million, compared to $21.0 million for the three months ended June 30, 2024, a decrease of $2.3 million.

Previous wording

•Produced Net interest income of $27.5 million, resulting from interest income of $78.1 million and interest expense of $50.6 million. Net interest income increased $0.7 million compared to the three months ended March 31, 2024.

Current wording

•Produced Net interest income of $29.3 million, resulting from interest income of $77.9 million and interest expense of $48.6 million. Net interest income increased $1.8 million compared to the three months ended June 30, 2024.

Previous wording

•Generated Distributable Earnings of $22.3 million, compared to $23.3 million for the three months ended March 31, 2024, a decrease of $1.0 million.

Current wording

•Generated Distributable Earnings of $23.0 million, compared to $22.3 million for the three months ended June 30, 2024, an increase of $0.7 million.

Previous wording

•Recorded a decrease to our allowance for credit losses on our loan portfolio of $4.5 million, for a total allowance for credit losses of $69.6 million, or 208 basis points of total loan commitments of $3.3 billion.

Current wording

•Recorded a decrease to our allowance for credit losses on our loan portfolio of $0.3 million, for a total allowance for credit losses of $69.3 million, or 205 basis points of total loan commitments of $3.4 billion.

Previous wording

•Funded $18.1 million in future funding obligations associated with existing loans.

Current wording

•Funded $7.6 million in future funding obligations associated with existing loans.

Previous wording

•Received three full loan repayments of $162.5 million and partial principal payments of $23.7 million related to three loans, for total loan repayments of $186.1 million.

Current wording

•Received three full loan repayments of $141.1 million and partial principal payments of $8.2 million related to one loan, for total loan repayments of $149.3 million.

Previous wording

•$259.2 million of cash-on-hand, of which $244.2 million was available for investment, net of $15.0 million held to satisfy liquidity covenants under our secured financing agreements.

Current wording

•$226.3 million of cash-on-hand, of which $211.3 million was available for investment, net of $15.0 million held to satisfy liquidity covenants under our secured financing agreements.

Previous wording

•Undrawn capacity (liquidity available to us without the need to pledge additional collateral to our lenders) of $127.7 million under secured credit agreements with four lenders, and $2.4 million under other financing arrangements.

Current wording

•Undrawn capacity (liquidity available to us without the need to pledge additional collateral to our lenders) of $128.1 million under secured credit agreements with four lenders, and $2.6 million under other financing arrangements.

Previous wording

We have financed our loan investments as of June 30, 2024 utilizing three CRE CLOs totaling $1.8 billion, $531.1 million under secured credit agreements with total commitments of $1.7 billion provided by four lenders, and $132.6 million under asset-specific financing arrangements. As of June 30, 2024, 73.4% of our borrowings were pursuant to our CRE CLO vehicles, 21.3% were pursuant to our secured credit agreements and secured revolving credit facility and 5.3% were pursuant to our asset-specific financing arrangements. Non-mark-to-market financing comprised 78.7% of total loan portfolio borrowings as of June 30, 2024.

Current wording

We have financed our loan investments as of September 30, 2024 utilizing three CRE CLOs totaling $1.7 billion, $498.6 million under secured credit agreements with total commitments of $1.7 billion provided by four lenders, and $204.3 million under asset-specific financing arrangements. As of September 30, 2024, 70.2% of our borrowings were pursuant to our CRE CLO vehicles, 21.5% were pursuant to our secured credit agreements and secured revolving credit facility and 8.3% were pursuant to our asset-specific financing arrangements. Non-mark-to-market financing comprised 79.7% of total loan portfolio borrowings as of September 30, 2024.

