Greetings, and welcome to the TPG RE Finance Trust Fourth Quarter and Full Year 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to pass it off to our host, Dan Kasell. Thank you. You may begin.

Good morning, and welcome to the TPG RE Finance Trust Earnings Call for the Fourth Quarter of 2025. Today's speakers are Doug Bouquard, Chief Executive Officer; and Brandon Fox, Interim Chief Financial Officer and Chief Accounting Officer. Doug and Brandon are joined by Ryan Roberto, Head of Capital Markets and Asset Management. Doug and Brandon will provide commentary regarding the company, its performance and the general economy, and we'll answer questions from call participants. Yesterday afternoon, we filed our Form 10-K, 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 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. Now I'll turn the call over to Doug.

Good morning, everyone, and thank you for joining the call. The broader economic backdrop continues to provide a solid foundation for investment activity within the real estate sector. With dislocation in certain parts of the corporate credit market appearing, we are observing a marginal trend of capital allocation oriented towards real estate credit. As we have observed at the start of the year, the combination of increased dry powder, a 10-year treasury hovering just above 4% and favorable real estate fundamentals should be drivers of continued growth and investment activity for TRTX. Increased transaction volume is the essential catalyst for true price discovery and as more real estate assets trade, investors can more clearly triangulate where valuations have reset, replacing speculation with hard market clearing data. While we are almost 4 years removed from when the Fed began hiking rates, this price transparency forms the backdrop for what is shaping up to be an incredibly active year for both borrowers and lenders. 2025 was an important turning point for TRTX. We closed $1.9 billion of new investments, drove 25% year-over-year growth in earning assets and generated distributable earnings of $0.97 per share, which outearned our dividend for the year. Furthermore, we were able to achieve this while maintaining stable risk ratings, further diversifying our liability structure and ending the year with a 100% performing loan portfolio. From a recent investment perspective, the fourth quarter was incredibly active with $927 million of new loans closed, consisting of 62% multifamily and 38% industrial collateral, 2 thematic sectors that we continue to target. As a testament to the strength of our franchise, this quarter's investment activity was not only one of the most active quarters we've had since the company's founding, but over 90% of our new originations were with repeat borrowers. This…

Thank you, Doug, and good morning. For the fourth quarter of 2025, TRTX reported GAAP net income of $0.2 million. Distributable earnings for the quarter was $18.5 million or $0.24 per common share. For the full year ending December 31, 2025, TRTX reported GAAP net income of $45.5 million or $0.57 per share and distributable earnings of $76.8 million or $0.97 per common share, a 1.01x coverage ratio of our annual dividend of $0.96 per share. We have covered our common stock dividend for each of the last 2 years. Book value per common share decreased quarter-over-quarter to $11.07 from $11.25. Our net asset growth during 2025 continues to reflect our focus on allocating capital to new loan investments and actively managing our portfolio. For the full year 2025, we originated 20 loans with total commitments of $1.9 billion at a weighted average credit spread of 2.82% and received loan repayments of $987.9 million, including full loan repayments of $931.5 million on 15 loans where the underlying collateral was 64% multifamily, 20% hotel, 14% office and 2% industrial. Year-over-year, we grew our net assets from $3.3 billion to $4.1 billion or 25%. At year-end, our loan portfolio was 100% performing. Our weighted average risk rating for the loan portfolio is unchanged at 3.0. During the quarter, we upgraded 2 multifamily loans from a risk rating of 3 to 2 based on their continued strong operating performance and downgraded 1 multifamily loan from a risk rating of 3 to 4 due to operational challenges in the quarter. This loan represents approximately 1% of our total loan commitments at year-end. Our CECL reserve slightly increased quarter-over-quarter to 180 basis points compared to 176 basis points at September 30. We ended the quarter with near-term liquidity of $143 million, consisting of $72.6 million of cash on hand available for investment, net of $15 million held to satisfy liquidity covenants, undrawn capacity under secured financing arrangements of $51.4 million and CRE CLO reinvestment proceeds of $4 million. Additionally, we held unencumbered loan investments with an aggregate unpaid principal balance of $127.1 million that are eligible to pledge under our existing financing arrangements. The company's liability structure is 82% non-mark-to-market, an increase of 6% from 77% at December 31, 2024. Year-over-year, our cost of funds declined 18 basis points or 9% from 2.0% to 1.82%. The continued improvements to our liability structure in 2025 are primarily due to the issuance of our 2 CRE CLOs, TRTX, FL6 and FL7 totaling $2.2 billion. Total leverage increased quarter-over-quarter to 3.02x from 2.64x as a result of our substantial loan origination volume in the current quarter. At year-end, we had $1.6 billion of financing capacity available to support loan investment activity, and we're in compliance with all of our financial covenants. With that, we welcome your questions. Operator?

