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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 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 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, 2021.

Overview

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.

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.

We continue to evaluate the effects of macroeconomic concerns, including, without limitation, a rising interest rate environment, inflation, supply chain disruptions, geopolitical tensions, growing concerns of an economic recession in the near term, and changes to the way commercial tenants use real estate. Rising interest rates, increased volatility in public debt and equity markets, and elevated geopolitical risk led us to moderate our loan origination volume and increase our liquidity during the first half of 2022. Improving conditions for lending caused us to increase investment activity during the second half of 2022. From January 1, 2022 through December 31, 2022, we originated 18 and acquired 5 first mortgage transitional loans, with total commitments of $1.7 billion, an initial unpaid principal balance of $1.5 billion, and unfunded commitments at closing of $0.2 billion.

For more information regarding the impact that current macroeconomic concerns have had and may have on our business, see the risk factors set forth in this Form 10-K.

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 investment 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 10 to our Consolidated Financial Statements included in this Form 10-K.

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Fourth Quarter 2022 Activity

Operating Results:

•Recognized Net income attributable to common stockholders of $32.6 million, compared to Net loss of ($117.9) million for the three months ended September 30, 2022, an increase of $150.6 million.

•Produced Net interest income of $35.2 million, resulting from interest income of $100.3 million and interest expense of $65.2 million. Net interest income increased $4.7 million compared to the three months ended September 30, 2022. All interest income and interest expense resulted from our loan portfolio.

•Generated Distributable Earnings of $23.3 million, an increase of $8.0 million, compared to the three months ended September 30, 2022.

•Recorded a decrease to our allowance for credit losses on our loan portfolio of $11.1 million, for a total allowance for credit losses of $214.6 million, or 395 basis points of total loan commitments of $5.4 billion.

•Declared a common stock dividend of $0.24 per common share for the three months ended December 31, 2022.

Investment Portfolio Activity:

•Originated one first mortgage loan with a total loan commitment of $87.0 million, an aggregate initial unpaid principal balance of $59.0 million, unfunded loan commitment of $28.0 million, an interest rate of Term SOFR plus 5.25%, and an interest rate floor of 2.50%.

•Funded $39.3 million in future funding obligations associated with existing loans.

•Received five full loan repayments of $294.4 million, and partial principal payments including accrued PIK interest payments of $42.1 million across five loans, for total loan repayments of $336.5 million.

•Sold a three-building office property classified as real estate owned for gross proceeds of $78.6 million.

Investment Portfolio Financing Activity:

•Utilized the reinvestment feature in TRTX 2021-FL4 one time, recycling loan repayments of $12.5 million and in TRTX 2022-FL5 one time, recycling loan repayments of $107.5 million.

•Closed a $23.3 million asset-specific financing arrangement with a new institutional counterparty secured by a performing first mortgage loan. The arrangement provides financing on a matched term, non-recourse, non-mark-to-market basis.

•Increased the capacity of our secured revolving credit facility by $40.0 million to $290.0 million, with the inclusion of an additional lender.

Full Year 2022 Activity

Operating Results:

•Recognized Net (loss) attributable to common stockholders of ($73.6) million, or ($0.95) per diluted share, and Distributable Earnings of $86.7 million or $1.08 per diluted share.

•Produced Net interest income of $142.1 million, resulting from interest income of $302.9 million and interest expense of $160.8 million. All interest income and interest expense resulted from our loan portfolio.

•Declared dividends of $75.1 million, or $0.96 per common share, representing a 14.1% annualized dividend yield based on the December 30, 2022 closing price of $6.79.

Investment Portfolio Activity:

•Originated 18 and acquired 5 first mortgage loans with total loan commitments of $1.7 billion, an aggregate initial unpaid principal balance of $1.5 billion, unfunded loan commitments of $0.2 billion, a weighted average interest rate of the applicable benchmark rate plus 3.77%, and a weighted average interest rate floor of 0.72%.

•Funded $145.2 million in future funding obligations associated with existing loans.

•Received loan repayments, in whole and in part, of $1.5 billion including accrued PIK interest.

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Investment Portfolio Financing Activity:

•Issued TRTX 2022-FL5, a $1.075 billion managed CRE CLO with $907.0 million of investment-grade bonds outstanding, a two-year reinvestment period, an advance rate of 84.4%, and a weighted average interest rate at issuance of Compounded SOFR plus 2.02%, before transaction costs.

•Redeemed all $600.0 million of outstanding investment-grade bonds of TRTX 2018-FL2. The 17 collateral interests with an aggregate unpaid principal balance of $805.7 million financed therein were refinanced by the issuance of TRTX 2022-FL5 and the expansion of an existing secured credit agreement.

•Closed a $250.0 million secured revolving credit facility with a syndicate of 5 banks to provide interim funding of up to 180 days for newly-originated and existing loans, and subsequently added an additional lender increasing total capacity to $290.0 million. The credit facility has a 3-year term and an interest rate of Term SOFR plus 2.00%.

•Closed a $397.9 million asset-specific financing arrangement with an Institutional Lender secured by five first mortgage loans. The arrangement provides financing on a matched term, non-recourse, non-mark-to-market basis.

•Closed five separate non-mark-to-market asset-specific financing arrangements with four counterparties, increasing our non-market-to-market financing to 73.5% from 70.4% as of December 31, 2021.

Liquidity:

Available liquidity as of December 31, 2022 of $590.9 million was comprised of:

•$254.0 million of cash-on-hand, of which $231.7 million was available for investment, net of $22.4 million held to satisfy liquidity covenants under our secured financing agreements.

•$297.2 million of cash in our CRE CLOs available for investment in eligible collateral.

•Undrawn capacity (liquidity available to us without the need to pledge additional collateral to our lenders) of $38.4 million under secured credit agreements with five lenders, $0.6 million under our secured revolving credit facility and $0.8 million under asset-specific financing arrangements.

We have financed our loan investments as of December 31, 2022 utilizing three CRE CLOs totaling $2.5 billion, two of which are open for reinvestment of eligible loan collateral at year end, $1.1 billion under secured credit agreements with total commitments of $2.8 billion provided by six lenders, $565.4 million under asset-specific financing arrangements, and $44.3 million under our $290.0 million secured revolving credit facility. As of December 31, 2022, 58.9% of our borrowings were pursuant to our CRE CLO vehicles, 27.6% were pursuant to our secured credit agreements and secured revolving credit facility and 13.5% were pursuant to our asset-specific financing arrangements. Non-mark-to-market financing comprised 73.5% of total loan portfolio borrowings as of the end of the fourth quarter of 2022.

Our ability to draw on our secured credit agreements and secured revolving credit facility 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-driven events. Borrowings under our secured revolving credit agreement are permitted with respect to collateral that satisfies pre-determined eligibility standards, and have a pre-determined advance rate (generally, 75% of the unpaid principal balance pledged) and credit spread (Term SOFR plus 2.00%). As of December 31, 2022, borrowings under these secured credit agreements and secured revolving credit facility had a weighted average credit spread of 1.86% (1.86% for arrangements with mark-to-market provisions and 2.00% for one arrangement with no mark-to-market provisions), and a weighted average term to extended maturity assuming exercise of all extension options and term-out provisions of 2.1 years. These financing arrangements are generally 25% recourse to Holdco, with the exception of the secured revolving credit facility that is 100% recourse to Holdco.

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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, 2022, we recorded net income attributable to common stockholders of $0.42 per diluted common share, an increase of $1.94 per diluted common share from the three months ended September 30, 2022, of which $1.91 per diluted common share relates to a decrease in our credit loss expense during the fourth quarter of 2022 as compared to the third quarter of 2022.

Distributable Earnings per diluted common share was $0.30 for three months ended December 31, 2022, an increase of $0.11 per diluted common share from the three months ended September 30, 2022. The increase in Distributable Earnings per diluted common share was primarily due to $0.06 per diluted common share of a write-off recognized during the third quarter of 2022 related to a non-performing retail loan.

For the three months ended December 31, 2022, we declared a cash dividend of $0.24 per common share which was paid on January 25, 2023.