Previous wording

Our ability to draw on our secured credit agreements and secured revolving credit facility is dependent upon our lenders’ willingness to accept as collateral loan investments we pledge to them to secure additional borrowings. These financing arrangements have credit spreads based upon the LTV and other risk characteristics of collateral pledged, and provide financing with mark-to-market provisions limited to collateral-specific events (i.e., "credit" marks). Borrowings under our secured revolving credit agreement are permitted with respect to collateral that satisfies pre-determined eligibility standards, and have a pre-determined advance rate (generally, 75% of the unpaid principal balance pledged) and credit spread (Term SOFR plus 2.00%). As of June 30, 2024, borrowings under these secured credit agreements and secured revolving credit facility had a weighted average credit spread of 1.93% (1.93% for arrangements with mark-to-market provisions and 2.00% for one arrangement with no mark-to-market provisions), and a weighted average term to extended maturity assuming exercise of all extension options and term-out provisions of 2.8 years. These financing arrangements are generally 25% recourse to Holdco, with the exception of the secured revolving credit facility that is 100% recourse to Holdco.

Current wording

Our ability to draw on our secured credit agreements and secured revolving credit facility is dependent upon our lenders’ willingness to accept as collateral loan investments we pledge to them to secure additional borrowings. These financing arrangements have credit spreads based upon the LTV and other risk characteristics of collateral pledged, and provide financing with mark-to-market provisions limited to collateral-specific events (i.e., "credit" marks). Borrowings under our secured revolving credit agreement are permitted with respect to collateral that satisfies pre-determined eligibility standards, and have a pre-determined advance rate (generally, 75% of the unpaid principal balance pledged) and credit spread (Term SOFR plus 2.00%). As of September 30, 2024, borrowings under these secured credit agreements and secured revolving credit facility had a weighted average credit spread of 1.96% (1.95% for arrangements with mark-to-market provisions and 2.00% for one arrangement with no mark-to-market provisions), and a weighted average term to extended maturity assuming exercise of all extension options and term-out provisions of 2.5 years. These financing arrangements are generally 25% recourse to Holdco, with the exception of the secured revolving credit facility that is 100% recourse to Holdco.

Previous wording

For the three months ended June 30, 2024, we recorded net income attributable to common stockholders of $0.26 per diluted common share, an increase of $0.09 per diluted common share from the three months ended March 31, 2024, of which $0.11 per diluted common share relates to a decrease quarter over quarter in our credit loss expense, which was a $4.5 million benefit during the second quarter of 2024 as compared to $4.4 million expense during the first quarter of 2024.

Current wording

For the three months ended September 30, 2024, we recorded net income attributable to common stockholders of $0.23 per diluted common share, a decrease of $0.03 per diluted common share from the three months ended June 30, 2024, of which $0.05 per diluted common share relates to a decrease quarter over quarter in our credit loss benefit, which was a $0.3 million benefit during the third quarter of 2024 as compared to $4.5 million benefit during the second quarter of 2024. This decrease was partially offset by an increase in net interest income of $0.02 per diluted common share.

Previous wording

Distributable Earnings per diluted common share was $0.28 for three months ended June 30, 2024, a decrease of $0.02 per diluted common share from the three months ended March 31, 2024. The decrease in Distributable Earnings per diluted common share was primarily due to a decrease in total other revenue of $0.01 per diluted common share, an increase in expenses of $0.01 per diluted common share, and includes the impact of dilution from the exercise of the Warrants during the three months ended June 30, 2024.

Current wording

Distributable Earnings per diluted common share was $0.28 for three months ended September 30, 2024, consistent with the three months ended June 30, 2024.

Previous wording

Our book value per common share as of June 30, 2024 was $11.40, a decrease of $0.46 per common share from our book value per common share as of December 31, 2023 of $11.86, primarily due to the exercise of the Warrants during the six months ended June 30, 2024, which resulted in the issuance of 2,647,059 shares of our common stock, diluting our book value by $0.39 per common share.

Current wording

Our book value per common share as of September 30, 2024 was $11.41, a decrease of $0.45 per common share from our book value per common share as of December 31, 2023 of $11.86, primarily due to the exercise of the Warrants during the six months ended June 30, 2024, which resulted in the issuance of 2,647,059 shares of our common stock, diluting our book value by $0.38 per common share.

