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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this Form 10-K. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed in Part, 1. Item 1A, “Risk Factors” in this Form 10-K.

This section discusses 2021 and 2020 items and year-to-year comparisons between 2021 and 2020. Discussions of 2019 items and year-to-year comparisons between 2020 and 2019 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, 2020.

Introduction

We are a commercial real estate finance company externally managed by TPG RE Finance Trust Management, L.P., an affiliate of our sponsor TPG. We directly originate, acquire and manage commercial mortgage loans and other commercial real estate-related debt instruments in North America for our balance sheet. Our objective is to provide attractive risk-adjusted returns to our stockholders over time through cash distributions and capital appreciation. To meet our objective, we focus primarily on directly originating and selectively acquiring floating rate first mortgage loans that are secured by high quality commercial real estate properties undergoing some form of transition and value creation, such as retenanting, refurbishment or other form of repositioning. The collateral underlying our loans is located in primary and select secondary markets in the U.S. that we believe have attractive economic conditions and commercial real estate fundamentals. We operate our business as one segment.

As of December 31, 2021, our loans held for investment portfolio consisted of 68 first mortgage loans (or interests therein) and one mezzanine loan with total loan commitments of $5.4 billion, an aggregate unpaid principal balance of $4.9 billion, a weighted average credit spread of 3.4%, a weighted average all-in yield of 4.8%, a weighted average term to extended maturity (assuming all extension options have been exercised by our borrowers) of 2.8 years, and a weighted average LTV of 67.1%. As of December 31, 2021, 100% of the loan commitments in our portfolio consisted of floating rate loans, of which 99.3% were first mortgage loans or, in two instances a first mortgage loan and contiguous mezzanine loan both owned by us, and 0.7% was a mezzanine loan. As of December 31, 2021, we had $487.8 million of unfunded loan commitments, our funding of which is subject to borrower satisfaction of certain milestones.

As of December 31, 2021, we owned a 10 acre parcel of largely undeveloped land near the north end of the Las Vegas Strip (the “REO Property”) with a carrying value of $60.6 million. The REO Property was acquired in December 2020 pursuant to a negotiated deed-in-lieu of foreclosure. The REO Property is held for investment and reflected on our consolidated balance sheets at its estimate of fair value at the time of acquisition, net of estimated selling costs.

As of December 31, 2021, we did not own any CRE debt securities.

We have made an election to be taxed as a REIT for U.S. federal income tax purposes, commencing with our initial taxable year ended December 31, 2014. We believe we have been organized and have operated in conformity with the requirements for qualification and taxation as a REIT under the Internal Revenue Code and we believe that our organization and current and intended manner of operation will enable us to continue to meet the requirements for qualification and taxation as a REIT. As a REIT, we generally are not subject to U.S. federal income tax on our REIT taxable income that we distribute currently to our stockholders. We operate our business in a manner that permits us to maintain an exclusion or exemption from registration under the Investment Company Act.

The COVID-19 pandemic has caused significant disruptions to the U.S. and global economies. These disruptions contributed to significant and ongoing volatility, widening credit spreads and sharp declines in liquidity in the real estate securities and whole loan financing markets at points during 2020. The pace of recovery following this disruption remains uncertain, as do the longer-term economic effects and shifts in behavior. As a result of the impact of COVID-19, many commercial real estate finance and financial services industry participants, including us, reduced new investment activity until the capital markets became more stable, the macroeconomic outlook became clearer, market liquidity improved, and transaction volumes increased. For most of 2020, we focused on actively managing our loan portfolio credit, generating and recycling liquidity from existing assets, extending the maturities and further reducing the mark-to-market exposure of our liabilities and controlling corporate overhead as a percentage of our total assets and total revenues.

Although market conditions remain uncertain due to COVID-19 and evolving new variants of the virus, the credit performance of our loan portfolio, loan repayments that have allowed us to retire certain borrowings and increase our liquidity, extended maturity

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dates for many of our secured credit agreements, the issuance on March 31, 2021 of TRTX 2021-FL4, a $1.25 billion CRE CLO, the issuance on June 14, 2021 of $201.3 million of Series C Preferred Stock, and the increase in non-mark-to-market liabilities to 70.4% of total borrowings (as of December 31, 2021) positioned us to resume the origination of first mortgage transitional loans throughout 2021.

Our Manager

We are externally managed by our Manager, TPG RE Finance Trust Management, L.P., an affiliate of TPG. TPG is a global, diversified alternative asset management firm consisting of five multi-product private equity investment platforms, including capital, growth, impact, 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. 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 is also responsible for our day-to-day operations and performs (or causes to be performed) such services and activities relating to our investments and business and affairs as may be appropriate. 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.

For a summary of certain terms of the management agreement between us and our Manager (the “Management Agreement”), see Note 11 to our Consolidated Financial Statements included in this Form 10-K.

Fourth Quarter 2021 Activity

Operating Results:

Investment Portfolio Activity:

Full Year 2021 Activity

Operating Results:

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Investment Portfolio Activity:

Corporate and Investment Portfolio Financing Activity:

Liquidity:

Available liquidity as of December 31, 2021 of $321.1 million consisted of:

We have financed our loan investments as of December 31, 2021 utilizing three CLOs totaling $2.6 billion, one of which is open for reinvestment of eligible loan collateral at year end, $1.2 billion under secured credit agreements with total commitments of $3.1 billion provided by seven lenders, and a $132.0 million non-consolidated senior interest. As of December 31, 2021, approximately 68.7% of our borrowings were via our CLO vehicles and 31.3% were pursuant to our secured credit agreements.

Our ability to draw on our secured credit agreements is dependent upon our lenders’ willingness to accept as collateral loan investments we pledge to them to secure additional borrowings. These financing arrangements have credit spreads based upon the LTV and other risk characteristics of collateral pledged, and provide financing with mark-to-market provisions generally limited to collateral-specific events and, in only one instance, to capital markets-specific events. As of December 31, 2021, borrowings under these secured credit agreements had a weighted average credit spread of 1.8% (1.7% for facilities with mark-to-market provisions and 4.5% for one facility with no mark-to-market provisions until after October 30, 2022), and a weighted average term to extended maturity assuming exercise of all extension options and term-out provisions of 2.2 years. These financing arrangements are generally 25% recourse to Holdco.

Key Financial Measures and Indicators

As a commercial real estate finance company, we believe the key financial measures and indicators for our business are earnings per share, dividends declared per common share, Distributable Earnings, and book value per common share. As further described below, Distributable Earnings is a measure that is not prepared in accordance with GAAP. We use Distributable Earnings to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan activity and operations.

For the three months ended December 31, 2021, we recorded net income attributable to common stockholders of $0.51 per diluted common share, an increase of $0.19 per diluted common share from the three months ended September 30, 2021, primarily due to the gain recorded from the partial sale of our REO Property in the current period. For the year ended December 31, 2021, we recorded net income attributable to common stockholders of $0.87 per diluted common share, compared to a net loss attributable to common stockholders of $(2.03) per diluted common share for the year ended December 31, 2020, which was due primarily to recognizing a $203.4 million securities impairment during the year ended December 31, 2020.

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Distributable Earnings per diluted common share was $0.23 for the three months ended December 31, 2021, a decrease of $0.10 per diluted common share from the three months ended September 30, 2021. The decrease in Distributable Earnings per diluted common share was primarily a result of decreasing our credit loss (benefit) expense by $8.8 million in the current period, of which $8.2 million was the partial write-off of a non-performing retail loan held for investment (recognized as a partial worthlessness deduction for income tax purposes). Distributable Earnings per diluted common share was $1.09 for the year ended December 31, 2021.

For the three months ended December 31, 2021, we declared cash dividends of $0.31 per common share, consisting of a quarterly cash dividend of $0.24 per share and a special cash dividend of $0.07 per share, which was paid on January 25, 2022. For the year ended December 31, 2021, we declared cash dividends of $73.8 million, or $0.95 per common share.

Our book value per common share as of December 31, 2021 was $16.37, an increase of $0.22 from our book value per common share as of September 30, 2021, primarily due to the gain recorded from the partial sale of our REO Property of $15.8 million, or $0.20 per common share outstanding, and net income in excess of our dividends declared per common and preferred shares in the period.

Earnings(loss) Per Common Share and Dividends Declared Per Common Share

The computation of diluted earnings per share is based on the weighted average number of participating securities outstanding plus the incremental shares that would be outstanding assuming exercise of the Warrants, which are exercisable on a net-settlement basis. The number of incremental shares is calculated by applying the treasury stock method. We exclude participating securities and the Warrants from the calculation of basic earnings (loss) per share in periods of net losses since their effect would be anti-dilutive.

For the three months and year ended December 31, 2021, we generated net income attributable to common stockholders and therefore included participating securities and the Warrants in our calculation of diluted earnings per share. The following table sets forth the calculation of basic and diluted net income (loss) attributable to common stockholders per share and dividends declared per share (in thousands, except share and per share data):

Three Months Ended, Year Ended December 31,

Participating securities' share in earnings (loss) (301 ) (717 ) (832 )

Series B preferred stock redemption make-whole payment(2) — (22,485 ) —

Earnings (loss) per common share, basic $ 0.54 $ 0.92 $ (2.03 )

Earnings (loss) per common share, diluted $ 0.51 $ 0.87 $ (2.03 )

Dividends declared per common share(4) $ 0.31 $ 0.95 $ 1.21

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Distributable Earnings

Distributable Earnings is a non-GAAP measure, which we define as GAAP net income (loss) attributable to our common stockholders, including realized gains and losses, regardless of whether such items are included in other comprehensive income or loss, or in GAAP net income (loss), and excluding (i) non-cash equity compensation expense, (ii) depreciation and amortization expense, (iii) unrealized gains (losses), and (iv) certain non-cash or income and expense items. The exclusion of depreciation and amortization expense from the calculation of Distributable Earnings only applies to debt investments related to real estate to the extent we foreclose upon the property or properties underlying such debt investments.

We believe that Distributable Earnings provides meaningful information to consider in addition to our net income (loss) and cash flow from operating activities determined in accordance with GAAP. We generally must distribute at least 90% of our net taxable income annually, subject to certain adjustments and excluding any net capital gains, for us to continue to qualify as a REIT for U.S. federal income tax purposes. We believe that one of the primary reasons investors purchase our common stock is to receive our dividends. Because of our investors’ continued focus on our ability to pay dividends, Distributable Earnings is an important measure for us to consider when determining our distribution policy and dividends per common share. Further, Distributable Earnings helps us to evaluate our performance excluding the effects of certain transactions and GAAP adjustments that we believe are not necessarily indicative of our current loan investment and operating activities.

Distributable Earnings excludes the impact of our credit loss provision or reversals of our credit loss provision, but only to the extent that our credit loss provision exceeds any realized credit losses during the applicable reporting period.

A loan will be written off as a realized loss when it is deemed non-recoverable or upon a realization event. Such a realized loss would generally be recognized at the time the loan receivable is settled, transferred or exchanged, or in the case of foreclosure, when the underlying property is foreclosed upon or sold. Non-recoverability may also be concluded by us if, in our determination, it is nearly certain that all amounts due will not be collected. A realized loss may equal the difference between the cash or consideration received or expected to be received, and the net book value of the loan, reflecting our economics as it relates to the ultimate realization of the asset.

Distributable Earnings does not represent net income (loss) or cash generated from operating activities and should not be considered as an alternative to GAAP net income (loss), an indication of our GAAP cash flows from operations, a measure of our liquidity, or an indication of funds available for our cash needs. In addition, our methodology for calculating Distributable Earnings may differ from the methodologies employed by other companies to calculate the same or similar supplemental performance measures, and accordingly, our reported Distributable Earnings may not be comparable to the Distributable Earnings reported by other companies.

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The following table provides a reconciliation of GAAP net income attributable to common stockholders to Distributable Earnings (in thousands, except share and per share data):

Three Months Ended, Year Ended December 31,

Participating securities' share in earnings (loss) (301 ) (717 ) (832 )

Series B preferred stock redemption make-whole payment(2) — (22,485 ) —

Series B preferred stock redemption make-whole payment — 22,485 —

Distributable Earnings per common share, basic $ 0.24 $ 1.16 $ (1.39 )

Distributable Earnings per common share, diluted $ 0.23 $ 1.09 $ (1.39 )

Book Value Per Common Share

The following table sets forth the calculation of our book value per common share (in thousands, except share and per share data):

Total stockholders’ equity and temporary equity $ 1,464,706 $ 1,466,451

Series B Preferred Stock — (199,551 )

Series A Preferred Stock ($125 aggregate liquidation preference) (125 ) (125 )

Book value per common share $ 16.37 $ 16.50

Investment Portfolio Overview

Our interest-earning assets are comprised almost entirely of a portfolio of floating rate, first mortgage loans, or in limited instances, mezzanine loans. As of December 31, 2021, our balance sheet loan portfolio consisted of 69 loans held for investment totaling $5.4 billion of commitments with an unpaid principal balance of $4.9 billion, as compared to 57 loans held for investment with $4.9 billion of commitments and an unpaid principal balance of $4.5 billion as of December 31, 2020.

