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What changed in TPG RE Finance Trust, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of TPG RE Finance Trust, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+457 added−461 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-20)

Top changes in TPG RE Finance Trust, Inc.'s 2024 10-K

457 paragraphs added · 461 removed · 375 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

35 edited+5 added−5 removed73 unchanged
Biggest changeWe had no fixed rate loans outstanding as of December 31, 2023. 10 Table of Contents Investment Guidelines Our board of directors has approved the following investment guidelines: • No investment will be made that would cause us to fail to maintain our qualification as a REIT under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”); • No investment will be made that would cause us or any of our subsidiaries to be required to be registered as an investment company under the Investment Company Act; • Our Manager will seek to invest our capital in our target assets; • Prior to the deployment of our capital into our target assets, our Manager may cause our capital to be invested in any short-term investments in money market funds, bank accounts, overnight repurchase agreements with primary Federal Reserve Bank dealers collateralized by direct U.S. government obligations and other instruments or investments determined by our Manager to be of high quality; • Not more than 25% of our Equity (as defined in our Management Agreement) may be invested in any individual investment without the approval of a majority of our independent directors (it being understood, however, that for purposes of the foregoing concentration limit, in the case of any investment that is comprised (whether through a structured investment vehicle or other arrangement) of securities, instruments or assets of multiple portfolio issuers, such investment for purposes of the foregoing limitation will be deemed to be multiple investments in such underlying securities, instruments and assets and not the particular vehicle, product or other arrangement in which they are aggregated); and • Any investment in excess of $300 million requires the approval of a majority of our independent directors.
Biggest changeThe following table illustrates the quarterly impact to our net interest income of an immediate increase or decrease of 50 and 100 basis points in the Term SOFR benchmark rates underlying our existing floating rate loans held for investment portfolio and related liabilities as of December 31, 2024 (dollars in thousands): Due to the floating rate and short-term nature of our loan investment portfolio, we have elected not to employ interest rate derivatives (e.g., interest rate swaps, caps, floors, collars or swaptions) to limit our exposure to increasing or declining interest rates, but we may do so in the future. 10 Table of Contents Investment Guidelines Our board of directors has approved the following investment guidelines: • No investment will be made that would cause us to fail to maintain our qualification as a REIT under the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”); • No investment will be made that would cause us or any of our subsidiaries to be required to be registered as an investment company under the Investment Company Act; • Our Manager will seek to invest our capital in our target assets; • Prior to the deployment of our capital into our target assets, our Manager may cause our capital to be invested in any short-term investments in money market funds, bank accounts, overnight repurchase agreements with primary Federal Reserve Bank dealers collateralized by direct U.S. government obligations and other instruments or investments determined by our Manager to be of high quality; • Not more than 25% of our Equity (as defined in our Management Agreement) may be invested in any individual investment without the approval of a majority of our independent directors (it being understood, however, that for purposes of the foregoing concentration limit, in the case of any investment that is comprised (whether through a structured investment vehicle or other arrangement) of securities, instruments or assets of multiple portfolio issuers, such investment for purposes of the foregoing limitation will be deemed to be multiple investments in such underlying securities, instruments and assets and not the particular vehicle, product or other arrangement in which they are aggregated); and • Any investment in excess of $300 million requires the approval of a majority of our independent directors.
We risk damage to our reputation if we, affiliates of our Manager, or TPG fail to act responsibly in such areas as diversity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency, and incorporating ESG factors in our investment processes.
We risk damage to our reputation if we, affiliates of our Manager, or TPG fail to act responsibly in areas such as diversity and inclusion, environmental stewardship, support for local communities, corporate governance and transparency, and incorporating ESG factors in our investment processes.
We compete with a variety of institutional investors, including other REITs, debt funds, specialty finance companies, savings and loan associations, banks, mortgage bankers, insurance companies, mutual funds, institutional investors, investment banking firms, financial institutions, private equity and hedge funds, governmental bodies and other entities and may compete with other TPG Funds (such as the TRECO Funds).
We compete with a variety of institutional investors, including other REITs, debt funds, specialty finance companies, savings and loan associations, banks, mortgage bankers, insurance companies, mutual funds, institutional investors, investment banking firms, financial institutions, private credit funds, private equity and hedge funds, governmental bodies and other entities and may compete with other TPG Funds (such as the TRECO Funds).
For additional information regarding our investment portfolio as of December 31, 2023, see Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K. 8 Table of Contents Investment Portfolio Financing Strategy We finance our investment portfolio using secured financing arrangements, including secured credit agreements, secured revolving credit facilities, mortgage loans, asset-specific financing arrangements, and collateralized loan obligations (“CLOs”).
For additional information regarding our investment portfolio as of December 31, 2024, see Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Form 10-K. 8 Table of Contents Investment Portfolio Financing Strategy We finance our investment portfolio using secured financing arrangements, including secured credit agreements, secured revolving credit facilities, mortgage loans, asset-specific financing arrangements, and collateralized loan obligations (“CLOs”).
(3) Unfunded loan commitments may be funded over the term of each loan, subject in certain cases to an expiration date or a force-funding date, primarily to finance property improvements or lease-related expenditures by our borrowers, and to finance operating deficits during renovation and lease-up. (4) As of December 31, 2023, all of our loans were indexed to Term SOFR.
(3) Unfunded loan commitments may be funded over the term of each loan, subject in certain cases to an expiration date or a force-funding date, primarily to finance property improvements or lease-related expenditures by our borrowers, and to finance operating deficits during renovation and lease-up. (4) As of December 31, 2024, all of our loans were indexed to Term SOFR.
We reserve the right to adjust this range without advance notice to satisfy our corporate finance and risk management objectives. 9 Table of Contents Floating Rate Portfolio Our business model seeks to minimize our exposure to changing interest rates by match-indexing our assets and liabilities using the same benchmark index, which is Term SOFR.
We reserve the right to adjust this range without advance notice to satisfy our corporate finance and risk management objectives. 9 Table of Contents Floating Rate Portfolio Our business model seeks to minimize our exposure to changing interest rates by match-indexing our assets and liabilities using the same benchmark index, which is one-month Term SOFR.
In addition, we intend to conduct our operations so that we do not come within the definition of an investment company under Section 3(a)(1)(C) of the Investment Company Act because less than 40% of the value of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis will consist of “investment securities.” Excluded from the term “investment securities” (as that term is defined in the Investment Company Act) are securities issued by majority-owned subsidiaries that are themselves not investment companies and are not relying on the exclusions from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7) of the 12 Table of Contents Investment Company Act.
In addition, we intend to conduct our operations so that we do not come within the definition of an investment company under Section 3(a)(1)(C) of the Investment Company Act because less than 40% of the value of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis will consist of “investment securities.” Excluded from the term “investment securities” (as that term is defined in the Investment Company Act) are securities issued by majority-owned subsidiaries that are themselves not investment companies and are not relying on the exclusions from the definition of investment company set forth in Section 3(c)(1) or Section 3(c)(7) of the Investment Company Act.
The commercial mortgage loans we target for origination or acquisition typically include, but are not limited to, the following characteristics: • Unpaid principal balance greater than $35.0 million; • As-is loan-to value (“LTV”) of less than 80% with respect to individual properties; • Floating rate loans tied to the one-month U.S. dollar-denominated Secured Overnight Financing Rate (“Term SOFR”) and credit spreads of 300 to 600 basis points over the benchmark interest rate; • Secured by properties that are: (1) primarily in the multifamily, life science, mixed-use, hospitality, self storage, and industrial real estate sectors; (2) expected to reach stabilization within 24 months of the origination or acquisition date; and (3) located in primary and select secondary markets in the U.S. that we believe have attractive economic conditions and commercial real estate fundamentals, such as growth in employment and household formation, medical infrastructure, universities and attractive cultural and lifestyle amenities; and • Well-capitalized sponsors with experience in particular real estate sectors and geographic markets.
The commercial mortgage loans we target for origination or acquisition typically include, but are not limited to, the following characteristics: • Unpaid principal balance greater than $35.0 million; • As-is loan-to value (“LTV”) of less than 75% with respect to individual properties; • Floating rate loans tied to the one-month U.S. dollar-denominated Secured Overnight Financing Rate (“Term SOFR”) and credit spreads of 300 to 600 basis points over the benchmark interest rate; • Secured by properties that are: (1) primarily in the multifamily/housing, life science, mixed-use, hospitality, self storage, and industrial real estate sectors; (2) expected to reach stabilization within 36 months of the origination or acquisition date; and (3) located in primary and select secondary markets in the U.S. that we believe have attractive economic conditions and commercial real estate fundamentals, such as growth in employment and household formation, medical infrastructure, universities and attractive cultural and lifestyle amenities; and • Well-capitalized sponsors with experience in particular real estate sectors and geographic markets.
(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 December 31, 2023, divided by the as-is appraised value of our collateral at the time of origination or acquisition of such loan or participation interest.
(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 December 31, 2024, divided by the as-is appraised value of our collateral at the time of origination or acquisition of such loan or participation interest.
Our interests in wholly-owned or majority-owned subsidiaries that qualify for the exclusion pursuant to Section 3(c)(5)(C), as described below, Rule 3a-7, as described below, or another exclusion or exception under the Investment Company Act (other than Section 3(c)(1) or Section 3(c)(7) thereof), do not constitute “investment securities.” We hold our assets primarily through direct or indirect wholly-owned or majority-owned subsidiaries, certain of which are excluded from the definition of investment company pursuant to Section 3(c)(5)(C) of the Investment Company Act.
Our interests in wholly-owned or majority-owned subsidiaries that qualify for the exclusion pursuant to 12 Table of Contents Section 3(c)(5)(C), as described below, Rule 3a-7, as described below, or another exclusion or exception under the Investment Company Act (other than Section 3(c)(1) or Section 3(c)(7) thereof), do not constitute “investment securities.” We hold our assets primarily through direct or indirect wholly-owned or majority-owned subsidiaries, certain of which are excluded from the definition of investment company pursuant to Section 3(c)(5)(C) of the Investment Company Act.
In addition to credit spread, all-in yield includes the amortization of deferred origination fees, purchase price premium and discount, and accrual of both extension and exit fees. All-in yield for the total portfolio assumes Term SOFR as of December 31, 2023 for weighted average calculations.
In addition to credit spread, all-in yield includes the amortization of deferred origination fees, purchase price premium and discount, and accrual of both extension and exit fees. All-in yield for the total portfolio assumes Term SOFR as of December 31, 2024 for weighted average calculations.
TPG Real Estate’s teams work across TPG offices in New York, San Francisco and London, and representative offices in Atlanta and Chicago, and have 18 and 43 employees, respectively, between TPG’s real estate debt investment platform and TPG’s real estate equity platform. Our chief executive officer, president and chief financial officer are senior TPG Real Estate professionals.
TPG Real Estate’s teams work across TPG offices in New York, San Francisco and London, and representative offices in Atlanta and Chicago, and have 19 and 45 employees, respectively, between TPG’s real estate debt investment platform and TPG’s real estate equity platform. Our chief executive officer, president and chief financial officer are senior TPG Real Estate professionals.
Generally, loan investments are classified based on a percentage of deferred fundings of the total loan commitment. Bridge loans limit deferred fundings to less than 10%, while Light and Moderate Transitional loans limit deferred fundings to 10% to 20%, and over 20%, respectively. Construction loans involve ground-up construction and deferred fundings often represent the majority of the loan commitment amount.
Generally, loan investments are classified based on the percentage of total loan commitment represented by deferred fundings. Bridge loans involve deferred fundings of less than 10%, while Light and Moderate Transitional loans involve deferred fundings of 10% to 20%, and over 20%, respectively. Construction loans involve ground-up construction where deferred fundings often represent the majority of the loan commitment amount.
Our loans held for investment consist of Bridge, Light Transitional, Moderate Transitional and Construction floating rate loans that are secured by a diverse portfolio of properties located in primary and select secondary markets in the U.S. These loan categories are utilized by us to classify, define, and assess our loan investments.
Our loans held for investment are classified as Bridge, Light Transitional, Moderate Transitional and Construction loans and are secured by a diverse portfolio of properties located in primary and select secondary markets in the U.S. These loan categories are utilized by us to classify, define, and assess our loan investments.
As of December 31, 2023, our allowance for credit losses for loans held for investment was $69.8 million, or 190 basis points of total loan commitments, including an allowance for credit losses on unfunded loan commitments, compared to $214.6 million, or 395 basis points of total loan commitments, as of December 31, 2022, a decrease of $144.8 million from the prior year. 7 Table of Contents The following table details our total loan commitments and unpaid principal balance across the top 25 Metropolitan Statistical Areas (“MSA”), as of December 31, 2023 (dollars in thousands).
As of December 31, 2024, our allowance for credit losses for loans held for investment was $64.0 million, or 187 basis points of total loan commitments, including an allowance for credit losses on unfunded loan commitments, compared to $69.8 million, or 190 basis points of total loan commitments, as of December 31, 2023, a decrease of $5.8 million from the prior year. 7 Table of Contents The following table details our total loan commitments and unpaid principal balance across the top 25 Metropolitan Statistical Areas (“MSA”), as of December 31, 2024 (dollars in thousands).
As of December 31, 2023, 100.0% 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 approximately $0.5 billion of net floating rate exposure, subject to the impact of interest rate floors on all of our floating rate loans and less than 1.2% of our liabilities.
As of December 31, 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 approximately $0.7 billion of net floating rate exposure, subject to the impact of interest rate floors on all of our floating rate loans and less than 5.6% of our liabilities.
We did not have any non-consolidated senior interests as of December 31, 2023. See Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Investment Portfolio Financing–Non-Consolidated Senior Interests” in this Form 10-K for additional information. (2) Unpaid principal balance includes PIK interest of $1.2 million as of December 31, 2023.
We did not have any non-consolidated senior interests as of December 31, 2024. See Item 7 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Investment Portfolio Financing–Non-Consolidated Senior Interests” in this Form 10-K for additional information. (2) Unpaid principal balance includes PIK interest of $0.4 million related to one loan as of December 31, 2024.
Investment Portfolio Our interest-earning assets are comprised almost entirely of a portfolio of floating rate, first mortgage loans and contiguous mezzanine loans. As of December 31, 2023, our balance sheet loan portfolio consisted of 53 loans held for investment totaling $3.7 billion of commitments and an unpaid principal balance of $3.5 billion, with a weighted average credit spread of 3.7%.
Investment Portfolio Our interest-earning assets are comprised substantially of a portfolio of floating rate, first mortgage loans and contiguous mezzanine loans. As of December 31, 2024, our balance sheet loan portfolio consisted of 45 loans held for investment totaling $3.4 billion of commitments and an unpaid principal balance of $3.3 billion, with a weighted average credit spread of 3.7%.
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 equity group and TPG’s executive committee.
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 equity group and TPG’s executive committee. TPG Real Estate, TPG’s real estate platform, includes TPG’s real estate equity and debt investment vehicles, (including us, TPG's public real estate debt investment platform).
Real Estate Owned As of December 31, 2023, we owned four office properties and one multifamily property with an aggregate carrying value of $199.8 million.
Real Estate Owned As of December 31, 2024, we owned four office properties and four multifamily properties with an aggregate carrying value of $275.8 million.
As of December 31, 2023, based on the unpaid principal balance of our total loan exposure, 8.4% of our loans were subject to yield maintenance or other prepayment restrictions and 91.6% were open to repayment by the borrower without penalty.
As of December 31, 2024, based on the unpaid principal balance of our total loan exposure, 22.1% of our loans were subject to yield maintenance or other prepayment restrictions and 77.9% were open to repayment by the borrower without penalty.
As of December 31, 2023, we owned four office properties and one multifamily property with an aggregate carrying value of $199.8 million. 5 Table of Contents Loan Portfolio The following table details overall statistics for our loans held for investment portfolio as of December 31, 2023 (dollars in thousands): Balance sheet portfolio Total loan exposure (1) Number of loans 53 53 Floating rate loans 100.0 % 100.0 % Total loan commitment (1) $ 3,666,173 $ 3,666,173 Unpaid principal balance (2) $ 3,484,052 $ 3,484,052 Unfunded loan commitments (3) $ 183,293 $ 183,293 Amortized cost $ 3,476,776 $ 3,476,776 Weighted average credit spread (4) 3.7 % 3.7 % Weighted average all-in yield (4) 9.3 % 9.3 % Weighted average term to extended maturity (in years) (5) 2.6 2.6 Weighted average LTV (6) 67.3 % 67.3 % _________________________________ (1) In certain instances, we create structural leverage through the co-origination or non-recourse syndication of a senior loan interest to a third-party.
As of December 31, 2024, we owned four office properties and four multifamily properties with an aggregate carrying value of $275.8 million. 5 Table of Contents Loan Portfolio The following table details overall statistics for our loans held for investment portfolio as of December 31, 2024 (dollars in thousands): Balance sheet portfolio Total loan exposure (1) Number of loans 45 45 Floating rate loans 99.7 % 99.7 % Total loan commitment (1) $ 3,412,016 $ 3,412,016 Unpaid principal balance (2) $ 3,284,510 $ 3,284,510 Unfunded loan commitments (3) $ 127,866 $ 127,866 Amortized cost $ 3,278,588 $ 3,278,588 Weighted average credit spread (4) 3.7 % 3.7 % Weighted average all-in yield (4) 8.3 % 8.3 % Weighted average term to extended maturity (in years) (5) 2.4 2.4 Weighted average LTV (6) 66.1 % 66.1 % _________________________________ (1) In certain instances, we create structural leverage through the co-origination or non-recourse syndication of a senior loan interest to a third-party.
As of December 31, 2023, 73.5% of our loan investment portfolio financing arrangements contained no mark-to-market provisions.
As of December 31, 2024, 77.0% of our loan investment portfolio financing arrangements contained no mark-to-market provisions.
In our judgment, existing statutes and regulations have not had a material adverse effect on our business. In recent years, legislators in the United States and in other countries have said that greater regulation of financial services firms is needed, particularly in areas such as risk management, leverage, and disclosure.
In recent years, legislators in the United States and in other countries have said that greater regulation of financial services firms is needed, particularly in areas such as risk management, leverage, and disclosure.
In the fourth quarter, TPG Real Estate held an initial closing of TPG Real Estate Credit Opportunities, and two associated funds-of-one (together the "TRECO Funds"). The TRECO Funds are private credit vehicles, with investment mandates focused on opportunistic real estate credit investing.
Throughout 2024, TPG Real Estate held additional closings of TPG Real Estate Credit Opportunities, and in the fourth quarter of 2024 closed an additional associated fund-of-one (collectively, the foregoing referenced vehicles, the "TRECO Funds"). The TRECO Funds are private credit vehicles, with investment mandates focused on opportunistic real estate credit investing.
As of December 31, 2023, our balance sheet loan portfolio had a weighted average all-in yield of 9.3% and a weighted average term to extended maturity (assuming all extension options are exercised by our borrowers) of 2.6 years.
As of December 31, 2024, our balance sheet loan portfolio had a weighted average all-in yield of 8.3% and a weighted average term to extended maturity (assuming all extension options are exercised by our borrowers) of 2.4 years. As of December 31, 2024, 99.7% of our loan commitments were floating rate, of which 100.0% were first mortgage loans.
Deferred fundings are commonly conditioned on the borrower’s satisfaction of certain collateral performance tests, the completion of specified property improvements, or both. 6 Table of Contents The following charts present, by total loan commitment, the property types securing our balance sheet loans held for investment portfolio and their geographic distribution within the U.S., as of December 31, 2023: The following charts present, by total loan commitment, our loans held for investment portfolio by year of origination and loan category, as of December 31, 2023: As of December 31, 2023, we did not have any loans on non-accrual status.
As of December 31, 2024, we held no Construction loans. 6 Table of Contents The following charts present, by total loan commitment, the property types securing our balance sheet loans held for investment portfolio and their geographic distribution within the U.S., as of December 31, 2024: The following charts present, by total loan commitment, our loans held for investment portfolio by year of origination and loan category, as of December 31, 2024: As of December 31, 2024, we had no loans on non-accrual status.
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 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.
We generally seek to match-fund and match-index our investments by minimizing the differences between the durations and indices of our investments and those of our liabilities, while minimizing our exposure to mark-to-market risk. This may be accomplished in certain instances using derivatives, although no such derivatives are currently used by us.
We generally seek to match-fund and match-index our investments by minimizing the differences between the durations and indices of our investments and those of our liabilities, while minimizing our exposure to mark-to-market risk.
