TRTX - Earnings call transcript Q2 2020 | TPG RE Finance Trust, Inc.

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Operator

Greetings. Welcome to the TPG RE Finance Trust Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. the to turn Ginsberg. host, now would conference your over Deborah I

may You begin.

Deborah Ginsberg

release morning. filed TPG some press up today questions. on welcome Trust with presentation you. Form differ may and the we’ll Bob And Thank company’s Good XX-Q call open Officer. Financial to a our the forward-looking Chief Officer; which XXXX evening of to Greta available Yesterday issued operating quarter materially. may our call. are Investor like statements, Foley, then Chief the all control. Guggenheim, today’s will second conference are for Real about I’m our a Actual the Greta results, joined everyone I’d share and of line in by that uncertain Bob Executive we results remind include and of Relations and comments quarter which Finance section. Estate website and outside

press reconciliations that, Executive to Officer you Form For the refer our that a to XX-K reports. discussion of undertake on also Chief results, Guggenheim, We to TPG over you and Greta most my update statements should this do to will Factors any and turn the of certain Estate and pleasure of non-GAAP With call, release Risk please it’s should measures for we Trust. -- Finance and refer XX-Q. recent XX-Q these not risks the our affect could to Real call section duty some of the see

Greta Guggenheim

Good our Thank second morning you, quarter to welcome call. Deborah. and earnings

time will meaningfully we expect very pressure. low markets indicate significant take capital for attendance NOI unknown. to in stands estate office to volatility. U.S. recover and and at With is recovery, continues see to equity aircraft a still a the debt real While downward us continue have to it relative The we’re

is no trough regarding we conditions. the operate is there behind clarity an near-term environment believe where economic us, we Although, in

affect few. just to we focused. recovery to the vaccine, our continue we relations name defensively environment, will are virus spread, this that election, factors numerous the the a period, the In slope company. position particular, taking best to are steps following there Additionally, In are of China, with

to starting that Matt Coleman am familiar partnering involved brings to background management. have joined the as TRT I prior us week our valuable continuously Matt experience Real Investing experience senior business. in and the President and inception and We present. Re. continued to workout in operational XXXX XXXX the announce as Estate during through -- our added with to with us business, with is this forward delighted very legal his we experience to First with TPG great has look our been perspective recession, he him. Equity the Matt’s and with of IPO

driver A Second, we’re is liquidity of loan the key liquidity. focused timing of on repayments.

cases tightening control not refinance. half two of in several repayments treasury the our expect or year significantly process in the aware as repayments the are and the where loan economy to LIBOR of in they NOI spread are we million. are During repay the and to than and Borrowers property. anticipated this were $XXX the will gets as large despite refinancing has This first of wanted, occurred borrowers Despite generally to borrower’s then continued years proceeds in prior earlier stopped. had rates selling ability COVID phenomenon rushing increase driven improve by March part to rebounds. or under potential a underlying we low in Repayments the last

leasing commissions reserves book. CapEx, improvement to and future fund on our for tenant is Our primary use of interest existing and cash draws

totaled fundings through and loan of only million under our fundings $XX the construction our construction future deferred one December million have $XXX remainder XXXX. loan We of

reminder, XX% approximately draws. of financing a future these receive lenders As funding to our up from finance to we

to our we credit loans the XX%. lenders our from pay by pledged facilities down reduced decided rate whole our quarter, XX% or approximately loan bank advance to on During X%. $XXX This million

uncertainty risk Our recovery. reduce to objective an believe in continue or the evaluate sales was portfolio to makes given timing the loans of where individual loans we our it the of we Also, in sense. of economic interest

asset are on zeroed we in Third, management.

our senior assets. joined to with our managers to team junior single teams asset origination a Our have and form manage