As of December 31, 2021, we owned a 10 acre parcel of largely undeveloped land near the north end of the Las Vegas Strip (the “REO Property”) with a carrying value of $60.6 million. The REO Property was acquired pursuant to a negotiated deed-in-lieu of

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foreclosure in December 2020. The REO Property is held for investment and reflected on our consolidated balance sheets at its estimate of fair value at the time of acquisition, net of estimated selling costs.

Loan Portfolio

During the three months ended December 31, 2021, we originated 10 first mortgage loans with a total commitment of $651.6 million, an initial unpaid principal balance of $564.5 million, unfunded commitment at closing of $87.1 million (including a follow-on loan investment of $9.6 million (commitment) and $8.7 million (initial unpaid principal balance) relating to a loan originated during the three months ended September 30, 2021). The loan count for the fourth quarter and full-year excludes this follow-on loan. Loan fundings included $34.4 million of deferred fundings related to previously originated loans. We received proceeds from loan repayments in-full of $420.9 million across six loans, and principal amortization payments of $15.4 million across eight loans, for total loan repayments of $428.1 million during the period, excluding a $8.2 million partial write-off of a non-performing retail loan held for investment (recognized as a partial worthlessness deduction for income tax purposes) as of December 31, 2021.

For the year ended December 31, 2021, we originated 27 first mortgage loans with a total commitment of $1.9 billion, an initial unpaid principal balance of $1.6 billion, and unfunded commitment at closing of $0.3 billion. Loan fundings included $146.0 million of deferred fundings related to previously originated loans. We received total proceeds of $1.4 billion, including $1.2 billion from 13 loan repayments in-full and $0.2 billion from principal amortization payments across 19 loans and two loan sales during the current year.

Additionally, for the year ended December 31, 2021, the Company sold, in separate transactions, two performing hotel loans with an aggregate unpaid principal balance of $148.0 million. The sales prices were 98.0% and 100.0% of par, producing a weighted average sales price of 99.2% of par.

See Note 3 to our Consolidated Financial Statements included in this Form 10-K for details.

The following table details our loans held for investment portfolio activity by unpaid principal balance for the three months and year ended December 31, 2021 (dollars in thousands):

Three Months Ended, Year Ended,

Loan originations and acquisitions — initial funding $ 564,501 $ 1,641,303

(1) Additional fundings made under existing loan commitments.

For the year ended December 31, 2021, we generated net interest income of $155.1 million, resulting from interest income of $240.2 million and interest expense of $85.1 million. All of our interest income for the year ended December 31, 2021 resulted from our transitional mortgage loan portfolio.

The following table details overall statistics for our loans held for investment portfolio as of December 31, 2021 (dollars in thousands):

Loan exposure(1)

Balance Sheet Portfolio Total Loan Portfolio

Number of loans 69 70

Floating rate loans (by unpaid principal balance) 100.0 % 100.0 %

Weighted average credit spread(4) 3.4 % 3.4 %

Weighted average all-in yield(4) 4.8 % 4.8 %

Weighted average term to extended maturity (in years)(5) 2.8 2.8

Weighted average LTV(6) 67.1 % 67.1 %

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For information regarding the financing of our loans held for investment portfolio, see the section entitled “Investment Portfolio Financing.”

Real Estate Owned

In December 2020, we acquired the REO Property pursuant to a negotiated deed-in-lieu of foreclosure. Our cost basis in the REO Property upon acquisition was $99.2 million, equal to the estimated fair value of the collateral at the date of acquisition, net of estimated selling costs. Our estimate of the REO Property’s fair value was determined using a discounted cash flow model and Level 3 inputs, which include estimates of parcel-specific cash flows over a specific holding period, discount rates that range between 8.0% - 17.5% based on the risk profile of estimated cash flows associated with each respective parcel, and an estimated capitalization rate of 6.25%, where applicable. These inputs were based on the highest and best use for each parcel, estimated future values for the parcels based on extensive discussions with local brokers, investors and other market participants, the estimated holding period for the parcels, and discount rates that reflect estimated investor return requirements for the risks associated with the expected use of each sub-parcel. We obtained from a third party a $50.0 million non-recourse first mortgage loan secured by the REO Property, which was classified as Mortgage Loan Payable on our consolidated balance sheets.

On November 22, 2021, we sold a 17 acre parcel near the southern end of the Las Vegas Strip, generating net cash proceeds of $54.4 million and a gain for GAAP and income tax purposes of $15.8 million. As of December 31, 2021, we held the remaining 10 acre parcel at its estimated fair value at the time of acquisition, net of estimated selling costs, of $60.6 million. During the three months ended December 31, 2021, we repaid the Mortgage Loan Payable, recovered the unexpended portion of the pre-funded cash interest reserve of $0.6 million, and recognized $0.6 million of unamortized deferred financing costs in Interest Expense on our consolidated statement of income (loss) and comprehensive income (loss).

See Note 7 to our Consolidated Financial Statements included in this Form 10-K for details of the Mortgage Loan Payable.

CRE Debt Securities

We have invested and may invest in the future in CRE debt securities as part of our investment strategy. As of December 31, 2021 and December 31, 2020, we did not own any CRE debt securities. Refer to Note 4 to our Consolidated Financial Statements included in this Form 10-K for details on CRE debt securities.

Asset Management

We actively manage the assets in our portfolio from closing to final repayment. 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. 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. Through the final repayment of an investment, the asset management team maintains regular contact with borrowers, servicers and local market experts monitoring performance of the collateral, anticipating borrower, property and market issues, and enforcing our rights and remedies when appropriate.

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Loan Portfolio Review

Our Manager reviews our entire loan portfolio quarterly, undertakes an assessment of the performance of each loan, and assigns it a risk rating between “1” and “5,” from least risk to greatest risk, respectively. See Note 2 to our Consolidated Financial Statements included in this Form 10-K for a discussion regarding the risk rating system that we use in connection with our portfolio. The following table allocates the amortized cost of our loans held for investment portfolio as of December 31, 2021 and December 31, 2020 based on our internal risk ratings (dollars in thousands):

Risk Rating Amortized cost Number of loans Amortized cost Number of loans

1 $ — — $ — —

For the period ended December 31, 2021 and December 31, 2020, the weighted average risk rating of our total loan exposure based on amortized cost was 3.0 and 3.1, respectively. The decrease in the risk rating was primarily the result of the net impact of loan originations, loan repayments, continued improvement in property-level operating performance, and improving economic trends in local markets following the initial onset of the COVID-19 pandemic in March 2020.

For changes in risk ratings during the three months and year ended December 31, 2021, refer to Note 3 to the Consolidated Financial Statementsincluded in this Form 10-K.

Loan Modification Activity

The economic and market disruptions caused by COVID-19 have adversely impacted the financial condition of many of our borrowers. These impacts have and may differ in timing, duration and magnitude depending on factors such as property type and geography. We have experienced a small number of delinquencies and defaults, but we cannot be certain that delinquencies and defaults will not increase in the future.

Loan modifications and amendments are commonplace in the transitional lending business. COVID-induced modifications caused an increase in the number and volume of short-term modifications immediately following the onset of COVID-19, but have since subsided. Loan modifications implemented by us since January 1, 2021 typically involve the adjustment or waiver of property level or business plan milestones or performance tests that are prerequisite to the extension of a loan maturity, in exchange for borrower concessions that may include any or all of the following: a partial repayment of principal; termination of all or a portion of the remaining unfunded loan commitment; a cash infusion by the sponsor or borrower to replenish loan reserves (interest or capital improvements); additional call protection; and/or an increase in the loan coupon. By contrast, loan modifications in 2020 typically involved the repurposing of existing reserves to pay interest and other property-level expenses, and providing relief to conditions for extension, such as waiving or reducing debt yield tests or modifying the conditions upon which the underlying borrower may extend the maturity date. In exchange, borrowers and sponsors made partial principal repayments and/or provided additional cash for payment of interest, operating expenses, and replenishment of interest reserves or capital reserves in amounts and combinations acceptable to us.

As of December 31, 2021, we had 14 loan modifications outstanding related to loans with an unpaid principal balance of $1.4 billion. Under GAAP, none of these loan modifications are considered troubled debt restructurings.

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Loan modification activity from April 1, 2020 through December 31, 2021 is summarized in the following table (dollars in thousands):

Executed loan modifications 34

Expired loan modifications(1) (20 )

Outstanding loan modifications 14

Unpaid principal balance of outstanding loan modifications $ 1,354,531

Accrued PIK interest $ 6,213

Repayments of accrued PIK interest (2,152 )

Write-off of accrued PIK interest (1,033 )

Outstanding accrued PIK interest $ 3,028

During the three months ended December 31, 2021, we executed three loan modifications with three borrowers. As of December 31, 2021, the loans to which the loan modifications relate had an aggregate commitment amount of $410.1 million and an aggregate unpaid principal balance of $401.8 million. None of the loan modifications triggered the accounting requirements of a troubled debt restructuring. In connection with these modifications, borrowers infused $0.7 million to replenish reserves. All of the modified loans are performing as of December 31, 2021. No PIK interest on an existing modified loan was accrued and added to the outstanding loan principal during the three months ended December 31, 2021. As of December 31, 2021, the total amount of PIK interest in the portfolio was $3.0 million with respect to five loans.

We continue to work with our borrowers to address the circumstances caused by COVID-19 while seeking to protect the credit attributes of our loans. However, we cannot assure you that these efforts will be successful, and we may experience payment delinquencies, defaults, foreclosures, or losses.

Allowance for Credit Losses

Our allowance for credit losses is influenced by the size of our loan portfolio, loan quality, risk rating, delinquency status, historic loss experience and other conditions influencing our loss expectations, such as reasonable and supportable forecasts of economic conditions. For the three months ended December 31, 2021, we recorded a decrease of $8.8 million to our allowance for credit losses, of which $8.2 million was the partial write-off of a non-performing retail loan held for investment (recognized as a partial worthlessness deduction for income tax purposes). For the year ended December 31, 2021, we recorded a decrease of $16.6 million to our allowance for credit losses primarily due to (1) shifts in the composition of our loan portfolio, by property type (2) loan originations, repayments, and sales, and (3) the partial write-off of a non-performing retail loan held for investment (which write-off constituted a partial worthlessness deduction for income tax purposes). An improving macroeconomic outlook and normalizing commercial real estate capital markets activity also contributed to the reduction in our allowance for credit losses during the year ended December 31, 2021. While the ultimate impact of the macroeconomic outlook and property performance trends remain uncertain, we selected our macroeconomic outlook to address this uncertainty, made specific forward-looking valuation adjustments to the inputs of our calculation to reflect variability in the timing, strength and breadth of an economic recovery, and the unknown post-COVID levels of economic activity that may result.

Investment Portfolio Financing

We finance our investment portfolio using secured credit agreements, including secured credit facilities, mortgage loans payable, asset-specific financing arrangements, and collateralized loan obligations. In certain instances, we may create structural leverage and obtain matched-term financing through the co-origination or non-recourse syndication of a senior loan interest to a third party (a “non-consolidated senior interest”). 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.

Investment Portfolio Financing Arrangements

Our portfolio financing arrangements during the years ended December 31, 2021 and December 31, 2020 included collateralized loan obligations, secured credit agreements, a mortgage loan payable, and a non-consolidated senior interest. The increase in total

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indebtedness as of December 31, 2021 is primarily due to the closing of TRTX 2021-FL4, a $1.25 billion CLO, on March 31, 2021. TRTX 2021-FL4 has a weighted average advance rate of 83.0% and increased our total loan indebtedness and our non-mark-to-market financing, which at December 31, 2021 represented 70.4% of our total loan portfolio borrowings (including non-consolidated senior interests). In connection with TRTX 2021-FL4, we placed $1.04 billion (principal amount) of investment grade-rated notes with institutional investors. See Note 6 to our consolidated financial statements included in this Form 10-K for details.

The following table details the aggregate outstanding principal balances of our investment portfolio financing arrangements as of December 31, 2021 and December 31, 2020 (dollars in thousands):

Outstanding Principal Balance

Mortgage loan payable — 50,000

Non-mark-to-market financing sources accounted for 70.4% of our total loan portfolio borrowings as of December 31, 2021, an increase of 6.9%, from 63.5% as of December 31, 2020. The remaining 29.6% of our loan portfolio borrowings, which are comprised primarily of our seven secured credit facilities, are subject to credit marks, and in only one instance to credit and spread marks. The following table summarizes our loan portfolio borrowings as of December 31, 2021 (dollars in thousands):

Outstanding Principal Balance

Secured credit facilities

Collateralized loan obligations

Percentage of total indebtedness 70.4 % 29.6 % 100.0 %

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Secured Credit Facilities

As of December 31, 2021, aggregate borrowings outstanding under our secured credit facilities totaled $1.2 billion, relating solely to our loan investment portfolio. As of December 31, 2021, the overall weighted average interest rate was LIBOR plus 1.8% per annum, the weighted average interest rate for borrowings with mark-to-market provisions was 1.7%, the weighted average interest rate for borrowings with no current mark-to-market provisions was 4.5%, and the overall weighted average advance rate was 76.1%. As of December 31, 2021, outstanding borrowings under these facilities had a weighted average term to extended maturity of 2.2 years assuming the exercise of all extension options and term out provisions. These secured credit facilities are 25.0% recourse to Holdco.