The following table details the principal balance amounts outstanding for our loan portfolio financing arrangements as of December 31, 2023 (dollars in thousands): Total indebtedness Non-mark-to-market Mark-to-market Collateralized loan obligations $ 1,919,790 $ 1,919,790 $ — Secured credit agreements 799,518 — 799,518 Secured revolving credit facility 23,782 23,782 — Asset-specific financing 274,158 274,158 — Total indebtedness (1) $ 3,017,248 $ 2,217,730 $ 799,518 Percent of total indebtedness 73.5 % 26.5 % _________________________________ (1) Excludes deferred financing costs of $8.4 million as of December 31, 2023.
The following table details the principal balance amounts outstanding for our loan portfolio financing arrangements as of December 31, 2024 (dollars in thousands): Total indebtedness Non-mark-to-market Mark-to-market Collateralized loan obligations $ 1,682,288 $ 1,682,288 $ — Secured credit agreements 585,042 — 585,042 Secured revolving credit facility 86,625 86,625 — Asset-specific financing 186,500 186,500 — Total indebtedness (1) $ 2,540,455 $ 1,955,413 $ 585,042 Percent of total indebtedness 77.0 % 23.0 % _________________________________ (1) Excludes deferred financing costs of $2.3 million as of December 31, 2024.
Manager 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 $222 billion of assets under management (as of December 31, 2023) and investment and operational teams around the world.
Manager 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 manager with $246 billion in assets under management as of December 31, 2024. TPG offers a broad range of investment strategies across the alternative asset management landscape, primarily in private equity, credit, and real estate.
Under certain circumstances, we may determine not to match-fund or match-index our investments, or we may otherwise be unable to do so.
This may be accomplished in certain instances using derivatives, although no such derivatives are currently used by us. Under certain circumstances, we may determine not to match-fund or match-index our investments, or we may otherwise be unable to do so.
As of December 31, 2023, our balance sheet loan portfolio had a weighted average LTV of 67.3% and, subject to the satisfaction of certain borrower milestones, $183.3 million of unfunded loan commitments. We may hold real estate owned (“REO”) as a result of taking title to a loan's collateral.
In two instances, a first mortgage loan and contiguous mezzanine loan are both owned by us. As of December 31, 2024, our balance sheet loan portfolio had a weighted average LTV of 66.1% and, subject to the satisfaction of certain borrower milestones, $127.9 million of unfunded loan commitments.
MSA (1) MSA rank (1) Number of loans Loan commitment Unpaid principal balance New York City 1 4 $ 604,133 $ 603,544 San Francisco 11 3 392,900 363,728 San Antonio 24 4 184,370 178,438 Los Angeles 2 2 174,775 168,001 Miami 8 3 172,375 164,372 Dallas 4 2 124,000 100,093 Baltimore 21 1 122,500 121,133 Phoenix 12 2 78,100 69,511 San Diego 17 2 75,600 69,875 Tampa 18 1 69,000 64,570 St.
MSA (1) MSA rank (1) Number of loans Loan commitment Unpaid principal balance New York City 1 4 $ 555,623 $ 555,624 San Francisco 11 2 317,573 308,130 Phoenix 12 3 173,600 166,099 Los Angeles 2 2 172,732 168,284 Dallas 4 3 170,160 144,145 Miami 8 3 169,375 161,372 San Antonio 24 3 120,460 117,448 Baltimore 21 1 113,025 113,025 Tampa 18 1 69,000 66,647 St.
TPG Real Estate, TPG’s real estate platform, includes TPG Real Estate Partners and TPG Thematic Advantage Core-Plus, TPG’s real estate equity investment vehicles, and us, TPG's public real estate debt investment platform. Collectively, TPG Real Estate managed more than $17.9 billion in real estate and real estate-related assets as of December 31, 2023.
Collectively, TPG Real Estate managed more than $17.6 billion in real estate and real estate-related assets as of December 31, 2024. In the fourth quarter of 2023, TPG Real Estate held an initial closing of TPG Real Estate Credit Opportunities, and two associated funds-of-one.
Removed
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.
Added
We may hold real estate owned (“REO”) as a result of taking title to a loan's collateral.
Removed
As of December 31, 2023, 100.0% of our loan commitments were floating rate, of which 100.0% were first mortgage loans or, in one instance, a first mortgage loan and contiguous mezzanine loan both owned by us.
Added
Deferred fundings are commonly conditioned on the borrower’s satisfaction of certain collateral performance tests, the completion of specified property improvements, or both.
Removed
Louis 20 1 65,600 57,000 Atlanta 9 1 44,500 35,072 Chicago 3 1 39,000 39,000 Riverside (San Bernardino) 13 1 36,440 33,915 Other 25 1,482,880 1,415,800 Total 53 $ 3,666,173 $ 3,484,052 _________________________________ (1) Based on rankings of MSA for 2020 according to the United States Census Bureau.
Added
Louis 20 1 65,600 63,546 San Diego 17 1 51,000 46,425 Denver 19 1 31,000 30,309 Other 20 1,402,868 1,343,456 Total 45 $ 3,412,016 $ 3,284,510 _________________________________ (1) Based on rankings of MSAs according to the United States Census Bureau.
Removed
The following table illustrates the quarterly impact to our net interest income of an immediate increase or decrease of 50 and 100 basis points in the Term SOFR benchmark rates underlying our existing floating rate loans held for investment portfolio and related liabilities as of December 31, 2023 (dollars in thousands).
Added
We seek to accomplish this primarily by selecting borrowing arrangements (i) where benchmark interest rate mirrors the benchmark rates of our loan investments, (ii) where maturities equal or exceed the expected maturities of our loan investments, and (iii) that do not involve mark-to-market structural features.
Removed
Due to the floating rate and short-term nature of our loan investment portfolio, we have elected not to employ interest rate derivatives (e.g., interest rate swaps, caps, collars or swaptions) to limit our exposure to increasing interest rates, but we may do so in the future.
Added
The weighted average interest rate floor on the mortgage loan investment portfolio was 1.84% and the weighted average interest rate floor on the liabilities was 0.10% as of December 31, 2024.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur charter and bylaws obligate us, to the maximum extent permitted by Maryland law in effect from time to time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to: • any individual who is a present or former director or executive officer of our company and who is made, or threatened to be made, a party to, or witness in, the proceeding by reason of his or her service in that capacity; or • any individual who, while a director or officer of our company and at our request, serves or has served as a director, officer, trustee, member, manager or partner of another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made, or threatened to be made, a party to, or witness in, the proceeding by reason of his or her service in that capacity.
Biggest changeUnder current Maryland law, our present and former directors and officers will not have any liability to us or our stockholders for money damages except for liability resulting from: • actual receipt of an improper personal benefit or profit in money, property or services; or • active and deliberate dishonesty by the director or executive officer that is established by a final judgment and is material to the cause of action adjudicated. 58 Table of Contents Our charter and bylaws obligate us, to the maximum extent permitted by Maryland law in effect from time to time, to indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to: • any individual who is a present or former director or executive officer of our company and who is made, or threatened to be made, a party to, or witness in, the proceeding by reason of his or her service in that capacity; or • any individual who, while a director or officer of our company and at our request, serves or has served as a director, officer, trustee, member, manager or partner of another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made, or threatened to be made, a party to, or witness in, the proceeding by reason of his or her service in that capacity.
These deterrents to repayment include prepayment fees expressed as a percentage of the unpaid principal balance, or the amount of foregone net interest income due us from the date of repayment through initial maturity, or a sooner date that is frequently 12 or 18 months after the origination date.
These deterrents to repayment include prepayment fees expressed as a percentage of the unpaid principal balance, or the amount of foregone net interest income due to us from the date of repayment through initial maturity, or a sooner date that is frequently 12 or 18 months after the origination date.
There can be no assurance that any of the loan modifications and restructurings we have effected will be successful or that (i) we will be able to identify and implement successful modifications and/or restructurings with respect to any other distressed loans or investments we may have from time to time, or (ii) we have sufficient resources to implement such modifications and/or restructurings in times of widespread market challenges.
There can be no assurance that any of the loan modifications and restructurings we have effected will be successful or that (i) we will be able to identify and implement successful modifications and/or restructurings with respect to any other distressed loans or investments we may have from time to time, or (ii) we will have sufficient resources to implement such modifications and/or restructurings in times of widespread market challenges.
A decline in the fair value of investments we may make in CRE debt securities may require us to recognize an other-than-temporary (“OTTI”) impairment against such assets under GAAP if we were to determine that, with respect to any assets in unrealized loss positions, we do not have the ability and intent to hold such assets to maturity or for a period of time sufficient to allow for recovery to the original acquisition cost of such assets.
A decline in the fair value of investments we may make in CRE debt securities may require us to recognize an other-than-temporary impairment (“OTTI”) against such assets under GAAP if we were to determine that, with respect to any assets in unrealized loss positions, we do not have the ability and intent to hold such assets to maturity or for a period of time sufficient to allow for recovery to the original acquisition cost of such assets.
Incurring substantial debt could subject us to many risks that, if realized, would materially and adversely affect us, including the risk that: • our cash flow from operations may be insufficient to make required payments of principal of and interest on our debt, which is likely to result in (a) acceleration of such debt (and any other debt containing a cross-default or cross-acceleration provision), which we then may be unable to repay from internal funds or to refinance on favorable terms, or at all, (b) our inability to borrow undrawn amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements, which would result in a decrease in our liquidity, and/or (c) the loss of some or all of our collateral assets to foreclosure or sale; • our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase in an amount sufficient to offset the higher financing costs; • we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions or other purposes; and • we may not be able to refinance any debt that matures prior to the maturity (or realization) of an underlying investment it was used to finance on favorable terms or at all.
Incurring substantial debt could subject us to many risks that, if realized, would materially and adversely affect us, including the risk that: • our cash flow from operations may be insufficient to make required payments of principal and interest on our debt, which is likely to result in (a) acceleration of such debt (and any other debt containing a cross-default or cross-acceleration provision), which we then may be unable to repay from internal funds or to refinance on favorable terms, or at all, (b) our inability to borrow undrawn amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements, which would result in a decrease in our liquidity, and/or (c) the loss of some or all of our collateral assets to foreclosure or sale; • our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that investment yields will increase in an amount sufficient to offset the higher financing costs; • we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, stockholder distributions or other purposes; and • we may not be able to refinance any debt that matures prior to the maturity (or realization) of an underlying investment it was used to finance on favorable terms or at all.
We depend on our Manager and its affiliates to develop the appropriate systems and procedures to control operational risk.
We depend on our Manager to develop appropriate systems and procedures to control operational risk. We depend on our Manager and its affiliates to develop the appropriate systems and procedures to control operational risk.
Some of the factors that could negatively affect the market price of our common stock include: • our actual or projected operating results, financial condition, cash flows and liquidity, or changes in investment strategy or prospects; • actual or perceived changes in the value of our investment portfolio; • actual or perceived conflicts of interest with TPG, including our Manager, and the personnel of TPG provided to our Manager, including our executive officers, and TPG Funds; • equity issuances by us, or share resales by our stockholders, or the perception that such issuances or resales may occur; • loss of a major funding source or inability to obtain new favorable funding sources in the future; • increases in market interest rates, which may lead investors to demand a higher distribution yield for our common stock and would result in increased interest expense on our debt; • our financing strategy and leverage; • actual or anticipated accounting problems; • publication of research reports, including by short sellers, or speculation in the press or the investment community, about us or the commercial real estate industry; • adverse market reaction to additional indebtedness we incur or securities we may issue in the future; • additions to or departures of key personnel of TPG, including our Manager; • changes in market valuations or operating performance of companies comparable to us; • price and volume fluctuations in the overall stock market from time to time; • short-selling pressure with respect to shares of our common stock or REITs generally; • speculation in the press or investment community; • any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts; • failure to maintain our REIT qualification or exclusion or exemption from Investment Company Act regulation or listing on the NYSE; • changes in law, regulatory policies or tax guidelines, or interpretations thereof, particularly with respect to REITs; • general market and economic conditions and trends, including inflationary concerns and the current state of the credit and capital markets; and • the other factors described in this Item 1A - “Risk Factors.” As noted above, market factors unrelated to our performance could also negatively impact the market price of our common stock.
Some of the factors that could negatively affect the market price of our common stock include: • our actual or projected operating results, financial condition, cash flows and liquidity, or changes in investment strategy or prospects; • actual or perceived changes in the value of our investment portfolio; • actual or perceived conflicts of interest with TPG, including our Manager, and the personnel of TPG provided to our Manager, including our executive officers, and TPG Funds; • equity issuances by us, or share resales by our stockholders, or the perception that such issuances or resales may occur; • loss of a major funding source or inability to obtain new favorable funding sources in the future; • increases in market interest rates, which may lead investors to demand a higher distribution yield for our common stock and would result in increased interest expense on our debt; • our financing strategy and leverage; • actual or anticipated accounting problems; • publication of research reports, including by short sellers, or speculation in the press or the investment community, about us or the commercial real estate industry; • adverse market reaction to additional indebtedness we incur or securities we may issue in the future; • additions to or departures of key personnel of TPG, including our Manager; • changes in market valuations or operating performance of companies comparable to us; • price and volume fluctuations in the overall stock market from time to time; • short-selling pressure with respect to shares of our common stock or REITs generally; • speculation in the press or investment community; • any shortfall in revenue or net income or any increase in losses from levels expected by investors or securities analysts; • failure to maintain our REIT qualification or exclusion or exemption from Investment Company Act regulation or listing on the NYSE; • changes in law, regulatory policies or tax guidelines, or interpretations thereof, particularly with respect to REITs; • general market and economic conditions and trends, including inflationary concerns and the current state of the credit and capital markets; and • the other factors described in this Item 1A - “Risk Factors.” 55 Table of Contents As noted above, market factors unrelated to our performance could also negatively impact the market price of our common stock.
Such joint venture investments may involve risks not otherwise present when we originate or acquire investments without partners, including the following: • we may not have exclusive control over the investment or the joint venture, which may prevent us from taking actions that are in our best interest; • joint venture agreements often restrict the transfer of a partner’s interest or may otherwise restrict our ability to sell the interest when we desire and/or on advantageous terms; • any future joint venture agreements may contain buy-sell provisions pursuant to which one partner may initiate procedures requiring the other partner to choose between buying the other partner’s interest or selling its interest to that partner; • we may not be in a position to exercise sole decision-making authority regarding the investment or joint venture, which could create the potential risk of creating impasses on decisions, such as with respect to acquisitions or dispositions; • a partner may, at any time, have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals; • a partner may be in a position to take action contrary to our instructions, requests, policies or objectives, including our policy with respect to maintaining our qualification as a REIT and our exclusion or exemption from registration under the Investment Company Act; • a partner may fail to fund its share of required capital contributions or may become bankrupt, which may mean that we and any other remaining partners generally would remain liable for the joint venture’s liabilities; • our relationships with our partners are contractual in nature and may be terminated or dissolved under the terms of the applicable joint venture agreements and, in such event, we may not continue to own or operate the interests or investments underlying such relationship or may need to purchase such interests or investments at a premium to the market price to continue ownership; • disputes between us and a partner may result in litigation or arbitration that could increase our expenses and prevent our Manager and our officers and directors from focusing their time and efforts on our business and could result in subjecting the investments owned by the joint venture to additional risk; or • we may, in certain circumstances, be liable for the actions of a partner, and the activities of a partner could adversely affect our ability to maintain our qualification as a REIT or our exclusion or exemption from registration under the Investment Company Act, even though we do not control the joint venture.
Such joint venture investments may involve risks not otherwise present when we originate or acquire investments without partners, including the following: • we may not have exclusive control over the investment or the joint venture, which may prevent us from taking actions that are in our best interest; • joint venture agreements often restrict the transfer of a partner’s interest or may otherwise restrict our ability to sell the interest when we desire and/or on advantageous terms; • any future joint venture agreements may contain buy-sell provisions pursuant to which one partner may initiate procedures requiring the other partner to choose between buying the other partner’s interest or selling its interest to that partner; • we may not be in a position to exercise sole decision-making authority regarding the investment or joint venture, which could create the potential risk of creating impasses on decisions, such as with respect to acquisitions or dispositions; • a partner may, at any time, have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals; • a partner may be in a position to take action contrary to our instructions, requests, policies or objectives, including our policy with respect to maintaining our qualification as a REIT and our exclusion or exemption from registration under the Investment Company Act; • a partner may fail to fund its share of required capital contributions or may become bankrupt, which may mean that we and any other remaining partners generally would remain liable for the joint venture’s liabilities; 22 Table of Contents • our relationships with our partners are contractual in nature and may be terminated or dissolved under the terms of the applicable joint venture agreements and, in such event, we may not continue to own or operate the interests or investments underlying such relationship or may need to purchase such interests or investments at a premium to the market price to continue ownership; • disputes between us and a partner may result in litigation or arbitration that could increase our expenses and prevent our Manager and our officers and directors from focusing their time and efforts on our business and could result in subjecting the investments owned by the joint venture to additional risk; or • we may, in certain circumstances, be liable for the actions of a partner, and the activities of a partner could adversely affect our ability to maintain our qualification as a REIT or our exclusion or exemption from registration under the Investment Company Act, even though we do not control the joint venture.
For example, the information and technology systems of TPG, its portfolio entities and other related parties, such as service providers, may be vulnerable to damage or interruption from cybersecurity breaches, computer viruses or other malicious code, network failures, computer and telecommunication failures, infiltration by unauthorized persons and other security breaches, usage errors by their respective professionals or service providers, power, communications or other service outages and catastrophic events such as fires, tornadoes, floods, hurricanes and earthquakes.
For example, the information and technology systems of TPG, its portfolio entities and other related parties, such as service providers, may be vulnerable to damage or interruption from cybersecurity breaches, computer viruses or other malicious code, network failures, computer and telecommunication failures, infiltration by unauthorized persons and other security breaches, usage errors by their respective professionals or service providers, power, communications or other service outages and catastrophic events such as fires, droughts, tornadoes, floods, hurricanes and earthquakes.
Market and economic disruptions have affected, and may in the future affect, consumer confidence levels and spending, personal bankruptcy rates, levels of incurrence and default on consumer debt and home prices, among other factors. We cannot assure you that market disruptions, including the increased cost of funding for certain governments and financial institutions, will not impact the global economy.
Market and economic disruptions have affected, and may in the future affect, consumer confidence levels and spending, bankruptcy rates, levels of incurrence and default on consumer debt and home prices, among other factors. We cannot assure you that market disruptions, including the increased cost of funding for certain governments and financial institutions, will not impact the global economy.
If the borrower's assessment of the asset as undervalued is inaccurate, or if the market in which the asset is located fails to recover according to the borrower’s projections, or if the borrower fails to improve the operating performance of the asset or the value of the asset, the borrower may not receive a sufficient return on the asset to satisfy the transitional loan, and we will bear the risk that we may not recover some or all of our investment.
If the borrower's assessment of the asset as undervalued is inaccurate, or if the market in which the asset is located fails to recover according to the borrower’s projections, or if the borrower fails to sufficiently improve the operating performance of the asset or the value of the asset, the borrower may not receive a sufficient return on the asset to satisfy the transitional loan, and we will bear the risk that we may not recover some or all of our investment.
If our Manager underestimates the asset-level losses relative to the price we pay for a particular investment, we may be required to recognize an impairment and/or realize losses with respect to such investment. Additionally, during the mortgage loan underwriting process, appraisals will generally be obtained by our Manager on the collateral underlying each prospective mortgage.
If our Manager underestimates the asset-level losses relative to the price we pay for a particular investment, we may be required to recognize an impairment and/or realize losses with respect to such investment. Additionally, during the loan underwriting process, appraisals will generally be obtained by our Manager on the collateral underlying each prospective loan.
Certain of our service providers or their affiliates (including administrators, lenders, brokers, property managers, attorneys, consultants and investment banking or commercial banking firms) also provide goods or services to, or have business, personal or other relationships with, TPG. Such service providers may be sources of investment opportunities, co-investors or commercial counterparties or portfolio companies of TPG Funds.
Certain of our service providers or their affiliates (including administrators, lenders, brokers, property managers, asset managers, attorneys, consultants and investment banking or commercial banking firms) also provide goods or services to, or have business, personal or other relationships with, TPG. Such service providers may be sources of investment opportunities, co-investors or commercial counterparties or portfolio companies of TPG Funds.
Instability in the U.S. and global financial markets in the future could be caused by any number of factors beyond our control, including, without limitation, terrorist attacks or other acts of war and adverse changes in national or international economic, market and political conditions or another health pandemic.
Instability in the U.S. and global financial markets in the future could be caused by any number of factors beyond our control, including, without limitation, terrorist attacks or other acts of war or other hostilities and adverse changes in national or international economic, market and political conditions or another health pandemic.