XX XX% Asset interest interest loans our on This payments. highlights payments. of are current include, XX represents of

portfolio to to is approximately referenced property very We properties. million with financing flow. property to property The collections asset loan rent are significant the not convention limited to acquirer modified loans of and are securing effectuate is of to and of over originated an dry their and to lieu properties existing prospective to in the Collections although, this of bar this about balance. tipped of non-contact the non-binding substantial These in averaging Brooklyn. two last NOI. our near-term. we office This averaged in the XXXX was an are additional portfolio. in Multifamily because a our loan resulted part tours with the -- loan The number accrual which the think of in loans sheet that the we is are low the current office generally disclose Current we properties under non-urban bars interest rise seven will an locations -- have of of who diversified locations XX% are borrower a new the operations quarter. of loan was distinction deed repay come support building subject $XXX,XXX strong $XXX not provide previously, new XX% also of been properties but have a table process financing loan XX% existing TRT of dependent a acquisition collections for an the of of request operating from we modifications certainly six have their the and/or in year. hotels equity the loan equity the impact acquisition business. whom City, including loan experienced in in track remain property bring We bars than loans the cash in one the themselves the required with a XX%. been the contributions Other invested. equity are it Marriott unpaid In record. quarter future number between New support York is dispute second limited The The our quarter. Most equity are contributions. in borrower, completing are principal strategies at of is hotel embraced the a X is hotels, group with on office hotel The in Office and This and XX% properties a guaranteed sponsors successful executed which virtual I strong, leasing long feeling well second cash corporate TRT and shutdowns, a they properties. other owner not. from closing cash range, multifamily who in as loan rent as modification have and can current will and will two This have occupancy XX% in significant six our owners in on costs Hilton COVID that contributed one not have other that those breakeven a in last large in operator current is and have a new modification. service term service branded the between markets.

is the Class property in occupancy. million primary on cost Houston. on stabilized a share financing of or for to improvements. earnings XX% Our reflects an loan sale $XX.X Since million our purpose additional $XX.X $X.XX property $X.XX loss provide Downtown a share, which origination, core lease quarter or million multifamily per loan The to $XX.X a XX% A this and loan was up of to the the

retail low to to meaningful prospects OpEx we higher due and is sell record than to growth, property for properties in constructed concessions our NOI the loan. this vacancy However, in market, space the view the underwritten significant relative newly decided in

approximately on times. loans, While loan floor and money, liabilities to turn loan WAC of maximized which we and increasing call the book, our oil loan liquidity I in which are of earnings conclude, COVID in maintaining on by focus we or This the subject uncertain COVID. impacts resulting us. property, prices the have a now continue the Bob. To able to and felt the [ph] is X.XX%. the value versus we over motivated performance decision lower were XXX focus asset committed these to Bolstering continued maximizing not X.XX% of economic to including to WAC our been LIBOR and will basis the sell price XXX-basis-point was has to not our helped negotiate is our points

Bob Foley

everyone. good of morning, review Greta, Thanks, A and operating quick results.

For second net or we $X.XX share. also $XX.X quarter $X.XX common $XX.X TRTX and common income $X.XX available generated GAAP per diluted core earnings of share, million $XX.X income million, net diluted shareholders or was common per per was the to common share million

XXth. the share we fund $X.XX $XX.XX July dividend the end loans excess and due the our Our the week on $X.XX B We was on $X.XX Stock quarter net by XXth, warrants had Book to per XXth, at paid on to per and XXth on the up $XX.X of X.X% from managed to share, interest connection Starwood issued dividend. share quarter. share per a year XX. Series increase issuance of share, earnings Capital declared first of at prior July no of May Group dividend June primarily we per value We million, was last on per common with relating non-accrual GAAP margin the $X.XX quarter in June this an in paid Preferred

had -- second Our quarter drivers. results several seven

loans, liabilities, of remains NIM due grew floors net by of X.X%, margin. First, to money floors combined quarter-over-quarter margin, and the combination our LIBOR net XXX% that on our our important X% an benefits non-zero LIBOR interest positive on in the our driver interest of only with largely of

floating assets are end, X.XX%. average liabilities end At quarter LIBOR basis rates. was points. weighted All at quarter comparison, and was LIBOR of floor In our our XX

continue rates. We were $X.X primarily million. up Expenses margin in effectively preserve approximately against strategies of explore expenses quarter-over-quarter, XX% positive to COVID-related non-recurring fluctuations cost to this due to