The following table details our secured credit facilities as of December 31, 2021 (dollars in thousands):

Once we identify an asset and the asset is approved by the secured credit facility lender to serve as collateral (which lender’s approval is in its sole discretion), we and the lender may enter into a transaction whereby the lender advances to us a percentage of the value of the loan asset, which is referred to as the “advance rate.” In the case of borrowings under our secured credit facilities that are repurchase arrangements, this advance serves as the purchase price at which the lender acquires the loan asset from us with an obligation of ours to repurchase the asset from the lender for an amount equal to the purchase price for the transaction plus a price differential, which is calculated based on an interest rate. Advance rates are subject to negotiation between us and our secured credit facility 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. A trade confirmation will also include benchmark interest rate transition language that complies with the current standards as set forth by the ARRC in its 2021 recommendations. For transactions under our secured credit facilities, the trade confirmation may also set forth any future funding obligations which are contemplated with respect to the specific transaction and/or the underlying loan asset. For loan assets which involve future funding obligations of ours, the transaction may provide for the lender to fund portions (for example, pro rata per the maximum advance rate of the related transaction) of such future funding obligations. The trade confirmation can also set forth loan-specific margin maintenance provisions, described below.

Generally, our secured credit facilities allow for revolving balances, which allow us to voluntarily repay balances and draw again on existing available credit. The primary obligor on each secured credit facility is a separate special purpose subsidiary of ours which is restricted from conducting activity other than activity related to the utilization of its secured credit facility and the loans or loan interests that are originated or acquired by such subsidiary. As additional credit support, our holding company subsidiary, Holdco, provides certain guarantees of the obligations of its subsidiaries. Holdco’s liability is generally capped at 25% of the outstanding obligations of the special purpose subsidiary which is the primary obligor under the related agreement. However, this liability cap does not apply in the event of certain “bad boy” defaults which can trigger recourse to Holdco for losses or the entire outstanding obligations of the borrower depending on the nature of the “bad boy” default in question. 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.

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Each of the secured credit facilities has “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. The lender’s margin amount is typically based on a percentage of the market value of the asset and/or mortgaged property collateral; however, certain secured credit facilities may also involve margin maintenance based on maintenance of a minimum debt yield with respect to the cash flow from the underlying real estate collateral. In certain cases, margin maintenance provisions can relate to minimum debt yields for pledged collateral considered as a whole, or limits on concentration of loan exposure measured by property type or loan type.

Our secured credit facilities contain defined mark-to-market provisions that permit the lenders to issue margin calls to us in the event that the collateral properties underlying our loans pledged to our lenders experience a non-temporary decline in value or net cash flow (“credit marks”). In connection with one of these borrowing arrangements, the lender is also permitted to issue margin calls to us in the event the lender determines capital markets events have caused credit spreads to change for similar borrowing obligations (“spread marks”). Furthermore, in connection with one of these borrowing arrangements, the lender has the right to re-margin the secured credit facility based solely on appraised loan-to-values in the third year of the facility. In the event that we experience market turbulence, we may be exposed to margin calls in connection with our secured credit facilities.

The maturity dates for each of our secured credit facilities are set forth in tables that appear earlier in this section. Our secured credit facilities generally have terms of between one and three years, but may be extended if we satisfy certain performance-based conditions. In the normal course of business, we maintain discussions with our lenders to extend or amend any financing facilities related to our loans.

As of December 31, 2021, the weighted average haircut (which is equal to one minus the advance rate percentage against collateral for our secured credit facilities taken as a whole) was 23.9% compared to 30.7% as of December 31, 2020.

The secured credit facilities also include cash management features which generally require that income from collateral loan assets be deposited in a lender-controlled account for distribution in accordance with a specified waterfall of payments designed to keep facility-related obligations current before such income is disbursed for our own account. The cash management features generally require the trapping of cash in such controlled account if an uncured default under our borrowing arrangement remains outstanding. Furthermore, some secured credit facilities may require an accelerated principal amortization schedule if the secured credit facility is in its final extended term.

Notwithstanding that a loan asset may be subject to a financing arrangement and serve as collateral under a secured credit facility, 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 facility, 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.

Collateralized Loan Obligations

As of December 31, 2021, we had three collateralized loan obligations, TRTX 2021-FL4, TRTX 2019-FL3 and TRTX 2018-FL2, totaling $2.6 billion, financing 43 existing first mortgage loan investments totaling $3.2 billion, and holding $0.2 million of cash for investment in eligible loan collateral. As of December 31, 2021, our CLOs provide low cost, non-mark-to-market, non-recourse financing for 66.7% of our loan portfolio borrowings. The collateralized loan obligations bear a weighted average interest rate of LIBOR or SOFR plus 1.5%, have a weighted average advance rate of 80.9%, and include a reinvestment feature that allows us to contribute existing or newly originated loan investments in exchange for proceeds from loan repayments held in the collateralized loan obligations.

On March 5, 2021, the Financial Conduct Authority of the U.K. (the “FCA”) announced that all LIBOR tenors relevant to us will cease to be published or will no longer be representative after June 30, 2023. The Alternative Reference Rates Committee (the “ARRC”) interpreted this announcement to constitute a benchmark transition event, and on May 17, 2021, Wells Fargo Bank, National Association, solely in its capacity as designated transaction representative under the FL3 indenture, determined that a benchmark transition event had occurred with respect to FL3. Accordingly, on June 15, 2021, the benchmark index interest rate for bondholders under FL3 was converted from LIBOR to the Compounded Secured Overnight Financing Rate (“Compounded SOFR”) plus a benchmark replacement adjustment of 11.448 basis points, conforming with the FL3 indenture and the recommendation of the ARRC. The designated transaction representative further determined that Compounded SOFR for any interest accrual period is the “30-Day Average SOFR” published on the website of the Federal Reserve Bank of New York on each benchmark determination date. Compounded SOFR was determined by the calculation agent in arrears using a lookback period equal to the number of calendar days in such interest accrual period plus two Compounded SOFR Business Days.

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On October 1, 2021, based on an ARRC recommendation and the terms of the FL3 indenture, the designated transaction representative further determined that the benchmark index interest rate for bondholders under FL3 was converted from Compounded SOFR plus a benchmark replacement adjustment of 11.448 basis points to Term SOFR plus a benchmark replacement adjustment of 11.448 basis points on the first day of the most recent calendar quarter (October 1, 2021, effective for the three months ended December 31, 2021 and in future periods). As of December 31, 2021, the FL3 mortgage assets are indexed to LIBOR and the borrowings under FL3 were indexed to Term SOFR, creating a difference between benchmark interest rates (a basis difference) for FL3 assets and liabilities, which is meant to be mitigated by the benchmark replacement adjustment described above. The Company has the right to transition the FL3 mortgage assets to Term SOFR, eliminating the basis difference between FL3 assets and liabilities, and will make its determination taking into account the loan portfolio as a whole. The transition to Term SOFR is not expected to have a material impact to FL3’s assets and liabilities and related interest expense.

During the three months ended December 31, 2021, we utilized the reinvestment feature in TRTX 2021-FL4 five times and TRTX 2019-FL3 once, recycling loan unpaid principal balances of $87.0 million and $4.3 million, respectively. During the three months ended September 30, 2021, we utilized the reinvestment feature in TRTX 2021-FL4 five times and TRTX 2019-FL3 three times, recycling loan unpaid principal balances of $178.2 million and $189.6 million, respectively. During the three months ended June 30, 2021, we utilized the reinvestment feature in TRTX 2021-FL4 two times, recycling loan unpaid principal balances of $77.2 million, and fully invested $308.9 million in the FL4 Ramp-Up Account available to purchase eligible collateral interests.

The reinvestment periods for TRTX 2019-FL3 and TRTX 2018-FL2 ended on October 11, 2021 and December 11, 2020, respectively. See Note 6 to our consolidated financial statements included in this Form 10-K for details about our CLO reinvestment feature.

Mortgage Loan Payable

We were, through a special purpose entity subsidiary, a borrower under a $50.0 million mortgage loan secured by the REO Property. Refer to Note 5 to our consolidated financial statements included in this Form 10-K for additional information. This mortgage loan was provided by an institutional lender, had an initial maturity date of December 15, 2021, and included an option to extend the maturity for 12 months subject to the satisfaction of customary extension conditions, including (i) the purchase of a new interest rate cap for the extension term, (ii) replenishment of the interest reserve with an amount equal to 12 months of debt service, (iii) payment of a 0.25% extension fee on the outstanding principal balance, and (iv) no event of default. This mortgage loan permitted partial releases of collateral in exchange for payment of a minimum release price equal to the greater of 100% of net sales proceeds (after reasonable transaction expenses) or 115% of the allocated loan amountfor the respective parcel. The loan had an interest rate of LIBOR plus 4.50% and was subject to a LIBOR interest rate floor and cap of 0.50%. We posted cash of $2.4 million to pre-fund interest payments due under the note during its initial term.

During the three months ended December 31, 2021, we repaid the Mortgage Loan Payable, recovered the unexpended portion of the pre-funded cash interest reserve of $0.6 million, and recognized $0.6 million of unamortized deferred financing costs in Interest Expense on our consolidated statement of income (loss) and comprehensive income (loss).

Non-Consolidated Senior Interests

In certain instances, we create structural leverage through the co-origination or non-recourse syndication of a senior loan interest to a third party. In either case, the senior mortgage loan (i.e., the non-consolidated senior interest) is not included on our balance sheet. 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, 2021, we retained a mezzanine loan investment with a total commitment of $35.0 million, an unpaid principal balance of $35.0 million, and an interest rate of LIBOR plus 10.3%.

The following table presents our non-consolidated senior interests outstanding as of December 31, 2021 (dollars in thousands):

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Financial Covenants for Outstanding Borrowings

Our financial covenants and guarantees for outstanding borrowings related to our secured credit facilities require Holdco to maintain compliance with the following financial covenants (among others), which were amended on June 7, 2021 as follows:

Financial Covenant Current Prior to June 7, 2021

Holdco’s equity for purposes of calculating the debt-to-equity test (which was revised as of June 7, 2021 at 4.25 to 1:00) was revised to include: stockholders’ equity as determined by GAAP; any other equity instrument(s) issued by Holdco or its Subsidiary that is or are classified as temporary equity under GAAP; and an adjustment equal to the sum of the Current Expected Credit Loss reserve, write-downs, impairments or realized losses taken against the value of any assets of Holdco or its subsidiaries from and after April 1, 2020; provided, however, that the equity adjustment may not exceed the amount of (a) Holdco’s total equity less (b) the product of Holdco’s total indebtedness multiplied by 25%.

Financial Covenant relating to the Series B Preferred Stock

For as long as the Series B Preferred Stock was outstanding, we were required to maintain a debt-to-equity ratio not greater than 3.0 to 1.0. For the purpose of determining this ratio, the aggregate liquidation preference of the outstanding shares of Series B Preferred Stock was excluded from the calculation of total indebtedness of the Company and its subsidiaries, and was included in the calculation of total stockholders’ equity. On June 16, 2021, we redeemed all 9,000,000 outstanding shares of the Series B Preferred Stock. As of December 31, 2021, we did not have any shares of Series B Preferred Stock outstanding and this covenant no longer applied.

Financial Covenant Compliance

We were in compliance with all financial covenants for our secured credit facilities and mortgage loan payable to the extent of outstanding balances as of December 31, 2021 and December 31, 2020, and were in compliance with the financial covenant relating to the Series B Preferred Stock as of December 31, 2020.

If we fail to meet or satisfy any of the covenants in our financing arrangements and are unable to obtain a waiver or other suitable relief from the lenders, we would be in default under these agreements, which could result in a cross-default or cross-acceleration under other financing arrangements, and our lenders could elect to declare outstanding amounts due and payable (or such amounts may automatically become due and payable), terminate their commitments, require the posting of additional collateral and enforce their respective interests against existing collateral. A default also could significantly limit our financing alternatives, which could cause us to curtail our investment activities or dispose of assets when we otherwise would not choose to do so. 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. For more information regarding the impact that COVID-19 may have on our ability to comply with these covenants, see “Risk Factors.”

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Debt-to-Equity Ratio and Total Leverage Ratio

The following table presents our Debt-to-Equity ratio and Total Leverage ratio as of December 31, 2021 and December 31, 2020:

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, typically LIBOR. 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 beneficial impact of interest rate floors in our mortgage loan investment portfolio. As of December 31, 2021, 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 $1.2 billion of net floating rate exposure, subject to the impact of interest rate floors on all our floating rate loans and less than 2.0% of our liabilities. Our liabilities are generally index-matched to each loan investment asset, resulting in a net exposure to movements in benchmark rates that vary based on the relative proportion of floating rate assets and liabilities.