Previous wording

Our interest-earning assets are comprised of a portfolio of primarily floating rate, first mortgage loans, or in limited instances, contiguous mezzanine loans. As of June 30, 2024, our loans held for investment portfolio consisted of 48 first mortgage loans (or interests therein) totaling $3.3 billion of commitments with an unpaid principal balance of $3.2 billion. As of June 30, 2024, 99.7% of the loan commitments in our portfolio consisted of floating rate loans, of which 100% were first mortgage loans or, in two instances, a first mortgage loan and contiguous mezzanine loan both owned by us. As of June 30, 2024, we had $139.6 million of unfunded loan commitments, our funding of which is subject to borrower satisfaction of certain milestones.

Current wording

Our interest-earning assets are comprised of a portfolio of primarily floating rate, first mortgage loans, or in limited instances, contiguous mezzanine loans. As of September 30, 2024, our loans held for investment portfolio consisted of 48 first mortgage loans (or interests therein) totaling $3.4 billion of commitments with an unpaid principal balance of $3.3 billion. As of September 30, 2024, 99.7% of the loan commitments in our portfolio consisted of floating rate loans, of which 100% were first mortgage loans or, in two instances, a first mortgage loan and contiguous mezzanine loan both owned by us. As of September 30, 2024, we had $122.3 million of unfunded loan commitments, our funding of which is subject to borrower satisfaction of certain milestones.

Previous wording

We may hold REO as a result of taking title to a loan's collateral. As of June 30, 2024, we owned four office properties and one multifamily property with an aggregate carrying value of $190.4 million.

Current wording

We may hold REO as a result of taking title to a loan's collateral. As of September 30, 2024, we owned four office properties and one multifamily property with an aggregate carrying value of $188.5 million.

Previous wording

During the three months ended June 30, 2024, we funded $18.1 million of deferred future fundings related to previously originated loans. We received proceeds from three loan repayments in-full of $162.5 million, and principal amortization of $23.7 million across three loans, for total loan repayments of $186.1 million during the period.

Current wording

During the three months ended September 30, 2024, we originated three mortgage loans with total commitments of $204.0 million, an initial unpaid principal balance of $199.8 million, and unfunded commitments at closing of $4.2 million. Loan fundings included $7.6 million of deferred future fundings related to previously originated loans. We received proceeds from three loan repayments in full of $141.1 million, and principal amortization of $8.2 million across one loan, for total loan repayments of $149.3 million during the period.

Previous wording

For the three months ended June 30, 2024, we generated interest income of $78.1 million and incurred interest expense of $50.6 million, which resulted in net interest income of $27.5 million.

Current wording

For the three months ended September 30, 2024, we generated interest income of $77.9 million and incurred interest expense of $48.6 million, which resulted in net interest income of $29.3 million.

Previous wording

(2)Unpaid principal balance includes PIK interest of $0.03 million as of June 30, 2024.

Current wording

(2)Unpaid principal balance includes PIK interest of $0.2 million as of September 30, 2024.

Previous wording

(5)Extended maturity assumes all extension options are exercised by the borrower; provided, however, that our loans may be repaid prior to such date. As of June 30, 2024, based on the unpaid principal balance of our total loan exposure, 7.1% of our loans were subject to yield maintenance or other prepayment restrictions and 92.9% were open to repayment without penalty.

Current wording

(5)Extended maturity assumes all extension options are exercised by the borrower; provided, however, that our loans may be repaid prior to such date. As of September 30, 2024, based on the unpaid principal balance of our total loan exposure, 16.6% of our loans were subject to yield maintenance or other prepayment restrictions and 83.4% were open to repayment without penalty.

Previous wording

(6)Except for construction loans, LTV is calculated for loan originations and existing loans as the total outstanding principal balance of the loan or participation interest in a loan (plus any financing that is pari passu with or senior to such loan or participation interest) as of June 30, 2024, divided by the as-is appraised value of our collateral at the time of origination or acquisition of such loan or participation interest. For construction loans only, LTV is calculated as the total commitment amount of the loan divided by the as-stabilized value of the real estate securing the loan. The as-is or as-stabilized (as applicable) value reflects our Manager’s estimates, at the time of origination or acquisition of the loan or participation interest in a loan, of the real estate value underlying such loan or participation interest determined in accordance with our Manager’s underwriting standards and consistent with third-party appraisals obtained by our Manager.