Our book value per common share as of December 31, 2022 was $14.48, a decrease of $1.89 per common share from our book value per common share as of December 31, 2021 of $16.37, primarily due to an increase in our allowance for credit losses during the year ended December 31, 2022 of $173.0 million, or $2.23 per common share. Approximately $136.7 million, or 79%, of the net increase in our allowance for credit losses was recorded during the third quarter of 2022.

Earnings Per Common Share and Dividends Declared Per Common 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 (dollars in thousands, except share and per share data):

Three Months Ended, Year Ended December 31,

Participating securities' share in (loss) earnings (404) (986) (717)

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

Earnings (loss) per common share, basic(2) $ 0.42 $ (0.95) $ 0.92

Earnings (loss) earnings per common share, diluted(2) $ 0.42 $ (0.95) $ 0.87

Dividends declared per common share $ 0.24 $ 0.96 $ 0.95

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(1)Includes preferred stock dividends declared and paid for Series A Preferred Stock and Series C Preferred Stock shares outstanding for the three months and year ended December 31, 2022. Includes preferred stock dividends declared and paid for Series A Preferred Stock, Series C Preferred Stock, and Series B Preferred Stock shares outstanding for the year ended December 31, 2021.

(2)Basic and diluted (loss) earnings per common share are computed independently based on the weighted-average shares of common stock outstanding. Diluted earnings per common share also includes the impact of participating securities outstanding plus any incremental shares that would be outstanding assuming the exercise of the Warrants.

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 stock compensation expense, (ii) depreciation and amortization expense, (iii) unrealized gains (losses) (including credit loss expense (benefit), net), and (iv) certain non-cash or income and expense

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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.

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

Three Months Ended, Year Ended December 31,

Series B Preferred Stock redemption make-whole payment(1) — — 22,485

Utilization of capital loss carryforwards(3) — (13,291) (15,790)

Write-off — (4,400) —

Distributable earnings per common share, basic $ 0.30 $ 1.12 $ 1.16

Distributable earnings per common share, diluted $ 0.30 $ 1.08 $ 1.09

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(1)Represents the make-whole payment to the holder of the Series B Preferred Stock for an 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. See Note 12 to our consolidated financial statements included in this Form 10-K.

(2)Series B Preferred Stock accretion and write-off of discount, including allocated warrant fair value and transaction costs includes amounts recorded as deemed dividends and the write-off of unamortized transaction costs and the unaccreted portion of the allocated warrant fair value related to the Series B Preferred Stock. For the year ended December 31, 2021, the write-off of unamortized transaction costs and unaccreted allocated warrant fair value was $22.5 million.

(3)For the years ended December 31, 2022 and 2021, capital loss carryforwards were utilized to offset the $13.3 million and $15.8 million, respectively, of taxable capital gain realized from the sale of REO.

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Book Value Per Common Share

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

Series A preferred stock ($125 aggregate liquidation preference) (125) (125)

Total stockholders’ equity, net of preferred stock $ 1,120,621 $ 1,263,331

Book value per common share $ 14.48 $ 16.37

Investment Portfolio Overview

Our interest-earning assets are comprised entirely of a portfolio of floating rate, first mortgage loans, or in limited instances, mezzanine loans. As of December 31, 2022, our loans held for investment portfolio consisted of 70 first mortgage loans (or interests therein) totaling $5.4 billion of commitments with an unpaid principal balance of $5.0 billion. As of December 31, 2022, 100% of the loan commitments in our portfolio consisted of floating rate loans, of which 100.0% were first mortgage loans or, in two instances, a first mortgage loan and contiguous mezzanine loan both owned by us. As of December 31, 2022, we had $426.1 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 with a carrying value of $60.6 million. The Las Vegas land was acquired pursuant to a negotiated deed-in-lieu of foreclosure in December 2020. On April 4, 2022, we sold the 10 acre parcel of Las Vegas land for net cash proceeds of $73.9 million and recognized a gain on sale of real estate owned, net of $13.3 million. On October 12, 2022, we acquired an office property pursuant to a negotiated deed-in-lieu of foreclosure. On November 21, 2022, we sold the office property for gross proceeds of $78.6 million. As of December 31, 2022, we no longer own any REO.

See Note 4 to our consolidated financial statements included in this Form 10-K for additional information.

Loan Portfolio

During the three months ended December 31, 2022, we originated one mortgage loan with a total commitment of $87.0 million, an initial unpaid principal balance of $59.0 million, and an unfunded commitment at closing of $28.0 million. Loan fundings included $39.3 million of deferred future fundings related to previously originated loans. We received proceeds from five loan repayments in-full of $294.4 million, and principal amortization and accrued PIK interest payments of $42.1 million across five loans, for total loan repayments of $336.5 million during the period.

The following table details our loans held for investment portfolio activity by unpaid principal balance (dollars in thousands):

Three Months Ended, Year Ended,

Loan originations and acquisitions — initial funding $ 59,038 $ 1,546,475

Accrued PIK interest repayments (701) (1,314)

Loan extinguishment on conversion to REO(2) (89,234) (89,234)

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(1)Additional fundings made under existing loan commitments.

(2)Extinguishment of a first mortgage loan with an unpaid principal balance of $89.2 million. In October 2022, we took title to the office property pursuant to a negotiated deed-in-lieu of foreclosure. The REO was sold during the three months ended December 31, 2022.

For the three months ended December 31, 2022, we generated interest income of $100.3 million and incurred interest expense of $65.2 million, which resulted in net interest income of $35.2 million. All interest income and interest expense resulted from our loan portfolio.

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The following table details overall statistics for our loans held for investment portfolio as of December 31, 2022 (dollars in thousands):

Balance sheet portfolio Total loan exposure(1)

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

Weighted average credit spread 3.4 % 3.4 %

Weighted average all-in yield(4) 8.1 % 8.1 %

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

Weighted average LTV(6) 67.2 % 67.2 %

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(1)In certain instances, we create structural leverage through the co-origination or non-recourse syndication of a senior loan interest to a third-party. 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. Total loan exposure encompasses the entire loan portfolio we originated, acquired and financed. We did not have any non-consolidated senior interests as of December 31, 2022.

(2)Unpaid principal balance includes PIK interest of $1.7 million as of December 31, 2022.

(3)Unfunded loan commitments may be funded over the term of each loan, subject in certain cases to an expiration date or a force-funding date, primarily to finance property improvements or lease-related expenditures by our borrowers, to finance operating deficits during renovation and lease-up, and in limited instances to finance construction.

(4)As of December 31, 2022, all of our loans were floating rate. Loans originated before December 31, 2021 are indexed to LIBOR, while loans originated after January 1, 2022 are indexed to Term SOFR. As of December 31, 2022, based on the total loan commitments of our loan portfolio, 20.7% (or $1.1 billion) of our loans were subject to Term SOFR and 79.3% (or $4.3 billion) were subject to LIBOR as the benchmark interest rate. In addition to credit spread, all-in yield includes the amortization of deferred origination fees, purchase price premium and discount, and accrual of both extension and exit fees. All-in yield for the total portfolio assumes the applicable floating benchmark interest rate as of December 31, 2022 for weighted average calculations.

(5)Extended maturity assumes all extension options are exercised by the borrower; provided, however, that our loans may be repaid prior to such date. As of December 31, 2022, based on the unpaid principal balance of our total loan exposure, 37.8% of our loans were subject to yield maintenance or other prepayment restrictions and 62.2% were open to repayment without penalty.

(6)Except for construction loans, LTV is calculated for loan originations and existing loans as the total outstanding principal balance of the loan or participation interest in a loan (plus any financing that is pari passu with or senior to such loan or participation interest) as of December 31, 2022, divided by the as-is appraised value of our collateral at the time of origination or acquisition of such loan or participation interest. For construction loans only, LTV is calculated as the total commitment amount of the loan divided by the as-stabilized value of the real estate securing the loan. The as-is or as-stabilized (as applicable) value reflects our Manager’s estimates, at the time of origination or acquisition of the loan or participation interest in a loan, of the real estate value underlying such loan or participation interest determined in accordance with our Manager’s underwriting standards and consistent with third-party appraisals obtained by our Manager.

