Q4 2020 Blackstone Mortgage Trust Inc Earnings Call
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Good day, and we want and welcome to the Blackstone mortgage Trust fourth quarter, and full year, 'twenty and 'twenty Investor call hosted by Weston Tucker head of Investor Relations. My name is Leslie and on the event manage it during the presentation. Your lines will remain on listen only and if you require assistance if any.
Time, plus Keystone zero on your telephone and a coordinator will be happy to assist you.
I'd like to advise all policies at a conference is being recorded for replay purposes and also if you wish to ask a question. It is just star then one on your telephone and I would like to hand, you over to your host for today Weston. Please go ahead.
Great. Thanks, Leslie and good morning, everyone and welcome to Blackstone mortgage Trust's fourth quarter Conference call I'm joined today by Mike Nash Executive Chairman steep lab, and Chief Executive Officer, Jonathan Pollack Global had a real estate debt strategies, Katie Keenan, President and Tony Marone, Chief Financial Officer, and Doug Armer Executive Vice President.
And capital markets.
This morning, we filed our 10-K and issued a press release with a presentation of our results which are available on our website and have been filed with the SEC.
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 for a discussion of some of the risks that could affect results. Please see the risk factors section of our 10-K, we do not undertake any duty to update forward looking statements well also refer to certain non-GAAP measures on this call and for reconciliations you should.
Refer to the press release and our 10-K.
Video cast is copyrighted material of Blackstone mortgage trust and may not be duplicated without our consent.
So a quick recap of our results we reported GAAP net income per share a 57 for the fourth quarter. While distributable earnings were 66 67 per share last month, we paid a dividend of 62 cents per share with respect to the fourth quarter.
You have any questions. Following today's call. Please let me know and with that I'll now turn things over to Steve. Thanks Weston.
It's a backdrop with a pandemic and extraordinary economic upheaval that stress tested our business like never before Bx and T out before.
Just as it did during a 70 year growth period that preceded COVID-19 in 'twenty and 'twenty, our loan portfolio at the a perfect collections and excellent credit performance with loan fundings and repayments remaining and balance.
We earned a considerable dividend, while increasing liquidity and decreasing asset level leverage and.
We access the capital markets throughout the year Opportunistically raising equity at a premium to book value and a corporate term loan as well as issuing to crease clo's.
In addition, this morning, we watched it upsize of our term loan.
We always believed their strategy of originating senior loans and so on large scale high quality assets with a financially strong sponsors with a better endure a periods of market volatility and they're a business would deliver a differentiated results throughout cycles.
<unk> borrowers have equities are protected and their assets and the financial wherewithal to do so so the ability and a willingness to support our loans, even when property cash flow has temporarily reduced from the pandemic.
As always we benefit from asset and funds underwriting by way of the Blackstone Real estate investment committee, bringing to bear all the knowledge and resources that come from a market, leading global real estate ownership and finance a footprint.
Our banks Trust, a track record as a lender and a borrower as well as our asset management and relationship focus.
We're a banks, where most pressured amid the pandemic, we opted to delever them on their most impacted assets today.
Anders are not only secure with their existing portfolios, but are a.
Active we are seeking to grow their facility utilization with new be X and T originations.
We run the X and XI was substantial liquidity to position it for the high quality large scale opportunities that we covet and also to maintain a significant level of protection from unexpected credit events.
We ended the quarter with over $1 $1 billion, a liquidity building a firepower for the increasing loan demand, we expect in 'twenty and 'twenty one.
As we look ahead, we feel great about the current returns PX and T is able to generate even and this extremely low yield environment.
And while the real estate recovery from Covid still has a way to go and certain sectors and markets. We believe there a business model remains very well positioned for the periods ahead.
And with that I'll turn it over to Katie.
Thanks, Yes, we do.
Also the SMT business to be stable and resilient with a portfolio of low volatility and first mortgage loans supported by a match funded balance sheet.
That business not a proved out last year, enabling us to weather the impacts of the pandemic and pretty steady distributable earnings at $2 and 48 per share covering our dividend and despite the aircrafts that as a backdrop.
Our earnings translate to a yield on above a 9%, even with LIBOR and near zero.
And we generated these earnings while simultaneously, increasing our liquidity by over 50% low.