Current wording

(6)Except for construction loans, LTV is calculated for loan originations and existing loans as the total outstanding principal balance of the loan or participation interest in a loan (plus any financing that is pari passu with or senior to such loan or participation interest) divided by the as-is appraised value of our collateral at the time of origination or acquisition of such loan or participation interest. For construction loans only, LTV is calculated as the total commitment amount of the loan divided by the as-stabilized value of the real estate securing the loan. The as-is or as-stabilized (as applicable) value reflects our Manager’s estimates, at the time of origination or acquisition of the loan or participation interest in a loan, of the real estate value underlying such loan or participation interest determined in accordance with our Manager’s underwriting standards and consistent with third-party appraisals obtained by our Manager.

Previous wording

(1)Excludes capitalized interest of $0.03 million.

Current wording

(1)Excludes capitalized interest of $0.2 million.

Previous wording

As of June 30, 2024, we owned four office properties and one multifamily property, each of which previously served as collateral for first mortgage loans. We did not acquire or sell any REO properties during the three and six months ended June 30, 2024.

Current wording

As of September 30, 2024, we owned four office properties and one multifamily property, each of which previously served as collateral for first mortgage loans. We did not acquire or sell any REO properties during the three and nine months ended September 30, 2024.

Previous wording

During the three months ended March 31, 2024, as part of our quarterly risk rating process, we downgraded one hotel loan from "2" to "3" due to a decrease in occupancy and we downgraded one multifamily loan from "3" to "4" due to a decrease in operating performance. During the three months ended March 31, 2024, we received repayment in full of five loans with a total unpaid principal balance of $211.3 million and a weighted average risk rating of 3.2 as of December 31, 2023. The five loan repayments were included within our hotel, other, and multifamily property categories. The hotel loan had a risk rating of "4", while the three multifamily and other loans each had a risk rating of "3" as of December 31, 2023. The three new loan investments made during the three months ended March 31, 2024 were assigned an initial risk rating of "3".

Current wording

During the three months ended March 31, 2024, as part of our quarterly risk rating process, we downgraded one hotel loan from "2" to "3" due to a decrease in occupancy and we downgraded one multifamily loan from "3" to "4" due to a decrease in operating performance. During the three months ended March 31, 2024, we received repayment in full of five loans with a total unpaid principal balance of $211.3 million and a weighted average risk rating of 3.2 as of December 31, 2023. The five loan repayments were included within our hotel, other, and multifamily property categories. The hotel loan had a risk rating of "4", while the three multifamily loans and other loan each had a risk rating of "3" as of December 31, 2023. The three new loan investments made during the three months ended March 31, 2024 were assigned an initial risk rating of "3".

Previous wording

Our allowance for credit losses is influenced by the size and weighted average maturity date of our loans, loan quality, risk rating, delinquency status, loan-to-value ratio, historical loss experience and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. During the three and six months ended June 30, 2024, we recorded a decrease of $4.5 million and $0.2 million, respectively, in our allowance for credit losses resulting in an aggregate CECL reserve of $69.6 million at quarter-end. This decrease was primarily attributable to improved asset level performance and a decrease in the general reserve which includes macroeconomic assumptions that reflect ongoing concerns about growing geopolitical tensions, the potential impact of market volatility, the possibility of an economic recession, limited liquidity in the capital markets, distress in the banking sector and a slowdown in investment sales, and loan specific property-level performance trends such as shifting office market fundamentals and inflationary pressures that may cause operating margins to narrow.

Current wording

Our allowance for credit losses is influenced by the size and weighted average maturity date of our loans, loan quality, risk rating, delinquency status, loan-to-value ratio, historical loss experience and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. During the three and nine months ended September 30, 2024, we recorded a decrease of $0.3 million and $0.5 million, respectively, in our allowance for credit losses resulting in an aggregate CECL reserve of $69.3 million at quarter-end. This decrease was primarily attributable to improved asset level performance and a decrease in the general reserve which includes macroeconomic assumptions that reflect ongoing concerns about growing geopolitical tensions, the potential impact of market volatility, the general level of interest rates and slope of the yield curve, the possibility of an economic recession, limited liquidity in the capital markets, structural shifts and regulatory changes in the banking sector and a slowdown in investment sales, and loan specific property-level performance trends such as shifting office market fundamentals and inflationary pressures that may cause operating margins to narrow.