The following table details the interest rate floors for our loans held for investment portfolio as of December 31, 2022 (dollars in thousands):

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(1)Excludes capitalized interest of $1.7 million relating to previously modified loans.

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

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Real Estate Owned

In December 2020, we acquired two largely undeveloped commercially-zoned land parcels on the Las Vegas Strip comprising 27 acres pursuant to a negotiated deed-in-lieu of foreclosure. Our cost basis in the Las Vegas land was $99.2 million, equal to the estimated fair value of the collateral at the date of acquisition, net of estimated selling costs. We obtained from a third party a $50.0 million non-recourse first mortgage loan secured by the Las Vegas land which was repaid on November 12, 2021.

During the three months ended December 31, 2021, we sold a 17 acre parcel of Las Vegas land. As of December 31, 2021, we held the remaining 10 acre parcel of the Las Vegas land at its estimated fair value at the time of acquisition, net of estimated selling costs, of $60.6 million. On April 4, 2022, we sold the 10 acre parcel of Las Vegas land for net cash proceeds of $73.9 million and recognized a gain on sale of real estate owned, net of $13.3 million.

During the three months ended December 31, 2022, we acquired an office property pursuant to a negotiated deed-in-lieu of foreclosure. Our cost basis in the office property was $76.5 million, equal to the estimated fair value of the collateral at the date of acquisition, net of estimated selling costs. During the period of ownership, we funded $2.1 million of capital expenditures related to tenant improvements for the property. On November 21, 2022, we sold the office property for gross proceeds of $78.6 million. As of December 31, 2022, we no longer own any REO.

See Notes 4 and 6 to our Consolidated Financial Statements included in this Form 10-K for additional information regarding the sale of the remaining portion of the Las Vegas land and the office property and the predecessor mortgage loan, respectively.

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.

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 loan portfolio.

The following table allocates the amortized cost basis of our loans held for investment portfolio based on our internal risk ratings (dollars in thousands):

Risk rating Number of loans Amortized cost Number of loans Amortized cost

1 — $ — — $ —

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The following table allocates the amortized cost basis of our loans held for investment portfolio based on our property type classification (dollars in thousands):

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(1)Condominium property type includes a 24% pari passu participation interest in each of four whole mortgage loans related to one project and to the same borrower.

The weighted average risk rating of our loan portfolio increased to 3.2 as of December 31, 2022 compared to 3.0 as of December 31, 2021.

During the three months ended December 31, 2022, as part of our quarterly risk rating process, we downgraded four loans and upgraded one loan. Of the four downgraded loans, one office property was downgraded from "4" to "5" because of a near-term loan maturity and a significant risk of principal loss and three multifamily properties were downgraded from "3" to "4" due to a monetary default in two instances, and a maturity default in a third instance. We upgraded one industrial loan from risk category "3" to "2" due to continued improvement in property-level operating performance and the sale of one of two collateral properties, which materially reduced our loan-to-value ratio. During the three months ended December 31, 2022, we received full loan repayments with respect to five loans with a total unpaid principal balance of $294.4 million and a weighted average risk rating of 3.1 as of September 30, 2022. The five loans were included within our office, hotel, and multifamily property categories. Additionally, we received partial principal repayments of $41.4 million relating to five separate loans. The one new loan investment made during the three months ended December 31, 2022 was assigned an initial risk rating of "3".

During the three months ended September 30, 2022, we downgraded three office loans from risk category "4" to "5" because of near-term loan maturities and a significant risk of principal loss; and upgraded one hotel and two multifamily loans from risk category "3" to "2" due to strong property-level operating performance and debt service coverage that materially exceeds original underwriting. During the three months ended September 30, 2022, we received full loan repayments with respect to eight loans with a total unpaid principal balance of $291.4 million and a weighted average risk rating of 2.6 as of June 30, 2022. The eight loans were included within our office, hotel, retail and condominium property categories. Additionally, we received partial principal repayments of $77.1 million relating to three separate loans secured by office properties. Two of the ten new loan investments made during the three months ended September 30, 2022, were assigned an initial risk rating of "2" based on their strong operating performance and debt service coverage ratios and the remaining eight new loan investments were assigned an initial risk rating of "3".

During the three months ended June 30, 2022, we downgraded one office loan and upgraded one hotel loan. We downgraded one office loan from risk category "4" to "5" because of the loan's near-term maturity, and a risk of principal loss because a short sale of the underlying collateral was likely during the second half of 2022. During the three months ended June 30, 2022, we upgraded one hotel loan from risk category "3" to "2" due to continued improvement in property-level operating performance and strong debt service coverage that exceeds original underwriting. Additionally, during the three months ended June 30, 2022, we received full loan repayments with respect to seven loans with a total unpaid principal balance of $676.9 million and a weighted average risk rating of 2.8 as of March 31, 2022. The seven loans were included within our multifamily, office, hotel, mixed-use and life science property categories.

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During the three months ended March 31, 2022, we downgraded nine loans and upgraded one loan. Of the nine downgraded loans, eight loans related to office properties and one loan related to a mixed-use property. We downgraded seven office loans from risk category "3" to "4" and one office loan from risk category "2" to "3" because of ongoing concerns about shifting office market fundamentals, the impact on property-level operating performance of slower-than-expected return-to-office trends, and increased market volatility. Additionally, we downgraded one mixed-use loan from risk category "3" to "4" because of plateauing property-level operating performance, local market economic conditions, and concerns regarding the borrower’s ability to repay the loan upon or prior to its maturity later this year. During the three months ended March 31, 2022, we upgraded one hotel loan from risk category "3" to "2" due to continued improvement in property-level operating performance and strong debt service coverage that exceeds original underwriting. During the three months ended March 31, 2022, we received repayment in full of one office loan with a total unpaid principal balance of $40.3 million and a risk rating of 3 as of December 31, 2021.

Loan Modification Activity

Loan modifications and amendments are commonplace in the transitional lending business. We may amend or modify a loan depending on the loan’s specific facts and circumstances. These loan modifications typically include additional time for the borrower to refinance or sell the collateral property, adjustment or waiver of performance tests that are prerequisite to the extension of a loan maturity, and/or deferral of scheduled principal payments. In exchange for a modification, we often receive a partial repayment of principal, a short-term accrual of PIK interest for a portion of interest due, a cash infusion to replenish interest or capital improvement reserves, termination of all or a portion of the remaining unfunded loan commitment, additional call protection, and/or an increase in the loan coupon or additional loan fees. None of our loan modifications resulted in a significant modification.

We continue to work with our borrowers to address issues as they arise, 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 and weighted average maturity date of our loans, loan quality, risk rating, delinquency status, loan-to-value ratio, historical loss experience and other conditions influencing loss expectations, such as reasonable and supportable forecasts of economic conditions. During the year ended December 31, 2022, we recorded an increase of $168.4 million in our allowance for credit losses resulting in an aggregate CECL reserve of $214.6 million at year-end. The increase in our allowance for credit losses reflects ongoing concerns about growing geopolitical tensions, the potential impact of market volatility, the increasing probability of an economic recession, tightening liquidity in the capital markets and a slowdown in investment sales, and loan specific property-level performance trends such as shifting office market fundamentals, supply chain constraints and delays, and inflationary pressures that may cause operating margins to narrow.

While the ultimate impact of the macroeconomic outlook and property performance trends remain uncertain, we selected our macroeconomic outlook to address this uncertainty, and made specific forward-looking adjustments to the inputs of our loan-level calculations to reflect variability in an economic climate marked by rising rates and other impacts to the broader economy.

The following table presents the allowance for credit losses for loans held for investment (dollars in thousands):

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Investment Portfolio Financing

We finance our investment portfolio using secured financing agreements, including secured credit agreements, secured revolving credit facilities, mortgage loans payable, asset-specific financing arrangements, and collateralized loan obligations. 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 involving either credit or spread (capital markets) considerations.