The following table details the net floating rate exposure of our loan portfolio, including loans held for investment and one loan held for sale, as of December 31, 2021 (dollars in thousands):

Net exposure

Floating rate mortgage loan assets(1) $ 4,919,343

Floating rate mortgage loan liabilities(1)(2) (3,722,199 )

Total floating rate mortgage loan exposure, net $ 1,197,144

With the cessation of LIBOR expected to occur effective June 30, 2023, we continue to evaluate the documentation and control processes associated with our assets and liabilities to manage the transition away from LIBOR to an alternative rate endorsed by the Alternative Reference Rates Committee of the Federal Reserve System. Although recent statements from regulators indicate the possibility of a longer period of transition, perhaps through June 2023, we continue to utilize resources to revise our control and risk management systems to ensure there is no disruption to our day-to-day operations from the transition, when it does occur. We will continue to employ prudent risk management as it relates to the potential financial, operational and legal risks associated with the expected cessation of LIBOR, and to ensure that our assets and liabilities generally remain match-indexed following this event. While we generally seek to match index our assets and liabilities, there is likely to be a transition period as different underlying assets and sources of financing may transition from LIBOR to an alternative index at different times.

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Interest-Earning Assets and Interest-Bearing Liabilities

The following table presents the average balance of interest-earning assets and related interest-bearing liabilities, associated interest income and expense, and financing costs and the corresponding weighted average yields for the three months ended December 31, 2021 and September 30, 2021 (dollars in thousands):

For the three months ended,

Core Interest-earning assets:

Interest-bearing liabilities:

Other Interest-earning assets:

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The following table presents the average balance of interest-earning assets and related interest-bearing liabilities, associated interest income and expense, and financing costs and the corresponding weighted average yields for the years ended December 31, 2021 and December 31, 2020 (dollars in thousands):

For the year ended,

Core Interest-earning assets:

Interest-bearing liabilities:

Secured revolving credit agreement — — — 21,734 — 0.0 %

Other Interest-earning assets:

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Our Results of Operations

Operating Results

The following table sets forth information regarding our consolidated results of operations for the years ended December 31, 2021 and December 31, 2020 (dollars in thousands, except per share data):

For the year ended December 31, Variance

INTEREST INCOME

OTHER REVENUE

OTHER EXPENSES

Gain on Sale of Real Estate Owned, net 15,790 — 15,790

Series B Preferred Stock Redemption Make-Whole Payment (22,485 ) — (22,485 )

OTHER COMPREHENSIVE INCOME (LOSS)

Unrealized Gain (Loss) on CRE Debt Securities — (1,051 ) 1,051

Earnings (Loss) per Common Share, Basic(1) $ 0.92 $ (2.03 ) $ 2.95

Earnings (Loss) per Common Share, Diluted(1) $ 0.87 $ (2.03 ) $ 2.90

Dividends Declared per Common Share $ 0.95 $ 1.21 $ (0.26 )

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Comparison of the Years Ended December 31, 2021 and 2020

Net Interest Income

Net interest income decreased to $155.1 million, during the year ended December 31, 2021 compared to $176.4 million for the year ended December 31, 2020. The decrease for the year ended December 31, 2021 was primarily due to a decline in our average interest earning asset base of $412.8 million, compared to the year ended December 31, 2020. Additionally, our loan portfolio weighted average all-in yield and weighted average interest rate floors declined from 5.3% and 1.66% as of December 31, 2020 to 4.8% and 1.10% as of December 31, 2021, respectively, resulting in a lower net interest margin for the year ended December 31, 2021.

Other Expenses

Other expenses decreased $2.2 million for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily due to a $4.1 million decrease in professional fees (legal, accounting and advisory fees) from those incurred during the year ended December 31, 2020. We incurred higher professional fees during the year ended December 31, 2020 in connection with our response to COVID-19.

Credit Loss Benefit (Expense)

For the year ended December 31, 2021, we recorded a credit loss benefit of $6.3 million, compared to a credit loss expense of $69.8 million during the year ended December 31, 2020, a decrease of $76.1 million. The year-over-year change in credit loss expense of $76.1 million is primarily due to (1) $17.0 million from positive macroeconomic data and improved operating performance of the underlying collateral for many of our loans in 2021 that were adversely impacted by COVID-19 in 2020, (2) $14.7 million related to the reversal of individually assessed loans, and (3) $63.4 million as a result of the onset of COVID-19 recognized during the three months ended March 31, 2020, offset by an increase of $19.0 million due to (1) an increase of $11.4 million and $9.7 million for loan originations and sales, respectively, and (2) a decrease of $2.1 million for loan repayments.

Gain on Sale of Real Estate Owned, net

During the year ended December 31, 2021, we sold 10 acres of REO Property generating net cash proceeds of $54.4 million and a gain on sale of $15.8 million. We did not sell any real estate owned during the year ended December 31, 2020.

Securities Impairments

We have owned no CRE debt securities since April 2020. Thus, we had no securities impairments for the year ended December 31, 2021, compared to $203.4 million for the year ended December 31, 2020. Securities impairments for the year ended December 31, 2020 include losses on sales of CRE debt securities of $36.2 million and an impairment charge of $167.3 million, offset by a realized gain on sale of $0.1 million related to one CRE debt security owned at March 31, 2020.

Dividends Declared Per Common Share

During the year ended December 31, 2021, we declared cash dividends of $0.95 per common share, or $73.8 million. During the year ended December 31, 2020, we declared cash dividends of $1.21 per common share, or $93.6 million.

Unrealized Gain (Loss) on CRE Debt Securities

Other comprehensive income (loss) decreased $1.0 million during the year ended December 31, 2021 compared to the year ended December 31, 2020. The decrease is due to the reversal of unrealized gains recognized during the year ended December 31, 2020, and no holdings of CRE debt securities in 2021.

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Income Tax Expense

Income tax expense increased $0.8 million during the year ended December 31, 2021 compared to the year ended December 31, 2020 primarily due to the excess inclusion income (“EII”) generated by certain of our CRE CLOs as a result of a sharp decline in LIBOR after issuance, loans with high interest rate floors, and liabilities largely unfloored with respect to LIBOR or SOFR. Any EII generated by our CRE CLOs is ultimately allocated further to our TRSs. Consequently, no EII is allocated to us and, as a result, our shareholders will not be allocated any EII or unrelated business taxable income by us. See Note 10 to our consolidated financial statements included in this Form 10-K for details.

Series B Preferred Stock Redemption Make-Whole Payment

During the year ended December 31, 2021, we made a make-whole payment of $22.5 million to the holder of the Series B Preferred Stock equaling the present value of all remaining dividend payments due on such shares from and after the redemption date (and not including any declared or paid dividends or accrued dividends prior to such redemption date) through the second anniversary of the original issue date, computed in accordance with the terms of the Articles Supplementary for the Series B Preferred Stock. See Note 13 to our consolidated financial statements included in this Form 10-K for additional details.

Series B Preferred Stock Accretion and Write-off of Discount, including Allocated Warrant Fair Value and Transaction Costs

During the year ended December 31, 2021, in connection with the redemption of the Series B Preferred Stock, we accelerated the accretion and wrote-off the unamortized discount related to the allocated Warrant fair value and transaction costs of $22.5 million.See Note 13 to our consolidated financial statements included in this Form 10-K for additional details.

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 facilities, collateralized loan obligations, mortgage loan payable, asset-specific financings, and non-consolidated senior interests. As of December 31, 2021, we had outstanding 77.2 million shares of our common stock representing $1.3 billion of stockholders’ equity, $194.4 million of Series C Preferred Stock, and $3.7 billion of outstanding borrowings used to finance our investments and operations.

See Notes 6 and 7 to our consolidated financial statements included in this Form 10-K for details regarding our borrowings under secured credit facilities, collateralized loan obligations, and mortgage loan payable

Sources of Liquidity

Our primary sources of liquidity include cash and cash equivalents, available borrowings under secured credit facilities and capacity in our collateralized loan obligations available for reinvestment, which are set forth in the following table for the years ended December 31, 2021 and December 31, 2020 (dollars in thousands):

For the Years Ended December 31,

Collateralized loan obligation proceeds held at trustee 204 121

Our existing loan portfolio provides 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. For the year ended December 31, 2021, loan repayments and loan sales totaled $1.4 billion. Additionally, as of December 31, 2021 we held unencumbered loan investments with an aggregate unpaid principal balance of $128.1 million that are eligible to pledge under our existing financing arrangements.

We continue to monitor the COVID-19 pandemic and its impact on our borrowers, their tenants, our lenders, and the economy as a whole. The magnitude and duration of the COVID-19 pandemic, and its impact on our operations and liquidity, are uncertain and continue to evolve in the United States and globally. Additional regional surges in infection rates due to COVID-19 variants, reversed

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re-openings, uncertainty regarding the effectiveness of vaccines approved for COVID-19, or high proportions of vaccine hesitancy in certain regions, may have a material impact on our operations and liquidity.

Uses of Liquidity

In addition to our ongoing loan activity, our primary liquidity needs include interest and principal payments under our $3.7 billion of outstanding borrowings under secured credit facilities and collateralized loan obligations, $487.8 million of unfunded loan commitments on our loans held for investment, dividend distributions to our preferred and common stockholders, and operating expenses.

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. The following table provides a breakdown of the net change in our cash, cash equivalents, and restricted cash balances for the year ended December 31, 2021 and December 31, 2020 (dollars in thousands):

For the Years Ended December 31,

Cash flows provided by operating activities $ 132,167 $ 132,085

Cash flows (used in) provided by investing activities (342,898 ) 964,585

Cash flows provided by (used in) financing activities 152,101 (856,668 )

Net change in cash, cash equivalents, and restricted cash $ (58,630 ) $ 240,002

Operating Activities

During the year ended December 31, 2021, cash flows provided by operating activities totaled $132.2 million primarily related to net interest income, offset by operating expenses. During the year ended December 31, 2020, cash flows provided by operating activities totaled $132.1 million primarily related to net interest income, offset by operating expenses.

Investing Activities

During the year ended December 31, 2021, cash flows used in investing activities totaled $342.9 million primarily due to new loan originations of $1.6 billion, advances on existing loans of $144.6 million, offset by loan repayments of $1.2 billion, and proceeds from sales of loans of $145.7 million. Cash flows provided by investing activities during the year ended December 31, 2020 totaled $964.6 million primarily due to repayments on loans held for investment of $819.8 million, sale of CRE debt securities totaling $766.4 million and proceeds from sale of loans of $131.9 million, offset by new loan originations and purchases of CRE debt securities of $520.5 million and advances on existing loans of $233.0 million.

Financing Activities

During the year ended December 31, 2021, cash flows provided by financing activities totaled $152.1 million primarily due to proceeds from the issuance of TRTX 2021-FL4 of $1.04 billion, proceeds from the issuance of Series C Preferred Stock of $194.4 million, offset by payments on secured financing agreements of $1.4 billion, payments related to the redemption of Series B Preferred Stock of $247.5 million, and payment of dividends on our common stock and preferred stock of $98.3 million. During the year ended December 31, 2020, cash flows used in financing activities totaled $856.7 million primarily due to payments on secured financing agreements of $2.3 billion and payment of dividends on our common stock, Series A preferred stock and Series B Preferred Stock of $111.6 million, offset by additional proceeds from secured financing agreements of $1.2 billion, and the issuance of Series B Preferred Stock and Warrants of $225.0 million.

During the period from March 1, 2020 to March 31, 2020, we received margin call notices with respect to borrowings against our CRE CLO securities investment portfolio aggregating $170.9 million, which were satisfied with a combination of $89.8 million of cash, cash proceeds from bond sales, and increases in market values prior to quarter-end. As of March 31, 2020, unpaid margin calls totaled $19.0 million, which were satisfied in April 2020 through cash proceeds from bond sales and increases in market value. During the quarter ended June 30, 2020, prior to making the voluntary deleveraging payments described below, we satisfied one margin call aggregating $20.0 million in connection with our secured credit agreements financing our loan investments by pledging a previously unencumbered loan investment.

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On May 28, 2020, we made voluntary deleveraging payments totaling $157.7 million to all six of our secured credit agreement lenders and our one secured credit facility lender that provide financing for certain of our first mortgage loan investments in exchange for their agreement to suspend margin calls for defined periods, subject to certain conditions. When these payments were made, no margin deficits existed, and no margin calls have been issued to us since. If market turbulence persists or resurges, we may be required to post cash collateral in connection with our secured credit agreements secured by our mortgage loan investments, with the exception of one financing arrangement with a margin call holiday through October 30, 2022. We maintain frequent dialogue with the lenders under our secured credit agreements regarding our management of their collateral assets in light of the impacts of the COVID-19 pandemic. For more information regarding the impact that COVID-19 has had on our liquidity and may have on our future liquidity, see “Risk Factors.”

Contractual Obligations and Commitments

Our contractual obligations and commitments as of December 31, 2021 were as follows (dollars in thousands):

Payment Timing

Total Obligation Less than 1 Year 1 to 3 Years 3 to 5 Years More than 5 Years

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 public and private 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 a collateralized loan obligations similar to TRTX 2021-FL4, TRTX 2019-FL3 or TRTX 2018-FL2, as a method of financing; (v) term loans with private lenders; (vi) selling loans to generate cash to repay our debt obligations; and/or (vii) applying repayments from underlying loans to satisfy the debt obligations which they secure. Although these avenues have been available to us in the past, we cannot offer any assurance that we will be able to access any or all of these alternatives in the future.

We are required to pay our Manager a base management fee, an incentive fee, and reimbursements for certain expenses pursuant to our Management Agreement. The table above does not include the amounts payable to our Manager under our Management Agreement as they are not fixed and determinable. No incentive fee was earned by our Manager during the year ended December 31, 2021. See Note 11 to our consolidated financial statements included in this Form 10-K for additional terms and details of the fees payable under our Management Agreement.