voluntary reserve for cumulative the net markets us facilities, real in capital commitment for Series unchanged million buttresses moved was quarter. We credit $XXX we XX% year arraignment credit cash $XX.X the lenders our in manage loss non-recourse million $XXX second million to of and ending in our outstandings. certain Stanley, million stock XX. course until borrowed Bank but under loss required from to back normal our covenant add are the amounts first each of XX May, We from X.X% the base second that controllable of us purposes, million with we for option three under to XX% maturities secured reduced aggregate and during tightly our facilities. we on rightsizing quarter. the of modest at reinvestment the than continues the which was a compliance, during In held benefit loans late summary, deleveraging CLO to income on least options $XX.X business. second quarter where incentive stock, with sustained a funds the during and hand, exercise from for loan payments two size CECL existing the earn It and America base end hold term these Loan related than expenses nor equal XX% regularly payments, management more will borrowings did issue rate credit arrangements, aligns of less Greta available up loan of our us at repo XX%. over $XX in in repaid we with to defined a will for not from management our non-mark-to-market, to CLOs, reserve of for cash longer million, commercial expected we of of on of facilities fee have work margin to on exchange balances by on LTV and before quarter that This for estate was We time $XXX that roughly capital borrowings borrowings deleveraged to of CECL available the to of me. the the We materially the $XXX the $XX.X extended look-through liquidity, in business. expense decline facilities the need existing repo quarter investments. we address $XXX of services capital of The million on FLX. manage or loans or holiday busy paid we two total uncertain recognize immediately in B excuse because we those of Capital no average professional net times, one extension share cash tranches and strongest We of realized including roughly we our sale which and very defensive investors an needs a Morgan facilities booked In credit continue our or million mortgage space. the incurred our than existing loss Starwood loss Goldman first made available fee of each. its outstripped preferred capital to $XX.X in totaled $XXX.X and hold we simultaneously Sachs while help lender higher March quarter, the million Group, -- first to our the a certain quarter XX%, raise these The of normal million the million that are actually for was dated $XXX million, We the $XX.X and loss existing of first described. front, our issued calls months of preferred million advance sale with periods with implies virtually very our from three We our increase

of at financing XX% $XXX facility X.X increase is commitments available facilities of retain America, Non-recourse, borrowings to a now but are Bank extensions reduce borrowings. unnecessary Additional we future to non-mark-to-market million avoid date. maturity the secured fees, of weighted final we each With to and us. and options years Goldman facilities our did XX% represent average The borrowings. our these current represent credit our of to

of repayment both have extended Across tied the maturity CLOs, XX% is loans. but almost about XXXX true represent to XXXX, final X.X and years. dates behavior CLOs current average so the of two maturity maturities of financed are Our borrowings underlying of rated the their loan the weighted

loan repo our million $XX.X lenders $XX.X connection During million from the of quarter commitments funding total a with to four borrowers. we the of borrowed in of our of preexisting

of on created quarter all the periods million of I CLO expire of the During capacity, capacity partial subject FLX, of quarter the and of available at This our reinvestment X.X loans until the TRTX $XX.X a below X, will contributed. the outside to FLX our with hotel $XX.X consistent principal fourth on for of net quarter million comfortably was reinvestment to CLOs to one our of existing million trends payment CLO we respect our is of remain for $XX capacity repayments recycling generating recycled which loan. cash the of XXXX by for create and financial debt That repayment removal long-term that refinancing with loans, an leverage, debt-to-equity just and the covenants. in fourth and finally, XXXX to loan historical quarter mentioned. end, was our And ratio us

prior the net and the the points at March XXX in of total The $X.XX of CECL loan million in increase plus $XX.X early realized of $XX.X million. reduction loan XXst. CECL, million mortgage sale June points, reserves a these $XX.X of loss million. against CECL or factors, decline reduction amount from of CECL net impact the its portfolio Expressed created a XXX our $X.X net a at offsetting was $XX.X by a share, reserve compared our increase was the first basis portfolio, The in income that that of resulted basis reserve the estimates net loss removal commitment as June quarter. CECL related of of over basis of million. million points loan in our CECL $XX.X a to reserve cause to the general of Regarding principal million reserve per in XXth, our was $XX.X was The