As of December 31, 2022, non-mark-to-market financing sources accounted for 73.5% of our total loan portfolio borrowings. The remaining 26.5% of our loan portfolio borrowings, comprised primarily of our six secured credit agreements, are subject to credit marks, and in only one instance to credit and spread marks. As of December 31, 2022, we did not have any non-consolidated senior interests.

The following table summarizes our investment portfolio financing arrangements (dollars in thousands):

Outstanding principal balance

Secured credit agreements

Secured revolving credit facility

Asset-specific financing

Collateralized loan obligations

Non-consolidated senior interests None n.a — — — 132,000 — 132,000

_______________________________

(1)On April 11, 2022, we repaid $34.0 million outstanding and simultaneously terminated the financing arrangement.

(2)The secured credit agreement became eligible for re-margining after its second anniversary date on October 30, 2022 based on an LTV test; previously, no credit or spread-based margin risk applied.

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Secured Credit Agreements

As of December 31, 2022, aggregate borrowings outstanding under our secured credit agreements totaled $1.1 billion. As of December 31, 2022, the overall weighted average interest rate was the benchmark interest rate plus 1.86% per annum and the overall weighted average advance rate was 78.1%. As of December 31, 2022, outstanding borrowings under these arrangements had a weighted average term to extended maturity of 2.1 years assuming the exercise of all extension options and term out provisions. These secured credit agreements are generally 25.0% recourse to Holdco.

The following table details our secured credit agreements as of December 31, 2022 (dollars in thousands):

________________________________

(1)Commitment amount represents the maximum amount of borrowings available under a given agreement once sufficient collateral assets have been approved by the lender and pledged by us.

(2)Undrawn capacity represents the positive difference between the borrowing amount approved by the lender against collateral assets pledged by us and the amount actually drawn against those collateral assets. The funding of such amounts is generally subject to the sole and absolute discretion of each lender.

(3)Represents the commitment amount less the approved borrowings, which amount is available to be borrowed provided we pledge, and the lender approves, additional collateral assets.

(4)Each secured credit agreement interest rate is subject to LIBOR or Term SOFR as its benchmark interest rate, depending upon the LIBOR transition provisions of the specific secured credit agreement and underlying transaction confirmations. The credit spread for each arrangement is added to the applicable benchmark interest rate to calculate the interest rate charged for each borrowing.

(5)Our ability to extend our secured credit agreements to the dates shown above is subject to satisfaction of certain conditions. Even if extended, our lenders retain sole discretion to determine whether to accept pledged collateral, and the advance rate and credit spread applicable to each borrowing thereunder.

(6)On August 19, 2022, the secured credit agreement's initial maturity was extended to August 19, 2023.

(7)On February 9, 2022 the secured credit agreement’s initial maturity was extended to April 18, 2025.

(8)On April 11, 2022 the secured credit agreement's initial maturity was extended to August 13, 2025 and the Company reduced the total commitment to $500.0 million from $750.0 million. The secured credit agreement includes a $250.0 million accordion feature subject to the lender's approval.

(9)On April 29, 2022 the secured credit agreement's maturity was extended to May 4, 2023.

(10)On September 14, 2022, the secured credit agreement's initial and extended maturity was extended to March 31, 2023.

Once we identify an asset and the asset is approved by the secured credit agreement 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 agreements 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 agreement lenders.

For each transaction, we and the lender agree to a trade confirmation which sets forth, among other things, the asset purchase price, the maximum advance rate, the interest rate and the market value of the asset. A trade confirmation will also include benchmark interest rate and any applicable transition language that complies with the current standards as set forth by the ARRC in its 2021 recommendations. For transactions under our secured credit agreements, 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 and loan-specific margin maintenance provisions, described below.

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Generally, our secured credit agreements 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 agreement 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 agreement 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.

Each of the secured credit agreements 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 agreements 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 agreements 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 agreement 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 agreements.

The maturity dates for each of our secured credit agreements are set forth in tables that appear earlier in this section. Our secured credit agreements 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, amend or otherwise optimize any financing agreements related to our loans.

As of December 31, 2022, the weighted average haircut (which is equal to one minus the advance rate percentage against collateral for our secured credit agreements taken as a whole) was 21.9% compared to 23.9% as of December 31, 2021.

The secured credit agreements 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 agreements may require an accelerated principal amortization schedule if the secured credit agreement 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 agreement, we retain the right to administer and service the loan and interact directly with the underlying obligors and sponsors of our loan assets so long as there is no default under the secured credit agreement, and so long as we do not engage in certain material modifications (including amendments, waivers, exercises of remedies, or releases of obligors and collateral, among other things) of the loan assets without the lender’s prior consent.

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Secured Revolving Credit Facility

On February 22, 2022, we closed a $250.0 million, secured revolving credit facility with a syndicate of 5 banks to provide interim funding of up to 180 days for newly-originated and existing loans. This facility has an initial term of 3 years, an interest rate of Term SOFR plus 2.00% that is payable monthly in arrears, and an unused fee of 15 or 20 basis points, depending upon whether utilization exceeds 50.0%. During the year ended December 31, 2022, the weighted average unused fee was 18 basis points. This facility is 100% recourse to Holdco. During the fourth quarter of 2022, an additional lender was added to the facility, increasing the borrowing capacity to $290.0 million. As of December 31, 2022, we pledged one loan investment with an aggregate collateral principal balance of $59.8 million and had outstanding Term SOFR-based borrowings of $44.3 million.

Asset-Specific Financing Arrangements

We closed five separate asset-specific financing arrangements with four third party lenders during the year ended December 31, 2022, which increased our non-mark-to-market portfolio financing arrangements. On November 17, 2022, we closed a $23.3 million asset-specific financing arrangement with Customers Bank. The arrangement provides non-mark-to-market matched term, non-recourse financing. On September 1, 2022, we closed a $397.9 million asset-specific financing arrangement with an Institutional Lender ("Institutional Lender 2"). The arrangement provides non-mark-to-market matched term, non-recourse financing. As of December 31, 2022, we had two asset-specific financing arrangements with Axos Bank secured by two mortgage loans. The separate arrangements provide non-mark-to-market financing, a term of up to 2 years, and are 15% recourse to Holdco. On June 30, 2022, we closed a $200.0 million loan financing facility (the "BMO Facility"). The BMO Facility provides asset-specific financing on a non-mark-to-market basis with matched term. This facility is 25% recourse to Holdco.

The following table details our asset-specific financing arrangements (dollars in thousands):

Financing Collateral

_______________________

(1)Net of $4.4 million unamortized deferred financing costs.

(2)Collateral loan assets are indexed to either LIBOR or Term SOFR and related financings are indexed to Term SOFR under Axos Bank, the BMO Facility and Customers Bank. Under the Institutional Lender 2 arrangement, collateral loan assets are indexed to LIBOR and the financing provided is indexed to Term SOFR.

(3)Term under Axos Bank is based on the extended maturity date for the specific arrangement. Borrowings under the BMO Facility, the Institutional Lender 2 arrangement and Customers Bank are term-matched to the corresponding collateral loan asset. The weighted-average term assumes all extension options of the collateral loan asset are exercised by the borrower.

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Collateralized Loan Obligations

As of December 31, 2022, we had three collateralized loan obligations, TRTX 2022-FL5, TRTX 2021-FL4, and TRTX 2019-FL3, totaling $2.5 billion, financing $3.0 billion, or 60.6%, of our loans held for investment portfolio, and holding $297.2 million of cash for investment in eligible loan collateral. As of December 31, 2022, our CRE CLOs provide low cost, non-mark-to-market, non-recourse financing for 58.9% of our loan portfolio borrowings. The collateralized loan obligations bear a weighted average interest rate of Term SOFR, LIBOR, or Compounded SOFR plus 1.78%, have a weighted average advance rate of 81.4%, and include a reinvestment feature that allows us to contribute existing or new loan investments in exchange for proceeds from loan repayments held by the CRE CLOs.

The following table details the loan collateral and borrowings under our CRE CLOs (dollars in thousands):

Total

________________________________

(1)Includes loan amounts held in our CRE CLO investment structures and does not include other loans held for investment, net of $2.9 million held within the Sub-REIT structure.

