Q1 2020 Earnings Call
Greetings and welcome to the TPG aren't you find them to trust first quarter parts, it's going to earnings conference call. At this time, all participants are in listen only mode.
Next question that out some questionable full of good formal presentation at the time, if you wish to ask a question the football by pressing star one.
As a reminder, this conference is being recorded.
Hi, my pleasure to introduce your host these Deborah Ginsberg, Vice President Secretary and General Counsel. Thank you you may begin.
Good morning, and welcome to TPG Real estate Finance Trust first quarter 2020 conference call.
I'm joined remotely today, I credit Guggenheim Chief Executive Officer.
Absolutely chief financial and risk officer.
Gobble share from comments about the corridor and then we'll open up the call for questions.
Last night, we filed a form 10-Q and issued a press release with a presentation of our operating results.
All of which are available on our website in the Investor Relations section [laughter] like her I'd like to remind everyone that today's call may include forward looking statements, which are uncertain and outside of the company's control.
Actual results may differ materially.
A discussion of some of the risks that could affect results. Please see the risk factor section of our most recent 10-K as well as our form 10-Q.
We do not undertake any duty to update these statements and we will also refer to certain non-GAAP measures on this call and for reconciliations you should refer to the press release that our 10-Q.
I'll turn the call of it Atlanta.
Thank you Deborah good morning, everyone.
Good health to all of you on your families and want to express our tremendous gratitude to the public and private sector workers, who are risking so much to protect all of us.
Let me start what the obvious.
This was a tough quarter.
Recorded losses of 203.5 million from the sale of RCR easy yellow portfolio. There is no way to sugar coat. This.
Faced with the extraordinary disruption to the markets in no timetable for recovery, we made the decision to eliminate additional securities margin called risk all of it by selling our entire port bond portfolio.
This was not an easy decision, but one that was necessary given the rapid series events that unfold in the stunningly short period of time.
The worst global health crisis in 100 years.
Most severe economic shock to the world economy since the great depression, and the most volatile market conditions of my career that dramatically affected all publicly traded securities values, including our highly rated short duration linerboard, they see a lot of securities.
These historically liquid securities suddenly became significantly illiquid, requiring an unpredictable and significant diversion to capital as a result, we sold the portfolio as we felt it was important to eliminate future securities margin call risk and raise cash to protect the value of our 5.1 billion in.
A U.P.B. first mortgage portfolio.
Our portfolio today is comprised primarily of office and multifamily loans 49, and 24% respectively.
Hotel and retail loans represent 13% and 0.6% respectively.
We remain focused on the top 10 markets as well as other high employment growth Mark major markets clearly employment growth is now on pause.
68% of our portfolio is secured by bridge in like transitional assets, we have one construction loans with future funding obligations of 15 million.
50% of our loan portfolio is financed with non-GAAP mark to market debt.
In April 99.5% of our loan portfolio paid interest to us. The one loan that is late senior to an institutionally own mezzanine loan that is 120% of our senior loan the basis. It sub 50% LTV of our loan is very attractive and we're not concerned with the collectability of.
So on interest on this one.
Also all of our hotel lane loans painful that service impactful.
As you know interest it's taken a rears and April payments effect reflect March performance, while the economic locked down continues it would be naive to not expect tenant and therefore bar performance become under increasing levels of stress.
In Q1 before the market abruptly changed we originated 437 million of loans comprised 90% of multifamily assets and 10% office assets consistent with the portfolio as a whole.
These are light to moderate transitional assets within in place that yield to 5.6%.
90% where acquisition once.
At this time market conditions are too uncertain to originate new loans, we are focusing all of our efforts on protecting the value of our portfolio in the current environment. This intel's providing modifications to bars that need some payment timing relief during our country's lock down periods.
Tell on retail properties had been the most affected by cobot and we've been working with bars, representing 13% of our portfolio to complete loan modifications. Most all of the bars are green to infuse significant new equity to support their properties.
As reported as we reported in the form 10-Q, a bar has very recently approached us to negotiate comes under terms under which we would accept a deed in lieu of the bars equity is from a very substantial global investment manager and there are certain significant guaranteed financial obligation.