remained points is than CECL hotel cash This basis, collateral the reflects economy loan reserve which and $X that the higher of analysis. in and XX, same-store the March our a loans Greta met it described than was CECL contribution on earlier, COVID The impact XX estate our estimated is so. which our using less was discounted impacted the macroeconomic at analysis We CECL the performance million On loans, to regarding basis guidance continuing values. for reserve slightly GAAP flow commercial very caution XXX assumptions and its doing embedded because conservative. independently one assess real dependent our

months three We’re crisis. COVID into deeper this

and a materially we’re COVID assumes continue markets our sales transactions macroeconomic no analysis do We expect and in actual loan recovery. in those quarter-over-quarter the to and may operating of collateral. change closer loan to sales investment Our the reserve changes to performance assumptions, observe responses

national accrue the cost from and six of Our other hotel the turn excuse questions. weighted based our floor X floor, measured that, loans the portfolio of described many to to X to sale rated the second exceeds will during loan, of the allow, loans strength multifamily X.X, average strong or June had risk amortized X quarter quarter-over-quarter the Future We due end. from PIK And we’ll approximately payment-in-kind modified performance to for during the me, loan the on classification non-accrual the we performance to Interest rating pace loan we XX% XXth, XXX,XXX interest. we’ll months. on X on no X.X factors, the up reflecting collections quarter X the were the of underwriting. At at of things, open Operator? and one declined to accrued of upgrade that borrowers economy. especially reopening of Greta six depend interest to and from quarter with among

Operator

[Operator from question. Stephen Instructions] Raymond Our first question Laws with from your James. Please is proceed

Stephen Laws

more if All -- figure, will assume give bit existing a I right. little first, six and the Greta, through a will LIBOR modifications would that I morning, remain in Bob. modifications, you discussions conversations those talk on know could I maybe takes loans around here, but the many are? and what and about could as maybe new provide that’s Greta process, be those of those go, great? Good duration. floors from color in additional how you the loan mentioned, little you bit one But the how color

Greta Guggenheim

than Sure. involved loans greater of two-thirds of in and and of we the four debt there many fund months the and making borrower require one XX% well any it we we that hotel, interest. period and reserves pay as and case deferral modified the amount, in the of upfront -- that costs to modifications. up operating with in FF&E less. to that of And down of cases, XX% to to interest other XX% the the borrowers six the than the of quarter, of XX% that property contributed -- went on they of to the Of in the and interest six hotels and -- either the allowed mentioned, plus, these these equity allow some case, the the deferral equity, representing six in have the rest which deferral the all no went were monthly and hotel interest. significant course, each reserve. all cover In in due pursuant of service cover or the expenses were case the have in which loan to second of was the of of associated interest And These debt element service deferral flags and greater in other and access and case, allowed to them, the costs to cases deferral loan of sponsor contributions we was loans many ongoing that was interest of basis no no significantly two an of

we We post It’s modifications. end -- have completed are most of on, a are quarter are the for the having of we modification these which properties as mentioned, and couple hotel working and stress. second one the generally

Stephen Laws

the switching loans. appreciate on color from And I Great. hotel I properties each Greta. those guess that,

versus any you more differences property outside how You those loans type talk all property mentioned be gateway complexes. whether office like bit hotel going it’s Can borrowers, central discussions a seeing, maybe in on non-gateway largest city your exposure. to type? the demand however, to just area, discussions color versus or dissect you those district little and are office, you to Can with what expect would maybe us it, give borrowers how about that business maybe and are you downtown inside performance business

Greta Guggenheim

I of purpose retail, as for Of but the years. office. these them the -- have And guess, people in City the properties well, is about of -- is the a leased property -- New to classified concerned two for three, York because urban it’s Well, tenant I’ll refer there really properties, XXX% is the And that XX main cities three call, these office are component Sure. very we to mixed-use, office. in primary one strong one cores. most as this a use office of three, of is that

of The online most movies other leased precise to XX% one successful XX% leased or tendency of the is is and XXX% companies… to streaming the be

Stephen Laws

Right.