Previous wording

As of June 30, 2024, non-mark-to-market financing sources accounted for 78.7% of our total loan portfolio borrowings. The remaining 21.3% of our loan portfolio borrowings, comprised primarily of our four secured credit agreements, are subject to credit marks only. As of June 30, 2024, we did not have any non-consolidated senior interests.

Current wording

As of September 30, 2024, non-mark-to-market financing sources accounted for 79.7% of our total loan portfolio borrowings. The remaining 20.3% of our loan portfolio borrowings, comprised primarily of our four secured credit agreements, are subject to credit marks only. As of September 30, 2024, we did not have any non-consolidated senior interests.

Previous wording

As of June 30, 2024, aggregate borrowings outstanding under our secured credit agreements totaled $0.5 billion. As of June 30, 2024, the overall weighted average interest rate was the benchmark interest rate plus 1.93% per annum and the overall weighted average advance rate was 77.4%. As of June 30, 2024, outstanding borrowings under these arrangements had a weighted average term to extended maturity of 2.8 years assuming the exercise of all extension options and term out provisions. These secured credit agreements are generally 25.0% recourse to Holdco.

Current wording

As of September 30, 2024, aggregate borrowings outstanding under our secured credit agreements totaled $0.5 billion. As of September 30, 2024, the overall weighted average interest rate was the benchmark interest rate plus 1.95% per annum and the overall weighted average advance rate was 77.3%. As of September 30, 2024, outstanding borrowings under these arrangements had a weighted average term to extended maturity of 2.6 years assuming the exercise of all extension options and term-out provisions. These secured credit agreements are generally 25.0% recourse to Holdco.

Previous wording

As of June 30, 2024, the weighted average haircut (which is equal to one minus the advance rate percentage against collateral for our secured credit agreements taken as a whole) was 22.6% compared to 22.3% as of December 31, 2023.

Current wording

As of September 30, 2024, the weighted average haircut (which is equal to one minus the advance rate percentage against collateral for our secured credit agreements taken as a whole) was 22.7% compared to 22.3% as of December 31, 2023.

Previous wording

On February 22, 2022, we closed a $250.0 million secured revolving credit facility with a syndicate of five banks to provide interim funding of up to 180 days for newly originated and existing loans. During the fourth quarter of 2022, an additional lender was added to the facility, increasing the borrowing capacity to $290.0 million. This facility has an initial term of three years, an interest rate of Term SOFR plus 2.00% that is payable monthly in arrears, and an unused fee of 15 or 20 basis points, depending upon whether utilization exceeds 50.0%. During the three and six months ended June 30, 2024, the weighted average unused fee was 20 and 20 basis points, respectively. This facility is 100% recourse to Holdco. As of June 30, 2024, we did not have any outstanding borrowings under our secured revolving credit facility.

Current wording

On February 22, 2022, we closed a $250.0 million secured revolving credit facility with a syndicate of five banks to provide interim funding of up to 180 days for newly originated and existing loans. During the fourth quarter of 2022, an additional lender was added to the facility, increasing the borrowing capacity to $290.0 million. This facility has an initial term of three years, an interest rate of Term SOFR plus 2.00% that is payable monthly in arrears, and an unused fee of 15 or 20 basis points, depending upon whether utilization exceeds 50.0%. During the three and nine months ended September 30, 2024, the weighted average unused fee was 20 and 20 basis points, respectively. This facility is 100% recourse to Holdco. As of September 30, 2024, we pledged one loan investment with a collateral principal balance of $41.3 million and had outstanding Term SOFR-based borrowings of $31.0 million.

