After the close last night, commercial real estate company TPG RE Finance Trust (TRTX) priced its 11.0 million share IPO at $20, the low end of the $20-$21 expected range, generating $220 million in gross proceeds. TRTX plans to use the capital from this offering to originate and acquire assets, such as commercial mortgage loans. The lead underwriters on this deal included BofA Merrill Lynch, Citigroup, Goldman Sachs, Wells Fargo, Morgan Stanley, Barclays, and JP Morgan. Shares are set to open later this morning on the NYSE.
TRTX is a commercial real estate finance company sponsored by TPG, an alternative investment firm with over $72 billion in assets under management. Its management is comprised of TPG employees, led by Greta Guggenheim, its CEO and President. Ms. Guggenheim was the co-founder of Ladder Capital (LADR), a commercial real estate debt finance company. Its leadership also includes Robert Foley, its CFO and risk officer, who was co-founder, CFO, and COO at Gramercy Capital (GPT).
The company directly originates, acquires, and manages commercial mortgage loans and other commercial real estate related debt instruments. It primary focuses on originating and acquiring floating rate first mortgage loans that are secured by high quality commercial real estate properties undergoing some form of transition and value creation -- such as re-tenanting, refurbishment, or re-positioning.
Taking a closer look at its portfolio, as of March 31, 2017, TRTX held 54 first mortgage loans with an unpaid principal balance of $2.6 billion, and four mezzanine loans with an unpaid balance of $58.5 million. Collectively, its loans have a weighted average all-in yield of 6.6% and a weighted average term to maturity of 3.0 years. As of June 30, 2017, its loan origination pipeline consisted of 41 potential new commercial mortgage loans representing total loan commitments of about $3.8 billion.
Financials & Distributions
For 1Q17, TRTX generated net income of $23.5 million, up 44.5% year/year, driven by a 24% increase in the unpaid principal balance of its loan portfolio and the increased scale of its origination business. During the quarter it originated five loans with a total loan commitment of $343.4 million, of which it funded $247.2 million. It received proceeds of $142.2 million from maturities, sales, and principal pre-payments on loans.
As of March 31, 2017 it had unrestricted cash available for investment of $82.3 million. Also, it had un-drawn capacity of $229.6 million under secured revolving repurchase facilities with 6 lenders, a non-recourse CLO financing, and asset-specific financings.
Lastly, regarding distributions, on April 25, 2017, it paid a dividend of $0.5425/share with respect to 1Q17. On June 30, 2017, it declared a dividend of $0.51, payable on July 25, for 2Q17. As a REIT, TRTX is required to distribute annually at least 90% of its taxable income.