Greta Guggenheim

… for that property. And long it’s doing and a tenant. well, quite time a is of one mixed-use have that period we then

Manhattan the property institutionally-owned focused, of in very tenancy. by mixed-use companies strong top operator private to office has one insurance be that three of really largest a have It equity the diverse very, more a of happens and property. We one

in downtown Chicago. are Los have that Francisco, like, San really exposure other some on the So We that’s focused major people cities don’t York New of our really exposure. Angeles,

diverse. pretty are properties Our

science. in Silicon Francisco one sort -- San life that of Valley We that is is have loan outside some properties

if tremendous in locations least that people say have the cities and amount We don’t urban about San at know are that’s one of concerned outside in diverse that I core. the Diego it’s you. markets But I a the pretty that not science. helped would life

Stephen Laws

to place on office the lot Great. Yeah. location That’s taking seem of Bob… the clearly that center helpful. being discussions A at and of be discussion. category

Greta Guggenheim

-- [ph]. I mentioned, going -- these the And with discussions are you these sorry interject, really think -- I’m the office also, to with the I the But -- as but I asked, but how borrowers bar rent collections borrowers in of us the modifications? interest they our not are asking and bars for other you type XX% or range have to our some like types come haven’t office of deferral have hotel -- really

Stephen Laws

That’s great a color. Appreciate that risk a question need comment. Bob back. of call at asking the that may

color So, assumptions number reserve assumptions? the those on sale? the clearly, or that sale situation March something conservatism conservatism what very great? for there any was there in question, that’s makes CECL? likely a it Can across that, that sold in So or a and CECL you was to the to simply was from behind Is talk but realized changed would a all broad about be bigger unique the and March assumptions that the general I March it May loan is maybe know then

Bob Foley

Sure. Stephen. Good morning,

see Houston rosier our a did. identify in note ability buyer that loan the the if I compared second and the two when sale results one break can the into CBD had topics Houston first. Let’s materially down we of and reserve, multifamily team’s the take than a view, that would CECL for reflects of view of largely that to the to we say that

we measured and other We economic views points of had involved box. a end, the the across of net prepared our out bent, March all schedule if we out basis research space that the assumptions yet. our to outlier with the the reserves was were executed on in in of were competitors. our are our loan conservative and that conservatism the But wise At With on your conservative high-end respect and appears in regard, reserves of and CECL near frankly. line ours lined of the the sold, relationship that quarter more with this that range, factors everything that are a So in came box it you in judgmental reserve. the found else, up, the

levels loans a but reserve important saw downgraded driver hotel estimates. in -- our four we at we You loss that to portfolio risk of an ratings from all, had March and the of end higher were one

context So I our the macroeconomic stance adopted we I of us But conservative quarter-over-quarter, beginning think our that should very reserve assumptions. a think evaluate CECL very in remain market in having March. conservative the in

Stephen Laws

That’s helpful.

reserve to are that correct. forward, wide much did question, a the the pay a the that one, the carrying certainly non-accrual. interest levels value four The assume QX range You’re contributing loan? income go pretty that of I across from sector. loan How quick five Last think went going we’ll we to down

Bob Foley

Yeah. recovery And generally speaking, we use cost the method.

Stephen Laws

Yeah.

Bob Foley

a to permits It’s you whole. The different precise and approaches as come can in back on GAAP we NIM the amount. not material comparison companies to

Stephen Laws

taking Right. both of question Greta… Fantastic. my Thanks you for

Bob Foley

Yeah.

Stephen Laws

Bob. …and

Greta Guggenheim

you. Thank

Operator

Delaney your Steve with Securities. Please question. from from is question next proceed our JMP And

Steve Delaney

and the with that? to meeting I look up morning, on I wasn’t from I Bob EPS I mentioned that writing Good could Houston you. fast sale. there Welcome. to Greta core keep and a was If you impact forward enough loan start, apologize that Matt.