As a REIT, we generally must distribute substantially all of our net taxable income to stockholders in the form of dividends to comply with the REIT provisions of the Internal Revenue Code. In 2017, the IRS issued a revenue procedure permitting “publicly offered” REITs to make elective stock dividends (i.e. dividends paid in a mixture of stock and cash), with at least 20% of the total distribution being paid in cash, to satisfy their REIT distribution requirements. On November 30, 2021, the IRS issued another revenue procedure which temporarily reduces (through June 30, 2022) the minimum amount of the total distribution that must be available in cash to 10%. Pursuant to these revenue procedures, we may elect to make future distributions of our taxable income in a mixture of stock and cash.

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Our REIT taxable income does not necessarily equal our net income as calculated in accordance with GAAP or our Distributable Earnings as described above. See Note 10 to our consolidated financial statements included in this Form 10-K for additional details.

Corporate Activities

Issuance of Series C Preferred Stock

On June 14, 2021, we received net proceeds of $194.4 million from the sale of the 8,050,000 shares of Series C Preferred Stock after deducting the underwriting discount and commissions of $6.3 million and issuance costs of $0.6 million. We used the net proceeds from the offering to partially fund the redemption of all of the outstanding shares of the Series B Preferred Stock. The Series C Preferred Stock is currently listed on the NYSE under the symbol “TRTX PRC.”

The Series C Preferred Stock has a liquidation preference of $25.00 per share. When, as, and if authorized by the board of directors and declared by us, dividends on the Series C Preferred Stock will be payable quarterly in arrears on or about March 30, June 30, September 30, and December 30 of each year at a rate per annum equal to 6.25% per annum of the $25.00 per share liquidation preference. Dividends on the Series C Preferred Stock are cumulative.

For additional details regarding the offering of Series C Preferred Stock, see Note 13 to our consolidated financial statements included in this Form 10-K.

Issuance of Series B Preferred Stock and Warrants to Purchase Common Stock

On May 28, 2020, we entered into an Investment Agreement with an affiliate of Starwood Capital Group Global II, L.P. (the “Purchaser”), under which we agreed to issue and sell to the Purchaser up to 13 million shares of Series B Preferred Stock and Warrants to purchase, in the aggregate, up to 15 million shares (subject to adjustment) of our Common Stock, for an aggregate cash purchase price of up to $325.0 million. Such purchases were permitted to occur in up to three tranches prior to December 31, 2020. The Investment Agreement contains market standard provisions regarding board representation, voting agreements, rights to information, and a standstill agreement and registration rights agreement regarding common stock acquired via exercise of Warrants. The Purchaser acquired the first tranche pursuant to the Investment Agreement, consisting of 9.0 million shares of Series B Preferred Stock and Warrants to purchase up to 12.0 million shares of Common Stock, for an aggregate price of $225.0 million. We allowed the option to issue additional shares of Series B Preferred Stock to expire unused.

On June 16, 2021, we redeemed all 9,000,000 outstanding shares of the Series B Preferred Stock at an aggregate redemption price of $247.5 million. Dividends on all shares of Series B Preferred Stock were paid in full as of the redemption date. As a result of the redemption, dividends will no longer accrue or be declared on any shares of Series B Preferred Stock, and no shares of Series B Preferred Stock remain outstanding. In connection with the redemption, we made a make-whole payment to the holder of the Series B Preferred Stock of $22.5 million, the amount equal to the present value of all remaining dividend payments due on such shares of Series B Preferred Stock from and after the redemption date (and not including any declared or paid dividends or accrued dividends prior to such redemption date) through the second anniversary of the original issue date, computed in accordance with the terms of the Articles Supplementary for the Series B Preferred Stock. This make-whole payment is recorded as Series B Preferred Stock Redemption Make-Whole Payment on our consolidated statements of changes in equity and treated similarly to a dividend on preferred stock for GAAP purposes. Additionally, we accelerated the accretion of approximately $22.5 million related to the remaining unamortized discount, which was included in Series B Preferred Stock Accretion and Write-off of Discount, including Allocated Warrant Fair Value and Transaction Costs on our consolidated statements of changes in equity and treated similarly to a dividend on preferred stock for GAAP purposes.

None of the Warrants had been exercised as of December 31, 2021.

Offering of Common Stock

On March 7, 2019, we and our Manager entered into an equity distribution agreement with each of Citigroup Global Markets Inc., J.P. Morgan Securities LLC, JMP Securities LLC, Wells Fargo Securities, LLC and TPG Capital BD, LLC (each a “Sales Agent” and, collectively, the “Sales Agents”) relating to the issuance and sale of shares of our common stock pursuant to a continuous offering program. In accordance with the terms of the equity distribution agreement, we may, at our discretion and from time to time, offer and sell shares of our common stock having an aggregate gross sales price of up to $125.0 million through the Sales Agents, each acting as our agent. The offering of shares of our common stock pursuant to the equity distribution agreement will terminate upon the earlier of (1) the sale of shares of our common stock subject to the equity distribution agreement having an aggregate gross sales price of $125.0 million and (2) the termination of the equity distribution agreement by the Sales Agents or us at any time as set forth in the equity distribution agreement. As of December 31, 2021, cumulative gross proceeds issued under the equity distribution agreement totaled $50.9 million, leaving $74.1 million available for future issuance subject to the direction of management, and market conditions.

Each Sales Agent will be entitled to commissions in an amount not to exceed 1.75% of the gross sales prices of shares of our common stock sold through it, as our agent. No shares of common stock were sold pursuant to the equity distribution agreement during the year ended December 31, 2021. For the year ended December 31, 2020, we sold 0.6 million shares of common stock pursuant to the

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equity distribution agreement at a weighted average price per share of $20.53, generating gross proceeds of $12.9 million. We paid commissions totaling $0.2 million.

Dividends

Upon the approval of our Board of Directors, we accrue dividends. Dividends are paid first to the holders of our Series A preferred stock at the rate of 12.5% of the total $0.001 million liquidation preference per annum plus all accumulated and unpaid dividends thereon, then to the holder of our Series B Preferred Stock at the rate of 11.0% per annum of the $25.00 per share liquidation preference and to the holders of our Series C Preferred Stock at the rate of 6.25% per annum of the $25.00 per share liquidation preference, and then to the holders of our common stock, in each case, to the extent outstanding. We intend to distribute each year substantially all our taxable income to our stockholders to comply with the REIT provisions of the Internal Revenue Code. The Board of Directors will determine whether to pay future dividends, entirely in cash, or in a combination of stock and cash based on facts and circumstances at the time such decisions are made.

On December 13, 2021, our Board of Directors declared and approved a cash dividend of $0.24 per share of common stock, or $18.7 million in the aggregate, for the fourth quarter of 2021. The Board of Directors also declared and approved an additional, non-recurring special cash dividend of $0.07 per share of common stock, or $5.5 million in the aggregate, attributable to the Company’s estimated 2021 REIT taxable income which was previously undistributed. The fourth quarter regular and special dividends were paid on January 25, 2022 to holders of record of our common stock as of December 29, 2021.

On December 9, 2021, 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 2021. The Series C Preferred Stock dividend was paid on December 30, 2021 to the preferred stockholders of record as of December 20, 2021.

For the years ended December 31, 2021 and 2020, common stock and Class A common stock dividends in the amount of $73.8 million and $93.6 million, respectively, were declared and approved.

For the year ended December 31, 2021, Series C Preferred Stock dividends in the amount of $6.9 million were approved and paid. No Series C Preferred Stock dividends were approved and paid in 2020, as the Series C Preferred Stock was not issued until June 2021.

For the years ended December 31, 2021 and 2020, Series B Preferred Stock dividends in the amount of $12.3 million and $14.7 million, respectively, were approved and paid.

As of December 31, 2021 and 2020,common stock dividends of $24.2 million and $29.5 million, respectively, were unpaid and are reflected in dividends payable on our consolidated balance sheets.

Income Taxes

We made an election to be taxed as a REIT for U.S. federal income tax purposes, commencing with our initial taxable year ended December 31, 2014. We generally must distribute annually at least 90% of our REIT taxable income, subject to certain adjustments and excluding any net capital gain, in order to qualify as a REIT for U.S. federal income tax purposes. To the extent that we satisfy this distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to U.S. federal income tax on our undistributed REIT taxable income. In addition, we will be subject to a 4% nondeductible excise tax if the actual amount that we pay out to our stockholders in a calendar year is less than a minimum amount specified under U.S. federal tax laws.

Our qualification as a REIT also depends on our ability to meet various other requirements imposed by the Internal Revenue Code, which relate to organizational structure, diversity of stock ownership, and certain restrictions with regard to the nature of our assets and the sources of our income. Even if we qualify as a REIT, we may be subject to certain U.S. federal income and excise taxes and state and local taxes on our income and assets. If we fail to maintain our qualification as a REIT for any taxable year, we may be subject to material penalties as well as U.S. federal, state and local income tax on our taxable income at regular corporate rates and we would not be able to qualify as a REIT for the subsequent four full taxable years. We believe we have complied with all REIT requirements since our initial taxable year.

Critical Accounting Policies and Use of 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. Our management bases these estimates and judgments about current, and for some estimates, future economic and market conditions and their effects on available information, historical experience and other assumptions that we believe are reasonable under the circumstances. However, these estimates, judgments and assumptions are often subjective and may be impacted negatively based on changing circumstances or changes in our analyses.

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If conditions change from those expected, it is possible that our judgments, estimates and assumptions described below could change, which may result in a change in our interest income and other revenue recognition, allowance for loan losses, expense recognition, tax liability, future write-off of our investments, and valuation of our investment portfolio, among other effects. If actual amounts are ultimately different from those estimated, judged or assumed, revisions are included in the consolidated financial statements in the period in which the actual amounts become known. We believe our critical accounting policies could potentially produce materially different results if we were to change underlying estimates, judgments or assumptions.

During 2021, our Manager reviewed and evaluated our critical accounting policies and believes them to be appropriate. The following is a summary of our significant accounting policies that we believe are the most affected by our Manager’s judgments, estimates, and assumptions:

Revenue Recognition

Interest income on loans is accrued using the interest method based on the contractual terms of the loan, adjusted for expected or realized credit losses, if any. The objective of the interest method is to arrive at periodic interest income, including recognition of fees and costs, at a constant effective yield. Premiums, discounts, and origination fees are amortized or accreted into interest income over the lives of the loans using the interest method, or on a straight-line basis when it approximates the interest method. Extension and modification fees are accreted into interest income on a straight-line basis, when it approximates the interest method, over the related extension or modification period. Exit fees are accreted into interest income on a straight-line basis, when it approximates the interest method, over the lives of the loans to which they relate unless they can be waived by us or a co-lender in connection with a loan refinancing, or if timely collection of principal and interest is doubtful. Prepayment penalties from borrowers are recognized as interest income when received. Certain of our loan investments have in the past, and may in the future, provide for additional interest based on the borrower’s operating cash flow or appreciation in the value of the underlying collateral. Such amounts are considered contingent interest and are reflected as interest income only upon certainty of collection. Certain of our loan investments have in the past, and may in the future, provide for the accrual of interest (in part, or in whole) instead of its current payment in cash, with the accrued interest (“PIK interest”) added to the unpaid principal balance of the loan. Such PIK interest is recognized currently as interest income unless we conclude eventual collection is unlikely, in which case the PIK interest is written off.

All interest accrued but not received for loans placed on non-accrual status is subtracted from interest income at the time the loan is placed on non-accrual status. Based on our judgment as to the collectability of principal, a loan on non-accrual status is either accounted for on a cash basis, where interest income is recognized only upon receipt of cash for interest payments, or on a cost-recovery basis, where all cash receipts reduce the loan’s carrying value, and interest income is only recorded when such carrying value has been fully recovered.

As of December 31, 2021, one of our loans secured by a retail property was on non-accrual status due to a borrower default during the fourth quarter of 2020. The amortized cost of the loan was $23.0 million.

Credit Losses

As discussed in Note 2 to the Consolidated Financial Statements included in this Form 10-K, on January 1, 2020, we adopted Accounting Standard Update (“ASU”) 2016-13, Financial Instruments-Credit Losses, and subsequent amendments, which replaced the incurred loss methodology with an expected loss model known as the Current Expected Credit Loss ("CECL") model. The initial CECL reserve recorded on January 1, 2020 is reflected as a direct charge to our retained earnings on the consolidated statements of changes in equity. Subsequent changes to the CECL reserve are recognized through net income on our consolidated statements of income (loss) and comprehensive income (loss). The allowance for credit losses measured under the CECL accounting framework represents an estimate of current expected losses for our existing portfolio of loans held for investment, and is presented as a valuation reserve on our consolidated balance sheets. Expected credit losses related to non-cancelable unfunded loan commitments are accounted for as separate liabilities included in accrued expenses and other liabilities on the consolidated balance sheets. The allowance for credit losses for loans held for investment, as reported in our consolidated balance sheets, is adjusted by a credit loss benefit (expense), which is reported in earnings in the consolidated statements of income (loss) and comprehensive income (loss) and reduced by the charge-off of loan amounts, net of recoveries and additions related to purchased credit-deteriorated (“PCD”) assets, if relevant. The allowance for credit losses includes a modeled component and an individually-assessed component. We have elected to not measure an allowance for credit losses on accrued interest receivables related to all of our loans held for investment because we write off uncollectable accrued interest receivable in a timely manner pursuant to our non-accrual policy, described above.