To the extent any TPG Funds, including a TRECO Fund, otherwise have investment objectives or guidelines that overlap with ours, in whole or in part, then, pursuant to TPG’s allocation policy, investment opportunities that fall within such common objectives or guidelines will generally be allocated among our company and one or more of such TPG Funds, including a TRECO Fund, on a basis that our Manager and applicable TPG affiliates determine to be fair and reasonable in their sole discretion, subject to the following considerations: • our and the relevant TPG Funds’ investment focuses and objectives; • the TPG professionals who sourced the investment opportunity; • the TPG professionals who are expected to oversee and monitor the investment; • the expected amount of capital required to make the investment, as well as our and the relevant TPG Funds’ current and projected capacity for investing (including for any potential follow-on investments); • our and the relevant TPG Funds’ targeted rates of return and investment holding periods; • the stage of development of the prospective portfolio company or borrower; • our and the relevant TPG Funds’ respective existing portfolio of investments; • the investment opportunity’s risk profile; • our and the relevant TPG Funds’ respective expected life cycles; • any investment targets or restrictions (e.g., industry, size, etc.) that apply to us and the relevant TPG Funds; • our ability and the ability of the relevant TPG Funds to accommodate structural, timing and other aspects of the investment process; and • legal, tax, contractual, regulatory or other considerations that our Manager and applicable TPG affiliates deem relevant.
To the extent any TPG Funds, including a TRECO Fund, otherwise have investment objectives or guidelines that overlap with ours, in whole or in part, then, pursuant to TPG’s allocation policy, investment opportunities that fall within such common objectives or guidelines will generally be allocated among our company and one or more of such TPG Funds, including a TRECO Fund, on a basis that our Manager and applicable TPG affiliates determine to be fair and reasonable in their sole discretion, subject to the following considerations: • our and the relevant TPG Funds’ investment focuses and objectives; • the TPG professionals who sourced the investment opportunity; • the TPG professionals who are expected to oversee and monitor the investment; 38 Table of Contents • the expected amount of capital required to make the investment, as well as our and the relevant TPG Funds’ current and projected capacity for investing (including for any potential follow-on investments); • our and the relevant TPG Funds’ targeted rates of return and investment holding periods; • the stage of development of the prospective portfolio company or borrower; • our and the relevant TPG Funds’ respective existing portfolio of investments; • the investment opportunity’s risk profile; • our and the relevant TPG Funds’ respective expected life cycles; • any investment targets or restrictions (e.g., industry, size, etc.) that apply to us and the relevant TPG Funds; • our ability and the ability of the relevant TPG Funds to accommodate structural, timing and other aspects of the investment process; and • legal, tax, contractual, regulatory or other considerations that our Manager and applicable TPG affiliates deem relevant.
One of the factors that investors may consider in deciding whether to buy or sell our common stock is our distribution yield, if any, as a percentage of our stock price relative to market interest rates. If market interest rates continue to increase, prospective investors may demand a higher distribution yield or seek alternative investments paying higher dividends or interest.
One of the factors that investors may consider in deciding whether to buy or sell our common stock is our distribution yield, if any, as a percentage of our stock price relative to market interest rates. If market interest rates increase, prospective investors may demand a higher distribution yield or seek alternative investments paying higher dividends or interest.
Therefore, it may not be possible for existing stockholders to participate in such future stock issuances, which may dilute the then existing stockholders’ interests in us. We have not established a minimum distribution payment level and we cannot assure you of our ability to pay distributions in the future.
Therefore, it may not be possible for existing stockholders to participate in such future stock issuances, which may dilute the then existing stockholders’ interests in us. We have not established a minimum distribution payment level and we cannot assure stockholders of our ability to pay distributions in the future.
In the event that our leverage is for a shorter term than the financed loan or other investment, we may not be able to extend or find appropriate replacement leverage and that would have an adverse impact on our liquidity and our returns.
In the event that our leverage is for a shorter term than the financed loan or other investment, we may not be able to extend or find appropriate replacement leverage, which would have an adverse impact on our liquidity and our returns.
Inflation, changes in building codes and ordinances, environmental considerations and other factors, including terrorism or acts of war, also might result in insurance proceeds that are insufficient to repair or replace a property if it is damaged or destroyed.
Inflation, changes in building codes and ordinances, environmental considerations and other factors, including terrorism or acts of war or other hostilities, also might result in insurance proceeds that are insufficient to repair or replace a property if it is damaged or destroyed.
Virginia, Colorado, Utah and Connecticut recently enacted similar data privacy legislation. Some jurisdictions have also enacted or proposed laws requiring companies to notify individuals and government agencies of data security breaches involving certain types of personal data.
Virginia, Colorado, Utah and Connecticut have also enacted similar data privacy legislation. Some jurisdictions have also enacted or proposed laws requiring companies to notify individuals and government agencies of data security breaches involving certain types of personal data.
Additionally, such loan modifications may result in our becoming the owner of underlying the real estate. We have in the past and may in the future acquire ownership of property securing our loans through foreclosure or deed-in-lieu of foreclosure.
Additionally, such loan modifications have resulted and may in the future result in our becoming the owner of the underlying real estate. We have in the past and may in the future acquire ownership of property securing our loans through foreclosure or deed-in-lieu of foreclosure.
See “—Risks Related to Our Company—Changes in laws or regulations governing our operations or those of our competitors, or changes in the interpretation thereof, or newly enacted laws or regulations, could result in increased competition for our target assets, required changes to our business practices and collectively could adversely impact our revenues and impose additional costs on us, which could materially and adversely affect us.” As a result, competition may limit our ability to originate or acquire attractive investments in our target assets and could result in reduced returns.
See “—Risks Related to Our Company—Changes in laws or regulations governing our operations or those of our competitors, or changes in the interpretation thereof, or newly enacted laws or regulations, could result in increased competition for our target assets, require changes to our business practices and collectively could adversely impact our revenues and impose additional costs on us, which could materially and adversely affect us.” As a result, competition may limit our ability to originate or acquire attractive investments in our target assets and could result in reduced returns.
Our ability to fund our investments and refinance our existing indebtedness will be impacted by our ability to secure additional financing on favorable terms through various arrangements, including secured credit agreements, non-recourse CLO financing, mortgage loans, and asset-specific borrowings. High interest rates have increased and could continue to increase the cost of debt financing for the transactions we pursue.
Our ability to fund our investments and refinance our existing indebtedness will be impacted by our ability to secure additional financing on favorable terms through various arrangements, including secured credit agreements, non-recourse CLO financing, mortgage loans, and asset-specific borrowings. Elevated interest rates have increased and could continue to increase the cost of debt financing for the transactions we pursue.
In addition, in connection with such investments, TPG will generally seek to implement certain procedures to mitigate conflicts of interest which typically involve maintaining a non-controlling interest in any such investment and a forbearance of rights, including certain non-economic rights, relating to the TPG Funds, such as where TPG may cause us to decline to exercise certain control- and/or foreclosure-related rights with respect to a portfolio entity (including following the vote of other third-party lenders generally or otherwise recusing itself with respect to decisions), including with respect to defaults, foreclosures, workouts, restructurings and/or exit opportunities, subject to certain limitations.
In addition, in connection with such investments, TPG will generally seek to implement certain procedures to mitigate conflicts of interest which typically involve maintaining a non-controlling interest in any such investment and a forbearance of rights, including certain non-economic rights, relating to the TPG Funds, such as where TPG may cause us to decline to exercise certain control- and/or foreclosure-related rights with respect to a borrower (including following the vote of other third-party lenders generally or otherwise recusing itself with respect to decisions), including with respect to defaults, foreclosures, workouts, restructurings and/or exit opportunities, subject to certain limitations.
In particular, the final rule requires covered swap entities and financial end-users having “material swaps exposure,” defined as an average aggregate daily notional amount of uncleared swaps exceeding a certain specified amount, to collect and/or post (as applicable) a minimum amount of “initial margin” in respect of each uncleared swap; the specified amounts for material swaps exposure differ subject to a phase-in schedule, when the average aggregate daily notional amount will thenceforth be 47 Table of Contents $8.0 billion as calculated from June, July and August of the previous calendar year.
In particular, the final rule requires covered swap entities and financial end-users having “material swaps exposure,” defined as an average aggregate daily notional amount of uncleared swaps exceeding a certain specified amount, to collect and/or post (as applicable) a minimum amount of “initial margin” in respect of each uncleared swap; the specified amounts for material swaps exposure differ subject to a phase-in schedule, when the average aggregate daily notional amount will thenceforth be $8.0 billion as calculated from June, July and August of the previous calendar year.
Furthermore, there is increasing competition among financial sponsors, investment banks and other real estate debt investors for hiring and retaining qualified investment professionals, and there can be no assurance that such professionals will continue to be associated with us, our Manager or its affiliates or that any replacements will perform well.
Furthermore, there is significant competition among financial sponsors, investment banks and other real estate debt investors for hiring and retaining qualified investment professionals, and there can be no assurance that such professionals will continue to be associated with us, our Manager or its affiliates or that any replacements will perform well.
However, proposals for legislation that would change how the financial services industry is regulated are continually being introduced in the U.S. Congress and in state legislatures. Federal financial regulatory agencies may adopt regulations and amendments intended to effect regulatory reforms including reforms to certain Dodd-Frank-related regulations.
However, proposals for legislation that would change how the financial services industry is regulated are continually being introduced in the U.S. Congress and in state legislatures. Federal financial regulatory agencies may adopt regulations and amendments intended to effect regulatory reforms including reforms to certain Dodd-Frank-related regulations. Moreover, following the U.S.
We may also issue additional equity, equity-related and debt securities to fund our investment strategy. On May 28, 2020, we issued $225.0 million in shares of 11% Series B Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”).
We have issued and may also in the future issue additional equity, equity-related and debt securities to fund our investment strategy. On May 28, 2020, we issued $225.0 million in shares of 11% Series B Cumulative Redeemable Preferred Stock, par value $0.001 per share (the “Series B Preferred Stock”).
Our Manager’s fee structure may not create proper incentives or may induce our Manager and its affiliates to make certain loans or other investments, including speculative investments, which increase the risk of our portfolio. We pay our Manager base management fees calculated on equity without regard to performance of our portfolio.
Our Manager’s fee structure may not create proper incentives or may induce our Manager and its affiliates to cause us to make certain loans or other investments, including speculative investments, which increase the risk of our portfolio. We pay our Manager base management fees calculated on equity without regard to performance of our portfolio.
Net operating income of an income-producing property may be adversely affected by the risks particular to commercial real property described above, as well as, among other things: • tenant mix and tenant bankruptcies; • success of tenant businesses; • property management decisions, including with respect to capital improvements, particularly in older building structures; • renovations or repositionings during which operations may be limited or halted completely; • property location and condition, including, without limitation, any need to address environmental contamination or climate-related risks at a property; • competition from comparable types of properties; • changes in global, national, regional or local economic conditions or changes in specific industry segments; • changes in interest rates, and in the state of the credit, securitization, debt and equity capital markets, including diminished availability or lack of debt financing for commercial real estate; • global trade disruption, supply chain issues, significant introductions of trade barriers and bilateral trade frictions; • declines in regional or local real estate values or rental or occupancy rates; • responses of businesses, governments and individuals to pandemics or outbreaks of contagious disease; • labor shortages and increases in the minimum wage and other forms of employee compensation and benefits; • higher rates of inflation; • changes in real estate tax rates, tax credits and other operating expenses; • changes to tax laws and rates to which real estate lenders and investors are subject; and • government regulations.
Net operating income of an income-producing property may be adversely affected by the risks particular to commercial real property described above, as well as, among other things: • tenant mix and tenant bankruptcies; • success of tenant businesses; • property management decisions, including with respect to capital improvements, particularly in older building structures; • renovations or repositionings during which operations may be limited or halted completely; • property location and condition, including, without limitation, any need to address environmental contamination or climate-related risks at a property; • competition from comparable types of properties; • changes in global, national, regional or local economic conditions or changes in specific industry segments; • changes in interest rates, and in the state of the credit, securitization, debt and equity capital markets, including diminished availability or lack of debt financing for commercial real estate; • global trade disruption, supply chain issues, significant introductions of trade barriers and bilateral trade frictions; • declines in regional or local real estate values or rental or occupancy rates; • responses of businesses, governments and individuals to pandemics or other severe public health events; • labor shortages and increases in the minimum wage and other forms of employee compensation and benefits; • higher rates of inflation; • changes in real estate tax rates, tax credits and other operating expenses; • changes to tax laws and rates to which real estate lenders and investors are subject; and • government regulations.
Attacks on TPG and its affiliates and their portfolio companies’ and service providers’ systems could involve attacks that are intended to obtain unauthorized access to our proprietary information or personal identifying information of our stockholders, destroy data or disable, degrade or sabotage the TPG systems on which we rely, or divert or otherwise steal funds, including through the introduction of “phishing” attempts and other forms of social engineering, computer viruses and other malicious code.
Attacks on TPG and its affiliates and their portfolio companies’ and service providers’ systems could involve attacks that are intended to obtain unauthorized access to our proprietary information or personal identifying information of our stockholders, destroy data or disable, degrade or sabotage the TPG systems on which we rely, or divert or otherwise steal funds, including through the introduction of “phishing” attempts and other forms of social engineering, ransomware attacks, cyber extortion, computer viruses and other malicious code.
Furthermore, if “regulatory capital” or “capital adequacy” requirements—whether under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), Basel III, or other regulatory action—are further strengthened or expanded with respect to lenders that provide us with debt financing, or were to be imposed on us directly, they or we may be required to limit, or increase the cost of, financing they provide to us or that we provide to others.
Furthermore, if “regulatory capital” or “capital adequacy” requirements—whether under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), Basel III, or other regulatory action—are further strengthened or expanded with respect to lenders that provide us 45 Table of Contents with debt financing, or were to be imposed on us directly, they or we may be required to limit, or increase the cost of, financing they provide to us or that we provide to others.
If we or our borrowers fail or are perceived to fail to comply with applicable rules, regulations and stakeholder expectations, it could negatively impact our reputation and our business results. Further, our business could become subject to additional regulations, penalties and/or risks of regulatory scrutiny and enforcement in the future.
If we or our borrowers fail or are perceived to fail to comply with or meet applicable stakeholder expectations, it could negatively impact our reputation and our business results. Further, our business could become subject to additional regulations, penalties and/or risks of regulatory scrutiny and enforcement in the future.
The TRS rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. Any of these taxes would reduce our cash flow, which could materially and adversely affect us. Complying with REIT requirements may cause us to forego otherwise attractive investment opportunities.
The TRS rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. Any of these taxes would reduce our cash flow, which could materially and adversely affect us. 51 Table of Contents Complying with REIT requirements may cause us to forego otherwise attractive investment opportunities.
Such transactions will be conducted in accordance with, and subject to, the terms and conditions of our Management Agreement (including the requirement that sales to, or acquisitions of investments or receipt of financing 41 Table of Contents from, TPG, any TPG Fund or any of their affiliates be approved in advance by a majority of our independent directors) and our code of business conduct and ethics and applicable laws and regulations. • Loan Refinancings.
Such transactions will be conducted in accordance with, and subject to, the terms and conditions of our Management Agreement (including the requirement that sales to, or acquisitions of investments or receipt of financing from, TPG, any TPG Fund or any of their affiliates be approved in advance by a majority of our independent directors) and our code of business conduct and ethics and applicable laws and regulations. • Loan Refinancings.
There has been an increase in the frequency and sophistication of the cyber and security threats TPG faces, with attacks ranging from those common to businesses generally to those that are more advanced and persistent, which may target TPG because TPG holds a significant amount of confidential and sensitive information about its and our investors, its portfolio companies and its and our potential investments.
There has been an increase in the frequency and sophistication of the cyber and security threats TPG faces, with attacks ranging from those common to businesses generally to those that are more advanced and persistent, which may target TPG because TPG holds a significant amount of confidential and sensitive information about its and our investors, its portfolio 47 Table of Contents companies and its and our potential investments.
There can be no 48 Table of Contents assurance that measures that TPG takes to ensure the integrity of its systems will provide protection, especially because cyberattack techniques change frequently, may persist undetected over extended periods of time, and may not be mitigated in a timely manner to prevent or minimize the impact of an attack on TPG or its affiliates.
There can be no assurance that measures that TPG takes to ensure the integrity of its systems will provide protection, especially because cyberattack techniques change frequently, may persist undetected over extended periods of time, and may not be mitigated in a timely manner to prevent or minimize the impact of an attack on TPG or its affiliates.
As described below, the process of foreclosing on a property is time-consuming, and we may incur significant expense if we foreclose on a property securing a loan under these or other circumstances. 23 Table of Contents Risks of cost overruns and non-completion of the construction or renovation of the properties underlying loans we originate or acquire could materially and adversely affect us.
As described below, the process of foreclosing on a property is time-consuming, and we may incur significant expense if we foreclose on a property securing a loan under these or other circumstances. Risks of cost overruns and non-completion of the construction or renovation of the properties underlying loans we originate or acquire could materially and adversely affect us.
Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their stock holdings in us. Item 1B. Unresolved Staff Comments. None. 63 Table of Contents
Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their stock holdings in us. Item 1B. Unresolved Staff Comments. None. 62 Table of Contents
We and the TPG Funds, including TRECO Funds, may make investments at different levels of an issuer’s or borrower’s capital structure (for example, an investment by a TPG Fund (such as a TRECO Fund) in an equity, debt or mezzanine interest with respect to the same portfolio entity in which we own a debt interest or vice versa) or in a different tranche of debt or equity with respect to an entity in which we have an interest.
We and the TPG Funds, including TRECO Funds, may make investments at different levels of an issuer’s or borrower’s capital structure (for example, an investment by a TPG Fund (such as a TRECO Fund) in an equity, debt or mezzanine interest with respect to the same portfolio entity in which we invest at a different level or vice versa) or in a different tranche of debt or equity with respect to an entity in which we have an interest.
In addition, the final rule requires covered swap entities entering into uncleared swaps with other covered swap entities or financial-end users, regardless of swaps exposure, to post and/or collect (as applicable) “variation margin” in reflection of changes in the mark-to-market value of an uncleared swap since the swap was executed or the last time such margin was exchanged.
In addition, the final rule requires covered swap entities entering into uncleared swaps with other covered swap entities or financial-end users, regardless of swaps exposure, to post and/or collect (as applicable) “variation margin” in reflection of changes in the mark-to-market value of an uncleared swap since the swap was executed 46 Table of Contents or the last time such margin was exchanged.
For example, we may be required to accrue income from mortgage loans, CRE debt securities and other types of debt investments or interests in debt investments before we receive any payments of interest or principal on such assets. We may also acquire distressed debt investments that are subsequently modified by agreement with the borrower.
For example, we may be required to accrue income from mortgage loans, CRE debt securities and other types of debt investments or interests in 50 Table of Contents debt investments before we receive any payments of interest or principal on such assets. We may also acquire distressed debt investments that are subsequently modified by agreement with the borrower.
We monitor our holdings to ensure ongoing compliance with this test, but there can be no assurance that we will be able to maintain an exclusion or exemption from registration under the Investment Company Act. The 40% test limits the types of businesses in which we may engage through our subsidiaries.
We monitor our holdings to ensure ongoing 43 Table of Contents compliance with this test, but there can be no assurance that we will be able to maintain an exclusion or exemption from registration under the Investment Company Act. The 40% test limits the types of businesses in which we may engage through our subsidiaries.
Real estate investments are subject to various risks, including: • economic and market fluctuations; • political instability or changes, terrorism and acts of war; • changes in building, environmental, zoning and other laws; • casualty or condemnation losses; • regulatory limitations on rents or moratoriums against tenant evictions or foreclosures; • decreases in property values; • changes in the appeal of properties to tenants, including due to the impact of remote work on how tenants and workers can efficiently use commercial space; • changes in supply (resulting from the recent growth in commercial real estate debt funds or otherwise) and demand; • energy supply shortages; • various uninsured or uninsurable risks; • increasing costs relating to, or the unavailability of, various categories of property-related insurance; • natural disasters and outbreaks of pandemic or contagious diseases; • changes in government regulations (such as rent control or regulation of greenhouse gas emissions); • changes in monetary policy; • changes in capital expenditure costs; • changes in the availability of debt financing and/or mortgage funds which may render the sale or refinancing of properties difficult or impracticable; • increased mortgage defaults; • declining interest rates which reduce asset yields, subject to the impact of interest rate floors on certain of our floating rate loans; • increasing interest rates, which may make it more difficult for our borrowers to repay loans via a refinancing or sale of the collateral property; • increases in borrowing rates; • changes in consumer spending; and • negative developments in the economy and/or adverse changes in real estate values generally and other risk factors that are beyond our control. 16 Table of Contents Recent concerns about the real estate market, rising interest rates, inflation, energy costs and geopolitical issues have contributed to increased volatility and diminished expectations for the economy and markets going forward.
