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

Sector: Real Estate Industry: REIT - Mortgage CIK: 0001630472
Market Cap 715.53 Mn
P/B 0.66
P/E 13.71
P/S 4.91
ROIC (Qtr) 1.82
Div Yield % 2.69
Rev 1y % (Qtr) -5.74
Total Debt (Qtr) 2.93 Bn
Debt/Equity (Qtr) 2.71

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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Price action

Investment thesis

Bull case

  • Operating cash flow of 91.20M provides strong 12.51x coverage of stock compensation 7.29M, indicating sustainable incentive practices.
  • Tangible assets of 4.06B provide exceptional 2255.74x coverage of deferred revenue 1.80M, showing strong service capability backing.
  • Robust free cash flow of 86.70M exceeds capital expenditure of 4.50M by 19.25x, indicating strong organic growth funding capability.
  • Strong operating cash flow of 91.20M provides 7.99x coverage of SG&A expenses 11.41M, showing efficient operational cost management.
  • Operating cash flow of 91.20M provides strong 50.61x coverage of deferred revenue 1.80M, indicating service delivery capability.

Bear case

  • Operating cash flow of 91.20M barely covers its investment activities of (546.03M), with a coverage ratio of -0.17, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 91.20M provides thin coverage of dividend payments of (79.10M) with a -1.15 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 86.70M represents just 0.20x of debt issuance 439.19M, suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Operating cash flow of 91.20M is outpaced by equity issuance of (25.02M) (-3.65 ratio), indicating concerning reliance on equity markets for funding operations.
  • R&D investment of 0 represents just 0x of SG&A expenses of 11.41M, 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 RITM Rithm Capital Corp. 5.56 Bn 7.15 1.12 34.97 Bn
2 STWD Starwood Property Trust, Inc. 5.05 Bn 11.75 4.20 21.43 Bn
3 AGNC AGNC Investment Corp. 4.13 Bn 1.40 1.31 95.01 Bn
4 NLY Annaly Capital Management Inc 3.69 Bn 2.21 1.94 107.02 Bn
5 LADR Ladder Capital Corp 1.29 Bn 20.14 6.00 3.51 Bn
6 MFA Mfa Financial, Inc. 0.89 Bn 3.03 2.45 9.84 Bn
7 CIM Chimera Investment Corp 0.84 Bn 8.08 1.54 12.22 Bn
8 BRSP BrightSpire Capital, Inc. 0.75 Bn -1.47 2.08 2.17 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.88 0.56
EV to Cash from Ops. EV/CFO 39.18 45.88
EV to Debt EV to Debt 1.22 0.87
EV to EBIT EV/EBIT 53.20 187.98
EV to EBITDA EV/EBITDA 40.31 120.37
EV to Free Cash Flow [EV/FCF] EV/FCF 41.21 56.42
EV to Market Cap EV to Market Cap 4.99 25.15
EV to Revenue EV/Rev 24.50 56.50
Price to Book Value [P/B] P/B 0.66 0.71
Price to Earnings [P/E] P/E 13.71 4.95
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.56 -0.57
Dividend Payout Ratio % Div Payout % (Qtr) 147.70 33.95
Dividend per Basic Share Div per Share (Qtr) 0.96 1.18
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 86.96 52.50
Interest Coverage Interest Coverage 0.00 -0.17
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 30.05 34.54
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -58.35 21.41
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 4.93
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -4.30 14.33
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -11.80 7.56
EBIT Growth (1y) % EBIT 1y % (Qtr) -4.95 17.27
EBT Growth (1y) % EBT 1y % (Qtr) -4.95 7.46
EPS Growth (1y) % EPS 1y % (Qtr) -5.80 41.90
FCF Growth (1y) % FCF 1y % (Qtr) -16.17 60.56
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -2.70 16.78
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.04 0.04
Cash Payout Ratio Cash Payout (Qtr) 0.98 0.90
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.00
Debt to Equity Ratio Debt/Equity (Qtr) 2.71 5.05
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) 55.80 136.11
EBIT Margin % EBIT Margin % (Qtr) 46.06 141.14
EBT Margin % EBT Margin % (Qtr) 46.06 128.11
Gross Margin % Gross Margin % (Qtr) 100.00 114.71
Net Profit Margin % Net Margin % (Qtr) 35.80 124.85