(2)Weighted average spread excludes the amortization of loan fees and deferred financing costs.

(3)Loan term represents weighted-average final maturity, assuming extension options are exercised by the borrower. Repayments of CRE CLO notes are dependent on timing of related loan repayments post-reinvestment period. The term of the CRE CLO notes represents the rated final distribution date.

(4)On October 1, 2021, the benchmark index interest rate for borrowings under TRTX 2019-FL3 was converted from Compounded SOFR to Term SOFR by the designated transaction representative under the FL3 indenture. We have the right to convert the mortgage assets benchmark interest rate from LIBOR to Term SOFR to eliminate the difference between benchmark rates used for the assets and liabilities of the CRE CLO.

(5)As of December 31, 2022, the TRTX 2021-FL4 mortgage assets are indexed to LIBOR, with the exception of four participation interests totaling $118.9 million which are indexed to Term SOFR.

(6)As of December 31, 2022, the TRTX 2022-FL5 mortgage assets are indexed to LIBOR, with the exception of two participation interests totaling $178.5 million which are indexed to Term SOFR. We have the right to convert the mortgage assets benchmark interest rate from LIBOR to Compounded SOFR to eliminate the difference between benchmark rates used for the assets and liabilities of the CRE CLO.

(7)Collateral loan investment assets of FL3, FL4 and FL5 represent 14.1%, 25.0% and 21.5% of the aggregate unpaid principal balance of our loans held for investment portfolio as of December 31, 2022.

(8)During the three months ended December 31, 2022, we recognized interest expense of $34.7 million, which includes $1.8 million of deferred financing cost amortization. During the year ended December 31, 2022, we recognized interest expense of $93.5 million, which includes $7.8 million of deferred financing cost amortization.

During the year ended December 31, 2022, we utilized our eligible reinvestment feature related to TRTX 2021-FL4 nine times, recycling repayment of loan principal received of $220.1 million. During the year ended December 31, 2022, we utilized our eligible reinvestment feature related to TRTX 2022-FL5 three times, recycling $181.7 million of principal repayments received. The reinvestment period for TRTX 2019-FL3 ended on October 11, 2021.

See Note 5 to our Consolidated Financial Statements included in this Form 10-K for details about our CRE CLO reinvestment feature.

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Non-Consolidated Senior Interests and Retained Mezzanine Loans

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.

On August 18, 2022, our $35.0 million retained mezzanine loan was repaid in connection with repayment of a related $132.0 million non-consolidated senior interest owned by a third party. As of December 31, 2022, there are no non-consolidated senior interests or retained mezzanine loans outstanding.

Financial Covenants for Outstanding Borrowings

Our financial covenants and guarantees for outstanding borrowings related to our secured financing agreements require Holdco to maintain compliance with the following financial covenants (among others):

Financial Covenant Current

Debt-to-Equity Debt-to-Equity ratio not to exceed 4.25 to 1.0

Interest Coverage Minimum interest coverage ratio of no less than 1.5 to 1.0

We were in compliance with all financial covenants for our secured credit agreements and secured revolving credit facility to the extent of outstanding balances as of December 31, 2022 and December 31, 2021.

If we fail to 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.

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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. Prior to December 31, 2021, LIBOR was the prevailing benchmark; thereafter Term or Compounded SOFR apply. 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 in our mortgage loan investment portfolio. As of December 31, 2022, 100.0% of our loan investments by unpaid principal balance earned a floating rate of interest and were financed with liabilities that require interest payments based on floating rates, which resulted in $0.8 billion of net floating rate exposure, subject to the impact of interest rate floors on all our floating rate loans and less than 3.0% of our liabilities. Subject to the specific footnote disclosures in the preceding tables describing our revolving credit facilities, secured financing arrangements, asset-specific financing arrangements and CRE CLOs, and the table that follows, our liabilities are generally index-matched to each loan investment asset, resulting in a net exposure to movements in floating benchmark interest rates that varies based on the relative proportion of floating rate assets and liabilities.

The following table details the net floating rate exposure of our loan portfolio as of December 31, 2022 (dollars in thousands):

Net exposure

Floating rate mortgage loan assets(1) $ 5,004,798

Floating rate mortgage loan liabilities(1)(2) (4,179,211)

Total floating rate mortgage loan exposure, net $ 825,587

__________________________________

(1)Prior to December 31, 2021, substantially all of our floating rate mortgage loan assets and liabilities were subject to LIBOR as the benchmark interest rate. As of December 31, 2022, $1.1 billion of $5.0 billion of our floating rate mortgage loan assets and $2.8 billion of $4.2 billion of our outstanding floating rate mortgage loan liabilities were subject to Compounded SOFR or Term SOFR as the benchmark interest rate.

(2)Floating rate liabilities include secured credit agreements, a secured revolving credit facility, asset-specific financing arrangements and collateralized loan obligations.

With the cessation of LIBOR expected to occur effective June 30, 2023, we continue to evaluate the appropriate timing to transition our assets and liabilities away from LIBOR to Term SOFR, the 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 extending through the final cessation of LIBOR in 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 is completed. 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. While we generally seek to match index our assets and liabilities, there is an ongoing transition period as different underlying assets and sources of financing transition from LIBOR to an alternative index (generally, Term SOFR or Compounded SOFR) at different times. We expect substantially all of our loan investments and liabilities will transition by June 30, 2023.

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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 interest expense, and financing costs and the corresponding weighted average yields for our loan portfolio (dollars in thousands):

Three Months Ended,

Core Interest-earning assets:

Interest-bearing liabilities:

Other Interest-earning assets:

___________________________________

(1)Based on amortized cost for loans held for investment and interest-bearing liabilities as of December 31, 2022. Calculated balances as the month-end averages.

(2)Weighted average yield or financing cost calculated based on annualized interest income or expense divided by calculated month-end average outstanding balance.

(3)Represents interest income on core interest-earning assets less interest expense on total interest-bearing liabilities. Interest income on Other Interest-earning assets is included in Other Income, net on the consolidated statements of income and comprehensive income.

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The following table presents the average balance of interest-earning assets and related interest-bearing liabilities, associated interest income and interest expense, and financing costs and the corresponding weighted average yields for our loan portfolio (dollars in thousands):

Years Ended

Core Interest-earning assets:

Interest-bearing liabilities:

Other Interest-earning assets:

____________________________________

(1)Based on amortized cost for loans held for investment and interest-bearing liabilities as of December 31, 2022. Calculated balances as the month-end averages.

(2)Weighted average yield or financing cost calculated based on annualized interest income or expense divided by calculated month-end average outstanding balance.

(3)Represents interest income on core interest-earning assets less interest expense on total interest-bearing liabilities. Interest income on Other Interest-earning assets is included in Other Income, net on the consolidated statements of income and comprehensive income.

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Our Results of Operations

Operating Results

Comparison of the Three Months Ended December 31, 2022 and September 30, 2022

The following table sets forth information regarding our consolidated results of operations (dollars in thousands, except per share data):

Three Months Ended

Interest income and interest expense

Other revenue

Other expenses

Servicing and asset management fees 494 494 —

Other comprehensive income (loss)

(Loss) earnings per common share, basic(1) $ 0.42 $ (1.52) $ 1.94

(Loss) earnings per common share, diluted(1) $ 0.42 $ (1.52) $ 1.94

Dividends declared per common share $ 0.24 $ 0.24 $ —

___________________________________

(1)Basic and diluted (loss) earnings per common share are computed independently based on the weighted-average shares of common stock outstanding. Diluted earnings per common share also includes the impact of participating securities outstanding plus any incremental shares that would be outstanding assuming the exercise of the Warrants.

(2)Additional information regarding our consolidated results of operations and financial performance for the three months ended September 30, 2022 can be found in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 filed with the SEC on November 1, 2022.