Since relating to completion and carry that must be paid in connection with a date deed and Lynn.
Our discussions are at a very early stage and we are currently assessing the financial impact if any to us of this development.
While we were not expecting this to occur given the quality of the assets location sponsor the substantial equity invested in the asset by the sponsor and the sponsors recent infusion of capital into the bar, we're prepared to take whatever action is necessary to secure the asset value.
Based on changes to individual loan writings are overall portfolio risk rating increased to 3.1 <unk>.
The increase primarily results from movies, all operating hotels that were pretty cobot rated two or three two way for writing.
Also moved one asset somebody fourq to a five based on our belief the bar may default in the very new near future as the property is operating significantly below what we underwrote.
We have great confidence in our country's ability to fight through the tremendous challenges we face, but we also realized that the economic strain experienced by tenants and landlords will not just disappear we will have to continue to work with our borrowers.
Regarding our financing Counterparties, we have no margin calls in or an active discussions with our lenders to implement re margining holidays.
Our lenders have worked cooperatively with us on all fronts. As an example in the first week of this month, we had one 500 million expiring facility that was renewed for one year with numerous extension options.
Each of our lenders has been very responsive and supported in approving loan modifications for higher stressed assets such as hotels.
I would like to acknowledge and thank the T. art T. team, which has performed 24 seven with extra ordinary dedication during these times.
Also the strength of the TPG platform and its senior level banking berlet relationships have contributed significantly to our partnership with our lenders.
And finally and about most important since been the wise guidance of our board of directors, who have helped us whether this unprecedentedly difficult period I. Thank each of you for your dedication and tremendous commitment of time.
As we previously reported in the press, we have retained houlihan lokey to help us source new capital to both whether the current economic environment and allow us to go on the offense once markets begin to stabilize.
Finally, we believe that's a long term value of our portfolio is very strong and that the current disruptions to cash flow will begin.
To dissipate as the locked down sort east and with that I will now turn the call over to Bob totally.
Thank you congrats and good morning, everyone. After the first quarter, we generated a GAAP net loss of 232.8 million or $3.05 per diluted share in core earnings of 168.3 million or $2 in 20 cents per diluted share.
Net interest income from our transitional lending business was $40.8 million and that's up 5.9% from the prior quarter.
Our first quarter results were driven by the losses to screen in connection with the previously announced divestiture of our CRM debt securities portfolio.
The March 23rd through March 31st we sold 179.3 million a bombs generating a lost $36.2 million.
Quarter ends we recorded an impairment charge of 167.3 million against the 767.3 million face value of bonds, we owned on that page.
Sales executed over the next three weeks you sold the entirety of our portfolio for a loss equal to the impairment charge recorded at March 31st offset by a very slight gain on a single bonds.
The reduction in book value, resulting from new sales was $2.65 per share.
Market volatility was extreme liquidity was scarce and margin calls with frequent material.
Management, and our board of directors opted to stop out or loss you. This complete exit from our securities portfolio.
All securities related financings were extinguished upon the last of or bond sales currently our investment portfolio consists entirely of floating rate mortgage loans.
With regards to Cecil we recorded expense through Cecil of $63.3 million, which is equal to the difference between the initial general reserve of 19.6 million established on January 1st and the total General Reserve of 83 million recorded at March 31st.
Quarterly seasonal expenses, a noncash expense and as an add back to GAAP net income from GAAP net income to core earnings, which is consistent with existing accounting practice and the terms of our management agreement with our external manager.
Our Cecil General reserve equals approximately 144 basis points of total commitments to $5.8 billion.
When we established our initial reserve on January 1st the comparable rate was 35 basis points.
Quadrupling of our reserve rate is due almost entirely to the impacted kogan 19, pandemic, which caused us to apply a sharply recessionary macroeconomic forecast against our loan portfolio data and historical loan data to estimate expected bites of loan losses.
Cumulative impact of Cecil for the first quarter was to reduce book value per share.
Hi, one dollar and eight cents.
A few additional comments about Cecil.
We licensed from trap, a large database and performance default in Moscow data for first mortgage loans stretching back to 1998 to provide a stable broad data foundation to drive our estimate.
