TPG Mortgage Investment Trust Inc 9.500% Senior Notes due 2029 Q4 FY2024 earnings call

• TJ Durkin highlighted continued execution of core strategy amidst challenging macroeconomic conditions, disciplined securitization strategy with economic leverage at 1.4 turns, successful WMC acquisition with over 15% stockholder returns since closing, and commitment to growth initiatives.
• Nic Smith discussed MITT advantage, emphasizing TPG Angelo Gordon's access to capital, expertise in structured credit and mortgage finance, and resources like custom-built asset manager Red Creek and data science department. Notable highlights included WMC acquisition, fluid equity deployment, disposition of mortgage servicing rights, and Arc Home's transition to profitability.
• Anthony Rosiello reported 2024 performance with $6.7 billion investment portfolio growth, six securitizations, incorporation of home equity loans, and successful senior unsecured notes issuance. Q4 book value increase driven by gains in home equity loans and portfolio hedges, with EAD of $0.18 per share and Arc Home moving to profitability in December.

In the fourth quarter of 2024, book value moved higher by 0.6% from $10.58 to $10.64, with a 2.4% economic return on equity for the quarter. For the full year 2024, book value increased by 4.3%, generating an 11.7% economic return on equity. The investment portfolio saw activity including acquiring $359 million of agency-eligible loans and $153 million of home equity loans in Q4. Arc Home contributed a loss to EAD but improved to profitability in December, with volumes and margins showing strength.

• Nicolas Smith mentioned deployable capital from $20-25 million from CRE maturities, $25-30 million from WMC inefficient financings rolling off, and $30-50 million from rotation, totaling $75-100 million deployable.
• TJ Durkin expected continued growth for Arc Home regardless of market conditions, citing its resilient business model.
• Anthony Rosiello noted Arc Home moving from negative to neutral EAD contribution and expected it to be a positive contributor in 2025.

Q: How would you characterize your excess capital?

A: Nicolas Smith said there's $20-25 million from CRE maturities, $25-30 million from WMC financings rolling off, and $30-50 million from rotation, totaling $75-100 million deployable.

Q: Thoughts on preferred, given increased cost?

A: TJ Durkin said they knew about floating rate switching and have upcoming financings to offset increased cost.

Q: Yield on securitized non-agency loans?

A: Anthony Rosiello said it's a function of 2021-2022 origination and not likely to move much until rotation or sale.

Q: Origination volume in Arc Home into 2025?

A: TJ Durkin said Arc Home's business model is more immune, non-QM and non-agency markets growing, and investment in the company will lead to growth.

Q: Dividend and rate outlook?

A: Anthony Rosiello said Arc Home transitioned from negative to neutral EAD contribution and expected it to be a positive contributor in 2025, needing composite EAD north of dividend.