Previous wording

As of June 30, 2024, we had three separate asset-specific financing arrangements with three third-party lenders. On December 5, 2023, we closed a $90.6 million loan financing facility (the "HSBC Facility"). The HSBC Facility provides asset-specific financing on a non-mark-to-market basis with matched term. This facility is 20% recourse to Holdco. On November 17, 2022, we closed a $23.3 million asset-specific financing arrangement with Customers Bank. The arrangement provides non-mark-to-market matched term, non-recourse financing. On June 30, 2022, we closed a $200.0 million loan financing facility (the "BMO Facility"). The BMO Facility provides asset-specific financing on a non-mark-to-market basis with matched term. This facility is 25% recourse to Holdco.

Current wording

As of September 30, 2024, we had three separate asset-specific financing arrangements with three third-party lenders. On December 5, 2023, we closed a $90.6 million asset-specific financing facility (the "HSBC Facility"). During the third quarter of 2024, we increased the borrowings pursuant to the HSBC facility by $72.0 million to a total of $162.6 million, with the pledge of an additional loan. The HSBC Facility provides asset-specific financing on a non-mark-to-market basis with matched term. This facility is 20% recourse to Holdco. On November 17, 2022, we closed a $23.3 million asset-specific financing arrangement with Customers Bank. The arrangement provides non-mark-to-market matched term, non-recourse financing. On June 30, 2022, we closed a $200.0 million loan financing facility (the "BMO Facility"). The BMO Facility provides asset-specific financing on a non-mark-to-market basis with matched term. This facility is 25% recourse to Holdco.

Previous wording

(1)Net of $0.9 million unamortized deferred financing costs.

Current wording

(1)Net of $1.0 million unamortized deferred financing costs.

Previous wording

As of June 30, 2024, we had three collateralized loan obligations, TRTX 2022-FL5, TRTX 2021-FL4, and TRTX 2019-FL3, totaling $1.8 billion, financing $2.4 billion, or 75.0%, of our loans held for investment portfolio. As of June 30, 2024, our CRE CLOs provide low cost, non-mark-to-market, non-recourse financing for 73.4% of our loan portfolio borrowings. The collateralized loan obligations bear a weighted average interest rate of Term SOFR plus 1.97%, and have a weighted average advance rate of 78.9%. Each CRE CLO included a reinvestment feature that allowed us to contribute existing or new loan investments in exchange for proceeds from loan repayments held by the CRE CLOs. The last of these reinvestment windows closed in February 2024.

Current wording

As of September 30, 2024, we had three collateralized loan obligations, TRTX 2022-FL5, TRTX 2021-FL4, and TRTX 2019-FL3, totaling $1.7 billion, financing $2.3 billion, or 70.5%, of our loans held for investment portfolio. As of September 30, 2024, our CRE CLOs provide low cost, non-mark-to-market, non-recourse financing for 70.2% of our loan portfolio borrowings. The collateralized loan obligations bear a weighted average interest rate of Term SOFR plus 2.00%, and have a weighted average advance rate of 78.0%. Each CRE CLO included a reinvestment feature that allowed us to contribute existing or new loan investments in exchange for proceeds from loan repayments held by the CRE CLOs. The last of these reinvestment windows closed in February 2024.

Previous wording

(3)Collateral loan investment assets of FL3, FL4 and FL5 represent 9.9%, 31.8% and 33.3% of the aggregate unpaid principal balance of our loans held for investment portfolio as of June 30, 2024.

Current wording

(3)Collateral loan investment assets of FL3, FL4 and FL5 represent 9.7%, 28.2% and 32.6% of the aggregate unpaid principal balance of our loans held for investment portfolio as of September 30, 2024.

Previous wording

(4)During the three months ended June 30, 2024, we recognized interest expense of $35.7 million, which includes $1.5 million of deferred financing cost amortization. During the six months ended June 30, 2024, we recognized interest expense of $71.9 million, which includes $2.9 million of deferred financing cost amortization.

Current wording

(4)During the three months ended September 30, 2024, we recognized interest expense of $33.5 million, which includes $0.7 million of deferred financing cost amortization. During the nine months ended September 30, 2024, we recognized interest expense of $105.4 million, which includes $3.5 million of deferred financing cost amortization.

