Q3 2019 Earnings Call
Good afternoon, and welcome to the Hannon Armstrongs conference call on its Q3 2019 financial results.
Management will be utilizing a slide presentation for this call, which is available now for download on the company's Investor Relations page at investors Dot Hannon Armstrong Dot com.
Today's call is being recorded and we have allocated 30 minutes for prepared remarks, and acuity all participants will be in listen only mode.
If you need any operator assistance. Please press star zero on your telephone keypad.
At this time I would like to turn the conference over to Chaudhry, Vice President Investor Relations and U.S.G. if for the company. Please go ahead Sir.
Thank you operator, good afternoon, everyone and welcome.
Earlier this afternoon Hannon Armstrong distributed a press release detailing our third quarter 2019 results a copy of which is available on our website.
This conference call is being webcast live on the Investor Relations page of our website for replay will be available later today.
Before the call begins I would like to remind you that some of the comments made in the course of this call are forward looking statements and within the meaning of section 27 eight of the Securities Act of 1933 as amended and section 20, Onee Other Securities and Exchange Act of 934 as amended.
The company claims the protection so the safe Harbor for forward looking statements contained insects such sections.
Forward looking statements made in this call are subject to the risks and uncertainties described in the risk factor section of the company's Form 10-K , and other filings with the FCC.
Actual results may differ materially from those described during the call.
In addition, all forward looking statements are made as of today and the company does not undertake any responsibility to update any forward looking statements based on new circumstances for revised expectations. Please note that certain non-GAAP financial measures will be discussed on this conference call. A presentation. This information is not intended to be considered an isolation or as a substitute for the financial information presented in accordance with.
GAAP.
A reconciliation of GAAP to non-GAAP financial measures is available on our posted earnings release and slide presentation.
Joining me on todays call or Jeff I called the company's chairman and CEO , and Jeff flips and our CFO with that I'd like to turn the call over to Jeff who will begin on slide three Jeff. Thanks, Chad and good afternoon, everyone. Today, we're announcing GAAP earnings of 13 cents per share core earnings of 38 cents per share GAAP earnings decreased due to.
One time provision that will be discuss later in the coal.
In the third quarter, we realized year over year growth core earnings per share of 6% and growth in core net investment income of 37%.
This growth was driven by an improvement of 130 basis points in our portfolio yield, which now stands at 7.7% and a lower leverage position now one of the half times debt to equity.
We closed 287 million of transactions in the third quarter more than 90% of which we intend to fund on balance sheet year to date, we've closed 810 million of transactions I remain well on track to close over a billion dollars investments for the full year.
In addition, we continue to improve our access to capital and our liquidity position like following up with a $150 million add onto our previously discussed $350 million inaugural corpus unsecured bond.
We also reiterate our three year guidance through 20, 22% to 6% growth in core earnings per share from the 2017 base.
As we do every quarter and for every investment we make we calculate the carbon reductions from our investments the carbon kill for third quarter investments at this 0.35 offsetting over 96000 metric tons of annual carbon emissions.
Turning to slide for the reminder, we source or pipeline from the Premier Engineering development in operating companies driving the energy system of the future. We endeavor to do this on a programmatic basis in each of the behind the meter sustainable infrastructure and grid connected markets across these markets, we invested approximately 10 asset classes.
That provide a highly diversified and uncorrelated flow of investment opportunities.
Given our investments year to date and our view on fourth quarter opportunities. We remain comfortable we will be able to meet or exceed our billion dollar annual target.
As of the ended the third quarter, our 12 month pipeline remains strong at more than two and a half billion with behind the meter or BTM opportunities totaling 76% of this opportunity set the weighting of our pipeline toward BTM opportunities is reflective of our belief that the future of energy will be decentralize digitalized Indeed carb.
Uh huh.
The majority of the BTM pipeline remains governmental energy efficiency and resiliency opportunities the bulk of which are securitized with regard to other BTM asset classes, the commercial and industrial portion of our pipeline continues to grow as several recent announcements of indicators, including those and community solar see nice solar.
And see an eye energy efficiency opportunities with new clients as well as a safe harbor facility for Sunpower seeing eye business, all of which demonstrate the potential of programmatic relationships.
Residential solar market continues to expand and makes up a growing but still modest portion of our pipeline. I'd also note how quickly resi solar one storage is added has gone nice to have home addition to a need to have home resiliency system due to the ongoing power outages associated with a catastrophic wildfires in California.
