TPG RE Finance Trust, Inc. (NYSE: TRTX)

Sector: Real Estate Industry: REIT - Mortgage CIK: 0001630472
Market Cap 702.93 Mn
P/B 0.66
P/E 15.46
P/S 4.81
ROIC (Qtr) 1.74
Div Yield % 10.90
Rev 1y % (Qtr) 0.87
Total Debt (Qtr) 3.29 Bn
Debt/Equity (Qtr) 3.08
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About

TPG RE Finance Trust, Inc., often referred to as TRTX, is a commercial real estate finance company that operates as a real estate investment trust (REIT) for U.S. federal income tax purposes. It is externally managed by TPG RE Finance Trust Management, L.P., an affiliate of TPG, a leading global alternative asset management firm. The company's primary business activity is to directly originate and acquire a diversified portfolio of commercial real estate-related assets, consisting primarily of first mortgage loans and senior participation interests...

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Investment thesis

Bull case

  • Tangible assets of 4.41B provide exceptional 2271.25x coverage of deferred revenue 1.94M, showing strong service capability backing.
  • Strong operating cash flow of 90.36M provides 6.42x coverage of SG&A expenses 14.08M, showing efficient operational cost management.
  • Robust free cash flow of 84.22M exceeds capital expenditure of 6.14M by 13.71x, indicating strong organic growth funding capability.
  • Operating cash flow of 90.36M provides strong 46.58x coverage of deferred revenue 1.94M, indicating service delivery capability.
  • Cash position of 88.27M provides strong 45.50x coverage of deferred revenue 1.94M, ensuring service delivery capability.

Bear case

  • Operating cash flow of 90.36M barely covers its investment activities of (789.71M), with a coverage ratio of -0.11, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 90.36M provides thin coverage of dividend payments of (78.50M) with a -1.15 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 84.22M represents just 0.12x of debt issuance 713.90M, suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 90.36M is outpaced by equity issuance of (25.68M) (-3.52 ratio), indicating concerning reliance on equity markets for funding operations.
  • R&D investment of 0 represents just 0x of SG&A expenses of 14.08M, indicating potential underinvestment in innovation relative to administrative overhead.

Peer comparison

Companies in the REIT - Mortgage
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NLY Annaly Capital Management Inc 14.71 Bn 7.87 6.55 116.19 Bn
2 STWD Starwood Property Trust, Inc. 6.37 Bn 17.38 3.53 21.43 Bn
3 RITM Rithm Capital Corp. 5.13 Bn 8.83 1.19 34.97 Bn
4 AGNC AGNC Investment Corp. 4.37 Bn -4.73 -5.78 95.01 Bn
5 BXMT Blackstone Mortgage Trust, Inc. 3.37 Bn 30.72 6.09 16.11 Bn
6 ARI Apollo Commercial Real Estate Finance, Inc. 1.51 Bn 13.19 5.56 7.92 Bn
7 LADR Ladder Capital Corp 1.32 Bn 20.49 6.10 3.51 Bn
8 EFC Ellington Financial Inc. 1.18 Bn 10.42 3.75 15.57 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.80 0.76
EV to Cash from Ops. EV/CFO 39.20 -6.93
EV to Debt EV to Debt 1.08 1.12
EV to EBIT EV/EBIT 58.35 167.08
EV to EBITDA EV/EBITDA 40.57 48.08
EV to Free Cash Flow [EV/FCF] EV/FCF 42.05 9.77
EV to Market Cap EV to Market Cap 5.04 21.65
EV to Revenue EV/Rev 24.24 6.17
Price to Book Value [P/B] P/B 0.66 0.54
Price to Earnings [P/E] P/E 15.46 772.25
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.49 -0.59
Dividend Payout Ratio % Div Payout % (Qtr) 168.40 -30.07
Dividend per Basic Share Div per Share (Qtr) 0.96 1.18
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 90.40 74.31
Interest Coverage Interest Coverage 0.00 -0.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -15.35 -29.64
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -53.66 17.79
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 5.51
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -18.86 -21.86
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -7.99 -15.11
EBIT Growth (1y) % EBIT 1y % (Qtr) -18.78 -17.24
EBT Growth (1y) % EBT 1y % (Qtr) -18.78 -27.05
EPS Growth (1y) % EPS 1y % (Qtr) -24.00 -51.32
FCF Growth (1y) % FCF 1y % (Qtr) -21.15 53.49
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -4.57 -1.07
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.03 0.04
Cash Payout Ratio Cash Payout (Qtr) 0.96 0.73
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 3.08 5.09
Interest Cover Ratio Interest Cover Ratio 0.00 -0.17
Times Interest Earned Times Interest Earned 0.00 -0.17
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 50.20 131.69
EBIT Margin % EBIT Margin % (Qtr) 41.54 136.71
EBT Margin % EBT Margin % (Qtr) 41.54 123.68
Gross Margin % Gross Margin % (Qtr) 100.00 113.34
Net Profit Margin % Net Margin % (Qtr) 31.10 120.00