Real estate investments are subject to various risks, including: • economic and market fluctuations; • political instability or changes, terrorism and acts of war or other hostilities; • changes in building, environmental, zoning and other laws; • casualty or condemnation losses; • regulatory limitations on rents or moratoriums against tenant evictions or foreclosures; • decreases in property values; • changes in the appeal of properties to tenants, including due to the impact of remote work on how tenants and workers can efficiently use commercial space; • changes in supply (resulting from the recent growth in commercial real estate debt funds or otherwise) and demand; • energy supply shortages; • various uninsured or uninsurable risks; • increasing costs relating to, or the unavailability of, various categories of property-related insurance; • natural disasters and outbreaks of pandemic or other severe public health events; • changes in government regulations (such as rent control, regulation of investments in multifamily/housing properties or regulation of greenhouse gas emissions); • changes in monetary policy; • changes in capital expenditure costs; • changes in the availability of debt financing and/or mortgage funds which may render the sale or refinancing of properties difficult or impracticable; • increased mortgage defaults; • declining interest rates which reduce asset yields, subject to the impact of interest rate floors on certain of our floating rate loans; • increasing interest rates, which may make it more difficult for our borrowers to repay loans via a refinancing or sale of the collateral property; • increases in borrowing rates; • changes in consumer spending; and • negative developments in the economy and/or adverse changes in real estate values generally and other risk factors that are beyond our control. 16 Table of Contents Recent concerns about the real estate market, elevated interest rates, inflation, energy costs and geopolitical issues have contributed to increased volatility and diminished expectations for the economy and markets going forward.
Cash flow with respect to interest receipts that is swept by our lenders is considered as taxable income to us, and our distribution requirements as a REIT are not lessened. 36 Table of Contents Risks Related to Our Relationship with Our Manager and its Affiliates We depend on our Manager and the personnel of TPG provided to our Manager for our success.
Cash flow with respect to interest receipts that is swept by our lenders is considered as taxable income to us, and our distribution requirements as a REIT are not lessened. Risks Related to Our Relationship with Our Manager and its Affiliates We depend on our Manager and the personnel of TPG provided to our Manager for our success.
Altering our investment portfolio in this manner may materially and adverse affect us if we are forced to dispose of or acquire assets in an unfavorable market. 45 Table of Contents There can be no assurance that we and our subsidiaries will be able to successfully avoid operating as an unregistered investment company.
Altering our investment portfolio in this manner may materially and adverse affect us if we are forced to dispose of or acquire assets in an unfavorable market. There can be no assurance that we and our subsidiaries will be able to successfully avoid operating as an unregistered investment company.
Cybersecurity incidents and cyber-attacks, denial of service attacks, ransomware attacks, and social engineering attempts (including business email compromise attacks) have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency in the future (including as a consequence of the COVID-19 pandemic and the increased frequency of virtual working arrangements).
Cybersecurity incidents and cyber-attacks, denial of service attacks, ransomware attacks, and social engineering attempts (including business email compromise attacks) have been occurring globally at a more frequent and severe level and will likely continue to increase in frequency in the future (including as a consequence of the increased frequency of virtual working arrangements).
It is possible, however, that the IRS could assert that we did not own the assets during the term of the repurchase transaction, in which case we could fail to continue to qualify as a REIT. Liquidation of assets may jeopardize our REIT qualification or create additional tax liability for us.
It is possible, however, that the IRS could assert that we did not own the assets during the term of the repurchase transaction, in which case we could fail to continue to qualify as a REIT. 53 Table of Contents Liquidation of assets may jeopardize our REIT qualification or create additional tax liability for us.
If we are unable to maintain these functions in an effective fashion, our ability to comply with the financial reporting requirements and other rules that apply to reporting companies could be impaired. If we fail to maintain an effective system of internal control, we may be unable to accurately determine our financial results or prevent fraud.
If we are unable to maintain these functions in an effective fashion, our ability to comply with the financial reporting requirements and other rules that apply to reporting companies could be impaired. 60 Table of Contents If we fail to maintain an effective system of internal control, we may be unable to accurately determine our financial results or prevent fraud.
Qualifying Interests for this purpose include senior mortgage loans, certain B-Notes and certain mezzanine loans that satisfy various conditions as set forth in SEC staff no-action letters 44 Table of Contents and other guidance, and other assets that the SEC staff in various no-action letters and other guidance has determined are Qualifying Interests for the purposes of the Investment Company Act.
Qualifying Interests for this purpose include senior mortgage loans, certain B-Notes and certain mezzanine loans that satisfy various conditions as set forth in SEC staff no-action letters and other guidance, and other assets that the SEC staff in various no-action letters and other guidance has determined are Qualifying Interests for the purposes of the Investment Company Act.
In addressing these conflicts and regulatory, legal and contractual requirements across its various businesses, TPG has implemented certain policies and procedures (for example, 38 Table of Contents information walls) that may reduce the benefits that TPG expects to utilize for our Manager for purposes of identifying and managing our investments.
In addressing these conflicts and regulatory, legal and contractual requirements across its various businesses, TPG has implemented certain policies and procedures (for example, information walls) that may reduce the benefits that TPG expects to utilize for our Manager for purposes of identifying and managing our investments.
As a result, we could experience poor performance or losses for which our Manager would not be liable. 42 Table of Contents We do not own the TPG name, but we may use it as part of our corporate name pursuant to a trademark license agreement with an affiliate of TPG.
As a result, we could experience poor performance or losses for which our Manager would not be liable. We do not own the TPG name, but we may use it as part of our corporate name pursuant to a trademark license agreement with an affiliate of TPG.
In certain cases (e.g., in connection with a workout, restructuring and/or foreclosure proceedings involving one or more of our loans), the success of our investment strategy will depend, in part, on our ability to effectuate loan modifications and/or restructurings with our borrowers.
In certain cases (e.g., in connection with a workout, restructuring and/or foreclosure proceedings involving one or more of our loans), the success of our investment strategy has depended, and will continue to depend, in part, on our ability to effectuate loan modifications and/or restructurings with our borrowers.
We may provide financing (1) as part of the bid or acquisition by a third party to acquire interests in (or otherwise make an investment in the underlying assets of) a portfolio entity owned by one or more TPG Funds or their affiliates of assets and/or (2) with respect to one or more portfolio entities or borrowers in connection with a proposed acquisition or investment by one or more TPG Funds or their affiliates relating to such portfolio entities and/or their underlying assets.
We may provide financing (1) as part of the bid or acquisition by a third party to acquire interests in (or otherwise make an investment in the underlying assets of) a portfolio entity or borrower owned by one or more TPG Funds or their affiliates of assets and/or (2) with respect to one or more portfolio entities or borrowers in connection with a proposed acquisition or investment by one 39 Table of Contents or more TPG Funds or their affiliates relating to such portfolio entities and/or their underlying assets.
Unless we were entitled to relief under certain Internal Revenue Code provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year in which we failed to qualify as a REIT. 50 Table of Contents Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
Unless we were entitled to relief under certain Internal Revenue Code provisions, we also would be disqualified from taxation as a REIT for the four taxable years following the year in which we failed to qualify as a REIT. Dividends payable by REITs do not qualify for the reduced tax rates available for some dividends.
Any of the above may subject us to liabilities in excess of those contemplated and adversely affect the value of our future joint venture investments. 22 Table of Contents We are subject to additional risks associated with investments in the form of loan participation interests.
Any of the above may subject us to liabilities in excess of those contemplated and adversely affect the value of our future joint venture investments. We are subject to additional risks associated with investments in the form of loan participation interests.
In certain situations, we have: • acquired loans or investments subject to rights of senior classes, servicers or collateral managers under intercreditor or servicing agreements or securitization documents; • pledged our investments as collateral for financing arrangements; 21 Table of Contents • acquired only a minority and/or a non-controlling participation in an underlying loan or investment; • co-invested with others through partnerships, joint ventures or other entities, thereby acquiring non-controlling interests; or • relied on independent third-party management or servicing with respect to the management of an asset.
In certain situations, we have in the past or may in the future: • acquired loans or investments subject to rights of senior classes, servicers or collateral managers under intercreditor or servicing agreements or securitization documents; • pledged our investments as collateral for financing arrangements; • acquired only a minority and/or a non-controlling participation in an underlying loan or investment; • co-invested with others through partnerships, joint ventures or other entities, thereby acquiring non-controlling interests; or • relied on independent third-party management or servicing with respect to the management of an asset.
Ownership and operation of real estate is subject to various risks, including: • tenant mix and tenant bankruptcies; • success of tenant businesses; • property management decisions, including with respect to capital improvements, particularly in older building structures; • renovations or repositionings during which operations may be limited or halted completely; • property location and condition, including, without limitation, any need to address environmental contamination or climate-related risks at a property; • competition from comparable types of properties; • changes in global, national, regional or local economic conditions or changes in specific industry segments; • changes in interest rates, and in the state of the credit, securitization, debt and equity capital markets, including diminished availability or lack of debt financing for commercial real estate; • global trade disruption, supply chain issues, significant introductions of trade barriers and bilateral trade frictions; • declines in regional or local real estate values or rental or occupancy rates; • responses of businesses, governments and individuals to pandemics or outbreaks of contagious disease; • labor shortages and increases in the minimum wage and other forms of employee compensation and benefits; • higher rates of inflation; • increases in the costs and availability of various property-related insurance; • changes in real estate tax rates, tax credits and other operating expenses; • changes to tax laws and rates to which real estate lenders and investors are subject; and • government regulations.
Ownership and operation of real estate is subject to various risks, including: • tenant mix and tenant bankruptcies; • success of tenant businesses; • property management decisions, including with respect to capital improvements, particularly in older building structures; • renovations or repositionings during which operations may be limited or halted completely; • property location and condition, including, without limitation, any need to address environmental contamination or climate-related risks at a property; • competition from comparable types of properties; • changes in global, national, regional or local economic conditions or changes in specific industry segments; • changes in interest rates, and in the state of the credit, securitization, debt and equity capital markets, including diminished availability or lack of debt financing for commercial real estate; • global trade disruption, supply chain issues, significant introductions of trade barriers and bilateral trade frictions; • declines in regional or local real estate values or rental or occupancy rates; • responses of businesses, governments and individuals to pandemics or other severe public health events; • labor shortages and increases in the minimum wage and other forms of employee compensation and benefits; • higher rates of inflation; 25 Table of Contents • increases in the costs and/or reduced availability of property-related insurance coverage; • changes in real estate tax rates, tax credits and other operating expenses; • changes to tax laws and rates to which real estate lenders and investors are subject; and • government regulations.
The risks associated with our business are more severe 60 Table of Contents during periods of economic slowdown or recession and if these periods are accompanied by declining real estate values, our business can be materially adversely affected.
The risks associated with our business are more severe during periods of economic slowdown or recession and if these periods are accompanied by declining real estate values, our business can be materially adversely affected.
The interest coverage ratio threshold will revert to 1.40 to 1.0 for the quarter ending March 31, 2024 and thereafter. Our financing arrangements may require us to provide additional collateral or repay debt.
The interest coverage ratio threshold reverted to 1.40 to 1.0 for the quarter ending March 31, 2024 and thereafter. Our financing arrangements may require us to provide additional collateral or repay debt.
As a result, interest rate fluctuations and conditions in the capital markets can affect the market price of our common stock. 56 Table of Contents Common stock eligible for future sale may have adverse effects on the market price of our common stock.
As a result, interest rate fluctuations and conditions in the capital markets can affect the market price of our common stock. Common stock eligible for future sale may have adverse effects on the market price of our common stock.
Inaccurate or inflated appraisals may result in an increase in the severity of losses on the mortgage loans. Any such losses could materially and adversely affect us. 19 Table of Contents Interest rate fluctuations could significantly decrease our ability to generate income on our investments, which could materially and adversely affect us.
Inaccurate or inflated appraisals may result in an increase in the severity of losses on the loans. Any such losses could materially and adversely affect us. 19 Table of Contents Interest rate fluctuations have decreased and in the future could significantly decrease our ability to generate income on our investments, which could materially and adversely affect us.
Stockholders are urged to consult with their tax advisors with respect to potential changes to the tax laws and any other regulatory or administrative developments and proposals and their potential effect on an investment in our common stock. 55 Table of Contents Risks Related to Our Common Stock The market price for our common stock may fluctuate significantly.
Stockholders are urged to consult with their tax advisors with respect to potential changes to the tax laws and any other regulatory or administrative developments and proposals and their potential effect on an investment in our common stock. Risks Related to Our Common Stock The market price for our common stock may fluctuate significantly.
This may prejudice our ability to dispose of such securities at an opportune time. TPG has long-term relationships with a significant number of corporations and their senior management.
This may prejudice our ability to dispose of such securities at an opportune time. 40 Table of Contents TPG has long-term relationships with a significant number of corporations and their senior management.
Any credit ratings on our investments are subject to ongoing evaluation by credit rating agencies, and we cannot assure you that any such ratings will not be downgraded or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant.
Some of our investments may be rated by rating agencies. Any credit ratings on our investments are subject to ongoing evaluation by credit rating agencies, and we cannot assure you that any such ratings will not be downgraded or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant.
We are subject to conflicts of interest arising out of our relationship with TPG, including our Manager and its affiliates. As of December 31, 2023, three of our eight directors are employees of TPG. In addition, our chief financial officer and our other executive officers are also employees of TPG, and we are managed by our Manager, a TPG affiliate.
We are subject to conflicts of interest arising out of our relationship with TPG, including our Manager and its affiliates. As of December 31, 2024, three of our seven directors are employees of TPG. In addition, our chief financial officer and our other executive officers are also employees of TPG, and we are managed by our Manager, a TPG affiliate.
Similarly, the desire to maintain assets under management or to enhance 40 Table of Contents our Manager’s or its affiliates’ performance records or to derive other rewards, financial or otherwise, could influence our Manager or its affiliates in affording preferential treatment to TPG Funds (including TRECO Funds) over us.
Similarly, the desire to maintain assets under management or to enhance our Manager’s or its affiliates’ performance records or to derive other rewards, financial or otherwise, could influence our Manager or its affiliates in affording preferential treatment to TPG Funds (including TRECO Funds) over us.
To the extent we acquire ownership of properties securing our loans through foreclosure or deed-in-lieu of foreclosure and own real estate directly, as we have done and will likely continue to do, we may be subject to environmental liabilities arising from such properties.
To the extent we acquire ownership of properties securing our loans through foreclosure or deed-in-lieu of foreclosure and own real estate directly, as we have done and may do in the future, we may be subject to environmental liabilities arising from such properties.
Our primary interest rate exposure relates to the yield on our investments and the financing cost of our debt. Changes in interest rates affect our net interest income, which is the difference between the interest income we earn on our interest-earning investments and the interest expense we incur in financing these investments.
Our primary interest rate exposure relates to the yield on our investments and the financing cost of our debt. Changes in interest rates have affected and may in the future affect our net interest income, which is the difference between the interest income we earn on our interest-earning investments and the interest expense we incur in financing these investments.
Such investments may conflict with the interests of such TPG Funds in related investments, and the potential for any such conflicts of interests may be heightened in the event of a default 39 Table of Contents or restructuring of any such investments.
Such investments may conflict with the interests of such TPG Funds in related investments, and the potential for any such conflicts of interests may be heightened in the event of a default or restructuring of any such investments.
As a result, our board of directors may establish a class or series of common stock or preferred stock that could delay, defer or prevent a transaction or a change in control that might involve a premium price for shares of our common stock or otherwise be in the best interest of our stockholders.
As a result, our board of directors may establish a class or series of common stock or preferred stock that could delay, defer or prevent a transaction or a change in control that might involve a premium price for shares of our common stock or otherwise be in the best interest of our stockholders. 57 Table of Contents Ownership limitations may delay, defer or prevent a transaction or a change in our control that might involve a premium price for our common stock or otherwise be in the best interest of our stockholders.
In the event of the bankruptcy of a mortgage loan borrower, the mortgage loan to that borrower will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law.
In the event of the bankruptcy of a borrower of a loan, or a tenant or an operator of a property, the loan to such borrower or the loan secured by such property will be deemed to be secured only to the extent of the value of the underlying collateral at the time of bankruptcy (as determined by the bankruptcy court), and the lien securing the mortgage loan will be subject to the avoidance powers of the bankruptcy trustee or debtor-in-possession to the extent the lien is unenforceable under state law.
Relatedly, certain investors have also begun to use ESG data, third-party benchmarks and ESG ratings to allow them to monitor the ESG impact of their investments. 62 Table of Contents These changing rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations.
Relatedly, certain investors have also begun to use ESG data, third-party benchmarks and ESG ratings to allow them to monitor the ESG impact of their investments. 61 Table of Contents These changing stakeholder expectations have resulted in, and may continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such expectations.
In addition, in instances where multiple TPG businesses may be exploring a potential individual investment, certain of these service providers may choose to be engaged by TPG rather than us. • Material, Non-Public Information.
In addition, in instances where multiple TPG businesses may be exploring a potential individual investment, certain of these service providers may choose to be engaged by TPG rather than us.
To the extent we acquire ownership of properties securing our loans through foreclosure or deed-in-lieu of foreclosure and own real estate directly, as we have done and will likely continue to do, we are subject to risks particular to owning real property.
To the extent we acquire ownership of properties securing our loans through foreclosure or deed-in-lieu of foreclosure and own real estate directly, as we have done and may do in the future, we are subject to risks particular to owning real property.
We believe that a change in any one of the following factors could adversely affect our results of operations and cash flows and impair our ability to make distributions to our stockholders: • our ability to make attractive investments; • margin calls or other expenses that reduce our cash flows; • defaults or prepayments in our investment portfolio or decreases in the value of our investment portfolio; • the impact of changes in interest rates on our net interest income; and 57 Table of Contents • the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates.
We believe that a change in any one of the following factors could adversely affect our results of operations and cash flows and impair our ability to make distributions to our stockholders: • our ability to make attractive investments; • margin calls or other expenses that reduce our cash flows; • defaults or prepayments in our investment portfolio or decreases in the value of our investment portfolio; • the impact of changes in interest rates on our net interest income; and • the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates. 56 Table of Contents We have in the past deferred the payment of our cash dividends and reduced the authorized amount of our cash dividends.
Recent or ongoing developments in banking, such as bank closures, may also have other implications for broader economic and monetary policy, including interest rate policy, and may impact the financial condition of banks and other financial institutions outside of the United States. 31 Table of Contents In addition, the capital and credit markets have recently experienced extreme volatility and economic disruption, inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates, which may result in additional liquidity concerns for us and/or in the broader financial services industry.
Recent or ongoing developments in banking, such as bank closures, may also have other implications for broader economic and monetary policy, including interest rate policy, and may impact the financial condition of banks and other financial institutions outside of the United States. 31 Table of Contents In addition, inflation, rapid increases in interest rates, and other similar macroeconomic trends or factors can result in extreme volatility in the capital and credit markets, and economic disruptions have led and may in the future lead to a decline in the trading value of previously issued government securities with interest rates below current market interest rates, which may result in additional liquidity concerns for us and/or in the broader financial services industry.
However, there can be no assurance that we or our subsidiaries will be able to satisfy these requirements and maintain our and their exclusion or exemption from such registration.
However, there can be no assurance that we or our subsidiaries will be able to satisfy these requirements and maintain our and their 44 Table of Contents exclusion or exemption from such registration.
Risks Related to Our Financing We have a significant amount of debt, which subjects us to increased risk of loss, and our charter and bylaws contain no limitation on the amount of debt we may incur or have outstanding. As of December 31, 2023, we had $3.0 billion of debt outstanding.
Risks Related to Our Financing We have a significant amount of debt, which subjects us to increased risk of loss, and our charter and bylaws contain no limitation on the amount of debt we may incur or have outstanding. As of December 31, 2024, we had $2.6 billion of debt outstanding.
A change in our investment strategy may increase our exposure to interest rate risk, default risk and real estate market fluctuations. Furthermore, a change in our asset allocation could result in our making investments in asset categories different from those described in this Form 10-K.
A change in our investment strategy may increase our exposure to interest rate risk, default risk and real estate market fluctuations. Furthermore, a change in our asset allocation could result in our making investments in asset categories different from those described in this Form 10-K. These changes could materially and adversely affect us.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+12 added−5 removed4 unchanged
Biggest changeWe, in conjunction with our Manager and TPG, have adopted processes designed to identify, assess and manage material risks from cybersecurity threats. These processes include responses to and assessments of internal and external threats to the security, confidentiality, integrity and availability of our and TPG’s data and systems along with other material risks to firm operations.