Approximately 13% of our pipeline consists of sustainable infrastructure assets. This diverse set of opportunities includes climate change adaptation resiliency investments.
The grid connected market remains competitive do the amount of capital chasing deals driving down returns as a result, our opportunities remain weighted towards utility scale solar land investments with existing clients for whom we offer an accretive slice of capital to help them compete for new business.
As landlord with a senior position in the cash flows were also largely protected from short term energy price fluctuations and counterparty credit risk like the PG any bankruptcy.
Summarizes page with a long term investment horizon in a broad platform focused on climate change solutions, we will continue to execute on the investment opportunities in a given quarter that provide the best risk adjusted returns.
Turning to slide five we provide a view into our managed assets on our portfolio. Since the end of Q2, our portfolio has grown from 1.8 billion to 1.9 billion as rotation of lower yielding assets off balance sheet is more than offset by additions of higher yielding assets through the balance sheet VTM assets comprised 50%.
So the 57% of our portfolio with grid connected and sustainable infrastructure assets, making up the remainder at 36% and 7% respectively.
In total we have 195 investments with a $9 million average investment size, which speaks to the diversity of our portfolio. As we previously noted we treat some portfolios of assets as a single investment. So the total number of physical assets and Obligors is substantially larger and thus diversity is even more robust.
These figures suggest.
Well residential solar has become a larger portion of our portfolio because of the attractive risk adjusted returns we have several decades of experience and syndicating large positions and are focused on ensuring our portfolio retains the appropriate level of diversity and returned to support our continued growth.
I'll now turn it over to Jeff L. to detail our financial performance.
Thanks, Jeff and good afternoon.
Turning to slide six we revised our presentation to emphasize that our earnings are broadly the result of two sources of revenue.
Investment income from our balance sheet portfolio.
And gain on sale in fees, primarily resulting from the securitization and servicing of assets that we originate.
GAAP earnings of 9.1 billion or 13 cents per diluted share. This quarter were down from 16.6 million 30 cents per diluted share in the same quarter last year.
This decrease was primarily the result of an $8 million provision for losses related to lease royalty receivables, which we initially placed on nonaccrual status in 2017.
This provision was recorded due to a recent court ruling in the litigation matter related to these projects.
The underlying assets are part of a previously disclosed land portfolio acquisition from 2014, which in aggregate remains a very successful investment.
I'd also note that we now have zero assets on nonaccrual status and our cumulative losses since 2012 or approximately 30 basis points.
One further item related to GAAP results is that GAAP earnings do not include the full effect of the cash we receive from our equity method investments.
Year to date, we've collected 75 million in cash from our equity method investments, which include both the core earnings component of 29 billion and a return of investment of 46 million.
Core earnings for the third quarter increased 29% to 25.2 million or 38 cents per share that's compared to 19.6 million or 36 cents per share in the same quarter last year.
This is primarily due to weak 37% increase in coordinate investment income to 19.7 million as compared to 14.4 million in the same quarter last year.
Gain on sale in fees were up 6% compared to the same quarter last year.
Turning to slide seven we demonstrate that growth in net investment income is driven by two factors increasing portfolio yield and lower leverage.
As we've discussed for the last few quarters, we've been rotating lower yielding higher highly leverage assets off of our balance sheet and replacing them with higher yielding assets.
The lower leverage has reduced our interest expense.
Therefore in 2019, we are currently on track to continue their upward trend in core net investment income we've experienced since 2015.
Given the 14 year average life of our assets, we're well positioned for this trend to continue.
Turning to slide eight.
We want to highlight continued recent success, we've had in adding more flexibility and diversity to our funding platform.
Following our inaugural issuance in July of 350 million, a five year unsecured green bonds at 5.25%.
In September we issued a $150 million add onto these notes with a yield to maturity of 4.13%.
Note that both offerings were oversubscribed, enabling an aggregate 100 million dollar upsize to the original transaction, which sizes.
These transactions demonstrate our access to the deep stable and liquid corporate bond market, which when coupled with our established access to the secured debt and equity markets because this positions us well to consistently and flexibly fund our growth going forward.
Note that we have no material recourse debt maturities until 2023, when our convertible bonds mature.
This maturity profile.
Combined with the fact that the nonrecourse debt on our underlying assets largely amortizes within the contract it terms of the assets and that approximately 97% of all of our debt as at fixed rates.
And straight that were largely inoculated against near term refinance risk and interest rate movements.
The 97% fixed rate debt ratio is above our previously disclose target range of 60% to 85%.