We consider key credit quality indicators in underwriting loans and estimating credit losses, including but not limited to: the capitalization of borrowers and sponsors; the expertise of the borrowers and sponsors in a particular real estate sector and geographic market; collateral type; geographic region; use and occupancy of the property; property market value; loan-to-value (“LTV”) ratio; loan amount and lien position; debt service and coverage ratio; our risk rating for the same and similar loans; and prior experience with the borrower and sponsor. This information is used to assess the financial and operating capability, experience and profitability of the sponsor/borrower. Ultimate repayment of our loans are sensitive to interest rate changes, general economic conditions, liquidity, LTV

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ratio, existence of a liquid investment sales market for commercial properties, and availability of replacement short-term or long-term financing. The loans in our commercial mortgage loan portfolio are secured by collateral of the following property types: office; life science; multifamily; hotel; mixed-use; condominium; and retail.

Our loans are typically collateralized by real estate, or in the case of mezzanine loans, by a partnership interest or similar equity interest in an entity that owns real estate. We regularly evaluate on a loan-by-loan basis, typically no less frequently than quarterly, the extent and impact of any credit deterioration associated with the performance and/or value of the underlying collateral property, and the financial and operating capability of the borrower/sponsor. We also evaluate the financial strength of loan guarantors, if any, and the borrower’s competency in managing and operating the property or properties. In addition, we consider the overall economic environment, real estate sector, and geographic sub-market in which the borrower operates. Such analyses are completed and reviewed by asset management personnel and evaluated by senior management, who utilize various data sources, including, to the extent available (i) periodic financial data such as property occupancy, tenant profile, rental rates, operating expenses, the borrower’s exit plan, and capitalization and discount rates, (ii) site inspections, (iii) sales and financing comparables, (iv) current credit spreads for refinancing and (v) other market data.

Quarterly, we evaluate the risk of all loans and assign a risk rating based on a variety of factors, 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). Based on a 5-point scale, our loans are rated “1” through “5,” from least risk to greatest risk, respectively, which ratings are defined as follows:

1 - Outperform—Exceeds performance metrics (for example, technical milestones, occupancy, rents, net operating income) included in original or current credit underwriting and business plan;

2 - Meets or Exceeds Expectations—Collateral performance meets or exceeds substantially all performance metrics included in original or current underwriting / business plan;

3 - Satisfactory—Collateral performance meets or is on track to meet underwriting; business plan is met or can reasonably be achieved;

4 - Underperformance—Collateral performance falls short of original underwriting, material differences exist from business plan, or both; technical milestones have been missed; defaults may exist, or may soon occur absent material improvement; and

5 - Default/Possibility of Loss—Collateral performance is significantly worse than underwriting; major variance from business plan; loan covenants or technical milestones have been breached; the loan is in default or substantially in default; timely exit from loan via sale or refinancing is questionable; significant risk of principal loss.

We generally assign a risk rating of “3” to all loans originated during the most recent quarter, except in the case of specific circumstances warranting an exception.

Our CECL reserve also reflects an estimation of the current and future economic conditions that impact the performance of the commercial real estate assets securing the loans. These estimations include unemployment rates, inflation rates, interest rates, price indices for commercial property, current and expected future availability of liquidity in the commercial property debt and equity capital markets, and other macroeconomic factors that may influence the likelihood and magnitude of potential credit losses for our loans during their anticipated term. We license certain macroeconomic financial forecasts to inform our view of the potential future impact that broader economic conditions may have on our loan portfolio’s performance. Selection of the economic forecast or forecasts used, in conjunction with loan level inputs, to determine the CECL reserve requires significant judgment about future events that, while based on the information available to us as of the balance sheet date, are ultimately unknowable with certainty. The actual economic conditions impacting our loan portfolio could vary significantly from the estimates made for the periods presented.

Due to the COVID-19 pandemic and the dislocation it has caused to the national economy, the commercial real estate markets, and the capital markets, our ability to estimate key inputs for estimating the allowance for credit losses remains materially and adversely impacted. The amount of allowance for credit losses is influenced by the size of our loan portfolio, loan asset quality, risk rating, delinquency status, historic loss experience and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. We employ two methods to estimate credit losses in our loan portfolio: a loss-given-default (“LGD”) model-based approach utilized for substantially all of our loans; and an individually-assessed approach for loans that we conclude are ill-suited for use in the model-based approach, or are individually-assessed based on accounting guidance contained in the CECL framework. Estimates made by use are necessarily subject to change due to the limited number of observable inputs and uncertainty regarding the duration of the COVID-19 pandemic and its aftereffects. See Note 2 to the Consolidated Financial Statements in this Form 10-K for further discussion of our methodologies.

Significant judgment is required when estimating future credit losses and as a result actual losses over time could be materially different. As of December 31, 2021, we held $4.9 billion of loans measured at amortized cost with expected future funding commitments

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of $487.8 million. We recognized a net credit loss benefit of $6.3 million during the year ended December 31, 2021. The credit loss allowance was $46.2 million as of December 31, 2021.

See Note 2 to our Consolidated Financial Statements included in this Form 10-K for a listing and description of our significant accounting policies.

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Subsequent Events

The following events occurred subsequent to December 31, 2021:

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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, 2021 (dollars in millions, except loan per square foot/unit):

First Mortgage Loans(1)

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Mezzanine Loans

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(3) Represents unpaid principal balance net of unamortized costs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Investment Portfolio Risks

Interest Rate Risk

Our business model seeks to minimize our exposure to changing interest rates by matching duration of our assets and liabilities and match-indexing our assets using the same, or similar, benchmark indices, typically LIBOR. 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, 2021, the weighted average interest rate floor for our loan portfolio was 1.10%. As of December 31, 2021, all of our loans by unpaid principal balance earned a floating rate of interest, subject to the beneficial impact of embedded interest rate floors, and were financed with liabilities that require interest payments based on floating rates. As of December 31, 2021, less than 2.0% of our liabilities do not contain interest rate floors greater than zero.

The following table illustrates the impact on our interest income and interest expense, for the twelve-month period following December 31, 2021, 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):

Increase Decrease Increase Decrease Increase Decrease

Credit Risk

Our loans are also subject to credit risk. The performance and value of our loans and other investments depend upon the sponsors’ ability to operate the properties that serve as our collateral so that they produce cash flows adequate to pay interest and principal due to us. 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.

In addition, we are exposed to the risks generally associated with the commercial real estate market, including variances in occupancy rates, capitalization rates, absorption rates and other macroeconomic factors beyond our control. We seek to manage these risks through our underwriting and asset management processes.

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. 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 accretion of purchase discounts, thereby increasing the interest income earned on the assets.

Extension Risk

Our Manager computes the projected weighted average life of our assets based on assumptions regarding the rate at which the borrowers will prepay the mortgages or extend. If prepayment rates decrease in a rising interest rate environment or extension options are exercised, the life of our loan investments could extend beyond the term of the secured debt agreements. We expect that the economic and market disruptions caused by COVID-19 will lead to a decrease in prepayment rates and an increase in the number of our borrowers who exercise extension options. This could have a negative impact on our results of operations. In some situations, we may be forced to sell assets to maintain adequate liquidity, which could cause us to incur losses. For more information regarding the impact of COVID-19 on the financial condition of our borrowers, see “Risk Factors.”

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Non-Performance Risk

In addition to the risks related to fluctuations in cash flows and asset values associated with movements in interest rates, there is also the risk of non-performance on floating rate assets. In the case of a significant increase in interest rates, the additional debt service payments due from our borrowers may strain the operating cash flows of the collateral real estate assets and, potentially, contribute to non-performance or, in severe cases, default. This risk is partially mitigated by various factors we consider during our underwriting and loan structuring process, including but not limited to, requiring substantially all of our borrowers to purchase an interest rate cap contract for the term of our loan.

Loan Portfolio Value

We may in the future originate loans that earn a fixed rate of interest on unpaid principal balance. The value of fixed rate loans is sensitive to changes in interest rates. We generally hold all of our loans to maturity, and do not expect to realize gains or losses on any fixed rate loan we may hold in the future, as a result of movements in market interest rates during future periods.

Real Estate Risk

The market values of commercial mortgage assets are subject to volatility and may be adversely affected by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans, which could also cause us to suffer losses. For more information regarding the impact that COVID-19 has had on these risks, see “Risk Factors.”

Operating and Capital Market Risks

Liquidity Risk

Liquidity is a measure of our ability to meet potential cash requirements, including ongoing commitments to repay borrowings including margin calls, fund and maintain investments, pay dividends to our stockholders and other general business needs. Our liquidity risk is principally associated with our financing of longer-maturity investments with shorter-term borrowings in the form of secured credit facilities. We are subject to “margin call” risk under our secured credit facilities. In the event that the value of our assets pledged as collateral suddenly decreases as a result of changes in credit spreads or interest rates, margin calls relating to our secured credit facilities could increase, causing an adverse change in our liquidity position. See “Management's Discussion and Analysis of Financial Condition and Results of Operations—Our Results of Operations—Consolidated Cash Flows—Financing Activities” for information regarding margin calls that we funded during the quarter ended March 31, 2020 in connection with secured credit agreements used to finance our former investments in CRE debt securities. Additionally, if one or more of our secured credit facility counterparties chooses not to provide ongoing funding, we may be unable to replace the financing through other lenders on favorable terms or at all. As such, we provide no assurance that we will be able to roll over or replace our secured credit facilities as they mature from time to time in the future.

Prior to making our voluntary deleveraging payment during the second quarter of 2020, we satisfied one margin call aggregating $20.0 million in connection with our secured credit facilities financing our debt securities by pledging a previously unencumbered loan investment. On May 28, 2020, we made voluntary deleveraging payments totaling $157.7 million to our six secured credit facility lenders and one secured credit facility lender in exchange for their agreement to suspend margin calls for defined periods, subject to certain conditions. At the time these payments were made, no margin deficits existed, and no margin calls have been issued to us since. If market turbulence returns, we may be required to post cash collateral in connection with our secured credit facilities secured by our mortgage loan investments, since these agreements are no longer in effect. We maintain frequent dialogue with the lenders under our secured credit facilities regarding our management of their collateral assets in light of the impacts of the COVID-19 pandemic. For more information regarding the impact that COVID-19 has had on our liquidity and may have on our future liquidity, see “Risk Factors.”

In some situations, we have in the past, and may in the future, decide to sell assets to maintain adequate liquidity. Market disruptions may lead to a significant decline in transaction activity in all or a significant portion of the asset classes in which we invest and may at the same time lead to a significant contraction in short-term and long-term debt and equity funding sources. A decline in market liquidity of real estate-related investments, as well as a lack of availability of observable transaction data and inputs, may make it more difficult to sell assets or determine their fair values. As a result, we may be unable to sell investments, or only be able to sell investments at a price that may be materially different from the fair values presented. Also, in such conditions, there is no guarantee that our borrowing arrangements or other arrangements for obtaining leverage will continue to be available or, if available, will be available on terms and conditions acceptable to us.

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Capital Market Risk

We are exposed to risks related to the equity capital markets and our related ability to raise capital through the issuance of our stock or other equity instruments. We are also exposed to risks related to the debt capital markets and our related ability to finance our business through borrowings under secured credit facilities, collateralized loan obligations, mortgage loans, term loans, or other debt instruments or arrangements. As a REIT, we are required to distribute a significant portion of our taxable income annually, which constrains our ability to accumulate operating cash flow and therefore requires us to utilize debt or equity capital to finance our business. We seek to mitigate these risks by monitoring the debt and equity capital markets to inform our decisions on the amount, timing and terms of capital we raise.

During 2020, the COVID-19 pandemic caused significant disruptions to the U.S. and global economies. These disruptions contributed to significant and ongoing volatility, widening credit spreads and sharp declines in liquidity in the real estate securities markets. This capital markets environment has led to increased cost of funds and reduced availability of efficient debt capital, factors which caused us to reduce our investment activity in 2020. We resumed lending and capital markets new issue activity in the first quarter of 2021. We also anticipate the lingering consequences of COVID-19 may adversely impact the ability of commercial property owners to service their debt and refinance their loans as they mature. For more information, see “Risk Factors.”

Counterparty Risk

The nature of our business requires us to hold our cash and cash equivalents with, and obtain financing from, various financial institutions. This exposes us to the risk that these financial institutions may not fulfill their obligations to us under these various contractual arrangements. We mitigate this exposure by depositing our cash and cash equivalents and entering into financing agreements with high credit-quality institutions.

The nature of our loans and other investments also exposes us to the risk that our counterparties do not make required interest and principal payments on scheduled due dates. 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. 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. Any such changes in foreign currency exchange rates may impact the measurement of such assets or income for the purposes of our REIT tests and may affect the amounts available for payment of dividends on our common stock.

We intend to hedge any currency exposures in a prudent manner. However, our currency hedging strategies may not eliminate all of our currency risk due to, among other things, uncertainties in the timing and/or amount of payments received on the related investments and/or unequal, inaccurate or unavailability of hedges to perfectly offset changes in future exchange rates. Additionally, we may be required under certain circumstances to collateralize our currency hedges for the benefit of the hedge counterparty, which could adversely affect our liquidity.