Views actual loan and collateral level performance data truck data.
Did macroeconomic forecast and the loss given default truck models to develop our general allowance for credit losses.
We do expect her Cecil estimate will change over time based upon a variety of factors, including actual performance of our first mortgage loans and the underlying property securing them macroeconomic conditions capital markets conditions, and the pace of loan repayments and originations.
It's challenging for any market participant to extract solid observable valuation inputs from the current commercial real estate markets. Since transaction volume is like in the markets remain to liquid although liquidity has improved a bit over the past month.
We do expect to actual results and our Cecil estimates of future forecasts.
Highly dependent upon the lengths and the severity of the coven 19 induced recession and we do not believe the Cecil allowance currently reflects likely credit performance of our loan portfolio over the long term due to the extreme near term impact the scope of 19 backfill economic assumptions.
Turning briefly to loans and credit.
Our portfolio wide pretty cope with weighted average assets Ltd.
65.7%, which is consistent with prior quarters and reflects our longstanding emphasis on prudent advance rates against quality properties in major markets based on our loan amounts and east and third party appraised values, our borrowers have at risk approximately 2.9 billion of equity capital subordinate to our loans.
Providing meaningful downside protection to us and motivation for them to protect their investments.
We do expect repayments to be restrain for several quarters due to coated and.
And we expect early stage repayments, most likely to occur in the multifamily sector due primarily to support in that market from the GE achieves.
Regarding capitalization, 50% of our loan related financing is not a mark to market non recourse term liabilities, including 1.8 billion from or to see yellows, plus private term financing and the syndication of the senior loan.
Those yellow liabilities are extremely valuable coupon is constantly roughly LIBOR plus 144 basis points until amortization begins after each reinvestment period ends.
The LIBOR floors for both transactions or zero.
During the first quarter, we've utilized we utilize the reinvestment features of our COO. Those four times to finance 10 loans are participation interests that are in generating 92.4 million of cash to us.
Our remaining funding is provided by eight different bank lenders under committed term credit facilities, all but one of which then it margin calls to credit marks for other than temporary declines in collateral value.
It's great to referenced in early May.
Extended for another year or 500 million dollar credit facility with Morgan Stanley.
We expect to extend to other credit facilities later this year than it in combination represent almost 14% of our borrowings at March 31st under our secured credit facilities. The bulk of our remaining secured credit facilities mature in 2022.
And as a result at the divestiture of our entire securities portfolio, we no longer have any outstanding liabilities associated with securities.
At quarter end, our debt to equity ratio was 3.6 to one.
Temporarily elevated due to the impairment charge recorded at March 31st.
Prior to bond sales in early April totaling 571.7 million a face amount that we paid more than 429 million net borrowings currently our debt to equity ratio is approximately 3.2 to one only slightly above our typical operating level of 3.1 or less.
Liquidity at quarter end was 168.8 million comprised primarily of cash of 103.6 million.
60 million of near term availability under our credit facilities as of last Friday, we held approximately 180.6 million of cash on hand.
And approximately 600 and I'm, sorry, again, approximately 62 million of near term borrowing capacity.
Regarding rates all of our loans are floating rate and all have LIBOR floors.
At quarter end, our weighted average LIBOR floor was LIBOR plus one 1.66%.
At 94.8 of our loans measured by you PB had embedded floors that were in the money in comparison to met month, and one month LIBOR, which at that time was 99 basis points.
As of last Friday, when one month LIBOR was 20 basis points all of our interest rate floors are now will be on the next interest determination date in the money.
These floors when combined with our liabilities, which are largely unexplored hopefully boost net interest margin.
Finally, a personal observation I've been in this business for more than three decades, I experienced the SNL crisis 1987, Black Monday in its aftermath.
T C. The Thai baht.
Russian ruble.
Dotcom and the global financial crisis every crisis was different but each taught me and my colleagues lessons that we can and will apply in the face of the challenge of Cobot 19, and its aftermath.