This is primarily primarily the result of utilizing the proceeds of unsecured debt offerings to temporarily reduce our credit facility balance as a credit facilities are the primary source of our floating rate debt.
Turning to slide nine the credit quality of our portfolio remain strong as depicted in the Pie chart on the upper right.
All of our government and the vast majority of our commercial obligors enjoy investment grade ratings.
In addition, the Obligors of our residential solar assets are high credit quality consumers in or equity method investments, which by their nature do not lend themselves to simple public or credit analysis, we are typically senior or preferred and the investment structure.
As I turn the call back over to Jeff I, just want to give a quick shot out to the Washington Nationals and with some success in gave several of the World series Tonight as many of us or not fans and we're very excited about the game with that I'll turn it back over to Jeff.
Thanks, Jeff turning to slide 10, we believe that investors broadly are seeking opportunities that offer a few common characteristics first they're looking to capture yield in an environment with historically low interest rates.
Second they're looking for recession resilient companies that can demonstrate sustainable growth in the late stage economy.
And finally, they're looking for a company strongly committed DSG and environmental leadership.
With a demonstrated history of providing a total return comprised of a dividend yield plus growth Hannon Armstrong presents and attractive opportunity for yield hungry investors further through our flexible and diversified funding platform, our decades long history of sourcing accretive investment opportunities and our many recession resilient government utility another kind.
Other parties, we have demonstrated sustainable growth across all turns of the business cycle and with a mission of funding climate change solutions and industry, leading E.S.G. practices and disclosures, we offer very compelling opportunity for the E.S.G. focused investor.
Thank you for joining us today operator, please open the line for a few questions [noise].
Thank you if you would like to ask a question. Please take note by pressing star one on your telephone keypad, if you're using a speakerphone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment.
Once again that is star one if you would like to ask a question.
And we'll take Arqule first question today from Noah Kaye with Oppenheimer. Please go ahead.
Thanks, Good afternoon.
I can start with a question on the investment by the Sun strong JV for 200 megawatts and safe Harbor panels under the ITC. It seems like there could be more runway here just looking at you know forecasts for distributed solar installations over the next couple of years. So can you comment on how do you view this growth opportunity over the short and medium term.
Im asked the ITC ramps down.
Oh, Hi, no up.
I think we've we've commented in prior calls that as the ITC ramps down the investment opportunity for Hannon Armstrong goes up as tax equity is replaced with cash equity. So that's the big picture, what we're talking about with.
The Oh Safe Harbor facility is that increase opportunity for hannon in this transition period, which you know, we certainly see as an opportunity.
And we certainly see the overall growth and distributed solar as being very constructive for our business as well some powers and our other solar clients. So not I'm not sure what more to add other than.
And gets.
Good opportunity for Henan and our clients are the the ones that we think are going to be the a the winners in this business.
Okay.
Maybe on a.
Beer investment in grid point can you talk about what attracted you to that platform. Why you believe you energy management as a service approach makes sense for the target market of of mid sized buildings or maybe what kind of pipeline or deal opportunities. This partnership brings you.
Well first of all its not an investment in grid point, its an investment in the assets, which is consistent with our.
General business practices, not taking company, that's but but investing in the assets.
Energy as a service has grown and that's an example of digitalization of the energy systems of the future.
We we've known grid point for 20 years, we tried to sell them something probably 20 years ago and it took a while but we look you know really like what they're doing now they're very granular transactions very very small investments and they've been able to aggregate.
Through corporate clients.
Series of very profitable very carbon impactful transactions. It when I say very profitable very cost effective for the for the end user.
Terms of the limited amount of capital that needs to be invested to gain a a significant amount of savings.
It's you know we look at it is.
An evolution of the industry. We certainly think pace is an opportunity to get at some of this market, but frankly the grid point actual investments are so much smaller than you would want to do through a pace transaction. This is really a another way to access the.
Energy savings opportunities in the.
Commercial sector.
Okay, and maybe as a follow up here you know you mentioned the partnership the pace opportunity and you're partnering with companies. There for now the energy management as a service approach. It is still seems like the Cnine market is very underpenetrated is there not area of opportunity and higher yield potential for you. So I guess you know.
Can you talk about.
Reasons to think that commercial.
Building efficiency can start to become more material for the company I do you have any targets you can share with respect to growth or any timetables for growth for the segment.
Yes. Good question you know the see an eye is the market is what 20% of U.S. greenhouse gas emissions. So it's clearly.
An interesting market and we think it's one of the more profitable markets that said it has historically been quite resistant to these kinds of services, we still think paces a terrific solution.