During or a debt to equity ratio from three pointed out its a 2.5 and.
And maintaining strong credit performance across the portfolio.
Over the full year, we collected 99, 7% a interest you under a allowance, including 100% and the fourth quarter with less than 1% a interest a ferry.
Our sponsors are steadfast and their commitment and have contributed to over half a billion dollars a fresh equity since the startup depend on that to support the assets backing our loans.
Regular way repayments must flow and I have continued throughout the year, we had $1 4 billion since March, including repayments and New York City, Chicago, and San Francisco, That's a corner, which is indicative of the continued health and the markets and strength of our collateral.
And the performance of our underlying office industrial and multifamily assets remains strong with rent collections consistently and the mid nineties and gross leasing across a portfolio of over a 3 million square feet since March.
Although the exact shape of the recovery and remains fluid and performance of our assets today and it's a clear positive indicator of their long term prospects and Meanwhile, the large and growing equity investments subordinate to our loans provide substantial installation from further volatility.
Over the year, we built up and enhanced level of liquidity on our balance sheet as well, which helped ensure a stability through 'twenty and 'twenty and puts us in and opportune possession to build a portfolio as we enter 2021.
And the last quarter and accelerating into the new year, we have seen a market increase and the origination pipeline.
Given the vaccine and prospects for additional stimulus our borrowers are feeling more confident that its time to direct new capital toward acquisitions and value added repossession and sale.
Some of the dry powder and their investment vehicles, and recapitalize assets that have progressed and their business plans.
Today, we have over a one $5 billion of new post COVID-19 originations closed and and closing across 15 transactions.
This includes five new loans and a fourth quarter I'll also repeat borrowers on a high quality real estate comprising four newly built multifamily assets and a well leased office building and South Florida.
At the core of a Blackstone approach as a collaborative process that ensures the insights from across our global portfolio are incorporated into the X M. T. It's credit decisions.
And the recovery still any then we are focused on the assets and markets that are working best multifamily industrial and lab, which had a strong secular trends and continue to demonstrate both resilience and fundamental strength.
Markets catering to Tech life Sciences, and content creation, which are among the most vibrant and where tenants are moving.
And high quality real estate at a low basis, where values will endure over time.
And these themes arent novel, we've long and passed it with a view toward newer assets knowledge based industries and dynamic markets, where the best talent is located.
And it's already apparent in our portfolio today.
Our latest vintage a transaction with also reflects a continued adherence to our core principles of lending to experienced well capitalized sponsors on high quality institutional assets a view, we hope more strongly than ever having seen our portfolio would stay on the volatility last year.
And as always we're making a senior mortgage loans, we have a weighted average LTV of 61% for a fourth quarter deals consistent with the overall portfolio.
The pipeline today and reflects capital markets that are healthy and a liquid that maintaining good credit discipline with a significant capital available and our sector and indeed across the investment universe. There is an increasingly competitive search for yield and many segments of the lending market, including ours, but while we face this dynamic on the lending side. We are also a beneficiary.
On the borrowing side, where we have consistently been able to access the best available terms based on our credit track record and our possession and that's part of a Blackstone platform.
A recent originations reflect net returns in line with historical levels and while the market is moving the spread between where we land and where we buy a remains a thing.
The stability of a business through 'twenty and 'twenty and it provides a robust foundation for the coming year and the activity and our pipeline and suggest strong momentum for new investments.
Our portfolio is generating steady cash flow and we are well positioned to pursue the next wave of new lending opportunities, while maintaining appropriate protection against any lingering effects of the pandemic.
And we continue to draw upon the tremendous scale and reach of the Blackstone platform to create compelling well protected and best sense for our shareholders with that I'll pass it over to Tony.
Thank you Katie and good morning, everyone.
Before I get into our financial results I would like to briefly comment on our non-GAAP earnings measure core earnings, which we renamed distributable earnings starting this quarter.
Historically, we have disclosed core earnings and an important financial metric that we use in addition, a GAAP net income to assess the performance of our business.
Most importantly, I want to be clear that this is only a change and terminology and not how we calculate this metric.
Distributable earnings is calculated the same way as core earnings was before.