And with that credit and I are prepared to take your questions. Thanks very much operator. Thank you think it serves as a reminder, if you wish to ask a question at this time basically by pressing star. One if you find that your question has already been up. So do you may remember just so from the Q by pressing star to forget it is star.
Wanted to ask a question.
Given those Craven James. Please go ahead your line is open.
Hi, good morning, Thanks for taking my questions.
Appreciate the ER disclosure of the color grid, if I could ask you about a couple alone. So I guess first could you maybe provide a little bit more color on them.
Five rated.
Loan I think it's number 19, the multifamily in Houston, if I have the numbers matched up correctly, but you give us any color on that asset and discussions about any property details about that.
Sure I believe we referenced it before because it has been a four rated loan for quite some time. This is the one that.
It is a class a multifamily property it it was.
Completely read on and redevelop the office building in Houston.
A very nice property, however, I rent concessions have not gone away in that market. There had been tremendous amount of new supply that continued for quite awhile and so that just property haven't been able to reduce concessions and rent growth has not been very significant.
Significant as well they have.
There's about 20000, excuse me 29000 square feet of retail space. It never lease on the ground floor as well. So the bottom line is the property has underperformed and given then the extra stress on the oil industry caused by co that we don't see that are improving in the near term.
And we believe that it is appropriate to write this stuff I used five.
Great. Thanks for that color that switching to the.
Deed in lieu I think is that number 21, the Brooklyn office, you know when and if so in India.
Let me give along with the Buda lead block that somebody put some fun talking about it but how do we think a resolution from a timing standpoint is that something that takes place underwriter matures at the balance of the year, whether it's the biggest Scott can you give us an update on.
Timing and options on the resolutions for those.
We're very early stage on this you know did this just occurred.
Matter of you know two weeks ago, and we're determining the best strategy now what we do know is that there are significant financial obligations or many of which are guaranteed chet the sponsor must comply with in order to tender the property to us and we were a value.
Awaiting those now that this country. This is.
A property in Brooklyn, as you mentioned, it's very well located and it's got a very very substantial sponsor with very substantial equity and at times, where we're trying to you know it's early stages. So I can't really comment too much on it but we're doing we're very much diligence thing what we you know thinks about a pro.
Which will be.
Great and they know the only going concern. It was in the 10-Q two can you talk to that as far as the analysis that went into the.
It was 432 million of funding due in a year I know included in the press release, you talked about renewing the Morgan Stanley facility and then that was all I've mentioned in her prepared remarks, I think Goldman is in August, but can you give us any color about that and what steps are need to be taken to have that.
I'm going to ask Bob to address that question.
But I'd be glad to good morning, Stephen How're you.
Good morning, Bob good.
With respect to the going concern.
Disclosures and going concern generally.
This is a standard analysis that each restaurant or does it should be each quarter ended the year end.
They can army instance, well in every once in since that's the key focus we analysis is on inbound and outbound cash flows and debt maturities and our instance, bretaa and I both mentioned earlier the [noise].
Reduction in liquidity that resulted from maybe a liquidation of our bond portfolio.
We project as I mentioned earlier.
Sharply with these.
Loan repayments in the next several quarters and for us and other lenders.
Loan repayments or a typical and material.
Source of cash.
Or retiring existing debt ceiling, you investment business.
So I would say that those are the two principal factors in our analysis do you have two notable credit facilities maturing less later this year.
Said about 14% of our secured credit facility borrowings one is with.
Goldman Sachs first lender.
Back in the early stages of the company in successfully extended our credit facility with them before.
The other is within normal.
On the wonderful pledged.
And as you mentioned that we discussed earlier just extended last week Morgan Stanley, which has been another.
Longtime friend of ours so.
Management is comfortable and confident yes, our plans.
And that's what that's against.
Great. Thanks for the color, Bob and last question Bob.
But thinking.
About the portfolio when are turned some potential dividend obligation. So I. Appreciate the disclosure we provided regarding securities losses will be very forward or not off of ordinary income can you talk a little bit about it or other things we need to think about as far as adjustments to our core ought to think about retaxable income another some benefits of LIBOR floors.
Can you maybe give us some a little bit of color on how to think about where retaxable income.
Well the considerations the girl.