And when we have talked about pace or some other new markets we generally.
Ill talk about them on calls when we think that can be about $100 million or more of annual.
Investment.
So we still think that's that's the case I would say energy as a service is.
Early days.
But it seems seems quite promising.
The the problem with small transactions it takes a lot of them to making meaningful difference in anybody's financials, but you got to start somewhere and we like where we are with the with good point.
Okay. Thanks, very much for the color and of course, because if you're not tonight at a should be good game.
Thanks.
[noise].
Our next question today comes from Philip Shen with Roth Capital Partners. Please go ahead.
Hey, guys. Thanks to the question.
For the first one would love to explore the empowered and she's a partnership.
When do you expect assets to be added to the balance sheet can you talk to the pipeline and and perhaps give some examples at the types of projects I know, it's seen I municipal University, but what's kind of near term and the dock in terms of what you guys might go to.
Add to the balance sheet.
Okay.
Similar to the concept on grid point, we really are focused on financing the assets that mpower is developing an engineering and operating yeah, they've they've done a good job of developing assets. They do them on a contract basis as well as a.
ER.
Finance basis, and we just have a great deal of comfort with the the management team.
Its a.
One of the we were excited to have a new origination platform with them.
This is a market that is exploding I think nationally and.
Weve.
Struggled in the past to figure out how to participate and I think we now have a model with mpower that will allow us to get to scale. As you know again, the consistent theme in all of our assets no. One transaction no. One client does all that big so while we're excited about mpower and grid point.
I don't think either of these bend the a the curve materially but it certainly gets us.
Into a market that were attracted to.
And and we think has a good risk adjusted returns.
Hi, Thanks, Jeff as a follow up there and would expect the average deal size to be and you mentioned just now that you've struggles in the past to get into this market Oh, what's different should about this model. What did you guys do to crack the code.
It's actually more what the empowers of the world are doing and you know, though a lot of companies. They are they compete with but they've they've started to focus on it then like every business. It takes a while and I think there are a number of companies that have figured out how to work with corporate clients and do things on a programmatic basis with their clients.
And naturally our programmatic finance as a pretty good fit so I will I don't think we did anything particularly innovative other than just stayed very persistent on the market. We knew we won't be there and you talk to a lot of companies and <unk>.
I try to find the ones that match up with your.
One with our capital, but also culturally and we think the Mpower team has a great set force.
Okay shifting over to resi solar you're at 29% of your portfolio being ready last quarter was 22% you know.
This is it's growing fast as a percentage of for overall mix.
At this rate yeah at some point you you're gonna get to a majority of your asset base being in resi solar what does this look like by year end 20, and and how much is too much or do you just keep on adding.
Okay.
Well I think part of the reasons, we added some some comments on the pipeline and the resi solar as well it's growing is relatively small piece of the pipeline.
Is to address that you know, we love, where we are or we do more for will have become a majority of our balance sheet I think.
That is highly unlikely.
Okay, Great and then staying with the solar theme.
The real estate line item on has been pretty flat for the past couple of years, what's the outlook for solar real estate for utility scale solar and do you expect any opportunities near term to add and real estate to the balance sheet.
Its a good question Phil.
I think a couple of years ago I was thinking you know that run of utility scale solar was pretty much over that's just not the case, yeah. I think we we see a pretty consistent flow of business.
Again, it's kind of lumpy.
If that's all we did it be a it'd be a lousy business, but as a.
One of our asset classes, we think its.
Good value for us good.
Much like the risk and utility scale guys are doing a terrific job of developing great projects. So do expect to see a more land and in the portfolio.
Okay. Thanks, Jeff I'll pass it on thank you.
Our next question today comes from Julien Dumoulin Smith with Bank of America. Please go ahead.
Hey, this is a onea filling in for Julien.
Uh huh.
So I guess on in terms of the on the pipeline of <unk>, maybe first could you discuss your thoughts around asset level growth path, but definitely a 2 billion that you've had historically and then is there any potential acceleration from the 2% to 6%, yes, sorry.
So on it we've we've had a history of talking about our pipeline I think we started out with a 1 billion five at the IPO and then.
Two and then more than two and now more than two and a half.
And the reason is if we're doing a billion or billion. Two year. You know that's two X coverage more than two X coverage of whether it is we're proposing to invest.
We certainly believe carrying a pipeline that is at least that size is sufficient for us to continue to hit our investment targets and to continue to grow earnings.