Net Interest Income

Net interest income increased by $4.7 million to $35.2 million during the three months ended December 31, 2022 compared to $30.4 million for the three months ended September 30, 2022. The increase was primarily due to an increase in the average loan balance, an increase in benchmark interest rates, and the collection of a $1.1 million prepayment penalty during the three months ended December 31, 2022. This was partially offset by an increase in the benchmark index rates tied to all of our loans and borrowings which increased our interest expense more quickly than it increased our interest income. By the end of the third quarter of 2022, the benchmark index rates exceeded the highest of the rate floors embedded in certain of our loans, which had previously constrained increases in interest income in response to rising benchmark rates. Additionally, our weighted average interest rate floors were unchanged from 0.85% as of December 31, 2022 and September 30, 2022.

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Other Revenue

Other revenue decreased $0.5 million for the three months ended December 31, 2022 compared to the three months ended September 30, 2022 primarily due to operating expenses incurred at our real estate owned office property during our brief period of ownership, partially offset by an increase in interest rates earned on cash balances.

Other Expenses

Other expenses increased $0.9 million for the three months ended December 31, 2022 compared to the three months ended September 30, 2022, primarily due to an increase in stock compensation expense of $0.6 million resulting from restricted stock grants made during the fourth quarter as part of the Company's year-end compensation cycle.

Credit Loss (Expense) Benefit

Credit loss (expense) benefit decreased by $147.5 million for the three months ended December 31, 2022 compared to the three months ended September 30, 2022. The decrease to our credit loss expense was due to a significant increase in the reserve during the three months ended September 30, 2022 due to weakening credit indicators, rising interest rates, inflationary expectations, an uncertain macroeconomic outlook that informed a more conservative macroeconomic forecast used to estimate our potential future credit losses, weakening conditions in the capital markets and a decline in investment sales, and new loan investments offset by loan repayments in-full. See Notes 3 and 15 to our Consolidated Financial Statements included in this Form 10-K for additional details regarding our allowance for credit losses, risk ratings, and property type concentration risk.

Preferred Stock Dividends and Participating Securities Share in Earnings

During the three months ended December 31, 2022 and September 30, 2022, we declared and paid a cash dividend of $3.1 million related to our Series C Preferred Stock.

Dividends Declared Per Common Share

During the three months ended December 31, 2022, we declared cash dividends of $0.24 per common share, or $19.0 million. During the three months ended September 30, 2022, we declared cash dividends of $0.24 per common share, or $18.7 million.

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Comparison of the Years Ended December 31, 2022 and December 31, 2021

The following table sets forth information regarding our consolidated results of operations (dollars in thousands, except per share data):

Years Ended

Interest income and interest expense

Other revenue

Other expenses

Series B Preferred Stock redemption make-whole payment — (22,485) 22,485

Other comprehensive income

Earnings per common share, basic(1) $ (0.95) $ 0.92 $ (1.87)

Earnings per common share, diluted(1) $ (0.95) $ 0.87 $ (1.82)

Dividends declared per common share $ 0.96 $ 0.95 $ 0.01

___________________________________

(1)Basic and diluted earnings per common share are computed independently based on the weighted-average shares of common stock outstanding. Diluted earnings per common share also includes the impact of participating securities outstanding plus any incremental shares that would be outstanding assuming the exercise of the Warrants.

Net Interest Income

Net interest income decreased $13.0 million to $142.1 million during the year ended December 31, 2022 compared to $155.1 million for the year ended December 31, 2021. The decrease was primarily due to an increase in the weighted average index rate, which increased our interest expense, and the lingering impact of high-rate floors on certain of our loans, which limited an increase in interest income on these loans until late in the third quarter, when benchmark rates exceeded 100% of our rate floors during the year ended December 31, 2022. Our weighted average interest rate floors decreased from 1.10% as of December 31, 2021 to 0.85% as of December 31, 2022.

Other Revenue

Other revenue increased $2.3 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to an increase in interest rates earned on our cash balances and $0.4 million recognized in association with our REO prior to its sale during the second quarter of 2022.

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Other Expenses

Other expenses increased $6.7 million for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to incentive management fees of $5.2 million resulting from an increase in Core Earnings primarily attributable to the $13.3 million gain on sale of real estate owned, net during the second quarter of 2022. Additionally, management fee expense increased $1.9 million for the year ended December 31, 2022 compared to the same period in 2021.

Gain on Sale of Real Estate Owned, net

During the year ended December 31, 2022, we sold the remaining 10 acre parcel of the Las Vegas land for net cash proceeds of $73.9 million and recognized a gain on sale of real estate owned, net of $13.3 million. During the year ended December 31, 2021, we sold 10 acres of the Las Vegas land generating net cash proceeds of $54.4 million and a gain on sale of $15.8 million.

Credit Loss (Expense) Benefit

Credit loss (expense) benefit increased by $179.3 million for the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to a $172.8 million increase to our allowance for credit losses during the year ended December 31, 2022 compared to a $6.3 million benefit recognized during the comparable period. The increase to the Company's allowance for credit losses was due to weakening credit indicators, weakening conditions in the capital markets and a decline in investment sales, inflationary expectations, an uncertain macroeconomic outlook that informed a more conservative macroeconomic forecast used to estimate our potential future credit losses, and new loan investments offset by loan repayments in-full. See Notes 3 and 15 to our Consolidated Financial Statements included in this Form 10-K for additional details regarding our allowance for credit losses, risk ratings, and property type concentration risk.

Income Tax Expense

Income tax expense decreased $0.5 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily due to a reduction of excess inclusion income (“EII”) generated by certain of our CRE CLOs. 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 9 to our Consolidated Financial Statements included in this Form 10-K for details.

Preferred Stock Dividends and Participating Securities Share in Earnings

During the year ended December 31, 2022, we declared and paid a cash dividend of $12.6 million related to our Series C Preferred Stock. During the year ended December 31, 2021, we declared and paid a cash dividend of $12.3 million related to our Series B Preferred Stock and $6.9 million related to our Series C Preferred Stock.

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 for an 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 (any 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. See Note 12 to our Consolidated Financial Statements included in this Form 10-K for additional details.

Series B Preferred Stock Accretion, 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 and wrote-off the unamortized discount related to the allocated Warrant fair value and transaction costs. See Note 12 to our Consolidated Financial Statements included in this Form 10-K for additional details.

Dividends Declared Per Common Share

During the year ended December 31, 2022, we declared cash dividends of $0.96 per common share, or $75.1 million. During the year ended December 31, 2021, we declared cash dividends of $0.95 per common share, or $73.8 million.

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Liquidity and Capital Resources

Capitalization

We have capitalized our business to-date through, among other things, the issuance and sale of shares of our common stock, issuance of Series C Preferred Stock classified as permanent equity, issuance of Series B Preferred Stock treated as temporary equity, borrowings under secured credit agreements, secured revolving credit facilities, collateralized loan obligations, mortgage loan payable, asset-specific financings, and non-consolidated senior interests. As of December 31, 2022, we had outstanding 77.4 million shares of our common stock representing $1.1 billion of stockholders’ equity, $194.4 million of Series C Preferred Stock, and $4.2 billion of outstanding borrowings used to finance our investments and operations.

See Notes 5 and 6 to our Consolidated Financial Statements included in this Form 10-K for details regarding our borrowings under secured credit agreements, a secured revolving credit facility, asset-specific financings and collateralized loan obligations.

Debt-to-Equity Ratio and Total Leverage Ratio

Our Debt-to-Equity ratio and Total Leverage ratio as of December 31, 2022 reflect the increase in our allowance for credit losses during the year ended December 31, 2022 of $173.0 million.

The following table presents our Debt-to-Equity ratio and Total Leverage ratio:

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(1)Represents (i) total outstanding borrowings under secured financing arrangements, including collateralized loan obligations, secured credit agreements, asset-specific financing arrangements, a secured revolving credit facility, and mortgage loans payable (if any), less cash, to (ii) total stockholders’ equity, at period end.

(2)Represents (i) total outstanding borrowings under secured financing arrangements, including collateralized loan obligations, secured credit agreements, asset-specific financing arrangements, a secured revolving credit facility, and mortgage loans payable (if any), plus non-consolidated senior interests sold or co-originated (if any), less cash, to (ii) total stockholders’ equity, at period end.