We may hedge foreign currency exposure on certain investments in the future by entering into a series of forwards to fix the U.S. dollar amount of foreign currency denominated cash flows (interest income, rental income and principal payments) we expect to receive from any foreign currency denominated investments. Accordingly, the notional values and expiration dates of our foreign currency hedges would approximate the amounts and timing of future payments we expect to receive on the related investments.

Item 8. Financial Statements and Supplementary Data.

The financial statements required by this item and the reports of the independent accountants thereon appear on pages F-2 to F-47. See the accompanying Index to Consolidated Financial Statements and Schedule on page F-1.

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our President (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our President (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), of the effectiveness of the design and operation of our disclosure controls and procedures as of December 31, 2021. Based upon that evaluation, our President (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2021.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting (as such term as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control Over Financial Reporting. Management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed under the supervision of our President and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles”).

Internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the company; provide reasonable assurances that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of the company’s management and directors; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the Company’s financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Management conducted an assessment of the effectiveness of internal control over financial reporting as of December 31, 2021, based on the framework established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this assessment, management has determined that the Company’s internal control over financial reporting as of December 31, 2021, was effective.

Deloitte & Touche LLP, an independent registered public accounting firm, has audited the Company’s financial statements included in this Annual Report on Form 10-K and issued its report on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, which is included herein.

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Item 9B. Other Information.

CLO Transaction Overview

On February 16, 2022 (the “FL5 CLO Closing Date”), we entered into a collateralized loan obligation (“TRTX 2022-FL5” or the “FL5 CLO”) through our wholly-owned subsidiaries, TRTX 2022-FL5 Issuer, Ltd., an exempted company incorporated with limited liability under the laws of the Cayman Islands, as issuer (the “FL5 Issuer”), and TRTX 2022-FL5 Co-Issuer, LLC, a Delaware limited liability company, as co-issuer (the “FL5 Co-Issuer” and together with the FL5 Issuer, the “FL5 Issuers”). On the FL5 CLO Closing Date, the FL5 Issuers co-issued the following classes of notes pursuant to the terms of an indenture, dated as of February 16, 2022 (the “FL5 Indenture”), by and among the FL5 Issuers, TRTX Master CLO Loan Seller, LLC, a Delaware limited liability company and our wholly-owned subsidiary (the “FL5 Seller”), as advancing agent, Wilmington Trust, National Association, as trustee (together with its permitted successors and assigns, the “FL5 Trustee”), and Computershare Trust Company, National Association, as note administrator, paying agent, calculation agent, transfer agent, custodian, authenticating agent, backup advancing agent and notes registrar (in all such capacities, together with its permitted successors and assigns, the “FL5 Note Administrator”):

The FL5 Offered Notes were placed by Wells Fargo Securities, LLC, Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Barclays Capital Inc. and BofA Securities, Inc. (the “Placement Agents”) pursuant to a placement agency agreement dated as of February 8, 2022.

In addition to the FL5 Offered Notes, on the FL5 CLO Closing Date, the FL5 Issuer issued, pursuant to the FL5 Indenture:

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As used herein, the term “Benchmark” has the meaning set forth in the FL5 Indenture. The calculation of the initial expected weighted average lives of the FL5 Notes assumes certain collateral characteristics, including that there are no prepayments, that there will be no extension of maturity dates and no capitalized and deferred interest and certain other modeling assumptions. There are no assurances that such assumptions will be met.

The FL5 Class F Notes and the FL5 Class G Notes were acquired by TRTX Master Retention Holder, LLC, a Delaware limited liability company and our indirect wholly-owned subsidiary (“FL5 Retention Holder”). The FL5 Class F Notes and the FL5 Class G Notes are not secured by the FL5 Collateral Interests (as defined below) or any other collateral securing the FL5 Offered Notes.

Concurrently with the issuance of the FL5 Notes, the FL5 Issuer also issued 76,593.750 preferred shares, par value $0.001 per share and with an aggregate liquidation preference and notional amount equal to $1,000 per share (the “FL5 Preferred Shares” and, together with the FL5 Notes, the “FL5 Securities”), to FL5 Retention Holder. FL5 Retention Holder acquired the FL5 Preferred Shares in order to comply with certain risk retention rules. The FL5 Preferred Shares are subject to the terms and conditions of a Preferred Share Paying Agency Agreement, dated as of February 16, 2022 (the “FL5 Preferred Share Paying Agency Agreement”), among the FL5 Issuer, Computershare Trust Company, National Association, as preferred share paying agent, and MaplesFS Limited, as preferred share registrar and administrator. The FL5 Preferred Shares have no stated dividend rate. Holders of the FL5 Preferred Shares will be entitled to receive monthly non-cumulative dividends, if and to the extent that funds are available for such purpose, in accordance with the priority of payments set forth in the FL5 Indenture and under Cayman Islands law. The FL5 Preferred Shares were issued by the FL5 Issuer as part of its issued share capital, and are not secured by the FL5 Collateral Interests or any other collateral securing the FL5 Offered Notes.

The FL5 Securities have not been registered under the Securities Act or any state securities laws, and unless so registered, may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws.

Proceeds from the issuance of the FL5 Securities were used to (i) purchase one (1) commercial real estate whole loan (the “FL5 Closing Date Whole Loan”) and nineteen (19) pari passu participations in 19 separate commercial real estate whole loans (the “FL5 Closing Date Pari Passu Participations” and, together with the FL5 Closing Date Whole Loan, the “FL5 Closing Date Collateral Interests”), (ii) repay amounts owed by the FL5 Seller and its affiliates in respect of certain pre-closing financing, including (a) under certain warehouse lines with affiliates of certain of the Placement Agents and other lenders, which warehouse lines were secured by certain of the FL5 Closing Date Collateral Interests and (b) for application to the redemption of the TRTX 2018-FL2 securitization, which financed certain of the FL5 Closing Date Collateral Interests, and (iii) to undertake certain related activities.

The FL5 Closing Date Collateral Interests were purchased by the FL5 Issuer from the FL5 Seller, our wholly-owned subsidiary and an affiliate of the FL5 Issuers. The FL5 Closing Date Collateral Interests represented approximately 21.9% of the aggregate unpaid principal balance of our loan investment portfolio as of December 31, 2021 and had an aggregate principal balance of approximately $1,075 million as of January 9, 2022 (the cut-off date for the FL5 CLO).

The FL5 Closing Date Collateral Interests were purchased and any additional FL5 Collateral Interests will be purchased in the future by the FL5 Issuer from the FL5 Seller pursuant to a collateral interest purchase agreement (the “FL5 Collateral Interest Purchase Agreement”), dated as of February 16, 2022, among the FL5 Issuer, the FL5 Seller, Holdco, and, solely, as to section 4(k) thereof, Sub-REIT. Pursuant to the FL5 Collateral Interest Purchase Agreement, the FL5 Seller made certain representations and warranties to the FL5 Issuer with respect to the FL5 Collateral Interests. In the event that a material breach of representation or warranty with respect to any FL5 Collateral Interests exists, the FL5 Seller will have to either (a) correct or cure such breach of representation or warranty, within 90 days, subject to certain extensions set forth in the FL5 Collateral Interest Purchase Agreement, of discovery by the FL5 Seller or receipt of written notice from any party to the FL5 Indenture and the FL5 Servicing Agreement (as defined below), (b) subject to the consent of a majority of the holders of each class of FL5 Notes, voting separately (excluding any FL5 Notes held by the FL5 Seller or any of its affiliates), make a cash payment to the FL5 Issuer, or (c) repurchase such FL5 Collateral Interest at a repurchase price calculated as set forth in the FL5 Collateral Interest Purchase Agreement. The obligation of the FL5 Seller to repurchase a FL5 Collateral Interest in connection with a material breach of the representations and warranties pursuant to the FL5 Collateral Interest Purchase Agreement has been guaranteed by Holdco. Additionally, with respect to any FL5 Collateral Interest comprised of a combination of a mortgage loan and a related mezzanine loan secured by equity interests in the related mortgage borrower, if the mortgage loan portion of such FL5 Collateral Interest is repaid in full but the mezzanine loan portion thereof remains outstanding, the FL5 Seller will be required to repurchase such FL5 Collateral Interest at a repurchase price calculated as set forth in the FL5 Collateral Interest Purchase Agreement.

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The FL5 Notes

FL5 Collateral

The FL5 Offered Notes are secured by, among other things, (i) the portfolio of FL5 Collateral Interests, (ii) certain collection, payment, custodial, reinvestment and expense reserve accounts and the related security entitlements and all income from the investment of funds in any of the foregoing at any time credited to any of the foregoing accounts, (iii) certain eligible investments purchased from deposits in certain accounts, (iv) the FL5 Issuer’s rights under certain related agreements, (v) all amounts delivered to the FL5 Note Administrator (or its bailee) (directly or through a securities intermediary), (vi) all other investment property, instruments and general intangibles in which the FL5 Issuer has an interest, other than certain excepted property, (vii) the FL5 Issuer’s ownership interests in and rights in certain permitted subsidiaries and (viii) all proceeds of the foregoing (collectively, the “FL5 Collateral”).

The FL5 Offered Notes are limited recourse obligations of the FL5 Issuer and non-recourse obligations of the FL5 Co-Issuer, and the FL5 Class F Notes and the FL5 Class G Notes are limited recourse obligations of the FL5 Issuer. The FL5 Co-Issuer owns no material assets and will engage in no business other than co-issuing the FL5 Offered Notes. To the extent that the FL5 Collateral is insufficient to meet payments due in respect of the FL5 Offered Notes and expenses following liquidation of the FL5 Collateral, the obligations of the FL5 Issuer and the FL5 Co-Issuer to pay such deficiency will be extinguished.

Interest Rate and Maturity

Interest payments on the FL5 Notes are payable monthly, beginning in March 2022. Each class of FL5 Notes will mature at par in February 2039, unless redeemed or repaid prior thereto. Principal payments on each class of FL5 Notes will be paid in accordance with the priority of payments set forth in the FL5 Indenture. However, it is anticipated that the FL5 Notes will be paid in advance of the stated maturity date in accordance with the priority of payments in the FL5 Indenture.

For so long as any class of FL5 Notes with a higher priority is outstanding, any interest due on the FL5 Class C Notes, the FL5 Class D Notes, the FL5 Class E Notes, the FL5 Class F Notes or the FL5 Class G Notes that is not paid as a result of the operation of the priority of payments set forth in the FL5 Indenture will be deferred, and the failure to pay such interest will not be an event of default under the FL5 Indenture (any such interest, “FL5 Deferred Interest”). FL5 Deferred Interest on any related class of FL5 Notes will be added to the outstanding principal balance of such class of FL5 Notes and will accrue interest at the applicable interest rate. FL5 Deferred Interest will not be payable until the earliest of the first interest payment date on which funds are available to pay such FL5 Deferred Interest in accordance with the priority of payments set forth in the FL5 Indenture, or the date on which such class of FL5 Notes matures or is redeemed.

Subordination of the FL5 Notes

In general, payments of interest and principal on any class of FL5 Notes are subordinate to all payments of interest and principal on any class of FL5 Notes with a more senior priority. Generally, all payments on the FL5 Notes will be subordinate to certain payments required to be made in respect of any interest advances and certain other expenses. Payments on the FL5 Notes will be senior to any payments on or in respect of the FL5 Preferred Shares to the extent required by the priority of payments set forth in the FL5 Indenture.

FL5 Note Protection Tests

The FL5 Notes are subject to note protection tests (the “FL5 Note Protection Tests”), which will be used primarily to determine whether and to what extent interest received on the FL5 Collateral Interests may be used to make certain payments subordinate to interest and principal payments to the FL5 Offered Notes in the priority of payments set forth in the FL5 Indenture. In the event that either FL5 Note Protection Test is not satisfied on any measurement date, interest received on the FL5 Collateral Interests that would otherwise be used to pay interest on the FL5 Class F Notes and the FL5 Class G Notes and dividends to the FL5 Preferred Shares and make certain other payments must instead be used to pay principal of first, the FL5 Class A Notes, second, the FL5 Class A-S Notes, third, the FL5 Class B Notes, fourth, the FL5 Class C Notes, fifth, the FL5 Class D Notes and sixth, the FL5 Class E Notes, in each case, to the extent necessary to cause the FL5 Note Protection Tests to be satisfied.

The FL5 Note Protection Tests consist of a par value test (the “FL5 Par Value Test”) and an interest coverage test (the “FL5 Interest Coverage Test”). The FL5 Par Value Test will generally be considered to be met if the number calculated by dividing (a) the aggregate principal balance of the FL5 Collateral Interests (other than any modified and defaulted FL5 Collateral Interest and subject to certain conditions set forth in the FL5 Indenture) plus principal proceeds held as cash and certain other eligible investments plus the calculation amount of the modified and defaulted FL5 Collateral Interests by (b) the sum of the aggregate outstanding principal balance of the FL5 Offered Notes and the amount of any unreimbursed interest advances, is equal to or greater than 116.15%. The FL5 Interest Coverage

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Test will generally be considered to be met if the Interest Coverage Ratio (as defined in the FL5 Indenture) on the FL5 Offered Notes is equal to or greater than 120.00%.