And the pipeline be bigger sure, but it's enough and what were particularly focused on we don't want to be judged on on the pipeline to us that's a second order metric.
And you can you know, there's a lot less disciplined and talking about pipelines.
Lets disciplined required to talk about your pipeline than there is to talk about.
Actual earnings in investment so.
We certainly think the future of energy will be are kind of assets behind the meter and we certainly expect that to grow with respect to earnings will address earnings in the future, but we're comfortable reiterating guidance at 2% to 6% growth.
Okay and idea that portion of your question that that addressed balance sheet growth keep in mind in the prepared remarks, I think we said at least two or three times, we've made reference to the balance sheet rotation, we've been going through so.
Although we've been closing large volume of balance sheet transactions. We've also been selling a decent amount to optimize so that's where.
You've not seen.
As robust balance sheet growth as we go through this rotation.
Okay bounces growing about it wasn't the gold rolling that.
Net interest income is the goal correct.
Hi, Thanks, a lot and on portfolio credit quality or how do you think of the non energy question, what would be a reasonable range going forward.
Like the AG question I mean, this correctly has declined.
Slightly under 50% as this week.
Was that maybe around 60% according to the Guy.
So I think we've in their prepared remarks tried to migrate away from that being the primary metric in terms of idea NIGC as it relates to the entire portfolio because.
You know as we show in the top of page nine we have two large components of the portfolio that really don't even lend themselves to this notion of being investment grade or non investment grade big portion and consumer.
Resin you know consumer Obligors are essentially.
You know the off takers and they're not certainly going to be investment grade either individually or collectively and likewise the equity method investments.
We're not going to investment grade rating. So we are trying to steer away from from that being the primary metric are very very comfortable with the level.
Credit quality in the portfolio and we'll continue to describe the portfolio detail, but this notion of investment grade non investment grade I.
I think has become a little less meaningful overtime in describing credit risk in the portfolio.
Hi, Thanks, a lot and last question from my end or what it could you talk more about the prospects that community solar habit of bank of America kind of being about kind of a chance could you see.
I think I, just heard a statistic that rooftop resi solar the app Max potential something like 10, or 15% just because of roof orientation, and shading and things like that [noise], which implies a much bigger opportunity for community solar then.
We were thinking about a couple of years ago. So.
We have announced a transaction in a in community solar and continue to think that's that's a pretty interesting models to expand the.
The solar market with some of the benefits of the residential market with some of the scale benefits of utility scale solar you know, it's up to the to our clients to go commercialize those and develop those projects and make them investable and I think when we talk to them they are pretty into.
As you asked about the the possibilities.
Okay. Thanks, and could you talk more about how meaningful like anything around portfolio and change that I have a change in size Oh yeah.
Not really.
I mean, we don't really talking about anyone a asset class and because it actually it would be factual not anyone asset classes driving the results but.
Like you know we've used the a the metaphor of 10 cylinder engine and with our 10 asset classes. You know this is potentially a an interesting new asset class that could be a $100 million of investment a year.
It's a it's starting to be more meaningful then I, particularly had anticipated to be.
Okay. Thanks, a lot.
Thanks.
Our next question comes from Mark Strouse with JP Morgan. Please go ahead Sir.
Yeah. Good afternoon, thank very much for taking my questions.
Most of them had been answered by now, but just a at a high level you know given the change in rage since the last time, we spoke.
Just open for an update on how we should think about though the mix of Securitizations going forward and then kind of on a similar to what I mean just.
Global search for yield just wondering if there's been a material change that you've noticed in your competitive landscape. Thanks, Jeff.
Sure Mark so on the first question.
It's not necessarily the absolute level of rates or even the slope of the yield curve that drives the level of securitization attends much more to be.
The type of asset that we originate so certain of our assets like energy efficiency, we tend to securitize and many of the other asset classes like a resi solar or solar land, we tend to keep on balance sheet. So that decision tends not to be driven by absolute level of interest rates.
And most of the.
Or let's put it this way the energy efficiency business as we've noted.
Many times tends to be lumpy so when that.
They have quarters, where we close a large volume of those transactions you will see securitization percentage go up and in a quarter like book second and third quarter of this year, where we didn't do too many of those deals you'll see securitization percentage go down. So that's the that's some more appropriate way to think about it.
And then the second question I'll, let Jeff.
I was still absorbed with your answer forgotten the second question.
Oh, a global search for yield again.
It persists and you know our ability to.
Continued to adapt our business model to access investors, who are looking for that or participants in that global search for yield.