Sources of Liquidity

Our primary sources of liquidity include cash and cash equivalents, available borrowings under secured credit agreements, available borrowings under our asset-specific financing arrangements, capacity in our collateralized loan obligations available for reinvestment, and a secured revolving credit facility.

Our current sources of near-term liquidity are set forth in the following table (dollars in thousands):

Secured revolving credit facility 556 —

Asset-specific financing arrangements 770 —

Collateralized loan obligation proceeds held at trustee 297,168 204

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, 2022, loan repayments (including $1.3 million of accrued PIK interest) totaled $1,508.2 million. Additionally, we held unencumbered loan investments with an aggregate unpaid principal balance of $5.6 million that are eligible to pledge under our existing financing arrangements.

Uses of Liquidity

In addition to our ongoing loan activity, our primary liquidity needs include interest and principal payments under our $4.2 billion of outstanding borrowings under secured credit agreements, a secured revolving credit facility, asset-specific financing arrangements, and collateralized loan obligations, $426.1 million of unfunded loan commitments on our loans held for investment, dividend distributions to our preferred and common stockholders, and operating expenses.

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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 (dollars in thousands):

Year Ended December 31,

Cash flows provided by operating activities $ 100,496 $ 132,167

Cash flows (used in) investing activities (452,561) (342,898)

Net change in cash, cash equivalents, and restricted cash $ (6,724) $ (58,630)

Operating Activities

During the year ended December 31, 2022 and 2021, cash flows provided by operating activities totaled $100.5 million and $132.2 million, respectively, primarily related to net interest income, offset by operating expenses.

Investing Activities

During the year ended December 31, 2022, cash flows used in investing activities totaled $452.6 million primarily due to new loan originations and acquisitions of $1,519.4 million, advances on loans and capital expenditures related to REO and other lending of $145.2 million and $5.1 million, respectively, offset by loan repayments of $1,062.4 million and proceeds from the sale of real estate owned of $154.7 million. During the year ended December 31, 2021 cash flows used in investing activities totaled $342.9 million primarily due to new loan originations of $1,623.6 million and advances on loans of $144.6 million, offset by loan repayments of $1,225.3 million, proceeds from sales of loans of $145.7 million and proceeds from the sale of real estate owned of $54.4 million.

Financing Activities

During the year ended December 31, 2022, cash flows provided by financing activities totaled $345.3 million primarily due to the issuance of TRTX 2022-FL5 which generated gross proceeds of $907.0 million, borrowings on our secured financing agreements of $1,333.0 million, borrowings on our asset-specific financing arrangements of $584.8 million, offset by repayments of CRE CLO liabilities of $1,001.9 million (of which $600.8 million related to the redemption of TRTX 2018-FL2), payments on secured financing agreements of $1,346.6 million, payments on asset-specific financing arrangements of $19.5 million and payment of dividends on our common stock and Series C Preferred Stock of $92.9 million. 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 net of the FL4 Ramp-Up Account of $308.9 million, issuance of Series C Preferred Stock of $201.3 million offset by net payments on secured financing agreements of $356.6 million, payments related to the redemption of Series B Preferred Stock of $247.5 million, payment of dividends on our common stock and Series B Preferred Stock of $98.3 million and payments of deferred financing costs of $11.1 million.

See Note 5 to our Consolidated Financial Statements included in this Form 10-K for additional details related to our CRE CLO financing activities.

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Contractual Obligations and Commitments

Our contractual obligations and commitments as of December 31, 2022 were as follows (dollars in thousands):

Total obligation Payment timing

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

Secured revolving credit facility—principal(3) 44,279 — 44,279 — —

Secured revolving credit facility—interest(3) 7,915 — 7,915 — —

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(1)The allocation of our unfunded loan commitments for our loans held for investment portfolio is based on the earlier of the commitment expiration date and the loan maturity date.

(2)Collateralized loan obligation liabilities are based on the fully extended maturity of mortgage loan collateral, considering the reinvestment window of our collateralized loan obligation.

(3)The allocation of secured credit agreements and secured revolving credit facility is based on the extended maturity date for those secured financing agreements where extensions are at our option, subject to no default, or the current maturity date of those facilities where extension options are subject to counterparty approval.

(4)The allocation of asset-specific financing arrangements are based on the extended maturity date for the specific arrangement or, in the case of the BMO Facility and the Institutional Lender 2 arrangement, the fully extended maturity date of the underlying mortgage loan collateral.

(5)Amounts include the related future interest payment obligations, which are estimated by assuming the amounts outstanding under our secured debt agreements, asset-specific financing arrangements and collateralized loan obligations and the interest rates in effect as of December 31, 2022 will remain constant into the future. This is only an estimate, as actual amounts borrowed and rates will vary over time. Our floating rate loans are indexed to LIBOR or Term SOFR; our related liabilities are indexed to LIBOR, Compounded SOFR or Term SOFR.

With respect to our debt obligations that are contractually due within the next five years, we plan to employ several strategies to meet these obligations, including: (i) exercising maturity date extension options that exist in our current financing arrangements; (ii) negotiating extensions of terms with our providers of credit; (iii) periodically accessing the private and public equity and debt capital markets to raise cash to fund new investments or the repayment of indebtedness; (iv) the issuance of additional structured finance vehicles, such as collateralized loan obligations similar to TRTX 2022-FL5, TRTX 2021-FL4, or TRTX 2019-FL3 as a method of financing; (v) term loans with private lenders; (vi) selling loans 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. During the year ended December 31, 2022, our Manager earned $5.2 million of incentive management fees. See Note 10 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. Pursuant to this revenue procedure, we may elect to make future distributions of our taxable income in a mixture of stock and cash.

Our REIT taxable income does not necessarily equal our net income as calculated in accordance with GAAP or our Distributable Earnings as described above. See Note 9 to our Consolidated Financial Statements included in this Form 10-K for additional details.

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Corporate Activities

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 (which was redeemed in-full on June 16, 2021) at the rate of 11.0% per annum of the $25.00 per share liquidation preference, then 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 not less than 90% of its taxable income to its 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 9, 2022, our Board of Directors declared and approved a cash dividend of $0.24 per share of common stock, or $19.0 million in the aggregate, for the fourth quarter of 2022. The common stock dividend was paid on January 25, 2023 to the holders of record of our common stock as of December 29, 2022.

On December 9, 2022, our Board of Directors declared a cash dividend of $0.3906 per share of Series C Preferred Stock, or $3.1 million in the aggregate, for the fourth quarter of 2022. The Series C Preferred Stock dividend was paid on December 30, 2022 to the preferred stockholders of record as of December 20, 2022.

On December 13, 2021, the Company’s 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 the holders of record of the Company’s 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 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 year ended December 31, 2022 and 2021, common stock dividends in the amount of $75.1 million and $73.8 million, respectively, were declared and approved.

As of December 31, 2022 and December 31, 2021, common stock dividends of $19.0 million and $24.2 million, respectively, were unpaid and are reflected in dividends payable on our consolidated balance sheets.

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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.

If conditions change from those expected, it is possible that our judgments, estimates and assumptions 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 impairment 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 estimates could potentially produce materially different results if we were to change underlying estimates, judgments or assumptions.

During 2022, 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:

Allowance for 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 write-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 uncollectible 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 is sensitive to interest rate changes, general economic conditions, liquidity, LTV 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; industrial; mixed-use; land for industrial and office use; and self storage.

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.

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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 or acquired during the most recent quarter, except when specific circumstances warrant an exception.

Our CECL reserve also reflects estimates of the current and future economic conditions that impact the performance of the commercial real estate assets securing the loans. These estimates 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.