Sure as a technical matter a couple of things first is.
You know, we intend to maintain our status as we do so we and other needs need to dividend out.
Or at least 90% of their taxable income.
There aren't that many weeks book to tax differences one of them I would say, most notably will be Cecil.
The general sort of associated with that.
And you know apart from that.
The differences between.
How loan fees for example are accounted for between both impacts are not material.
What more are they flew from interest income for that matter. So I'd say the real issue is.
So those are the biggest reconciling.
It just reconciling item.
Okay. Thanks for the color appreciate the time this morning I Hope you all your so much go well thank you.
Thank you see like back at you.
Steve Delaney of JMP JMP Securities. Please go ahead your line is open.
Good morning, bread, and Bob and I'm glad to hear your both well.
Just a couple from me in addition to the one delinquent loans that you cited grad or can you comment if you have any other loans that you placed on non accrual and have been more of a cost recovery mode and then accruing interest. Thanks.
No we do not have any.
Okay and that process just comment briefly on as you're looking at alone and maybe it's using interest reserves is they're up because they're a point that you look at alone and say, okay. We're going to stop accruing interest on the slower than just start reducing our basis and the loan.
Maybe just what conditions, where would you look forward to put alone on non accrual because we've seen some non accruals this quarter for the first time in the space and that's why I'm asking.
Yeah, Dan you want me there you know, what I'm, saying, well I I'll start and I'm sure you will be able to fill in gaps.
Gaps that I will probably have but I think a key factor is is it current and it's that service obligations and presently we just have that one loan that we reference so to me that is a key factor and you know typically you would look for it to be delinquent.
Beyond.
You know probably up to 60 90 days before we would start thinking about that is done and we do not have that situation and Bob please add to that.
No. That's that's a entirely accurate and you do clearly disclose and the key a policy just with respect them on a cool, which is 90 days unless we otherwise.
As a phone conviction that interest accrued.
This collectible even if it hasn't been paid for 90 days, which is anywhere but not San Jose.
According to the real estate business, but.
No. It's it's clearly define test and it's one that the you apply carefully.
That's helpful. Thanks for clarifying that for me.
And then switching to cash management now in the in the World where securities are not not to be part of that how should we think going forward. I know you commented repayments you are not likely to be you have significant and you have some future fundings, but as you issue have.
Sure it in a position where you have.
Yes cash over 100 couple hundred billion EUR 1 billion or what have you.
Would you use that pay down revolver term b loan or do you think it will go to specific loan and financings to de lever like he's done on Thunder hotel learn some retail ones.
Well I do think you know we it's we disclosed we are in discussions with our poke counterparts parties to.
Work out an arrangement with them I mean, we have no margin calls now, but we're in discussions to get a Ah you know sort of a longer term agreement for where they would forestall marketing and up and we're having active discussions and on that right now.
You know presently we are not seen interesting opportunities for deploying capital I take the.
Asset sales market has has slowed dramatically and I think most lenders are hesitant to refinance our properties, particularly if you know their cash flows have been affected.
I'll be at.
Temporarily while this pandemics going on but nevertheless negatively affected by the pandemic. So we're not seen a lot of opportunity. So we would we would at this moment, you know hoard cash and pay down liability.
Great and it I guess, what else did where it was going out to I think according cash is a great create strategy right now growth I was just switch trying to get to the question have you were keeping control over that cash as opposed to is there a balance between you know putting that cash somewhere where you can get it back or I guess it depends on your.
Crushing with the banks on a specific loan book, just just trying to figure out how but how you view the different financings and which debt you choose to pay down.
Just kind of where it was going you know on that sure well I you know given the state of the World, We would probably pay down loans that are financing hotels first [laughter], there, yeah unrealistic, but oh.
All things LC unequal that's what we would do and then otherwise we would look to pay the most expensive debt off first.
Make sense and just final question.
Steven I think I've tried to get to this with his ARQ <unk> question, but I'm just going to lay it out I guess directly in that is you know as I'm, representing your dividend currently in my top table and talking to investors I'm, saying for now but did it in hystem suspended as we as we move forward here for the next.