Biggest changeThese processes include risk assessments of internal and external threats to the confidentiality, integrity and availability of our and TPG’s data and systems along with other material risks to firm operations. These risk assessments inform TPG’s cybersecurity program and the continued development of a layered set of controls aimed at preventing, detecting and responding to threats.
As of the date of this report, we are not aware of any material risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. 64 Table of Contents
As of the date of this report, we are not aware of any material risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition.
Operational responsibility for ensuring the adequacy and effectiveness of TPG’s risk management, control and governance processes is assigned to TPG’s chief information security officer, who reports, among other things, potentially material cybersecurity incidents to the ORC and, in coordination with TPG’s chief information officer, reports to the ERC at least annually.
Operational responsibility for ensuring the adequacy and effectiveness of TPG’s risk management, control and governance processes is assigned to TPG’s chief information security officer, who periodically reports, among other things, potentially material cybersecurity incidents to the ORC and reports to the ERC at least annually.
In addition, TPG’s chief information security officer briefs the audit committee on TPG’s information security program and cybersecurity risks at least annually, and will brief the audit committee as needed in connection with any potentially material cybersecurity incidents affecting the Company.
TPG’s chief information security officer periodically briefs the audit committee and/or the Board Cyber Lead on TPG’s information security program and cybersecurity risks, and will brief the Board Cyber Lead or audit committee as needed in connection with any potentially material cybersecurity incidents affecting the Company.
TPG employs processes to oversee and identify material risks associated with the use of third-party service providers, taking into account the nature of the services provided, the sensitivity and quantity of information processed, and the identity of the service provider.
TPG’s cybersecurity team continues to take steps to maintain up-to-date knowledge of evolving cybersecurity threats and countermeasures. 63 Table of Contents TPG employs processes to oversee and identify material risks associated with the use of third-party service providers, taking into account the nature of the services provided, the sensitivity and quantity of information processed, and the identity of the service provider.
Annual briefings of the audit committee by TPG’s chief information security officer typically include topics such as risk assessment, risk management and control decisions, service provider arrangements, test results, security incidents and responses, and recommendations for changes and updates to policies and procedures. As an externally managed company, we rely on TPG’s information systems in connection with our day-to-day operations.
Periodic briefings of the Board Cyber Lead and/or audit committee by TPG’s chief information security officer typically include topics such as risk assessment, risk management and control decisions, service provider arrangements, test results, security incidents and responses, and recommendations for changes and updates to policies and procedures.
Item 1C. Cybersecurity. As an externally managed company, our business is highly dependent on the communications and information systems of our Manager, its affiliates and third-party service providers.
Item 1C. Cybersecurity. As an externally managed company, our business is highly dependent on the communications and information systems of our Manager, its affiliates and third-party service providers. Our Manager is an affiliate of TPG, a leading global alternative asset manager with $246 billion in assets under management as of December 31, 2024.
TPG has also established an operational risk committee (“ORC”) which is responsible for applying the policy decisions of the ERC.
The ERC includes representatives from relevant functions and is led by TPG’s chief executive officer. TPG has also established an operational risk committee (“ORC”) which is responsible for applying the policy decisions of the ERC.
Consequently, we also rely on the processes for assessing, identifying, and managing material risks from cybersecurity threats undertaken by TPG. TPG has established an enterprise risk committee (“ERC”) to manage overall risk, including cybersecurity risks identified by the cybersecurity team. The ERC includes representatives from relevant functions and is led by TPG’s chief executive officer.
As an externally managed company, we rely on TPG’s information systems in connection with our day-to-day operations. Consequently, we also rely on the processes for assessing, identifying, and managing material risks from cybersecurity threats undertaken by TPG. TPG has established an enterprise risk committee (“ERC”) to manage overall risk, including cybersecurity risks identified by TPG's cybersecurity team.
Removed
Our Manager is an affiliate of TPG, a leading global alternative asset management firm, founded in San Francisco in 1992, with $222 billion of assets under management (as of December 31, 2023) 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.
Added
TPG offers a broad range of investment strategies across the alternative asset management landscape, primarily in private equity, credit, and real estate. We, in conjunction with our Manager and TPG, have adopted processes designed to identify, assess and manage material risks from cybersecurity threats.
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As part of its collective risk management process, TPG engages outside providers to conduct periodic internal and external penetration testing. TPG also uses the NIST Cybersecurity Framework to assess our cybersecurity controls.
Added
TPG’s administrative, organizational, technical and physical security controls include, but are not limited to, policies and procedures, system hardening vulnerability scanning and patching, employee training and awareness, third-party risk management processes, backup and recovery processes, access controls, data encryption in transit and at rest, network perimeter controls, and identity verification.
Removed
TPG stores data, including ours, in cloud environments with security that we believe is appropriate for the data involved, and has adopted controls around, among other things, vendor risk assessment, access and acceptable use and backup and recovery. Governance Our board of directors has responsibility for the direction and oversight of our risk management.
Added
TPG also has policies and controls in place designed to detect and respond to cybersecurity events, including an incident response plan, an incident response team with dedicated roles and responsibilities for assessing and responding to a cybersecurity event, system logging and ongoing monitoring, and periodic training exercises simulating cybersecurity events that are designed to raise awareness and test the TPG team’s response readiness capabilities.
Removed
TPG’s chief information security officer leads TPG’s cybersecurity team, which includes individuals dedicated to incident detection and response. This team is responsible for identifying threats that can impact TPG and the Company, and designing controls to mitigate vulnerabilities before they are exploited and to detect and neutralize any threats that do materialize.
Added
The nature, scope and effectiveness of these controls are regularly reviewed through a series of internal and external processes. TPG's cybersecurity team performs both automated monitoring on a continuous basis and manual reviews of key controls.
Removed
TPG’s chief information security officer and TPG’s chief information officer each have more than 20 years of experience in their fields. TPG’s chief information security officer and other senior members of TPG’s cybersecurity team hold industry standard certifications.
Added
TPG also conducts annual assessments of TPG's cybersecurity program using industry standard cybersecurity frameworks, such as the NIST Cybersecurity Framework as benchmarks to perform TPG's evaluation. This does not imply that TPG fully meets any particular industry standards, specifications or requirements.
Added
In addition, independent reviews of TPG's cybersecurity control effectiveness are conducted by TPG's internal audit team on a periodic basis. TPG also engages external providers to conduct periodic external assessments, including penetration testing. Governance Our board of directors has responsibility for the direction and oversight of our risk management.
Added
Pursuant to our Cybersecurity Policy, our audit committee has appointed a dedicated member of the board of directors who is primarily responsible for our cybersecurity oversight (the "Board Cyber Lead").
Added
TPG’s cybersecurity team also regularly coordinates with other key stakeholders within TPG, including compliance, human resources, internal audit and legal. TPG’s chief information security officer leads TPG’s cybersecurity team, which is responsible for implementing, maintaining and enforcing TPG’s cybersecurity program.
Added
TPG’s chief information security officer previously held various leadership roles within the technology risk department of one of the world’s largest banking institutions over a 17-year period. He holds a Bachelor of Science in Electrical Engineering and Mathematics from the University of Texas at Arlington and is a Certified Information Systems Security Professional (CISSP).
Added
TPG’s cybersecurity team possesses a variety of cybersecurity skill sets and extensive expertise obtained through decades of experience, numerous industry certifications, and advanced degrees.
Added
Cyber criminals do, however, target us, TPG and TPG’s employees and other third parties. Ongoing or future attacks such as these could have impacts on our or TPG’s operations. For additional information on these ongoing risks, please refer to “Part 1. Item 1A.
Added
Risk Factors— Operational risks, including the risks of cyberattacks, may disrupt our businesses, result in losses or limit our growth”.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Biggest changeFrom time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. As of December 31, 2023, we were not involved in any material legal proceedings. Item 4. Mine Safety Disclosures. Not applicable. 65 Table of Contents PART II
Biggest changeFrom time to time, we may be involved in various claims and legal actions arising in the ordinary course of business. As of December 31, 2024, we were not involved in any material legal proceedings. Item 4. Mine Safety Disclosures. Not applicable. 64 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

2 edited+3 added−1 removed5 unchanged
Biggest changePerformance Graph The following graph sets forth the cumulative total stockholder return based on a $100 investment in our common stock, assuming a quarterly reinvestment of dividends before consideration of income taxes during the period from December 31, 2018 through December 31, 2023, as well as the corresponding returns on an overall stock market index (S&P 500 Index) and the Bloomberg REIT Mortgage Index.
Biggest changePerformance Graph The following graph sets forth the cumulative total stockholder return based on a $100 investment in our common stock, assuming a quarterly reinvestment of dividends before consideration of income taxes during the period from December 31, 2019 through December 31, 2024, as well as the corresponding returns on an overall stock market index (S&P 500 Index) and the FTSE NAREIT Mortgage REITs Index.
It has been our policy to declare quarterly dividends to common stockholders in compliance with applicable provisions of the Internal Revenue Code governing REITs. As of February 20, 2024, there were approximately 50 holders of record of our common stock. This does not include the number of stockholders that hold shares in “street name” through banks or broker-dealers.
It has been our policy to declare quarterly dividends to common stockholders in compliance with applicable provisions of the Internal Revenue Code governing REITs. As of February 18, 2025, there were approximately 45 holders of record of our common stock. This does not include the number of stockholders that hold shares in “street name” through banks or broker-dealers.
Removed
Stockholder returns over the indicated periods should not be considered indicative of future stock prices or stockholder returns. Item 6. [Reserved] 66 Table of Contents
Added
Stockholder returns over the indicated periods should not be considered indicative of future stock prices or stockholder returns. 65 Table of Contents Issuer Purchases of Equity Securities On April 30, 2024, we announced that our board of directors approved a share repurchase program pursuant to which we are authorized to repurchase up to $25.0 million of our common stock.
Added
The repurchase program authorizes the repurchase of common stock from time to time on the open market or in privately negotiated transactions, including under 10b5-1 plans. During the year ended December 31, 2024, we repurchased 4,603 shares of common stock, at a weighted average price of $7.98 per share, for total consideration (including commissions and related fees) of $0.04 million.
Added
We did not repurchase any shares of our common stock during the three months ended December 31, 2024. As of December 31, 2024, we had $24.96 million of remaining capacity under the share repurchase program. Item 6. [Reserved] 66 Table of Contents

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

159 edited+19 added−39 removed94 unchanged
Biggest changeLouis, MO Multifamily Moderate Transitional $158,838 Unit 69.3 % 3 18 Senior Loan 6/28/2019 63.9 60.7 60.7 S + 2.6% S + 2.8% Floating 7/9/2024 Burlingame, CA Office Light Transitional $352 Sq ft 70.9 % 3 19 Senior Loan 4/20/2022 63.0 63.0 62.7 S + 3.7% S + 4.0% Floating 5/9/2027 Buffalo, NY Multifamily Bridge $167,553 Unit 67.1 % 3 20 Senior Loan 4/11/2022 62.4 60.2 60.2 S + 3.4% S + 3.7% Floating 5/9/2027 San Antonio, TX Multifamily Bridge $104,017 Unit 81.2 % 4 21 Senior Loan 11/3/2023 62.0 48.3 48.0 S + 3.5% S + 3.8% Floating 11/9/2028 Stamford, CT Multifamily Moderate Transitional $254,098 Unit 66.1 % 3 22 Senior Loan 6/25/2019 62.0 62.0 62.0 S + 3.2% S + 3.4% Floating 7/9/2024 Calistoga, CA Hotel Moderate Transitional $620,000 Unit 48.6 % 2 23 Senior Loan (12) 6/9/2021 61.5 61.5 61.1 S + 2.9% S + 1.9% Floating 5/9/2026 Raleigh, NC Multifamily Bridge $188,650 Unit 66.2 % 3 24 Senior Loan 12/29/2021 60.6 56.0 55.8 S + 3.4% S + 3.7% Floating 1/9/2027 Rogers, AR Multifamily Bridge $153,125 Unit 75.9 % 3 25 Senior Loan 3/3/2022 58.0 58.0 58.0 S + 3.4% S + 3.7% Floating 3/9/2027 Hampton, VA Multifamily Bridge $202,091 Unit 72.4 % 3 26 Senior Loan 3/12/2020 55.0 51.8 51.8 S + 3.8% S + 3.9% Floating 2/29/2024 Round Rock, TX Multifamily Light Transitional $133,820 Unit 75.4 % 3 27 Senior Loan 12/17/2021 52.1 48.8 48.8 S + 3.8% S + 4.1% Floating 1/9/2027 Newport News, VA Multifamily Light Transitional $135,677 Unit 67.3 % 3 28 Senior Loan 10/27/2021 51.9 43.7 43.6 S + 3.5% S + 3.8% Floating 11/9/2026 Longmont, CO Office Moderate Transitional $150 Sq ft 70.6 % 3 29 Senior Loan 6/24/2022 51.6 50.2 50.2 S + 3.8% S + 4.1% Floating 7/9/2027 San Antonio, TX Multifamily Bridge $159,259 Unit 70.2 % 3 30 Senior Loan 12/20/2017 51.0 51.0 51.0 S + 4.9% S + 5.3% Floating 3/9/2025 New Orleans, LA Hotel Bridge $217,949 Unit 59.9 % 3 31 Senior Loan 8/26/2021 51.0 45.7 45.5 S + 4.2% S + 4.5% Floating 9/9/2026 San Diego, CA Life Science Moderate Transitional $599 Sq ft 72.1 % 3 32 Senior Loan 5/26/2022 50.6 38.4 38.3 S + 8.5% S + 9.5% Floating 6/9/2024 Durham, NC Other Construction $34 Sq ft 37.0 % 3 33 Senior Loan 3/12/2020 50.2 48.7 48.7 S + 3.8% S + 3.9% Floating 2/29/2024 Round Rock, TX Multifamily Light Transitional $137,049 Unit 75.6 % 3 34 Senior Loan 6/2/2021 48.6 48.3 48.2 S + 3.9% S + 4.2% Floating 6/9/2026 Fort Lauderdale, FL Office Light Transitional $187 Sq ft 71.0 % 3 35 Senior Loan 8/10/2022 46.2 37.6 37.4 S + 3.9% S + 4.4% Floating 9/9/2027 Plano, TX Multifamily Moderate Transitional $173,534 Unit 66.3 % 3 36 Senior Loan 9/30/2021 45.9 45.9 45.8 S + 3.4% S + 3.7% Floating 10/9/2026 San Antonio, TX Multifamily Bridge $136,488 Unit 64.1 % 3 37 Senior Loan 3/17/2021 45.4 45.2 45.2 S + 3.4% S + 3.7% Floating 4/9/2026 Indianapolis, IN Multifamily Light Transitional $62,294 Unit 63.7 % 3 38 Senior Loan 12/21/2021 45.0 44.9 44.9 S + 3.8% S + 4.1% Floating 1/9/2027 Knoxville, TN Multifamily Bridge $119,681 Unit 84.9 % 3 39 Senior Loan 8/7/2018 44.5 35.1 35.1 S + 3.5% S + 3.7% Floating 3/31/2024 Atlanta, GA Office Light Transitional $63 Sq ft 61.4 % 3 40 Senior Loan 7/28/2023 43.6 37.2 36.9 S + 4.6% S + 5.1% Floating 8/9/2028 Various, AZ Hotel Bridge $150,345 Unit 63.3 % 3 41 Senior Loan 1/14/2022 43.0 43.0 43.0 S + 3.7% S + 4.0% Floating 2/9/2027 Columbia, SC Multifamily Bridge $162,879 Unit 79.8 % 3 42 Senior Loan 3/30/2018 42.4 41.2 41.2 S + 3.8% S + 4.0% Floating 11/22/2024 Honolulu, HI Office Light Transitional $147 Sq ft 57.9 % 4 98 Table of Contents Loan # Form of investment Origination or acquisition date (2) Total loan Principal balance Amortized cost (3) Interest rate All-in yield (4) Fixed / floating Extended maturity (5) City / state Property type Loan type Loan per SQFT / unit LTV (6) Risk rating (7) 43 Senior Loan 3/7/2019 39.2 40.4 40.4 S + 4.0% S + 4.4% Floating 3/9/2024 Lexington, KY Hotel Moderate Transitional $107,221 Unit 61.6 % 4 44 Senior Loan 7/15/2021 39.0 39.0 38.9 S + 3.6% S + 3.9% Floating 8/9/2026 Chicago, IL Multifamily Bridge $261,745 Unit 78.8 % 3 45 Senior Loan 3/11/2019 37.0 37.0 37.0 S + 4.0% S + 4.2% Floating 4/9/2024 Miami Beach, FL Hotel Bridge $280,303 Unit 59.3 % 2 46 Senior Loan 3/24/2023 37.0 33.3 33.0 S + 3.5% S + 3.8% Floating 4/9/2028 Dallas, TX Industrial Light Transitional $83 Sq ft 61.2 % 3 47 Senior Loan 6/3/2021 36.4 33.9 33.9 S + 3.7% S + 4.0% Floating 6/9/2026 Riverside, CA Mixed-Use Bridge $103 Sq ft 62.2 % 3 48 Senior Loan 8/11/2021 34.5 32.3 32.2 S + 3.7% S + 3.9% Floating 9/9/2026 Mesa, AZ Multifamily Bridge $176,020 Unit 78.5 % 3 49 Senior Loan 6/9/2022 31.2 27.8 27.7 S + 3.6% S + 3.9% Floating 6/9/2027 Centerton, AR Multifamily Light Transitional $156,859 Unit 73.8 % 3 50 Senior Loan 8/23/2022 31.0 29.0 28.8 S + 4.0% S + 4.7% Floating 9/9/2027 Marietta, GA Multifamily Light Transitional $127,049 Unit 68.5 % 3 51 Senior Loan 5/14/2021 27.6 27.1 27.1 S + 3.3% S + 3.6% Floating 6/9/2026 Pensacola, FL Multifamily Moderate Transitional $137,752 Unit 72.8 % 3 52 Senior Loan 10/27/2021 24.6 24.1 24.1 S + 5.6% S + 5.9% Floating 11/9/2026 San Diego, CA Life Science Moderate Transitional $814 Sq ft 75.8 % 3 53 Senior Loan 6/29/2022 24.5 22.2 22.1 S + 3.9% S + 4.2% Floating 7/9/2027 San Antonio, TX Multifamily Light Transitional $107,456 Unit 75.5 % 3 Total / weighted average (8) $ 3,666.2 $ 3,484.1 $ 3,476.8 S +3.7% S +4.0% 2.6 years 67.3 % 3.0 _______________________________ * Numbers presented may not foot due to rounding.