Greta Guggenheim

Yes. impacted loss was The the -- realized $XX.X earnings core loss that million, which was $X.XX. on by

Steve Delaney

$X.XX.

correct, far as correct? anything going within I as than whether specific. And on always that that realized Is just that’s this or should think the Okay. focus impact general core, would be on is losses we CECL, on rather

Greta Guggenheim

Yeah.

Bob Foley

Yes.

Steve Delaney

impact really out Okay. you for all XXX on credit like but realized floors, when quarterly group lot I Great. each And the basis there. as a have to work guess, guess, these sounded we LIBOR -- I points, through you’ll helping you loss, the highlight a it issues, work actually for clarity okay. earnings. Thanks $X.XX, for quarter, hard us, so

general maybe broader expect you’re months? as beyond floors borrowers going You’re through were be weighted of of Greta decline, hotel that met forward, to either we just should on with sitting a the month modifications. just lower will -- that requests next part you borrower X remove But through to expect describing in and getting or your how you behalf sense, down you -- modifications, XX assume you’ll discussions worked to ask we that and be we you over hotel that the LIBOR floor say, should a receiving average the for roll as

Greta Guggenheim

of we None loans. changed rate our the have modifications our floor the or interest on

Steve Delaney

Interesting.

right. maybe… Great. then Okay. Well, All

Greta Guggenheim

up, is like, relief maybe, And of spread there goes if anything, the can some some -- negotiations the extension you on give the us if tests… if

Steve Delaney

Right.

Greta Guggenheim

in -- that’s big priority, as a spread. we increase spread, have get much actually down, off some that a ad but the we as of can the a if half try more might may …that we priority pay can the we as as year trade certainly in for we cases and as to

Steve Delaney

Interesting.

That -- makes sales, the situation raising your lower sales, these Intel. you found sort sense. there, The debt loan But broadly, it just and more of is who burden, equity distress do market further I asset consider private was would will you all -- money? strategic take strategic a one-off guess, -- market a there buyer you about just funds to read market develop a secondary Houston management expect local Okay. will maybe sounded that loan the had what like develop we given

Greta Guggenheim

Well, we parcels. consider would

at look a… would So, we

Steve Delaney

Okay.

Greta Guggenheim

loan If par. approached us at someone buy to a

is across that’s and to and don’t time the going be exposure. we our COVID with occupancy hotels shutdown Regarding really now our hotel loans, think distress hotel Board. varying hotels the related, the We most feel of selling on is is economic

it I July be open supposed to XX next -- scheduled is But so pushed that. and than not to be to update. opening the open sooner days one within seen haven’t back that has to I days. We reopened, percent may and August got It latest the it occupancy. zero believe have then XX was hotel that in will that

today and the looking that uncertainty the other a are happen then and to for to have, higher the of have hotel a selling XX% timing around discount have But an a City, is in and the end don’t but we In now limited occupancy, XX% XX%, the urban because On we reflects the that time people costs if general, the a hotels, extreme, has that like we spectrum, would recovery. you union of at don’t rate that operating occupancy. maybe IRR York service which lot New regarding using hotel these market occupancy at cover believe XX% in loans, be hotel between. breakeven to is

So medical once for through vaccine… that achievements uncertainty diminishes

Steve Delaney

Sure. Vaccine. Yeah.

Greta Guggenheim

discount that drops believe a and investors better from a result we …therapeutic, require the realize if sale. then would you’ll rate materially

Steve Delaney

Well, thank your comments. Makes Yeah. sense. Appreciate you both for it.

Bob Foley

Thank you, Steve.