[Operator Instructions] First question comes from Chris Muller with Citizens Capital.

Congrats on a really strong quarter here. So it looks like only one close -- loan closed so far in the first quarter. Do you guys expect originations to slow a little bit in the first quarter? Or will it be more just like later closings past February? And how are you guys thinking about the pace of originations in 2026?

[Audio Gap] of the quarter rather. And frankly, a lot of that did actually occur as well within Q4 for us, where we had the bulk of our payoffs in Q4 happened, frankly, in closer to the first month of the quarter and then the bulk of our new fundings occurred really kind of in the last month of the quarter. So we do see that trend continuing. Secondly, as it relates to pipeline, look, our pipeline is incredibly robust. We are seeing a lot of activity really across all property types, all regions, a number of our borrowers, including repeat borrowers have been very active. So I think that from a sort of pacing and investment perspective, I do feel really positive about this year. I mentioned in my remarks that there are a lot of kind of components that are driving that. I would say, one, we are still seeing a lot of those kind of peak of the market purchases from 2020, '21 and '22. Many of those 5-year loans are now in kind of some stage of either coming due. And when you combine that with the fact that a number of borrowers have generally not sold those assets yet. They're generally coming to us for typically a new financing, in some cases, requiring cash in. So I think it's really a combination of a lot of those 5-year loans coming due from when there was tremendously high activity. And then I think this year, what's been happening is if you just look from a macro perspective, there's a little bit more clarity around the sort of path of rates. You've got a 10-year hovering around 4%. And all in all, credit spreads are relatively accommodative. So I do feel like that's a pretty nice recipe for a very active year for us.

Got it. So it sounds like the origination volumes in 4Q isn't really showing up in interest income yet, which is really good to hear. I guess the other question I have here is, it looks like spreads on new loans is about 50 basis points below the portfolio average. Do you expect that type of drop-off on spreads for new loans to continue? And is that due to market competition or more so the type of assets you guys are originating?

Yes. I think it's a combination of really a few things. I would say, first, we've been very concentrated within multifamily and industrial and we've been kind of keeping our LTVs in that kind of sub-65% loan-to-value range. I would say, two, although loan spreads, particularly in the fourth quarter were a touch tighter than prior quarters, we've seen our cost of funds really frankly move in line. And that's really been the story of the entire year, which is although loan spreads have come tighter, the demand and competition to provide us back leverage continues to be incredibly robust. We saw that both in the closing of our Series C loan in Q4 with a weighted average cost of funds of about 1.67. But then also what is maybe less obvious is the number of bank relationships that we have across the broader TPG franchise that are, I would say, incredibly aggressive right now in terms of leading into providing us back leverage. So I think all of that has kind of resulted in despite loan spreads being a touch tighter, our ROEs generated are generally static relative to prior quarters.

The next question comes from Gabe Poggi with Raymond James.

Can you just talk about target leverage again? I know you're at 3x right now. Just remind us of kind of the ballpark comfort zone where you'd like to be as we go through the course of '26. And then just a follow-up, I'll give it to you now is I know that current REO is not a lever you need to pull, you have optionality there. But any color you can provide on the REO assets at TRTX at the asset level and how you're thinking about those assets as the year progresses, especially if transaction volume picks up?

Yes. Sure, absolutely. So I think first, from a target leverage perspective, I would say right now, we're really kind of targeting that 3.5 to 3.75:1 range is a target. I think that once we get to that point is where we will likely reassess, but I feel like that kind of gets us to what I would describe as close to fully invested. And then secondly, from an REO perspective, last year, we sold 2 office assets. We do have some REO remaining. But I think you said it well, which is that when we kind of think about levers to growth, we kind of, I would say, prioritized kind of getting fully invested given the opportunity set one, and you're kind of seeing us do that quarter-by-quarter. In terms of the REO, we do feel like this year is going to be a relatively attractive year to be continuing to sell down that REO. So you will see further progress out of us on our REO portfolio throughout the year.