Biggest changeLouis, MO Multifamily Moderate Transitional $158,838 Unit 69.3 % 3 20 Senior Loan 4/20/2022 63.0 63.0 62.9 S + 3.7% S + 4.0% Floating 5/9/2027 Buffalo, NY Multifamily Bridge $167,553 Unit 67.1 % 3 21 Senior Loan 9/13/2024 63.0 63.0 62.7 S + 3.5% S + 3.8% Floating 10/9/2029 Calistoga, CA Hotel Bridge $630,000 Unit 48.5 % 2 22 Senior Loan 11/3/2023 62.0 52.2 52.0 S + 3.5% S + 3.8% Floating 11/9/2028 Stamford, CT Multifamily Moderate Transitional $254,098 Unit 66.1 % 3 23 Senior Loan (13) 9/1/2022 61.5 61.5 61.5 S + 2.9% S + 1.6% Floating 5/9/2026 Raleigh, NC Multifamily Bridge $188,650 Unit 66.2 % 3 24 Senior Loan 12/29/2021 60.6 56.0 56.0 S + 3.4% S + 3.7% Floating 1/9/2027 Rogers, AR Multifamily Bridge $153,125 Unit 75.9 % 3 25 Senior Loan 3/3/2022 58.0 58.0 58.0 S + 3.4% S + 3.7% Floating 3/9/2027 Hampton, VA Multifamily Bridge $202,091 Unit 72.4 % 3 26 Senior Loan 12/17/2021 52.1 49.3 49.3 S + 3.8% S + 4.1% Floating 1/9/2027 Newport News, VA Multifamily Light Transitional $135,677 Unit 67.3 % 3 27 Senior Loan 6/24/2022 51.6 50.8 50.8 S + 3.8% S + 4.1% Floating 7/9/2027 San Antonio, TX Multifamily Bridge $159,259 Unit 70.2 % 3 28 Senior Loan 1/17/2024 51.3 45.9 45.5 S + 3.1% S + 3.4% Floating 2/9/2029 Albuquerque, NM Multifamily Light Transitional $149,128 Unit 71.7 % 3 29 Senior Loan 12/20/2017 51.0 51.0 51.0 S + 4.9% S + 5.3% Floating 12/31/2026 New Orleans, LA Hotel Bridge $217,949 Unit 59.9 % 3 30 Senior Loan 8/26/2021 51.0 46.4 46.3 S + 4.2% S + 4.5% Floating 9/9/2026 San Diego, CA Life Science Moderate Transitional $599 Sq ft 72.1 % 3 31 Senior Loan 10/27/2021 50.4 42.9 42.9 S + 3.5% S + 3.8% Floating 11/9/2026 Longmont, CO Office Moderate Transitional $145 Sq ft 70.6 % 3 32 Senior Loan 6/2/2021 48.6 48.3 48.3 S + 3.9% S + 4.2% Floating 6/9/2026 Fort Lauderdale, FL Office Light Transitional $187 Sq ft 71.0 % 3 33 Senior Loan 8/10/2022 46.2 38.5 38.4 S + 3.9% S + 4.4% Floating 9/9/2027 Plano, TX Multifamily Moderate Transitional $173,534 Unit 66.3 % 3 34 Senior Loan 12/21/2021 45.0 45.0 45.0 S + 3.8% S + 4.1% Floating 1/9/2027 Knoxville, TN Multifamily Bridge $119,681 Unit 84.9 % 3 35 Senior Loan 8/28/2024 45.0 41.3 41.2 S + 2.9% S + 3.1% Floating 9/9/2029 Bakersfield, CA Multifamily Light Transitional $180,723 Unit 72.9 % 3 36 Senior Loan 9/30/2021 44.4 44.4 44.4 S + 3.4% S + 3.7% Floating 10/9/2026 San Antonio, TX Multifamily Bridge $132,024 Unit 64.1 % 3 37 Senior Loan 7/28/2023 43.6 37.2 37.0 S + 4.6% S + 5.1% Floating 8/9/2028 Various, AZ Hotel Bridge $150,345 Unit 63.3 % 3 38 Senior Loan 3/30/2018 42.4 41.9 41.9 S + 3.8% S + 4.3% Floating 6/22/2025 Honolulu, HI Office Light Transitional $147 Sq ft 57.9 % 4 39 Senior Loan 3/24/2023 37.0 34.1 33.9 S + 3.5% S + 3.8% Floating 4/9/2028 Dallas, TX Industrial Light Transitional $83 Sq ft 61.2 % 3 40 Senior Loan 3/11/2019 34.0 34.0 34.0 S + 4.0% S + 4.4% Floating 8/9/2025 Miami Beach, FL Hotel Bridge $257,576 Unit 59.3 % 3 41 Senior Loan 3/28/2024 34.0 33.1 32.8 S + 3.9% S + 4.3% Floating 4/9/2029 Mesa, AZ Multifamily Bridge $173,469 Unit 72.9 % 3 42 Senior Loan 6/9/2022 31.2 27.8 27.8 S + 3.6% S + 3.9% Floating 6/9/2027 Centerton, AR Multifamily Light Transitional $156,859 Unit 73.8 % 3 98 Table of Contents Loan # Form of investment Origination or acquisition date (2) Total loan Principal balance Amortized cost (3) Interest rate All-in yield (4) Fixed / floating Extended maturity (5) City / state Property type Loan type Loan per SQFT / unit LTV (6) Risk rating (7) 43 Senior Loan 8/23/2022 31.0 29.4 29.3 S + 4.0% S + 4.7% Floating 9/9/2027 Marietta, GA Multifamily Light Transitional $127,049 Unit 68.5 % 3 44 Senior Loan 1/19/2024 31.0 30.3 30.1 S + 3.4% S + 3.7% Floating 2/9/2029 Castle Rock, CO Multifamily Moderate Transitional $303,922 Unit 63.7 % 3 45 Senior Loan 6/29/2022 24.5 22.3 22.3 S + 3.9% S + 4.2% Floating 7/9/2027 San Antonio, TX Multifamily Light Transitional $107,456 Unit 75.5 % 3 Subtotal / weighted average (8) $ 3,412.0 $ 3,284.5 $ 3,278.6 S +3.7% S +3.9% 2.4 years 66.1 % 3.0 Total / weighted average (8) $ 3,412.0 $ 3,284.5 $ 3,278.6 S +3.7% S +3.9% 2.4 years 66.1 % 3.0 _______________________________ * Numbers presented may not foot due to rounding.
Calculated balances as the month-end averages. (2) Weighted average yield or financing cost calculated based on annualized interest income or expense divided by calculated month-end average outstanding balance. (3) Represents interest income on core interest-earning assets less interest expense on total interest-bearing liabilities.
Calculated balances as the month-end averages. (2) Weighted average yield or financing cost calculated based on annualized interest income or expense divided by calculated month-end average outstanding balance. (3) Represents interest income on core interest-earning assets less interest expense on total interest-bearing liabilities.
Gain on Sale of Real Estate Owned, net During the year ended December 31, 2023, we sold a multifamily REO property for net cash proceeds of $75.4 million and recognized a gain on sale of real estate owned, net of $7.0 million.
During the year ended December 31, 2023, we sold a multifamily REO property for net cash proceeds of $75.4 million and recognized a gain on sale of real estate owned, net of $7.0 million.
The allowance for credit losses for loans held for investment, as reported in our consolidated balance sheets, is adjusted by a credit loss (expense) benefit, which is reported in earnings in the consolidated statements of income and comprehensive income and reduced by the write-off of loan amounts, net of recoveries and additions related to purchased credit-deteriorated (“PCD”) assets, if relevant.
The allowance for credit losses for loans held for investment, as reported in our consolidated balance sheets, is adjusted by a credit loss (expense) benefit, which is reported in earnings in the consolidated statements of income (loss) and comprehensive income (loss) and reduced by the write-off of loan amounts, net of recoveries and additions related to purchased credit-deteriorated (“PCD”) assets, if relevant.
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.
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.
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.
Examples of such “bad boy” defaults include, without limitation, fraud, intentional misrepresentation, willful misconduct, incurrence of additional debt in violation of financing documents, and the filing of a voluntary or collusive involuntary bankruptcy or insolvency proceeding of the special purpose entity subsidiary or the guarantor entity. 79 Table of Contents Each of the recourse secured credit agreements have “margin maintenance” provisions, which are designed to allow the lender to maintain a certain margin of credit enhancement against the assets which serve as collateral.
Examples of such “bad boy” defaults include, without limitation, fraud, intentional misrepresentation, willful misconduct, incurrence of additional debt in violation of financing documents, and the filing of a voluntary or collusive involuntary bankruptcy or insolvency proceeding of the special purpose entity subsidiary or the guarantor entity. 79 Table of Contents Each of the secured credit agreements have “margin maintenance” provisions, which are designed to allow the lender to maintain a certain margin of credit enhancement against the assets which serve as collateral.
Investing Activities During the year ended December 31, 2023, cash flows provided by investing activities totaled $1.1 billion primarily due to loan repayments of $1.1 billion, proceeds from the sale of loans held for investment of $247.6 million, and proceeds from the sale of real estate owned of $75.4 million, offset by new loan originations and acquisitions of $194.7 million, advances on loans of $140.5 million, and capital expenditures related to real estate owned of $5.4 million.
During the year ended December 31, 2023 cash flows provided by investing activities totaled $1.1 billion primarily due to loan repayments of $1.1 billion, proceeds from the sale of loans held for investment of $247.6 million, and proceeds from the sale of real estate owned of $75.4 million, partially offset by new loan originations and acquisitions of $194.7 million, advances on loans of $140.5 million, and capital expenditures related to real estate owned of $5.4 million.
Further, this could make it difficult for us to satisfy the requirements necessary to maintain our qualification as a REIT for U.S. federal income tax purposes. 83 Table of Contents Floating Rate Portfolio Our business model seeks to minimize our exposure to changing interest rates by match-indexing our assets using the same, or similar, benchmark indices.
Further, this could make it difficult for us to satisfy the requirements necessary to maintain our qualification as a REIT for U.S. federal income tax purposes. 83 Table of Contents Floating Rate Loan Portfolio Our business model seeks to minimize our exposure to changing interest rates by match-indexing our assets using the same, or similar, benchmark indices.
The credit loss expense increase during the year ended December 31, 2023, was primarily due to an increase of $79.6 million related to realized losses on loan resolutions, partially offset by a decline in the general CECL reserve of $62.6 million resulting from changes in macroeconomic conditions and investment activity during the current year.
Credit loss expense during the year ended December 31, 2023, was primarily due to an increase of $79.6 million related to realized losses on loan resolutions, partially offset by a decline in the general CECL reserve of $62.6 million resulting from changes in macroeconomic conditions and investment activity during the year ended December 31, 2023.
Notwithstanding that a loan asset may be subject to a financing arrangement and serve as collateral under a secured credit agreement, we retain the right to administer and service the loan and interact directly with the underlying obligors and sponsors of our loan assets so long as there is no default under the secured credit agreement, and so long as we do not engage in certain material modifications (including amendments, waivers, exercises of remedies, or releases of obligors and collateral, among other things) of the loan assets without the lender’s prior consent. 80 Table of Contents Secured Revolving Credit Facility On February 22, 2022, we closed a $250.0 million, secured revolving credit facility with a syndicate of 5 banks to provide interim funding of up to 180 days for newly-originated and existing loans.
Notwithstanding that a loan asset may be subject to a financing arrangement and serve as collateral under a secured credit agreement, we retain the right to administer and service the loan and interact directly with the underlying obligors and sponsors of our loan assets so long as there is no default under the secured credit agreement, and so long as we do not engage in certain material modifications (including amendments, waivers, exercises of remedies, or releases of obligors and collateral, among other things) of the loan assets without the lender’s prior consent. 80 Table of Contents Secured Revolving Credit Facility 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.
Financing Activities During the year ended December 31, 2023, cash flows used in financing activities totaled $1,222.8 million primarily due to repayments of CRE CLO liabilities of $541.4 million as a result of the repayment of underlying loans, payments on secured financing agreements of $814.2 million, payments on asset-specific financing arrangements of $386.2 million and payment of dividends on our common stock and Series C Preferred Stock of $88.4 million, offset by borrowings on our secured financing agreements of $484.8 million, borrowings on our asset-specific financing arrangements of $94.9 million and proceeds from mortgage loan payable of $31.2 million.
During the year ended December 31, 2023, cash flows used in financing activities totaled $1.2 billion primarily due to repayments on CRE CLO liabilities of $541.4 million as a result of the repayment of underlying loans, payments on secured financing agreements of $814.2 million, payments on asset-specific financing arrangements of $386.2 million, and payment of dividends on our common stock and Series C Preferred Stock of $88.4 million, offset by borrowings on our secured financing agreements of $484.8 million, borrowings on our asset-specific financing arrangements of $94.9 million and proceeds from mortgage loan payable of $31.2 million.
Following the closing of an investment, this dedicated asset management team rigorously monitors the investment under our Manager’s oversight, with an emphasis on ongoing financial, legal and quantitative analyses.
Following the closing of an investment, the dedicated asset management team rigorously monitors the investment under our Manager’s oversight, with an emphasis on ongoing financial, legal and quantitative analyses.
As of December 31, 2023 and December 31, 2022, common stock dividends of $19.2 million and $19.0 million, respectively, were unpaid and are reflected in dividends payable on our consolidated balance sheets. 94 Table of Contents Critical Accounting Estimates The preparation of our consolidated financial statements in accordance with GAAP requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities, interest income and other revenue recognition, allowance for loan losses, expense recognition, tax liability, future impairment of our investments, valuation of our investment portfolio and disclosure of contingent assets and liabilities, among other items.
As of December 31, 2024 and December 31, 2023, common stock dividends of $20.0 million and $19.2 million, respectively, were unpaid and are reflected in dividends payable on our consolidated balance sheets. 94 Table of Contents Critical Accounting Estimates The preparation of our consolidated financial statements in accordance with GAAP requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities, interest income and other revenue recognition, allowance for loan losses, expense recognition, tax liability, future impairment of our investments, valuation of our investment portfolio and disclosure of contingent assets and liabilities, among other items.
All-in yield for our loan assets and total loan portfolio excludes the applicable floating benchmark interest rate as of December 31, 2023 and excludes the impact of our interest rate floors and borrower interest rate caps. (5) Extended maturity assumes all extension options are exercised by the borrower; provided, however, that our loans may be repaid prior to such date.
All-in yield for our loan assets and total loan portfolio excludes the applicable floating benchmark interest rate as of December 31, 2024 and excludes the impact of our interest rate floors and borrower interest rate caps. (5) Extended maturity assumes all extension options are exercised by the borrower; provided, however, that our loans may be repaid prior to such date.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
(5) Amounts include the related future interest payment obligations, which are estimated by assuming the amounts outstanding under our secured debt agreements, asset-specific financing arrangements and collateralized loan obligations and the interest rates in effect as of December 31, 2023 will remain constant into the future.
(5) Amounts include the related future interest payment obligations, which are estimated by assuming the amounts outstanding under our secured debt agreements, asset-specific financing arrangements and collateralized loan obligations and the interest rates in effect as of December 31, 2024 will remain constant into the future.
(11) This loan represents a 41.2% pari passu participation interest in a first mortgage loan, that was originated by a third party on August 31, 2021 and acquired by us on September 1, 2022. (12) This loan was originated by a third party on June 9, 2021 and acquired by us on September 1, 2022. 99 Table of Contents
(12) This loan represents a 41.2% pari passu participation interest in a first mortgage loan, that was originated by a third party on August 31, 2021 and acquired by us on September 1, 2022. (13) This loan was originated by a third party on June 9, 2021 and acquired by us on September 1, 2022. 99 Table of Contents
Preferred Stock Dividends and Participating Securities Share in Earnings During each of the three month periods ended December 31, 2023 and September 30, 2023, we declared and paid a cash dividend of $3.1 million related to our Series C Preferred Stock.
Preferred Stock Dividends and Participating Securities Share in Earnings During each of the three month periods ended December 31, 2024 and September 30, 2024, we declared and paid a cash dividend of $3.1 million related to our Series C Preferred Stock.
See Note 5 to our Consolidated Financial Statements included in this Form 10-K for details about our CRE CLO reinvestment feature. 82 Table of Contents Mortgage Loan Payable 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.
See Note 5 to our Consolidated Financial Statements included in this Form 10-K for details about our CRE CLO reinvestment feature. Mortgage Loan Payable 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 table above does not include the amounts payable to our Manager under our Management Agreement as they are not fixed and determinable. During the year ended December 31, 2023, our Manager did not earn an incentive management fee.
The table above does not include the amounts payable to our Manager under our Management Agreement as they are not fixed and determinable. During the year ended December 31, 2024, our Manager did not earn an incentive management fee.
The factors that the Company considers in connection with this evaluation are grouped as follows: (i) loan and credit structure, including the as-is LTV and structural features; (ii) quality and stability of real estate value and operating cash flow, including debt yield, property type, dynamics of the geography, property type and local market, physical condition, stability of cash flow, leasing velocity and quality and diversity of tenancy; (iii) performance against underwritten business plan; and (iv) quality, experience and financial condition of sponsor, borrower and guarantor(s).
The factors that we consider in connection with this evaluation are grouped as follows: (i) loan and credit structure, including the as-is LTV and structural features; (ii) quality and stability of real estate value and operating cash flow, including debt yield, property type, dynamics of the geography, property type and local market, physical condition, stability of cash flow, leasing velocity and quality and diversity of tenancy; (iii) performance against underwritten business plan; and (iv) quality, experience and financial condition of sponsor, borrower and guarantor(s).
(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 December 31, 2023, divided by the as-is appraised value of our collateral at the time of origination or acquisition of such loan or participation interest.
(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.
During the year ended December 31, 2022, we declared cash dividends of $0.96 per common share, or $75.1 million. 90 Table of Contents Liquidity and Capital Resources Capitalization We have capitalized our business to-date through, among other things, the issuance and sale of shares of our common stock, issuance of Series C Preferred Stock classified as permanent equity, issuance of Series B Preferred Stock treated as temporary equity, borrowings under secured credit agreements, secured revolving credit facilities, collateralized loan obligations, mortgage loan payable, asset-specific financings, and non-consolidated senior interests.
During the year ended December 31, 2023, we declared cash dividends of $0.96 per common share, or $76.0 million. 90 Table of Contents Liquidity and Capital Resources Capitalization We have capitalized our business to-date through, among other things, the issuance and sale of shares of our common stock, issuance of Series C Preferred Stock classified as permanent equity, issuance of Series B Preferred Stock treated as temporary equity, borrowings under secured credit agreements, secured revolving credit facilities, collateralized loan obligations, mortgage loan payable, asset-specific financings, and non-consolidated senior interests.
The loans in our commercial mortgage loan portfolio are secured by collateral of the following property types: office; life science; multifamily; hotel; industrial; mixed-use; land for industrial and office use; and self storage.
The loans in our commercial mortgage loan portfolio are secured by collateral of the following property types: office; life science; multifamily; hotel; industrial; mixed-use; and self storage.
Pursuant to this revenue procedure, we may elect to make future distributions of our taxable income in a mixture of stock and cash. Our REIT taxable income does not necessarily equal our net income as calculated in accordance with GAAP or our Distributable Earnings as described above.
Pursuant to this revenue procedure, we may elect to make future distributions of our taxable income in a mixture of stock and cash. 93 Table of Contents Our REIT taxable income does not necessarily equal our net income as calculated in accordance with GAAP or our Distributable Earnings as described above.
Debt-to-Equity Ratio and Total Leverage Ratio The following table presents our Debt-to-Equity ratio and Total Leverage ratio: December 31, 2023 December 31, 2022 Debt-to-equity ratio (1) 2.53x 2.97x Total leverage ratio (2) 2.53x 2.97x __________________________________ (1) Represents (i) total outstanding borrowings under secured financing arrangements, including collateralized loan obligations, secured credit agreements, asset-specific financing arrangements, a secured revolving credit facility, and mortgage loans payable, less cash, to (ii) total stockholders’ equity, at period end.
Debt-to-Equity Ratio and Total Leverage Ratio The following table presents our Debt-to-Equity ratio and Total Leverage ratio: December 31, 2024 December 31, 2023 Debt-to-equity ratio (1) 2.14x 2.53x Total leverage ratio (2) 2.14x 2.53x __________________________________ (1) Represents (i) total outstanding borrowings under secured financing arrangements, including collateralized loan obligations, secured credit agreements, asset-specific financing arrangements, a secured revolving credit facility, and mortgage loans payable, less cash, to (ii) total stockholders’ equity, at period end.
During 2023, our Manager reviewed and evaluated our critical accounting policies and believes them to be appropriate, but such belief is based on judgments, estimates and assumptions.
During 2024, our Manager reviewed and evaluated our critical accounting policies and believes them to be appropriate, but such belief is based on judgments, estimates and assumptions.
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 executive committee.
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.
(7) For a discussion of risk ratings, please see Notes 2 and 3 to our Consolidated Financial Statements included in this Form 10-K. (8) Represents the weighted average of the credit spread as of December 31, 2023 for the loans, all of which are floating rate.
(7) For a discussion of risk ratings, please see Notes 2 and 3 to our Consolidated Financial Statements included in this Form 10-K. (8) Represents the weighted average of the credit spread as of December 31, 2024 for the loans, 99.7% of which are floating rate.
(9) Calculated as the ratio of unpaid principal balance as of December 31, 2023 to the as-is appraised value at origination, to reflect the sale by us in August 2020 of the contiguous mezzanine loan with an unpaid principal balance of $46.4 million and a commitment amount of $50.0 million as of sale date.
(10) Calculated as the ratio of unpaid principal balance as of December 31, 2024 to the as-is appraised value at origination, to reflect the sale by us in August 2020 of the contiguous mezzanine loan with an unpaid principal balance of $46.4 million and a commitment amount of $50.0 million as of the sale date.
Advance rates are subject to negotiation between us and our secured credit agreement lenders. For each transaction, we and the lender agree to a trade confirmation which sets forth, among other things, the asset purchase price, the maximum advance rate, the interest rate and the market value of the asset.
Advance rates are subject to negotiation between us and our secured credit agreement lenders. For transactions, we and the lender generally agree to a trade confirmation which sets forth, among other things, the asset purchase price, the maximum advance rate, the interest rate and the market value of the asset.
Item 1A, “Risk Factors” in this Form 10-K. This section discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Item 1A, “Risk Factors” in this Form 10-K. This section discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
On December 9, 2022, our Board of Directors declared a cash dividend of $0.3906 per share of Series C Preferred Stock, or $3.1 million in the aggregate, for the fourth quarter of 2022. The Series C Preferred Stock dividend was paid on December 30, 2022 to the preferred stockholders of record as of December 20, 2022.