Speed bumps or so is that is that in a proper wait for me to reflect your view towards the dividend.
Are you, referring to Q2 dividends or keyword any any well against Q1 I I warn you suspended yep.
Yeah. So all I can say to that is that you know we I would refer you back to our press release and and we don't have any additional information or update on that at this time.
Got it said that that's exactly right Peter Thank you both say well.
Thank you. Thank you see.
Our rents are going up at chips Citi. Please go ahead. Your line is open.
Thanks, Bob you did mention in your prepared marks that you don't do not believe see films currently reflects the likely credit performance.
Assuming that means you you believe that it's over a true for potential credit losses.
Well, what I believe is what that statement was intended to come back perhaps it was unclear at least that H.C. So as a general those are the its license alone and see the impact of the new macroeconomic assumptions that we and others are employed in connection with of course, Missouri.
He is severe.
And so the.
The impact.
Over the life of alone.
May or may not be the same as what the Cecil deserves suggests today, depending upon many things I'd say most importantly.
So how long do the after effects of Clovis 19.
Persist.
Does that answer your question.
Yeah, I mean, I imagine, it's very specific and you have you know various properties that are.
Already struggling.
I think the other thing it kind of stood out to me as you have to the seems like you know biggest problem jobs right now our multifamily in an office, which is not even though.
Hotel on retail, which we've been kind of focusing on from an at risk perspective.
It's it's I guess, a little bit surprising to the extensive your having.
Issues, there, but at this point, but I suppose Houston multi family this kind of environment makes sense, but.
The the borrow modification you've had I think Greg had mentioned a 13%.
Modifications, thus far that are coming with equity support which is pretty nice.
What's the underlying assets predominantly within those 30%.
I'll take that Bob so the 13% as borrowers who have requested modifications.
And that is primarily our hotel borrowers and our one.
30 million dollar retail loans and the modifications are really very bespoke ER and Cook Pan Intel something as simple as allowing the bar to access cash in NSF and even sir.
For uses other then at that funny, such as you know pain that service in other cases, it couldn't be relaxing and extension condition. If you have a debt yield task based on trailing 12 Ah Ah you know why and you know you're not going to have much in a lie a it you know in relate.
To the covert crisis for their each one is very different but I can't say.
In all cases, you know the bar is committing additional capital and in most of the cases, it's very significant capital.
Okay, and then just following on from a deed in lieu.
Just the process itself I'm not too familiar with maybe just talk a little bit about you know how how that works and it could go on and maybe there's not a.
Question for what typical typically being interviewed foreclosure I just trying to understand what's what's the benefit for you to to.
Negotiate a this kind of a transaction versus just the foreclose on the property.
Hi, I'm going to.
Asked ever Ginsberg, our general counsel to address this I she will be a much more legally precise then I will.
Sure Aaron So this sponsor had ongoing carry obligation for the property and I think that their idea they would like to tender it cut off their ongoing carry obligations as you know a foreclosure in New York could take you know call. It two years under the current circumstances.
So you know, but in order for them to tender and cut off those obligations. There are significant concession to they would have to make for that.
So that's kind of the process that we're starting now expected to take.
That's really.
Possibly tonight.
Okay, and the resolution, but I guess for it to be less than two years actually for us.
So it would be essentially been giving you the keys, but also.
Give me some cash along with that.
The way that you'd expect that the book.
I would more express it is making sure it's complete and tying up all obligations at the property.
But yes.
That is probably the ultimate seamless end result.
And then I suppose just touching on but the new capital sources that you're looking into.
Do you have any idea of what kind of form.
You know that you expected to come from.
You know other firms to.
Various types of.
New capital coming from their sponsor converts et cetera.
You.
I thought about.
Form that might come in.
But oh I can report on that is what we said publicly and that that we have hired houlihan lokey to help us source capital I know, there's been a lot of reports in the press from others.
Not us a lot of that they may be misleading, but I can say that you know we hired him to consider all sources of capital and and you don't that's what we're doing.
Okay. Thank you.
Thank you as a reminder to ask a question to signal or by pressing star one.
Rick Shane from JP Morgan. Please go ahead your line is open.