Previous wording

During the six months ended June 30, 2024, we utilized our eligible reinvestment feature related to TRTX 2022-FL5 14 times, recycling $255.2 million of principal repayments received. The reinvestment period for TRTX 2019-FL3 ended on October 11, 2021. The reinvestment period for TRTX 2021-FL4 ended on March 11, 2023. The reinvestment period for TRTX 2022-FL5 ended on February 9, 2024. In accordance with the TRTX 2022-FL5 indenture, prior to the end of the reinvestment period on February 9, 2024, we committed to contribute certain assets and completed the contribution process on April 12, 2024.

Current wording

During the nine months ended September 30, 2024, we utilized our eligible reinvestment feature related to TRTX 2022-FL5 14 times, recycling $255.2 million of principal repayments received. The reinvestment period for TRTX 2019-FL3 ended on October 11, 2021. The reinvestment period for TRTX 2021-FL4 ended on March 11, 2023. The reinvestment period for TRTX 2022-FL5 ended on February 9, 2024. In accordance with the TRTX 2022-FL5 indenture, prior to the end of the reinvestment period on February 9, 2024, we committed to contribute certain assets and completed the contribution process on April 12, 2024.

Previous wording

Through a wholly owned, special purpose subsidiary, we are the borrower under a $31.2 million mortgage loan secured by a deed of trust against an REO asset. The first mortgage loan was provided by an institutional lender, has an interest-only five-year term and bears interest at a rate of 7.7%. As of June 30, 2024, the carrying value of the loan was $30.6 million.

Current wording

Through a wholly owned special purpose subsidiary, we are the borrower under a $31.2 million mortgage loan secured by a deed of trust against an REO asset. The first mortgage loan was provided by an institutional lender, has an interest-only five-year term and bears interest at a rate of 7.7%. As of September 30, 2024, the carrying value of the loan was $30.7 million.

Previous wording

Our business model seeks to minimize our exposure to changing interest rates by match-indexing our assets using the same, or similar, benchmark indices. Accordingly, rising interest rates will generally increase our net interest income, while declining interest rates will generally decrease our net interest income, subject to the impact of interest rate floors in our mortgage loan investment portfolio. As of June 30, 2024, 99.8% of our loan investments by unpaid principal balance earned a floating rate of interest and were financed with liabilities that require interest payments based on floating rates, which resulted in $0.7 billion of net floating rate exposure, subject to the impact of interest rate floors on all our floating rate loans and less than 0.9% of our liabilities. Subject to the specific footnote disclosures in the preceding tables describing our revolving credit facilities, secured financing arrangements, asset-specific financing arrangements and CRE CLOs, and the table that follows, our liabilities are generally index-matched to each loan investment asset, resulting in a net exposure to movements in floating benchmark interest rates that varies based on the relative proportion of floating rate assets and liabilities.

Current wording

Our business model seeks to minimize our exposure to changing interest rates by match-indexing our assets using the same, or similar, benchmark indices. Accordingly, rising interest rates will generally increase our net interest income, while declining interest rates will generally decrease our net interest income, subject to the impact of interest rate floors in our mortgage loan investment portfolio. As of September 30, 2024, 99.8% of our loan investments by unpaid principal balance earned a floating rate of interest and were financed with liabilities that require interest payments based on floating rates, which resulted in $0.8 billion of net floating rate exposure, subject to the impact of interest rate floors on all our floating rate loans and less than 6.0% of our floating rate liabilities. The weighted average interest rate floor on the mortgage loan investment portfolio was 1.60% and the weighted average interest rate floor on the liabilities was 0.11% as of September 30, 2024. Subject to the specific footnote disclosures in the preceding tables describing our revolving credit facilities, secured financing arrangements, asset-specific financing arrangements and CRE CLOs, and the table that follows, our liabilities are generally index-matched to each loan investment asset, resulting in a net exposure to movements in floating benchmark interest rates that varies based on the relative proportion of floating rate assets and liabilities.

Previous wording

(2)Additional information regarding our consolidated results of operations and financial performance for the three months ended March 31, 2024 can be found in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 filed with the SEC on April 30, 2024.

Current wording

(2)Additional information regarding our consolidated results of operations and financial performance for the three and six months ended June 30, 2024 can be found in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 filed with the SEC on July 30, 2024.