Operator

Please And with our Morgan. your from Shane JP next proceed question from Rick question. is

Rick Shane

I with to guys to Thanks ability think you I incentive, that incentive and the think related questions appreciate that given the do challenges the nature incentive going investors. sign about And the just taking I high comments that welcome had of is incentive time? but do fee. the have do difficulty, given a probably and morning. watermark commitment the the fee high But curious forward. reiterating hate that an Interesting reuse a very in vehicle. their spherical long how to you for incentive, that sort of good that that guys being about the capture How I model for to fees am word watermarks of I this you wonder guys perspective, incentive my regaining economic think reduced the from -- it’s TPG

Bob Foley

a it’s very, know similar Well, The question agreement, traded standpoint. else as our of those everyone management Rick, space. of which publicly an provisions analytical in the good from very are you to

be be money and money to met. pay For to the it, on several us the the need be read on obligated in manager be for incentive to fee the incentive the or fee in to to the tests

cumulative the to preceding One over XX of them positive earnings needs quarters. measured as is be core that,

articulated and core run that the you’d it’s to TPG rate think economy But enough credit anything know that T company the core we our that math there and the And there first duty maintain of be last cooperation it’s see to liquidity earnings what and credit on a employees immediate, to and quarter, equals ensuring but and assuming quarter outcomes is zero the manager and divide our that going positive as that you from I work earlier in of can not can we then were by simple are it the at about they be earnings largely the forward. close the can cumulative maximize that’s they and it’s that was profile. would [ph] that that know our what think liability that to want are our value Greta, they get to the and portfolio strong continue macro doing with the shareholders take the our the look that So by some interim, there. that amplify? as a

Greta Guggenheim

I think you. very you well. it covered Thank

Rick Shane

Obviously, that. managers sort aware I am an and an is and around we’ve that. personal a other question level motivating in TPG good. and each commitments and known employees, like long is next highly the of important consideration being individual appreciate sounds for and which and integrity certainly Look I your all it of of of supportive, interesting terms time Yeah. It’s

Bob Foley

last very warrants investment I think of the Rick, platform. part is sorry emphasis. Yeah. to important but strategically point, The a I’m TRTX it it TPG interject, remains larger

sponsored. the Of We on and that the the only commitment, But an is very TSLX true global an platform important well. everybody as the us very business are the vehicle you successful a of by of TPG has type this emphasis lender area capital call. is a not firm firm. can that else as a and all assure BDC permanent lender,

Rick Shane

the I carried I’m to guys deed quarter. lieu was it thing to of quarter Great. discussed those on the on books way assuming had presented sponsor do the you, is, you wanted advocates And I property you that back Thank exactly in the the still last that conversations just last Bob. where appreciate loan a notion and is other circle that. curious I as you’re a curious on if conversations? finding good paper relative really with motivations driving have like sort a am scenarios, at situation taken surprising finding different other was little And you’re that incentives your unexpected on that are a I’m in basis. any a strange sponsors, of or if conversations just But least you’re course. loan that look

Greta Guggenheim

the views I economic come was the is the borrowers to the -- that I correct the That one related is And by portfolio. for yeah, think to, We it this rated opposed office in that I that come was among is these one not around. past being surprises properties limited my think -- was But we’ve go we’re anticipated. property not to being that asset drive and is mind comments, this something -- you’re that other it not with enter five. on perhaps, months. And quite turning that a ownership. us be to seeing modifications is situations the it proposal borrower interest we us that a and meaningful in number think and for had only to experience to I would their the have we property it capable that operating acquired mentioned with three in in property would as a really That a due service only one locations that best we that this hotel would that modification. letting into because be divergent

far the would the only that rest surprise portfolio, news. I of be So one no call other a the would so that unexpected

Rick Shane

like the Great. idiosyncratic prototypical sort Yeah. of That situation. definitely sounds

guys. so So Thank that’s a much you good example.

Greta Guggenheim

you. Thank

Operator

from your proceed [Operator Deutsche Instructions] is question. question with Bahamondes George from Bank. Please our next And

George Bahamondes

period, to borrowers agreed Stephen’s modifications, discussions modification for you just kind and Hi. of six shared what send having period to as more period better with loans agreed point want curious that an Should your Bob. the the the it but on, beyond of upon a shape on extension for question beyond months like? that the be is just checks process. that we be need default next beyond see ideally, I modifications between think recently. further and question the Good loan upon the and upon might look what of follow-up the morning, world pretty then, the there wondering or Greta about can regarding likely those are longer been agreed would A soon that you’ve earlier loan at kind for I’m thoughts