Guys. Thanks for taking my questions. This morning, and I hope everybody as well regarding the deeds in lieu transaction.
I am curious that's it that was a property 2018, so they've been in there for two years, a it was 52% LTV at inception.
That's really sounds to me given the way to describe the sponsor like in strategic to fall as opposed to them not having the dry powder to see the project through I'm curious if you could provide us some additional characteristics of the property given that there are two years into the transition is this a pop.
30, that's generating Iran, and what would it looked like T. R. T X balance sheet as a portfolio in terms of income and could you would your idea would be to hold it for she tried to dispose of property.
We are at that very diligently evaluating all our options what we'd like about the property is its location in Brooklyn or the the sponsor you know it was originally a warehouse project in that part of Brooklyn, and the sponsorship audit to convert it to creative.
Office and you know I think the there wasn't a tremendous amount of demand for that so we're looking at really all options to maximize value for the property you know the sponsor had significant equity you know 43% of equity at at this point of cash equity invested they can.
Tenuously contributed to the property since it's it's close.
And you know where we're in active discussions and diligent it just really premature to say you know to come to any conclusions on this property at this time.
Got it one follow up on that and then one other follow up related to that property was the idea that this was going to be a co workspace is that one of the things that's true.
No that not I I got was that was not a primary driver a bad I mean is it possible. They considered a co working candidate at some point possible, but I don't have that knowledge.
Okay, great that was not thinking right driver.
Okay, great. Thanks credit and then.
Who enter renegotiations or extensions on the.
The existing debt facilities, one of the benefits to enjoy over the next 12 24 months is a you'd have substantial floors in place on your assets and you guys provided good chart in terms of.
How that impacts.
And I I am curious if you think that there will be terms associated with the with the extension of the secured facilities that dampen that either floors on your borrowing or higher or spreads on base rates and.
Order to offset.
Where the banks are in terms of low base rent right now.
Well for our existing facilities nothing material has changed so the arrangements pretty covance still exists in most all cases.
Do I expect.
To see floors in some type of bespoke financings, yes, I think that that's quite possible I think we've seen it with a couple of competitors, whose recently refinanced and you know outside of the banks I don't know if that's answering your question.
I'm I'm, specifically wondering is you cite the $432 million drawn on facilities and in the extension of those facilities. If you think you'll you'll see some.
Efforts on behalf of those two banks to offset below the low rate environment, either through higher floors are wider spreads.
I, we you know it's to be saying I think it.
There could be hot wider spreads for new borrowings.
For additional borrowings, but under the existing facilities I believe they will honor the the terms of those facilities.
Okay and make write off after you have any further color on that.
No I think I think that's accurate we've stated I think that we've been we're always in constant contact with our vendors and that predicts the co the crisis.
We're clearly engaged in negotiating was granted mentioned in connection with these voluntary leveraging arrangements with specific regard to extensions generally speaking lenders on extensions hold firm to previous pricing for existing borrowings.
On existing pledged to assets.
The the financing markets have changed and so.
For new borrowings there there could or could not be adjustments to pricing I think that will depend on market circumstances in the facts at the time to those deals are extended would you expect would be between now and their next maturity dates which are Tim.
August and September this year.
Okay, that's very easy as Ed mentioned, we have substantial floors.
And and good weighted average spreads on alone so.
It's a strong bases from which to negotiate.
Thanks.
I would like to.
We work to one point that Steve Delaney made earlier with respect to our first quarter dividend.
And I can't comment Steve on on your firms.
Nomenclatures, but the first quarter dividend was was deferred.
The company hasn't announced any sense suspension excuse me.
Okay.
That is correct.
You bet it pursuant to the press release, yet that that is the the wording yes.
Alright, thank you.
Thank you and there are no. So the question in the queue I would like to turn the call back over to Greg to Guggenheim CEO for any additional or closing remarks over to you about them.
Well. Thank you all for calling in this morning, and Rick Great to hear your voice is again and that you all are well.
And unhealthy and we look forward to speaking to you next quarter.
Thank you that does conclude todays conference call. Thank you for your participation ladies and gentlemen, you may now disconnect.