FL5 Collateral Management Agreement

Certain advisory, administrative and monitoring functions relating to the FL5 Collateral Interests will be performed by the Manager, as FL5 collateral manager (in such capacity, the “FL5 Collateral Manager”) pursuant to a collateral management agreement, dated as of February 16, 2022, between the FL5 Issuer and the Manager (the “FL5 Collateral Management Agreement”).

As compensation for the performance of its obligations as FL5 Collateral Manager, the Manager is entitled to receive a collateral management fee, payable monthly in arrears, equal to 0.1% per annum of the net outstanding balance of the FL5 Collateral Interests to the extent funds are available. The Manager has agreed to waive its entitlement to the collateral management fee for so long as the Manager or an affiliate of the Manager is the FL5 Collateral Manager and also our external manager. However, there can be no assurance that any replacement collateral manager will also waive the right to receive the collateral management fee.

The Manager may be removed as FL5 Collateral Manager upon at least 30 days’ prior written notice if certain events of default have occurred, by the FL5 Issuer or the FL5 Trustee, if the holders of at least 66-2/3% in aggregate outstanding amount of each class of FL5 Notes then outstanding give written notice to the Manager, the FL5 Issuer and the FL5 Trustee directing such removal. The Manager cannot be removed as FL5 Collateral Manager without cause, but may resign as FL5 Collateral Manager upon 90 days’ prior written notice. Upon any resignation or removal of the Manager as FL5 Collateral Manager while any of the FL5 Notes are outstanding, holders of a majority of the FL5 Preferred Shares (excluding any FL5 Preferred Shares held by certain related parties) will have the right to instruct the FL5 Issuer to appoint an institution identified by such holders as replacement FL5 Collateral Manager. In the event that 100% of the aggregate outstanding FL5 Preferred Shares are held by related parties and the proposed replacement FL5 Collateral Manager is an affiliate of the Manager, the holders of at least a majority of the aggregate outstanding principal balance of the most junior class of FL5 Notes not 100% owned by related parties (excluding any FL5 Notes held by related parties to the extent the replacement FL5 Collateral Manager is an affiliate of the Manager or the Manager has been removed as FL5 Collateral Manager after the occurrence of an event of default) may direct the FL5 Issuer to appoint an institution identified by such holders as replacement collateral manager.

Except with respect to the limitations set forth in the FL5 Indenture, the Manager, in its capacity as FL5 Collateral Manager, is not obligated to pursue any particular investment strategy or opportunity with respect to the FL5 Collateral. The Manager and its affiliates may engage in other business and furnish investment management, advisory and other services to other portfolios. The Manager may make recommendations to or effect transactions for such other portfolios, which recommendations or transactions may differ from those made on behalf of the FL5 Issuer.

Managed Transaction with Reinvestment

The FL5 CLO includes a 24-month reinvestment period during which (and up to 60 days thereafter (or, if the last day of such 60-day period is not a business day, then the next succeeding business day) to the extent necessary to acquire FL5 Reinvestment Collateral Interests (as defined below) pursuant to binding commitments entered into during the 24-month reinvestment period) the Manager, as FL5 Collateral Manager, is permitted to reinvest certain proceeds arising from the FL5 Collateral Interests in additional collateral interests meeting certain eligibility criteria (the “FL5 Reinvestment Collateral Interests”). Additionally, the FL5 Issuer may acquire exchange collateral interests (the “FL5 Exchange Collateral Interests” and, together with the FL5 Closing Date Collateral Interests and the FL5 Reinvestment Collateral Interests, the “FL5 Collateral Interests”), in each case, in exchange for a defaulted collateral interest or a credit risk collateral interest. Any FL5 Reinvestment Collateral Interest and FL5 Exchange Collateral Interests will be required to meet certain eligibility criteria, acquisition criteria, acquisition and disposition requirements and other conditions set forth in the FL5 Indenture and the FL5 Collateral Interest Purchase Agreement.

The FL5 Servicing Agreement

Except for certain non-serviced loans, the commercial real estate loans related to the FL5 Collateral Interests (the “FL5 Loans”) will be serviced by Situs Asset Management LLC, a Texas limited liability company (the “FL5 Servicer”), pursuant to a servicing agreement (the “FL5 Servicing Agreement”), dated as of February 16, 2022, by and among the FL5 Issuer, the Manager, the FL5 Trustee, the FL5 Note Administrator, the FL5 Seller (as advancing agent), the FL5 Servicer and Situs Holdings, LLC, a Delaware limited liability company (the “FL5 Special Servicer”). Additionally, pursuant to the FL5 Servicing Agreement, the FL5 Issuer appointed the FL5 Special Servicer to act as special servicer with respect to serviced FL5 Loans.

The FL5 Servicing Agreement requires each of the FL5 Servicer and the FL5 Special Servicer to diligently service and administer the serviced Loans and any applicable mortgaged property acquired directly or indirectly by the FL5 Special Servicer for the benefit of the secured parties under the FL5 Indenture. In connection with their respective duties under the FL5 Servicing Agreement, the FL5

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Servicer and the FL5 Special Servicer (or any replacement servicer or special servicer) are entitled to monthly servicing and special servicing fees, as described in the FL5 Servicing Agreement.

The foregoing summaries of the FL5 Indenture, the FL5 Preferred Share Paying Agency Agreement, the FL5 Collateral Interest Purchase Agreement, the FL5 Collateral Management Agreement and the FL5 Servicing Agreement are qualified in their entirety by reference to the full text of the FL5 Indenture, the FL5 Preferred Share Paying Agency Agreement, the FL5 Collateral Interest Purchase Agreement, the FL5 Collateral Management Agreement and the FL5 Servicing Agreement, copies of which are filed herewith as Exhibits 10.17(a), 10.17(b), 10.17(c), 10.17(d) and 10.17(e), respectively, and incorporated herein by reference.

Item 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections.

Not Applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

The information required by this item is incorporated by reference to the Company’s definitive proxy statement to be filed not later than May 2, 2022 with the SEC pursuant to Regulation 14A under the Exchange Act.

Item 11. Executive Compensation.

The information required by this item is incorporated by reference to the Company’s definitive proxy statement to be filed not later than May 2, 2022 with the SEC pursuant to Regulation 14A under the Exchange Act.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The information required by this item is incorporated by reference to the Company’s definitive proxy statement to be filed not later than May 2, 2022 with the SEC pursuant to Regulation 14A under the Exchange Act.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item is incorporated by reference to the Company’s definitive proxy statement to be filed not later than May 2, 2022 with the SEC pursuant to Regulation 14A under the Exchange Act.

Item 14. Principal Accountant Fees and Services.

The information required by this item is incorporated by reference to the Company’s definitive proxy statement to be filed not later than May 2, 2022 with the SEC pursuant to Regulation 14A under the Exchange Act.

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PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) (1) Financial Statements

(a) (2) Consolidated Financial Statement Schedules

(a) (3) Exhibits

102

Exhibit Index

Exhibit Number Description

4.2* Description of Securities of TPG RE Finance Trust, Inc.

103

Exhibit Number Description

104

Exhibit Number Description

105

Exhibit Number Description

106

Exhibit Number Description

107

Exhibit Number Description

108

Exhibit Number Description

109

Exhibit Number Description

21.1* Subsidiaries of TPG RE Finance Trust, Inc.

23.1* Consent of Deloitte & Touche LLP

110

Exhibit Number Description

101.SCH* Inline XBRL Taxonomy Extension Schema Document

101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** Furnished herewith.

111

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: February 22, 2022 TPG RE Finance Trust, Inc.

By: /s/ Matthew Coleman

Matthew Coleman

President

(Principal Executive Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated.

Name Title Date

/s/ Avi Banyasz Chairman of the Board of Directors February 22, 2022

Avi Banyasz

/s/ Matthew Coleman President February 22, 2022

Matthew Coleman (Principal Executive Officer)

Robert Foley

/s/ Kelvin Davis Director February 22, 2022

Kelvin Davis

/s/ Michael Gillmore Director February 22, 2022

Michael Gillmore

/s/ Wendy Silverstein Director February 22, 2022

Wendy Silverstein

/s/ Bradley Smith Director February 22, 2022

Bradley Smith

/s/ Gregory White Director February 22, 2022

Gregory White

/s/ Todd Schuster Director February 22, 2022

Todd Schuster

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE

Report of Independent Registered Public Accounting Firm (PCAOB ID No.34) F-2

Consolidated Balance Sheets as of December 31, 2021 and 2020 F-4

Notes to the Consolidated Financial Statements F-8

Schedule IV – Mortgage Loans on Real Estate S-1

F-1

Report of Independent Registered Public Accounting Firm

To the stockholders and the Board of Directors of TPG RE Finance Trust, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of TPG RE Finance Trust, Inc. and subsidiaries (the "Company") as of December 31, 2021 and 2020, the related consolidated statements of income (loss) and comprehensive income (loss), changes in equity and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, the Company has changed its method of accounting for credit losses in the year ended December 31, 2020 due to the adoption of FASB Accounting Standards Update ASU 2016-13, “Financial Instruments – Credit Losses – Measurement of Credit Losses on Financial Instruments (Topic 326)”.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

F-2

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the Company’s Audit Committee that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments by us. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the Company’s Audit Committee that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments by us. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.audit matters does

Loans Held for Investment and the Allowance for Credit Losses – Refer to Note 3 to the Financial Statements

Critical Audit Matter Description

The Company presents certain financial assets carried at amortized cost, such as Loans Held for Investment, at the net amount expected to be collected after credit losses. The measurement of expected credit losses over the life of each financial asset is based on information about past events, including historical experience, current conditions, macroeconomic factors, and reasonable and supportable forecasts that affect the collectability of the reported amount. To estimate credit losses, the Company considers key credit quality indicators and utilizes a model-based approach for the majority of its financial assets and an individually-assessed approach for certain of its financial assets. As of December 31, 2021, the Company recorded an Allowance for Credit Losses of $46.2 million.

Given the significant amount of judgement required by management to estimate an Allowance for Credit Losses, we identified the Company’s Allowance for Credit Losses to be a critical audit matter. Auditing management’s Allowance for Credit Losses requires a high degree of auditor judgment and increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s Allowance for Credit Losses included the following, among others:

/s/ Deloitte & Touche LLP

Dallas, Texas

February 22, 2022

We have served as the Company’s auditors since 2016.

F-3

TPG RE Finance Trust, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

Assets(1)

Restricted Cash 404 —

Accounts Receivable 12 785

Collateralized Loan Obligation Proceeds Held at Trustee 204 174

Accounts Receivable from Servicer/Trustee 176 418

LIABILITIES AND STOCKHOLDERS’ EQUITY(1)

Liabilities

Accrued Expenses and Other Liabilities 11,563 14,450

Commitments and Contingencies - See Note 15

Temporary Equity

Permanent Equity

See accompanying notes to the Consolidated Financial Statements

F-4

TPG RE Finance Trust, Inc.

Consolidated Statements of Income (Loss)

and Comprehensive Income (Loss)

(in thousands, except share and per share data)

Year Ended December 31,

Interest Income and Interest Expense

Other Revenue

Other Expenses

Incentive Management Fee — — 7,146

Securities Impairments — (203,397 ) —

Gain on Sale of Real Estate Owned, net 15,790 — —

Credit Loss Benefit (Expense) 6,310 (69,755 ) —

Series B Preferred Stock Redemption Make-Whole Payment (22,485 ) — —

Earnings (Loss) per Common Share, Basic $ 0.92 $ (2.03 ) $ 1.73

Earnings (Loss) per Common Share, Diluted $ 0.87 $ (2.03 ) $ 1.73

Weighted Average Number of Common Shares Outstanding

Other Comprehensive Income (Loss)

Unrealized Loss on Available-for-Sale Debt Securities — (1,051 ) 3,036

See accompanying notes to the Consolidated Financial Statements

F-5

TPG RE Finance Trust, Inc.

Consolidated Statements of Changes in Equity

(In thousands, except share data)

Permanent Equity Temporary Equity

Issuance of Class A Common Stock — — — — — — — — — — — — —

Issuance of SubREIT Preferred Stock 125 — — — — — — — 125 — — 125 —

Transfer of Class A to Common Shares — — — — 6,648 — (6,648 ) — — — — — —

Retirement of Common Stock — — — — (16,682 ) — — — (285 ) (42 ) — (327 ) —

Amortization of Share Based Compensation — — — — — — — — 2,556 — — 2,556 —

Other Comprehensive Income (Loss) — — — — — — — — — — 3,036 3,036 —

Dividends on Preferred Stock — — — — — — — — — (15 ) — (15 ) —

Retirement of Common Stock — — — — (55,197 ) — — — — — — — —

Issuance of Series B Preferred Stock — — — — — — — — — — — — 210,598

Amortization of Share-Based Compensation — — — — — — — — 5,768 — — 5,768 —

Other Comprehensive Loss — — — — — — — — — — (1,051 ) (1,051 ) —

Dividends on Preferred Stock — — — — — — — — — (14,689 ) — (14,689 ) —

Issuance of Common Stock — — — — 440,509 — — — — — — — —