Greta Guggenheim

properties. Well, that is to don’t help know pace that and the recovery And these is question the we due how these why the to we improve times when key are. just fact the uncertain and will that travel highlight of

have the that into very However, we’ve required modifications equity entered significant from the very, borrower. contributions

are the of they usually to property. how in to presently their terms like the behavior since service they a would related property contributions. think of think, We properties keep and any will good costs, future that other debt to continue That’s cash and indicator I these treating them cover contributing still support are cash open, pay is expense. operating property to month So, each to own they

reverses will spread in modifications need increasing, cases their and properties. virus continue quite this rises start current rising be the yes, if support and to There it’s So continues decrease further and will borrowers, with for the work a think, possible. we who case I

George Bahamondes

kind in if kind able scenarios -- imagine hypothetical what And you’re just additional to of some think situation of that their share? part, Understand. you a that would of cash require an could be on may

Greta Guggenheim

will of three so borrower similar months, But most XX% them I it be willing us is significantly over lasting sense months been that how may that Well, there the payment. as that defer -- it economy permanently, cases, the other six defer to we hotels that people’s economy. is is will our I limited with in It’ll to I for what interest We than but a properties, majority as to-date recover the speaking. business quickly. to time There travel our they do secure I at broadly many travel quickly attitudes the be not corporate changed and travel leisure-oriented to a don’t properties our we but we’ve with as if defer is. to to total is reserves up to which bit, properties our interest. the get affected such mean, less take do less believe tell loans, long-term, that business expect a recover that. I Yes, way properties, the think of to a will need available interest to longer we that. corporate recovery, mean, we these we’ll would service-oriented sentiment think, rebound has

George Bahamondes

have questions today. and My it been and Greta. that me helpful I answered. asked That’s for that’s appreciate Great. color

Bob Foley

Thank you, George.

Operator

from Laws Please James. Raymond next your with question from Stephen And our is proceed questions.

Stephen Laws

either guess, don’t what of to leaning something many furlough that Do from of have Can guys receive don’t able under I follow-ups or your is funding employees on? are first, you they’re some these largely your programs. around mind. provide that additional borrowers how borrowers, any government if couple really of or A you for these to they been type Greta, anything that? support qualify need the color

Greta Guggenheim

borrowers received I funds. our Well, the But -- heard governmental not qualified have most our hotel are we needed large have advantage funds. of aware rest of I it. our and know not for qualify receiving of already institutional them taking future don’t the benefiting of programs. the for Many and of they’re funds from haven’t borrowers -- entities or the PPP assistance. more them were frankly additional have not bars did if type

Stephen Laws

it’s guessing should And be right. think lastly the you’ve All we then would Fantastic. third second got offensive drawn Capital down the I on that for about know How and Starwood reasons. that? options. Group, I’m unlikely

drawing is down the possibly behind look go you’re is to a is on as portfolio, round, in that second So, Maybe I you take you that process mean, the think that sheet, balance shift second it it some financing? prompt would thought is about what long-term third options is outlook. on something there your willing down the would and -- in to what threshold the color share liquidity that or a to

Greta Guggenheim

how it those of as in how you draw economic of have to uncertainty will to it this negative, But not out, that. made we proceed at negotiated amount a It pointed If taking to we there for we’re with the or We really And to decision the haven’t reasons. recovery haven’t Yes. But going out. because to we the any decision found for this draw it’s it. this be severe tremendous would help be economy would and pan point, made on offensive reasons. opaqueness at defensive us. to turn not a point,

Stephen Laws

cost dilution Great. it. feel could not you financing you take need we valuable -- high that of or a Well, the option like certainly the unless

great. So questions. follow-up my Thanks taking for

Greta Guggenheim

Thank you.

Operator

question-and-answer end the of And session. reached over have the Greta call the to turn now closing We Guggenheim for remarks. I will

Greta Guggenheim

look today and to us quarter another and third speaking the quarter. at the you thank with all of we Well, for joining you forward end eventful

Operator

conference participation. concludes you disconnect This your you and your this may at time. for Thank today’s lines

TPG RE Finance Trust (TRTX) 30 Jul 202020 Q2 Earnings call transcript