The next question comes from Rick Shane with JPMorgan.

I have 2 actually. First is actually, and I'm going to have to get this right after REO. On ROE, your returns right now are about, call it, SOFR plus 5%. I'm curious when you think about the business model long term, what do you think the appropriate ROE target is as a function of a spread to SOFR?

Yes. Look, I mean, I think that we've generally been able to achieve an ROE in excess of that. And I think that when we look at the ROE for a, frankly, a lending business that does require some amount of back leverage, I think that really is the health of the back leverage market continues to, frankly, make our business model incredibly relevant in the market. And so when I think about the sort of longer-term trends, I mean, I think, again, that 500 number isn't too far off from what I would think these businesses, frankly, should look like. I think that when you zoom out more broadly, and obviously, you're kind of hitting on a pretty kind of topical area. Real estate credit has been going through a pretty interesting evolution probably over the last decade or 2, and that big evolution has been a combination of banks pulling back, agencies growing in the space and then also all the nonbank lenders. We, of course, being one of those nonbank lenders and having a large platform. So when we think about the sort of evolution of real estate lending and real estate credit, we as a platform are very much sort of on the tip of the spear in terms of where that market evolves. But again, when I think about what's really kind of driving a lot of the nonbank lending activity, I think that the sort of inside baseball does relate to the sort of regulatory capital regime that is orienting banks towards providing back leverage. And I think that, again, is something that we are very focused on. And again, that seems to be a trend that continues to grow.

Got it. Okay. And then second question, and it is related. Obviously, there's been a significant transaction in the space with Apollo planning to sell their assets. You guys are executing well. I would describe it in terms of sort of the continuum of recovery, you guys are very much on the front end of that or leading edge of that, I should say. And your stock is still trading at a, call it, 20% discount to book. I'm curious how you think you can close that value gap? Or does it -- is the ARI transaction an indication that at least one sophisticated player in the space is not convinced that, that is going to happen for the sector?

Look, I mean, I think first thing we've kind of set a very clear record around maximizing shareholder value and have been incredibly clear about our strategic goals. And when you look back about kind of what we achieved last year and seek to achieve this year, I think that we are well on our way of closing that gap, and that's a big focus for us. I think two, when I think about the ARI transaction and just other kind of flows in the market, I can say that TPG broadly as a platform is constantly evaluating opportunities. And we are always looking for ways to maximize shareholder value to be creative. Obviously, the firm has a multiple decade background in platform acquisition and being thoughtful around organic and inorganic growth. So I can tell you that we are always thinking about it, and we're going to continue to be searching for opportunities to basically scale and grow.

Look, I realize that's a tricky question, and I appreciate the answer very much.

[Operator Instructions] The next question comes from John Nickodemus with BTIG.

Most of my questions have been asked already, but I have one more for the team here. Industrial exposure. I noticed that's gone up a bunch, highlight you did in the prepared remarks. I believe you mentioned 72% of the book is now in either multifamily or industrial. How are you thinking about target levels for industrial? Should we expect to see that continue to rise? Just sort of that trend over the course of 2026. Any details you could provide there would be great.

Yes. Sure. Happy to cover that. Obviously, we have meaningfully grown our industrial exposure from a few years back, frankly, less than 5% generally, and now we're kind of just under 20%. When I think about kind of like an appropriate target level, it's probably somewhere in that kind of 25% to 30% range would be an area where I think that we perhaps touch the brakes a little bit. But right now, what we're seeing is, again, sort of how I mentioned, there are many transactions that were done in really over the last kind of 3 to 5 years where there is some amount of recapitalization needed. So we still look at multi and industrial together as sectors that we think we can -- we have a particular edge in. Specific to industrial, we -- across our platform have been an owner of industrial assets. So we have a lot of intelligence across the entire market around valuation, leasing activity otherwise. So we do feel like we, as a platform, have a bit of an edge relative to most of the lenders just kind of given the depth and breadth of our franchise. But again, I think you'll see marginally more growth within industrial over time. And I think as we get to that kind of 25% range, we will, of course, assess and kind of take our views in the market at that juncture.

There are no further questions in queue at this time. I would like to turn the floor back to management for closing comments.

I just want to thank everyone for joining the call today, and we look forward to keeping you updated on our progress. Have a great day.

Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.