The commercial property investment sales and commercial mortgage loan markets have experienced uneven liquidity due to global macroeconomic conditions, including heightened inflation, changes to fiscal and monetary policy, increased interest rates, currency fluctuations, labor shortages and challenges in the supply chain, coupled with the war in Ukraine and the lingering aftereffects of COVID-19, which continue to make it more difficult to estimate key inputs for estimating the allowance for credit losses. 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: (1) a model-based approach and (2) an individually-assessed approach for loans considered to be "collateral-dependent" as the repayment of the loan is expected to be provided substantially through the operation or sale of the underlying collateral and the borrower is experiencing financial difficulty or foreclosure is probable. Estimates made by us are necessarily subject to change due to the limited number of observable inputs and uncertainty regarding the global macroeconomic conditions described above. 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. During the year ended December 31, 2022, we recognized an increase of $168.4 million, respectively, to our allowance for credit losses. The credit loss allowance was $214.6 million as of December 31, 2022.

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

Recent Accounting Pronouncements

For a discussion of recently issued accounting pronouncements, see Note 2 to our Consolidated Financial Statements included in this Form 10-K.

Subsequent Events

For a discussion of subsequent events, see Note 16 to our Consolidated Financial Statements included in this Form 10-K.

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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, 2022 (dollars in millions, except loan per square foot/unit):

First mortgage loans(1)

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* Numbers presented may not foot due to rounding.

(1)First mortgage loans are whole mortgage loans unless otherwise noted.

(2)Date loan was originated or acquired by us. The origination or acquisition date is not updated for subsequent loan modifications.

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

(4)Interest rate represents the underlying benchmark interest rate ("BR") plus credit spread.

(5)In addition to the interest rate, all-in yield includes the amortization of deferred origination fees, purchase price premium and discount, and accrual of both extension and exit fees. All-in yield for our loan assets and total loan portfolio excludes the applicable floating benchmark interest rate as of December 31, 2022 and excludes the impact of our interest rate floors and borrower interest rate caps.

(6)Extended maturity assumes all extension options are exercised by the borrower; provided, however, that our loans may be repaid prior to such date. As of December 31, 2022, based on unpaid principal balance, 37.8% of our loans were subject to yield maintenance or other prepayment restrictions and 62.2% were open to repayment by the borrower without penalty.

(7)Except for construction loans, LTV is calculated for loan originations and existing loans as the total outstanding principal balance of the loan or participation interest in a loan (plus any financing that is pari passu with or senior to such loan or participation interest) divided by the as-is appraised value of our collateral at the time of origination or acquisition of such loan or participation interest. For construction loans only, LTV is calculated as the total commitment amount of the loan divided by the as-stabilized value of the real estate securing the loan. The as-is or as-stabilized (as applicable) value reflects our Manager’s estimates, at the time of origination or acquisition of the loan or participation interest in a loan, of the real estate value underlying such loan or participation interest determined in accordance with our Manager’s underwriting standards and consistent with third-party appraisals obtained by our Manager.

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(8)For a discussion of risk ratings, please see Notes 2 and 3 to our Consolidated Financial Statements included in this Form 10-K.

(9)Represents the weighted average of the credit spread as of December 31, 2022 for the loans, all of which are floating rate.

(10)Calculated as the ratio of unpaid principal balance as of December 31, 2022 to the as-is appraised value at origination, to reflect the sale by us in August 2020 of the contiguous mezzanine loan with an unpaid principal balance of $46.4 million and a commitment amount of $50.0 million.

(11)This loan is comprised of a first mortgage loan of $98.3 million and a contiguous mezzanine loan of $86.7 million, of which we own both. Each loan carries the same interest rate.

(12)This loan is comprised of a first mortgage loan of $129.4 million and a contiguous mezzanine loan of $48.2 million, of which we own both. Each loan carries the same interest rate.

(13)This loan represents a 75.0% pari passu participation interest in a first mortgage loan, that was originated by a third party on June 11, 2021 and acquired by us on September 1, 2022.

(14)This loan represents a 19.2% pari passu participation interest in a first mortgage loan, that was originated by a third party on October 29, 2020 and acquired by us on September 1, 2022.

(15)This loan represents a 50.0% pari passu participation interest in a first mortgage loan, that was originated by a third party on July 18, 2019 and acquired by us on September 1, 2022.

(16)This loan represents a 41.2% pari passu participation interest in a first mortgage loan, that was originated by a third party on August 31, 2021 and acquired by us on September 1, 2022.

(17)This loan was originated by a third party on June 9, 2021 and acquired by us on September 1, 2022.

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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, prior to December 31, 2021 LIBOR, and thereafter SOFR. 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, 2022, the weighted average interest rate floor for our loan portfolio was 0.85%. As of December 31, 2022, 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, 2022, less than 3.0% 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, 2022, 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

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(1)Prior to December 31, 2021, substantially all of our floating rate mortgage loan assets and liabilities were subject to LIBOR as the benchmark interest rate. As of December 31, 2022, $1.1 billion of $5.0 billion of our floating rate mortgage loan assets (based on total unpaid principal balance) and $2.8 billion of $4.2 billion of floating rate mortgage loan liabilities (based on outstanding principal balance) were subject to Compounded SOFR or Term SOFR as the benchmark interest rate.

(2)Floating rate liabilities include secured credit agreements, a secured revolving credit facility, asset-specific financing arrangements, and collateralized loan obligations.

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.

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Extension Risk

Our Manager computes the projected weighted average life of our assets based on assumptions regarding the pace at which individual borrowers will prepay the mortgages or extend. If prepayment speeds 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 use to finance our loan investments, except for our CRE CLOs for which the obligation to repay liabilities is tied to the repayment of underlying loans held by the CRE CLO trust. We expect that higher interest rates imposed by the Federal Reserve to rein in inflation may lead to a decrease in prepayment speeds and an increase in the number of our borrowers who exercise extension options, especially for loans involving office, and hotel properties. 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.

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, establishing interest reserves in our loans and requiring substantially all of our borrowers to purchase an interest rate cap contract for all, or substantially all, of the initial 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.

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 agreements. We are subject to “margin call” risk under our secured credit agreements. In the event that the value of our assets pledged as collateral decreases as a result of changes in credit spreads or interest rates, or due to an other-than-temporary decline in the value of the collateral securing our pledged loan, margin calls relating to our secured credit agreements could increase, causing an adverse change in our liquidity position. Additionally, if one or more of our secured credit agreement 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 agreements as they mature from time to time in the future. We maintain frequent dialogue with the lenders under our secured credit agreements regarding our management of their collateral assets.

In some situations, we have in the past, and may in the future, decide to sell assets to adjust our portfolio construction or 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 Markets 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 agreements, secured revolving 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.

Global macroeconomic conditions, including, without limitation, heightened inflation, changes to fiscal and monetary policy, increased interest rates, currency fluctuations, labor shortages and challenges in global supply chains, coupled with the war in Ukraine and the lingering aftereffects of COVID-19 have contributed to increased volatility in public debt and equity markets, increased cost of funds and reduced availability of efficient debt capital, factors which caused us to reduce our investment activity in the first half of 2022, and may cause us to restrain our investment activity in the future.

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-48. See the accompanying Index to Consolidated Financial Statements and Schedule on page F-1.

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

None.

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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 Chief Executive Officer (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 Chief Executive Officer (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, 2022. Based upon that evaluation, our Chief Executive Officer (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, 2022.

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 Chief Executive Officer 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, 2022, 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, 2022, 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, 2022, which is included herein.

Item 9B. Other Information.

None.

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, 2023 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, 2023 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, 2023 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, 2023 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, 2023 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

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Exhibit Index

ExhibitNumber Description

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

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ExhibitNumber Description

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ExhibitNumber Description

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ExhibitNumber Description

21.1* Subsidiaries of TPG RE Finance Trust, Inc.

23.1* Consent of Deloitte & Touche LLP

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

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ExhibitNumber Description

* Filed herewith.

** Furnished herewith.

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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 21, 2023 TPG RE Finance Trust, Inc.

By: /s/ Doug Bouquard

Doug Bouquard

Chief Executive Officer

(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 21, 2023

Avi Banyasz

/s/ Doug Bouquard Chief Executive Officer February 21, 2023

Doug Bouquard (Principal Executive Officer)

Robert Foley

/s/ Michael Gillmore Director February 21, 2023