That just means several asset classes can be securitize, rather than and profitably securitize rather than put on the balance sheet, which from our clients standpoint that they don't really care, how we do it as long as we have to capital and.
So we're seeing.
Better opportunities to take things off the balance sheet.
But fundamentally you know with an average investment size of $9 million, it's really hard for some of these global players to actually.
Compete on a 9 million dollar transaction.
That's where I think many of them look at us as and an opportunity to aggregate.
Those assets, using our balance sheet or otherwise and partner with with those players rather than necessarily compete with them.
That said, we talked about you know the grid connected, particularly the wind projects and the a utility scale solar.
So those are not the areas, we're choosing to plan for precisely that reason there is.
An abundance of capital willing to take large transaction sizes and.
And you know there they're good bids for the developers are those projects, that's just not our business.
Got it okay very helpful. Thank you both.
Thanks Mark.
[noise].
Our next question comes from Chris Other with Cowen. Please go ahead.
Hey, Thanks for taking my question I want to go back to the.
Do you JV with Sunpower for safe harboring [noise].
Can you talk a little bit about how that structured b.
Similar or different to the Sun strong JV, just given it seems like it'd be kind of a shorter timeframe.
Just during that transition period versus.
Longer term.
Is it can be similar where are you guys have mezz debt, along with that and there's kind of us senior lender and all that kind of stopped for how does that kind of work.
Well I think it's it's a little bit of apples and oranges the Sun's strong.
Transaction is a true JV that's invested in a series of underlying transactions to finance many of these portfolios at least receivables.
Where's the safe harboring facility is born survey.
You know transaction then it and then a joint venture to capture these these itcs into your point, we'll run off quickly. So there's not a they're really to quite different transactions. Despite it being the same client.
Okay got it and then did that transaction occur in the third quarter was that fourth quarter, that's kind of ramping up here.
Good.
It closed in the third quarter.
Okay, and then just talking about that.
10, or so 10, plus kind of end markets could you talk a little bit about where else you're seeing strength beyond kind of a solar.
Where are the other markets are sitting at this point.
We continue to see I'm, a good flow in the governmental efficiency business, particularly for resiliency in or to climate change those transactions are getting larger and lumpier.
Didn't do any this quarter, but the resiliency problem in the United States government Didnt get fixed either so the the the transaction still persist.
We've talked about the energy as a service in the Cnine market Oh, you know that's maybe small dollars now, but it's certainly an area that we think can be a be interesting.
I've mentioned pace, we continue to to grow the pace.
Pay spends as.
In the sustainable infrastructure markets, you know again, our upper Sadik there they are pretty small in the pipeline but.
They're developing as communities cope with.
Oh and try to adapt to a.
Hundred years storms that happen more frequently than the then perhaps they have in the past.
And again that that takes time to develop but it's not like the problem is getting fixed.
For the severity of the issue is going away.
And again, it's really good to have.
10 cylinders on its engine because they don't all hit in the same quarter.
You know the area that we haven't seen much activity in that we've talked about for.
A number of quarters is when a there's a lot of capital in the win business and.
We're not seeing necessarily the risk adjusted returns we want there.
So I think that's a survey Jeff would you add anything any other color.
No I think you've covered.
Excellent and then just the last one I wanted to get an idea of where we are within.
Active management machine over the last couple of quarters, obviously second quarter was kind of big Big moves.
Theres still some moves here.
Looking at.
At the end of second quarter about 400 million.
Receivables and investments that were below 5%.
Is that going to kind of continue to come down here.
It really opposite Opportunistically that you guys are looking at that could you provide a little color there.
Sure. So your point, what we've been calling the rotation was larger in second quarter than third quarter.
I would characterize or are pointing the process there of.
As not being complete yet so I think there or do remain some assets on our balance sheet that we may rotate out of.
And so don't be surprised to see that but to your point, probably would've been logical for us to.
Due to the the more attractive ones first so that probably some diminishing marginal.
Returns to future rotation, sorry to interrupt you, but no I totally agree with that and Christy I was just going to say to your point about being opportunistic. It certainly is we're not aggressively marketing assets I would characterize it more as opportunistically, taking advantage of opportunities to do at times rotate out of some of these low yielding assets because the way to say.
But that is likely not not complete yet.
Okay and good luck can I make sure you send Bryce Harper right now if you guys. One [laughter]. Thank you.
But [noise].
Thank you all.
And it appears there no further questions in the queue at this time. So this will conclude today's call we'd like to thank you. So much for your participation and you may now disconnect.
Oh Oh.