TPG RE Finance Trust, Inc. (NYSE:TRTX) Q1 2020 Earnings Conference Call - Final Transcript

May 12, 2020 • 08:30 am ET


TPG RE Finance Trust, Inc. (NYSE:TRTX) Q1 2020 Earnings Conference Call - Final Transcript


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Greetings, and welcome to the TPG RE Finance Trust First Quarter 2020 Earnings Conference Call. [Operator Instructions] A brief question-and-answer session will follow the formal presentation. [Operator Instructions]

It is now my pleasure to introduce your host, Ms. Deborah Ginsberg, Vice President, Secretary and General Counsel. Thank you. You may begin.

Deborah Ginsberg

Good morning, and welcome to TPG Real Estate Finance Trust's first quarter 2020 conference call. I'm joined remotely today by Greta Guggenheim, Chief Executive Officer; and Bob Foley, Chief Financial and Risk Officer. Greta and Bob will share some comments about the quarter, and then we'll open up the call for questions.

Last night, we filed our Form 10-Q and issued a press release with a presentation of our operating results. All of which are available on our website in the Investor Relations section. I'd like to remind everyone that today's call may include forward-looking statements, which are uncertain and outside of the company's control. Actual results may differ materially. For a discussion of some of the risks that could affect results, please see the Risk Factors section of our most recent 10-K, as well as our Form 10-Q.

We do not undertake any duty to update these statements, and we will also refer to certain non-GAAP measures on this call. And for reconciliations, you should refer to the press release and our 10-Q.

With that, I'll turn the call over to Greta.

Greta Guggenheim

Thank you, Deborah. Good morning, everyone. I wish good health to all of you and your families and want to express our tremendous gratitude to the public and private sector workers, who are risking so much to protect all of us.

Let me start with the obvious. This was a tough quarter, we recorded losses of $203.5 million from the sale of our CRE CLO portfolio. There is no way to sugarcoat this. Based with the extraordinary disruption to the markets and no timetable for recovery, we made the decision to eliminate additional securities margin call risk, all of it, by selling our entire bond portfolio.

This was not an easy decision, but one that was necessary, given the rapid series of events that unfolded in a stunningly short period of time, the worst global health crisis in 100 years. The most severe economic shock to the world economy since the Great Depression and the most volatile market conditions of my career, that dramatically affected all publicly traded securities' values, including our highly rated, short duration LIBOR-based CLO securities.

These historically liquid securities suddenly became significantly illiquid, requiring an unpredictable and significant diversion of capital. As a result, we sold the portfolio, as we felt it was important to eliminate future securities marginal risk and raise cash to protect the value of our $5.1 billion in UPB first mortgage portfolio.

Our portfolio today is comprised primarily of office and multifamily loans, 49% and 24%, respectively. Hotel and retail loans represent 13% and 0.6%, respectively. We remain focused on the top 10 markets, as well as other high