On December 6, 2024, our Board of Directors declared a cash dividend of $0.3906 per share of Series C Preferred Stock, or $3.1 million in the aggregate, for the fourth quarter of 2024. The Series C Preferred Stock dividend was paid on December 30, 2024 to the preferred stockholders of record as of December 20, 2024.
With respect to our debt obligations that are contractually due within the next five years, we plan to employ several strategies to meet these obligations, including: (i) exercising maturity date extension options that exist in our current financing arrangements; (ii) negotiating extensions of terms with our providers of credit; (iii) periodically accessing the private and public equity and debt capital markets to raise cash to fund new investments or the repayment of indebtedness; (iv) the issuance of additional structured finance vehicles, such as collateralized loan obligations similar to TRTX 2022-FL5, TRTX 2021-FL4, or TRTX 2019-FL3 as a method of financing; (v) term loans with private lenders; (vi) selling loans and REO to generate cash to repay our debt obligations; and/or (vii) applying repayments from underlying loans to satisfy the debt obligations which they secure.
With respect to our debt obligations that are contractually due within the next five years, we plan to employ several strategies to meet these obligations, including: (i) exercising maturity date extension options that exist in our current financing arrangements; (ii) negotiating extensions of terms with our providers of credit; (iii) periodically accessing the private and public equity and debt capital markets to raise cash to fund new investments or the repayment of indebtedness; (iv) the issuance of additional structured finance vehicles, such as collateralized loan obligations similar to TRTX 2022-FL5, TRTX 2021-FL4, or TRTX 2019-FL3 as a method of financing; (v) the establishment of new asset-specific financing arrangements, including matched-term note-on-note facilities; (vi) term loans with private lenders; (vii) selling loans and REO to generate cash to repay our debt obligations; (viii) encumbering REO properties to generate cash; and/or (ix) applying repayments from underlying loans to satisfy the debt obligations which they secure.
(2) Additional information regarding our consolidated results of operations and financial performance for the three months ended September 30, 2023 can be found in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 filed with the SEC on October 31, 2023.
(2) Additional information regarding our consolidated results of operations and financial performance for the three months ended September 30, 2024 can be found in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2024 filed with the SEC on October 29, 2024.
For the three months ended December 31, 2023, we declared a cash dividend of $0.24 per common share which was paid on January 25, 2024.
For the three months ended December 31, 2024, we declared a cash dividend of $0.24 per common share which was paid on January 24, 2025.
As of December 31, 2023, borrowings under these secured credit agreements and secured revolving credit facility had a weighted average credit spread of 2.00% (2.00% 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 1.3 years.
As of December 31, 2024, borrowings under these secured credit agreements and secured revolving credit facility had a weighted average credit spread of 1.94% (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 2.6 years.
As of December 31, 2023, 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 22.3% compared to 21.9% as of December 31, 2022.
As of December 31, 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 22.4% compared to 22.3% as of December 31, 2023.
The commercial property investment sales and commercial mortgage loan markets have experienced uneven liquidity due to global macroeconomic conditions, including heightened inflation, changes to fiscal and monetary policy, increased interest rates, currency fluctuations, labor shortages and recent distress in the banking sector, which continue to make it more difficult to estimate key inputs for estimating the allowance for credit losses.
The commercial property investment sales and commercial mortgage loan markets have experienced uneven liquidity due to global macroeconomic conditions, including heightened inflation, changes to fiscal and monetary policy, sustained higher interest rates, currency fluctuations, labor shortages and structural shifts and regulatory changes in the banking sector, which continue to make it more difficult to estimate key inputs for estimating the allowance for credit losses.
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.
We continue to evaluate the effects of macroeconomic conditions, including, without limitation: a period of sustained high interest rates; 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.
As of December 31, 2023, 100.0% 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 $0.5 billion of net floating rate exposure, subject to the impact of interest rate floors on all our floating rate loans and less than 1.2% of our liabilities.
As of December 31, 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 5.6% of our floating rate liabilities.
See Note 2 to our Consolidated Financial Statements included in this Form 10-K for a listing and description of our significant accounting policies. Recent Accounting Pronouncements For a discussion of recently issued accounting pronouncements, see Note 2 to our Consolidated Financial Statements included in this Form 10-K.
Recent Accounting Pronouncements For a discussion of recently issued accounting pronouncements, see Note 2 to our Consolidated Financial Statements included in this Form 10-K.
During the year ended December 31, 2023, the weighted average unused fee was 20 basis points. This facility is 100% recourse to Holdco. As of December 31, 2023, we pledged one loan investment with a collateral principal balance of $32.8 million and had outstanding Term SOFR-based borrowings of $23.8 million.
During the year ended December 31, 2024, the weighted average unused fee was 20 basis points. This facility is 100% recourse to Holdco. As of December 31, 2024, we pledged one loan investment with a collateral principal balance of $115.5 million and had outstanding Term SOFR-based borrowings of $86.6 million.
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 December 31, 2023, the carrying value of the loan was $30.6 million.
The first mortgage loan was provided by an institutional lender, has an interest-only five-year term with a maturity date of July 6, 2028 and bears interest at a rate of 7.7%. As of December 31, 2024, the carrying value of the loan was $30.7 million.
We are party to an agreement with Situs Asset Management, LLC (“SitusAMC”), one of the largest commercial mortgage loan servicers, pursuant to which SitusAMC provides us with dedicated asset management employees to provide asset management services pursuant to our proprietary guidelines.
We are party to agreements with Situs Asset Management, LLC (“SitusAMC”), one of the largest commercial mortgage loan servicers, pursuant to which SitusAMC (i) provides us with dedicated asset management employees to provide asset management services pursuant to our proprietary guidelines and (ii) services our loans.
(3) Unfunded loan commitments may be funded over the term of each loan, subject in certain cases to an expiration date or a force-funding date, primarily to finance property improvements or lease-related expenditures by our borrowers and to finance operating deficits during renovation and lease-up. (4) As of December 31, 2023, all of our loans were indexed to Term SOFR.
(3) Unfunded loan commitments may be funded over the term of each loan, subject in certain cases to an expiration date or a force-funding date, primarily to finance property improvements or lease-related expenditures by our borrowers and to finance operating deficits during renovation and lease-up.
Our current sources of near-term liquidity are set forth in the following table (dollars in thousands): December 31, 2023 December 31, 2022 Cash and cash equivalents $ 206,376 $ 254,050 Secured credit agreements 24,784 38,380 Secured revolving credit facility — 556 Asset-specific financing arrangements 1,592 770 Collateralized loan obligation proceeds held at trustee 247,229 297,168 Total $ 479,981 $ 590,924 Our existing loan portfolio may provide us with liquidity as loans are repaid or sold, in whole or in part, of which some proceeds may be included in accounts receivable from our servicers until released and the proceeds from such repayments become available for us to reinvest.
Our current sources of near-term liquidity are set forth in the following table (dollars in thousands): December 31, 2024 December 31, 2023 Cash and cash equivalents $ 190,160 $ 206,376 Secured credit agreements 128,130 24,784 Secured revolving credit facility — — Asset-specific financing arrangements 2,485 1,592 Collateralized loan obligation proceeds held at trustee — 247,229 Total $ 320,775 $ 479,981 Our existing loan portfolio may provide us with liquidity as loans are repaid or sold, in whole or in part, of which some proceeds may be included in accounts receivable from our servicers until released and the proceeds from such repayments become available for us to reinvest.
Uses of Liquidity In addition to our ongoing loan activity, our primary liquidity needs include interest and principal payments under our $3.0 billion of outstanding borrowings under secured credit agreements, a secured revolving credit facility, asset-specific financing arrangements, and collateralized loan obligations, the repurchase or deleveraging of loans, $183.3 million of unfunded loan commitments on our loans held for investment, dividend distributions to our preferred and common stockholders, and operating expenses. 91 Table of Contents Consolidated Cash Flows Our primary cash flow activities involve actively managing our investment portfolio, originating floating rate, first mortgage loan investments, and raising capital through public offerings of our equity and debt securities.
Uses of Liquidity In addition to our ongoing loan activity, our primary liquidity needs include interest and principal payments under our $2.5 billion of outstanding borrowings under secured credit agreements, a secured revolving credit facility, asset-specific financing arrangements, and collateralized loan obligations, the repurchase or deleveraging of loans, $127.9 million of unfunded loan commitments on our loans held for investment, dividend distributions to our preferred and common stockholders, operating expenses, and repurchases of shares of our common stock pursuant to a $25.0 million share repurchase program that our board of directors approved on April 25, 2024. 91 Table of Contents Consolidated Cash Flows Our primary cash flow activities involve actively managing our investment portfolio, originating primarily floating rate, first mortgage loan investments, and raising capital through public offerings of our equity and debt securities.
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.
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.
Dividends Declared Per Common Share During the three months ended December 31, 2023, we declared cash dividends of $0.24 per common share, or $19.2 million.
Dividends Declared Per Common Share During the three months ended December 31, 2024, we declared cash dividends of $0.24 per common share, or $20.0 million.
Subsequent Events For a discussion of subsequent events, see Note 16 to our Consolidated Financial Statements included in this Form 10-K. 97 Table of Contents Loan Portfolio Details The following table provides details with respect to our loans held for investment portfolio on a loan-by-loan basis as of December 31, 2023 (dollars in millions, except loan per square foot/unit): Loan # Form of investment Origination or acquisition date (2) Total loan Principal balance Amortized cost (3) Interest rate All-in yield (4) Fixed / floating Extended maturity (5) City / state Property type Loan type Loan per SQFT / unit LTV (6) Risk rating (7) First mortgage loans (1) 1 Senior Loan 7/28/2022 $ 245.0 $ 245.0 $ 245.0 S + 3.4% S + 3.7% Floating 8/9/2027 San Jose, CA Multifamily Bridge $444,646 Unit 75.9 % 3 2 Senior Loan (9) 8/21/2019 227.1 227.1 227.1 S + 3.0% S + 3.2% Floating 9/9/2026 New York, NY Office Light Transitional $448 Sq ft 65.2 % 3 3 Senior Loan 5/5/2021 215.0 200.4 200.2 S + 4.0% S + 4.2% Floating 5/9/2026 Daly City, CA Life Science Moderate Transitional $545 Sq ft 63.1 % 3 4 Senior Loan (10) 9/18/2019 163.0 163.0 163.0 S + 4.1% S + 4.4% Floating 12/9/2024 New York, NY Office Moderate Transitional $733 Sq ft 65.2 % 3 5 Senior Loan 7/20/2021 142.0 142.0 142.0 S + 3.5% S + 3.9% Floating 8/9/2026 Various, NJ Multifamily Bridge $141,600 Unit 71.3 % 3 6 Senior Loan 5/7/2021 122.5 121.1 121.1 S + 3.0% S + 3.2% Floating 5/9/2026 Towson, MD Multifamily Bridge $147,947 Unit 70.2 % 3 7 Senior Loan 6/14/2021 114.0 102.6 102.6 S + 3.2% S + 3.5% Floating 7/9/2026 Hayward, CA Life Science Moderate Transitional $308 Sq ft 49.7 % 3 8 Senior Loan 12/9/2021 96.0 93.0 92.7 S + 3.9% S + 4.2% Floating 12/9/2026 Los Angeles, CA Multifamily Light Transitional $213,808 Unit 78.1 % 3 9 Senior Loan 11/21/2022 87.0 66.8 66.3 S + 5.3% S + 5.6% Floating 12/9/2027 Dallas, TX Office Moderate Transitional $100 Sq ft 60.8 % 3 10 Senior Loan 2/2/2023 86.8 79.1 78.4 S + 5.1% S + 5.4% Floating 3/9/2028 Miami, FL Hotel Bridge $170,866 Unit 58.4 % 3 11 Senior Loan 12/20/2018 78.8 75.0 75.0 S + 4.1% S + 4.4% Floating 1/9/2025 Torrance, CA Mixed-Use Moderate Transitional $214 Sq ft 61.1 % 4 12 Senior Loan 7/28/2022 72.0 71.4 71.4 S + 4.0% S + 4.3% Floating 8/9/2027 Yonkers, NY Multifamily Bridge $400,000 Unit 64.8 % 3 13 Senior Loan 2/9/2022 70.0 66.2 66.2 S + 3.3% S + 3.6% Floating 2/9/2027 Various, Various Industrial Bridge $187 Sq ft 72.1 % 3 14 Senior Loan (11) 8/31/2021 70.0 70.0 68.3 S + 3.6% S + 3.2% Floating 9/9/2026 Cedar Creek, TX Hotel Bridge $345,825 Unit 61.2 % 3 15 Senior Loan 9/30/2021 69.0 64.6 64.6 S + 3.8% S + 4.1% Floating 10/9/2026 Tampa, FL Multifamily Moderate Transitional $221,154 Unit 64.2 % 3 16 Senior Loan 7/26/2022 69.0 67.0 66.8 S + 4.2% S + 4.5% Floating 8/9/2027 Various, Various Self Storage Light Transitional $171 Sq ft 66.2 % 3 17 Senior Loan 11/30/2021 65.6 57.0 56.8 S + 3.5% S + 3.8% Floating 12/9/2026 St.
Subsequent Events For a discussion of subsequent events, see Note 16 to our Consolidated Financial Statements included in this Form 10-K. 97 Table of Contents Loan Portfolio Details The following table provides details with respect to our loans held for investment portfolio on a loan-by-loan basis as of December 31, 2024 (dollars in millions, except loan per square foot/unit): Loan # Form of investment Origination or acquisition date (2) Total loan Principal balance Amortized cost (3) Interest rate All-in yield (4) Fixed / floating Extended maturity (5) City / state Property type Loan type Loan per SQFT / unit LTV (6) Risk rating (7) First mortgage loans (1) 1 Senior Loan (9) 7/28/2022 $ 256.3 $ 253.1 $ 253.1 S + 3.6% S + 3.7% Floating 8/9/2027 San Jose, CA Multifamily Bridge $444,646 Unit 72.7 % 3 2 Senior Loan (10) 8/21/2019 227.1 227.1 227.1 S + 3.0% S + 3.2% Floating 9/9/2026 New York, NY Office Light Transitional $448 Sq ft 65.2 % 3 3 Senior Loan 5/5/2021 215.0 205.6 205.5 S + 4.0% S + 4.2% Floating 5/9/2026 Daly City, CA Life Science Moderate Transitional $544 Sq ft 63.1 % 3 4 Senior Loan (11) 9/18/2019 150.5 150.5 150.5 S + 4.1% S + 4.4% Floating 12/31/2025 New York, NY Office Moderate Transitional $677 Sq ft 65.2 % 3 5 Senior Loan 12/31/2024 129.0 115.5 114.2 S + 3.4% S + 3.7% Floating 1/9/2030 Various, Various Industrial Light Transitional $215 Sq ft 55.3 % 3 6 Senior Loan 5/7/2021 113.0 113.0 113.0 S + 3.5% S + 3.8% Floating 5/9/2026 Towson, MD Multifamily Bridge $136,504 Unit 70.2 % 3 7 Senior Loan 11/13/2024 113.0 109.7 108.9 S + 3.3% S + 3.6% Floating 12/9/2029 Various, Various Multifamily Bridge $112,214 Unit 64.6 % 3 8 Senior Loan 7/20/2021 106.0 106.0 106.0 S + 3.5% S + 3.9% Floating 8/9/2026 Various, NJ Multifamily Bridge $117,796 Unit 71.3 % 3 9 Senior Loan 6/14/2021 102.6 102.6 102.6 S + 3.2% S + 3.5% Floating 7/9/2026 Hayward, CA Life Science Moderate Transitional $277 Sq ft 49.7 % 3 10 Senior Loan 7/3/2024 96.0 95.8 95.0 S + 3.1% S + 3.4% Floating 7/9/2029 Phoenix, AZ Multifamily Bridge $209,150 Unit 68.6 % 3 11 Senior Loan 12/9/2021 94.0 93.0 93.0 S + 3.9% S + 4.2% Floating 12/9/2026 Los Angeles, CA Multifamily Light Transitional $209,258 Unit 78.1 % 3 12 Senior Loan 11/21/2022 87.0 71.6 71.3 S + 5.3% S + 5.6% Floating 12/9/2027 Dallas, TX Office Moderate Transitional $100 Sq ft 60.8 % 3 13 Senior Loan 2/2/2023 86.8 79.1 78.7 S + 5.1% S + 5.4% Floating 3/9/2028 Miami, FL Hotel Bridge $170,866 Unit 58.4 % 3 14 Senior Loan 12/20/2018 78.8 75.3 75.3 S + 4.1% S + 4.4% Floating 1/9/2025 Torrance, CA Mixed-Use Moderate Transitional $218 Sq ft 61.1 % 4 15 Senior Loan 7/28/2022 72.0 72.0 72.0 S + 4.0% S + 4.3% Floating 8/9/2027 Yonkers, NY Multifamily Bridge $400,000 Unit 64.8 % 3 16 Senior Loan (12) 9/1/2022 70.0 70.0 70.0 S + 3.6% S + 3.2% Floating 9/9/2026 Cedar Creek, TX Hotel Bridge $345,825 Unit 61.2 % 3 17 Senior Loan 9/30/2021 69.0 66.6 66.6 S + 3.8% S + 4.1% Floating 10/9/2026 Tampa, FL Multifamily Moderate Transitional $221,154 Unit 64.2 % 3 18 Senior Loan 7/26/2022 67.0 67.0 66.9 S + 4.2% S + 4.5% Floating 8/9/2027 Various, Various Self Storage Light Transitional $166 Sq ft 66.2 % 3 19 Senior Loan 11/30/2021 65.6 63.5 63.5 S + 3.5% S + 3.9% Floating 12/9/2026 St.
The remaining 26.5% of our loan portfolio borrowings, comprised primarily of our five secured credit agreements, are subject to credit marks only. As of December 31, 2023, we did not have any non-consolidated senior interests.
The remaining 23.0% of our loan portfolio borrowings, comprised primarily of our four secured credit agreements, are subject to credit marks only. As of December 31, 2024, we did not have any non-consolidated senior interests.
For the year ended December 31, 2023 and 2022, common stock dividends in the amount of $76.0 million and $75.1 million, respectively, were declared and approved.
For the year ended December 31, 2024 and 2023, common stock dividends in the amount of $78.7 million and $76.0 million, respectively, were declared and approved.
(2) Weighted average spread excludes the amortization of loan fees and deferred financing costs. (3) Loan term represents weighted-average final maturity, assuming extension options are exercised by the borrower. Repayments of CRE CLO notes are dependent on timing of underlying loan repayments post-reinvestment period. The term of the CRE CLO notes represents the rated final distribution date.
(2) Loan term represents weighted average final maturity, assuming extension options are exercised by the borrower. Repayments of CRE CLO notes are dependent on timing of underlying loan repayments post-reinvestment period. The term of the CRE CLO notes represents the rated final distribution date.
In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions.
In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expected lease-up periods, depending on local market conditions. In estimating costs to execute similar leases, we consider leasing commissions, legal and other related expenses.
(2) Basic and diluted earnings (loss) per common share are computed independently based on the weighted-average shares of common stock outstanding. Diluted earnings per common share also includes the impact of participating securities outstanding plus any incremental shares that would be outstanding assuming the exercise of the Warrants.
(2) Basic and diluted earnings per common share are computed independently based on the weighted average shares of common stock outstanding. Diluted earnings per common share includes the impact of participating securities outstanding. Prior to the May 8, 2024 Warrant exercise, diluted earnings per common share included any incremental shares that would be outstanding assuming the exercise of the Warrants.
For information regarding the financing of our loans held for investment portfolio, see the section entitled “Investment Portfolio Financing.” 73 Table of Contents Real Estate Owned During the year ended December 31, 2023, we acquired four office properties and two multifamily properties, each of which were collateral for first mortgage loans.
For information regarding the financing of our loans held for investment portfolio, see the section entitled “Investment Portfolio Financing.” 73 Table of Contents Real Estate Owned As of December 31, 2024, we owned four office properties and four multifamily properties, each of which previously served as collateral for first mortgage loans.
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.
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").
On December 9, 2022, our Board of Directors declared and approved a cash dividend of $0.24 per share of common stock, or $19.0 million in the aggregate, for the fourth quarter of 2022. The common stock dividend was paid on January 25, 2023 to the holders of record of our common stock as of December 29, 2022.
On December 13, 2024, our Board of Directors declared and approved a cash dividend of $0.24 per share of common stock, or $20.0 million in the aggregate, for the fourth quarter of 2024. The common stock dividend was paid on January 24, 2025 to the holders of record of our common stock as of December 27, 2024.
As of December 31, 2023, based on the unpaid principal balance of our total loan exposure, 8.4% of our loans were subject to yield maintenance or other prepayment restrictions and 91.6% were open to repayment without penalty.
As of December 31, 2024, based on the unpaid principal balance of our total loan exposure, 22.1% of our loans were subject to yield maintenance or other prepayment restrictions and 77.9% were open to repayment without penalty.
For a summary of certain terms of the management agreement between us and our Manager (the “Management Agreement”), see Note 10 to our Consolidated Financial Statements included in this Form 10-K. 67 Table of Contents Fourth Quarter 2023 Activity Operating Results: • Recognized Net income (loss) attributable to common stockholders of $2.6 million, compared to ($64.6) million for the three months ended September 30, 2023, an increase of $67.3 million. • Produced Net interest income of $21.3 million, resulting from interest income of $84.1 million and interest expense of $62.8 million.
For a summary of certain terms of the management agreement between us and our Manager (the “Management Agreement”), see Note 10 to our Consolidated Financial Statements included in this Form 10-K. 67 Table of Contents Fourth Quarter 2024 Activity Operating Results: • Recognized Net income attributable to common stockholders of $6.9 million, compared to $18.7 million for the three months ended September 30, 2024, a decrease of $11.8 million. • Produced Net interest income of $24.7 million, resulting from interest income of $69.0 million and interest expense of $44.3 million.
The following table details our investment portfolio financing arrangements (dollars in thousands): Outstanding principal balance December 31, 2023 December 31, 2022 Collateralized loan obligations $ 1,919,790 $ 2,461,170 Secured credit agreements 799,518 1,108,386 Secured revolving credit facility 23,782 44,279 Asset-specific financing arrangements 274,158 565,376 Mortgage loan payable 31,200 — Total $ 3,048,448 $ 4,179,211 All of our investment portfolio financing arrangements are floating rate indexed to Term SOFR except a single fixed-rate mortgage loan secured by an REO property in Houston, TX. 77 Table of Contents As of December 31, 2023, non-mark-to-market financing sources accounted for 73.5% of our total loan portfolio borrowings.
The following table details our investment portfolio financing arrangements (dollars in thousands): Outstanding principal balance December 31, 2024 December 31, 2023 Collateralized loan obligations $ 1,682,288 $ 1,919,790 Secured credit agreements 585,042 799,518 Asset-specific financing arrangements 186,500 274,158 Secured revolving credit facility 86,625 23,782 Mortgage loan payable 31,200 31,200 Total $ 2,571,655 $ 3,048,448 All of our investment portfolio financing arrangements are floating rate indexed to Term SOFR except a single fixed-rate mortgage loan secured by an REO property in Houston, TX. 77 Table of Contents As of December 31, 2024, non-mark-to-market financing sources accounted for 77.0% of our total loan portfolio borrowings.
As of December 31, 2023, based on unpaid principal balance, 8.4% of our loans were subject to yield maintenance or other prepayment restrictions and 91.6% were open to repayment by the borrower without penalty.
As of December 31, 2024, based on unpaid principal balance, 22.1% of our loans were subject to yield maintenance or other prepayment restrictions and 77.9% were open to repayment by the borrower without penalty.
The following table details the net floating rate exposure of our loan portfolio by unpaid principal balance as of December 31, 2023 (dollars in thousands): Net exposure Floating rate mortgage loan assets (1) $ 3,484,052 Floating rate mortgage loan liabilities (1)(2) (3,017,248) Total floating rate mortgage loan exposure, net $ 466,804 __________________________________ (1) As of December 31, 2023, all of our floating rate mortgage loan assets and all of our outstanding floating rate mortgage loan liabilities were subject to Term SOFR as the benchmark interest rate.
The following table details the net floating rate exposure of our loan portfolio by unpaid principal balance as of December 31, 2024 (dollars in thousands): Net exposure Floating rate mortgage loan assets (1) $ 3,276,400 Floating rate mortgage loan liabilities (1)(2) (2,540,455) Total floating rate mortgage loan exposure, net $ 735,945 __________________________________ (1) As of December 31, 2024, all of our floating rate mortgage loan assets and all of our outstanding floating rate mortgage loan liabilities were subject to Term SOFR as the benchmark interest rate.
For the three months ended December 31, 2023, we generated interest income of $84.1 million and incurred interest expense of $62.8 million, which resulted in net interest income of $21.3 million. 72 Table of Contents The following table details overall statistics for our loans held for investment portfolio as of December 31, 2023 (dollars in thousands): Balance sheet portfolio Total loan exposure (1) Number of loans (1) 53 53 Floating rate loans 100.0 % 100.0 % Total loan commitments $ 3,666,173 $ 3,666,173 Unpaid principal balance (2) $ 3,484,052 $ 3,484,052 Unfunded loan commitments (3) $ 183,293 $ 183,293 Amortized cost $ 3,476,776 $ 3,476,776 Weighted average credit spread 3.7 % 3.7 % Weighted average all-in yield (4) 9.3 % 9.3 % Weighted average term to extended maturity (in years) (5) 2.6 2.6 Weighted average LTV (6) 67.3 % 67.3 % _________________________________ (1) In certain instances, we create structural leverage through the co-origination or non-recourse syndication of a senior loan interest to a third-party.
For the three months ended December 31, 2024, we generated interest income of $69.0 million and incurred interest expense of $44.3 million, which resulted in net interest income of $24.7 million. 72 Table of Contents The following table details overall statistics for our loans held for investment portfolio as of December 31, 2024 (dollars in thousands): Balance sheet portfolio Total loan exposure (1) Number of loans (1) 45 45 Floating rate loans 99.7 % 99.7 % Total loan commitments $ 3,412,016 $ 3,412,016 Unpaid principal balance (2) $ 3,284,510 $ 3,284,510 Unfunded loan commitments (3) $ 127,866 $ 127,866 Amortized cost $ 3,278,588 $ 3,278,588 Weighted average credit spread 3.7 % 3.7 % Weighted average all-in yield (4) 8.3 % 8.3 % Weighted average term to extended maturity (in years) (5) 2.4 2.4 Weighted average LTV (6) 66.1 % 66.1 % _________________________________ (1) In certain instances, we create structural leverage through the co-origination or non-recourse syndication of a senior loan interest to a third-party.
Preferred Stock Dividends and Participating Securities Share in Earnings During each of the year ended periods ended December 31, 2023 and 2022, we declared and paid cash dividends of $12.6 million related to our Series C Preferred Stock.
Preferred Stock Dividends and Participating Securities Share in Earnings During each of the years ended December 31, 2024 and 2023, we declared and paid cash dividends of $12.6 million related to our Series C Preferred Stock. Dividends Declared Per Common Share During the year ended December 31, 2024, we declared cash dividends of $0.96 per common share, or $78.7 million.
During the three months ended June 30, 2023, we received repayment in full of four loans with a total unpaid principal balance of $236.0 million and a weighted average risk rating of 2.8 as of March 31, 2023. The four loan repayments were included within our office and multifamily property categories.
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.
Distributable Earnings (loss) per diluted common share was ($2.05) for three months ended December 31, 2023, a decrease of $0.72 per diluted common share from the three months ended September 30, 2023.
Distributable Earnings per diluted common share was $0.10 for three months ended December 31, 2024, a decrease of $0.18 per diluted common share from the three months ended September 30, 2024.
This decrease was partially offset by an increase 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.
This decrease was primarily attributable to improved asset level performance, a reduction in the aggregate amount of our loan investment portfolio, 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.
(10) This loan is comprised of a first mortgage loan of $81.0 million and a contiguous mezzanine loan of $82.0 million, of which we own both. Each loan carries the same interest rate.
(11) This loan is comprised of a first mortgage loan of $72.2 million and a contiguous mezzanine loan of $78.3 million, both of which we own. Each loan carries the same interest rate.
During the three months ended March 31, 2023, we received repayment in full of three loans with a total unpaid principal balance of $144.4 million and a weighted average risk rating of 3.1 as of December 31, 2022.
During the three months ended June 30, 2024, we received repayment in full of three loans with a total unpaid principal balance of $162.5 million and a weighted average risk rating of 3.0 as of March 31, 2024.
Diluted earnings per common share also includes the impact of participating securities outstanding plus any incremental shares that would be outstanding assuming the exercise of the Warrants.
Diluted earnings per common share includes the impact of participating securities outstanding. Prior to the May 8, 2024 Warrant exercise, diluted earnings per common share included any incremental shares that would be outstanding assuming the exercise of the Warrants.
When we create structural leverage through the co-origination or non-recourse syndication of a senior loan interest to a third party, we retain on our balance sheet a mezzanine loan. As of December 31, 2023, there are no non-consolidated senior interests or retained mezzanine loans outstanding.
When we create structural leverage through the co-origination or non-recourse syndication of a senior loan interest to a third party, we retain on our balance sheet a mezzanine loan.
The reinvestment period for TRTX 2019-FL3 ended on October 11, 2021. The reinvestment period for TRTX 2021-FL4 ended on March 11, 2023. In accordance with the TRTX 2021-FL4 indenture, prior to the end of the reinvestment period on March 11, 2023, we committed to contribute certain assets and completed the contribution process by mid-May 2023.
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.
For the three months ended December 31, 2023, we recorded net income attributable to common stockholders of $0.03 per diluted common share, an increase of $0.86 per diluted common share from the three months ended September 30, 2023, of which $0.75 per diluted common share relates to a decrease in our credit loss expense during the fourth quarter of 2023, which totaled $17.3 million as compared to $75.8 million during the third quarter of 2023.
For the three months ended December 31, 2024, we recorded net income attributable to common stockholders of $0.09 per diluted common share, a decrease of $0.14 per diluted common share from the three months ended September 30, 2024, of which $0.06 per diluted common share, or $4.6 million, relates to an increase quarter over quarter in our credit loss expense, compared to $0.3 million benefit during the third quarter of 2024.
Net interest income increased $1.7 million compared to the three months ended September 30, 2023. • Generated Distributable Earnings (Loss) of ($159.7) million, compared to ($103.7) million for the three months ended September 30, 2023, a decrease of $56.0 million. • Recorded a decrease to our allowance for credit losses on our loan portfolio of $166.9 million, for a total allowance for credit losses of $69.8 million, or 190 basis points of total loan commitments of $3.7 billion. • Declared a common stock dividend of $0.24 per common share for the three months ended December 31, 2023.
Net interest income decreased $4.6 million compared to the three months ended September 30, 2024. • Generated Distributable Earnings of $7.8 million, compared to $23.0 million for the three months ended September 30, 2024, a decrease of $15.2 million. • Recorded a decrease to our allowance for credit losses on our loan portfolio of $5.3 million, for a total allowance for credit losses of $64.0 million, or 187 basis points of total loan commitments of $3.4 billion. • Declared a common stock dividend of $0.24 per common share for the three months ended December 31, 2024.
Full Year 2023 Activity Operating Results: • Recognized Net (loss) attributable to common stockholders of ($130.9) million, or ($1.69) per diluted share, and Distributable Earnings (Loss) of ($264.1) million or ($3.40) per diluted share. • Produced Net interest income of $88.7 million, resulting from interest income of $362.6 million and interest expense of $273.9 million. • Declared dividends of $76.0 million, or $0.96 per common share, representing a 14.8% annualized dividend yield based on the December 29, 2023 closing price of $6.50.
Full Year 2024 Activity Operating Results: • Recognized Net income attributable to common stockholders of $59.7 million, or $0.75 per diluted share, and Distributable Earnings of $76.5 million or $0.96 per diluted share. • Produced Net interest income of $108.3 million, resulting from interest income of $307.1 million and interest expense of $198.9 million. • Declared dividends of $78.7 million, or $0.96 per common share, representing a 11.3% annualized dividend yield based on the December 31, 2024 closing price of $8.50.
As of December 31, 2023, we had outstanding 77.9 million shares of our common stock representing $0.9 billion of stockholders’ equity, $194.4 million of Series C Preferred Stock, and $3.0 billion of outstanding borrowings used to finance our investments and operations.
As of December 31, 2024, we had outstanding 81.0 million shares of our common stock representing $0.9 billion of stockholders’ equity, and $2.6 billion of outstanding borrowings used to finance our investments and operations.
The following table presents the allowance for credit losses for loans held for investment (dollars in thousands): December 31, 2023 Allowance for credit losses: loans held for investment Unpaid principal balance Allowance for credit losses: unfunded commitments Unfunded commitments Total commitments Total basis points General reserve $ 67,092 $ 3,484,052 $ 2,679 $ 183,293 $ 3,666,173 190 bps Specific reserve — — — — — Total $ 67,092 $ 3,484,052 $ 2,679 $ 183,293 $ 3,666,173 190 bps Investment Portfolio Financing We finance our investment portfolio using secured financing agreements, including secured credit agreements, secured revolving credit facilities, mortgage loans payable, asset-specific financing arrangements, and collateralized loan obligations.
The following table presents the allowance for credit losses for loans held for investment (dollars in thousands): December 31, 2024 Allowance for credit losses: loans held for investment Unpaid principal balance Allowance for credit losses: unfunded commitments Unfunded commitments Total commitments Total basis points General reserve $ 61,558 $ 3,284,510 $ 2,415 $ 127,866 $ 3,412,016 187 bps Specific reserve — — — — — — bps Total $ 61,558 $ 3,284,510 $ 2,415 $ 127,866 $ 3,412,016 187 bps 76 Table of Contents Investment Portfolio Financing We finance our investment portfolio using secured financing agreements, including secured credit agreements, secured revolving credit facilities, mortgage loans payable, asset-specific financing arrangements, and collateralized loan obligations.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeIn general, an increase in prepayment rates accelerates the accretion of purchase discounts, thereby increasing the interest income earned on the assets. 100 Table of Contents Extension Risk Our Manager computes the projected weighted average life of our assets based on assumptions regarding the pace at which individual borrowers will prepay the mortgages or extend.
Biggest changeIncreasing prepayment speeds may expose us to the risk that we cannot reinvest loan repayment proceeds promptly in suitable loan investments or other investments, which may cause investment income to decline. 100 Table of Contents Extension Risk Our Manager computes the projected weighted average life of our assets based on assumptions regarding the pace at which individual borrowers will prepay the mortgages or extend.
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 embedded in substantially all of our loans. As of December 31, 2023, the weighted average interest rate floor for our loan portfolio was 1.09%.
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 embedded in substantially all of our loans. As of December 31, 2024, the weighted average interest rate floor for our loan portfolio was 1.84%.
To monitor this risk, the asset management team reviews our portfolio and maintains regular contact with borrowers, co-lenders and local market experts to monitor the performance of the underlying collateral, anticipate borrower, property and market issues and, to the extent necessary or appropriate, enforce our rights as the lender.
To monitor this risk, our Manager and the asset management team review our portfolio and maintain regular contact with borrowers, co-lenders and local market experts to monitor the performance of the underlying collateral, anticipate borrower, property and market issues and, to the extent necessary or appropriate, enforce our rights as the lender.
As of December 31, 2023, all of our loans by unpaid principal balance earned a floating rate of interest, subject to the impact of embedded interest rate floors, and were financed with liabilities that require interest payments based on floating rates.
As of December 31, 2024, 99.8% of our loans by unpaid principal balance earned a floating rate of interest, subject to the impact of embedded interest rate floors, and were financed with liabilities that require interest payments based on floating rates.
Global macroeconomic conditions, including, without limitation, heightened inflation, changes to fiscal and monetary policy, increased interest rates, stress to the commercial banking systems of the U.S. and Western Europe, currency fluctuations, and labor shortages, have contributed to increased volatility in public debt and equity markets, increased cost of funds and reduced availability of efficient debt capital, factors which caused us to reduce our investment activity in 2023, and may cause us to restrain our investment activity in the future.
Global macroeconomic conditions, including, without limitation, heightened inflation, changes to fiscal and monetary policy, sustained higher interest rates, structural shifts and regulatory changes to the commercial banking systems of the U.S. and Western Europe, currency fluctuations, and labor shortages, have contributed to increased volatility in public debt and equity markets, increased cost of funds and reduced availability of efficient debt capital, factors which caused us to moderate our investment activity in 2023 and throughout 2024, and may cause us to restrain our investment activity in the future.
Prepayment Risk Prepayment risk is the risk that principal will be repaid at a different rate than anticipated, causing the return on certain investments to be less than expected. As we receive prepayments of principal on our assets, any premiums paid on such assets are amortized against interest income.
Prepayment Risk Prepayment risk is the risk that principal will be repaid at a different rate than anticipated, causing the return on certain investments to be less than expected. Generally, declining interest rates result in increasing prepayment speeds. As we receive prepayments of principal on our assets, any premiums paid on such assets are amortized against interest income.
In the event that the value of our assets pledged as collateral decreases as a result of changes in credit spreads or interest rates, or due to an other-than-temporary decline in the value of the collateral securing our pledged loan, margin calls relating to our secured credit agreements could increase, causing an adverse change in our liquidity position.
In the event that the value of our assets pledged as collateral decreases due to an other-than-temporary decline in the value of the collateral securing our pledged loan, margin calls relating to our secured credit agreements could increase, causing an adverse change in our liquidity position.
As a result, a change in foreign currency exchange rates may have an adverse impact on the valuation of our assets, as well as our income and distributions.
Currency Risk We may in the future hold assets denominated in foreign currencies, which would expose us to foreign currency risk. As a result, a change in foreign currency exchange rates may have an adverse impact on the valuation of our assets, as well as our income and distributions.
In general, an increase in prepayment rates accelerates the amortization of purchase premiums, thereby reducing the interest income earned on the assets. Conversely, discounts on such assets are accreted into interest income.
In general, an increase in prepayment rates accelerates the amortization of purchase premiums, which reduces the interest income earned on the assets, and accelerates the accretion into interest income of purchase discounts, which increases interest income.
We seek to manage this risk through a comprehensive credit analysis prior to making an investment and rigorous monitoring of the underlying collateral during the term of our investments. Currency Risk We may in the future hold assets denominated in foreign currencies, which would expose us to foreign currency risk.
We seek to manage this risk through a comprehensive credit analysis prior to making an investment, rigorous monitoring of the underlying collateral during the term of our investments, and active asset management to protect our security interest in our collateral.
The following table illustrates the impact on our interest income and interest expense, for the twelve-month period following December 31, 2023, of an immediate increase or decrease in the underlying benchmark interest rate of 25, 50 and 75 basis points on our existing floating rate loans held for investment portfolio and related liabilities (dollars in thousands): Assets (liabilities) subject to interest rate sensitivity (1)(2) Net exposure Income (expense) subject to interest rate sensitivity 25 Basis Point 50 Basis Point 75 Basis Point Increase Decrease Increase Decrease Increase Decrease Floating rate mortgage loan assets $ 3,484,052 Interest income $ 8,710 $ (8,710) $ 17,420 $ (17,420) $ 26,130 $ (25,904) Floating rate mortgage loan liabilities (3,017,248) Interest expense (7,543) 7,543 (15,086) 15,086 (22,629) 22,629 Total floating rate mortgage loan exposure, net $ 466,804 Total change in net interest income $ 1,167 $ (1,167) $ 2,334 $ (2,334) $ 3,501 $ (3,275) __________________________ (1) As of December 31, 2023, all of our floating rate mortgage loan assets and all of our floating rate mortgage loan liabilities were subject to Term SOFR as the benchmark interest rate.
The following table illustrates the impact on our interest income and interest expense, for the twelve-month period following December 31, 2024, of an immediate increase or decrease in the underlying benchmark interest rate of 25, 50 and 75 basis points on our existing floating rate loans held for investment portfolio and related liabilities (dollars in thousands): Assets (liabilities) subject to interest rate sensitivity (1)(2) Net exposure Income (expense) subject to interest rate sensitivity 25 Basis Point 50 Basis Point 75 Basis Point Increase Decrease Increase Decrease Increase Decrease Floating rate mortgage loan assets $ 3,276,400 Interest income $ 8,191 $ (8,191) $ 16,382 $ (16,297) $ 24,573 $ (24,171) Floating rate mortgage loan liabilities (2,540,455) Interest expense (6,351) 6,351 (12,702) 12,702 (19,053) 19,053 Total floating rate mortgage loan exposure, net $ 735,945 Total change in net interest income $ 1,840 $ (1,840) $ 3,680 $ (3,595) $ 5,520 $ (5,118) __________________________ (1) As of December 31, 2024, all of our floating rate mortgage loan assets and all of our floating rate mortgage loan liabilities were subject to Term SOFR as the benchmark interest rate.
As of December 31, 2023, less than 1.2% of our liabilities do not contain interest rate floors greater than zero.
As of December 31, 2024, less than 5.6% of our floating rate liabilities contain an interest rate floor greater than zero. The weighted average interest rate floor for our floating rate mortgage loan liabilities was 0.10% as of December 31, 2024.

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