We're making this change following discussions between the mortgage REIT industry and the FCC over the past several months to adopt terminology that is more descriptive of what this metric represents.
As a measurement of our results anchored and GAAP net income and adjusted for a certain noncash items to be a better indicator of our performance within the context of a potential dividend.
Note that just like with core earnings there will be differences between distributable earnings and our dividend and any given quarter, but we expect them to generally correlate over time.
This quarter, we generated GAAP EPS, a 57 per share and 97 per share for 'twenty and 'twenty with <unk> distributable earnings of <unk> 60 per share and $2.48 for the year.
Fight the turbulence a 2020, our dividend remained at $2.48. This year at the same level as a past four years.
The success would be a <unk> business model and 2020 can best be summarized by reviewing what components have endured this year alongside a positive changes we have made.
Starting with would've stayed the same.
The ratio of our distributable earnings to a book value for our yield on book is effectively unchanged at nine 2% for 'twenty and 'twenty relative to nine 5% for 2019, reflecting the stability of our portfolio and its enduring earnings power. Despite a decline of 170 bps basis points and average USD LIBOR a year over year.
Importantly, as before the pandemic nearly all of our interest income is paid currently with less than 1% a interests differed across our entire portfolio.
We continue to benefit from a LIBOR floors embedded in our loan portfolio and a historically low rate environment with $9 $6 billion, a active floors as a 12 31 and our U S. D portfolio alone generating incremental earnings for our stockholders, which we expect to continue and the near term as well.
The size of our portfolio and $18 $2 billion is largely unchanged with a loan fundings in step with repayments during 2020.
This includes a $1 $1 billion, a incremental loan fundings during the year on previously originated loans, which bolstered our portfolio during a period a fewer new loan originations and provides a tailwind to our portfolios earnings power as we see regular way business beginning to resume.
Lastly, we continue to enjoy market, leading terms for the $8 $7 billion, a currency tenor and index matched credit facilities that we used to finance our assets, including all of our <unk> originations, which were financed at levels approaching pre COVID-19 terms generating similar rois for these loans and our 2019 and originations and all.
A level financings have a long durations with no maturities until 2022.
On the other hand, there have been some notable changes during the year.
To see all those generating $2 $1 billion, a proceeds and increasing our total nonrecourse non mark to market Securitizations, and syndications and nearly 50% of our USD asset level financings and reducing our debt to equity ratio to two five times from three point out times and 2019.
Looking at our earnings and context. This year, we generated similar returns to our stockholders will even further insulating the right hand side of our balance sheet.
Similarly, we increased liquidity, it's a $1 1 billion a level, we have maintained since two cube and a 52% increase from where we started a year.
As we have mentioned in the past this capital allows us to be nimble as the initial COVID-19 shocks subsides and so we can originate new loans as the CRE lending markets reopen or defend our existing portfolio should the need arise.
We had our most active asset management a year by far with 18 loan modifications closed and <unk> and 49 year to date, representing an aggregate principal balance of $6 $5 billion as of December 31.
The vast majority of these modifications reflect true commercial arrangements involving new financial commitments from our sponsors with virtually no interest deferrals or a forgiveness.
Lastly, during 2020, we adopted the <unk> accounting standard with an aggregate provision of $185 million or a $1 on 26 cents per share a 12 31 to reflect the heightened risks of the current macroeconomic environment on a portfolio.
Following the initial reserves, we recorded and <unk> and <unk> as Covid unfolded, we reduced our provision modestly and the second half a 2020 as markets began to normalize on a portfolio showed continued stable credit performance over time.
Overall, we are proud of our results for the fourth quarter and full year, a 2020 and look forward to a resumption of our ordinary course business and continued opportunity to generate value for our stockholders a 2021.
Thank you for your support and with that I will ask the operator to open the call to questions and Leslie before you open up for questions. If I could just remind everyone to limit. Your first question to one question and one follow on and then reenter the queue. If you have a further questions that'd be great. Thank you.
Okay.
Thank you everyone.
We will now begin if you wish to ask a question. It's just stall and then one on your attendees from.
If you want to withdraw your question and it's still a two and just to remind you. If you wish to ask a question.
And then one on your attendees on them.
Sure.
And we do have some questions. Your first question comes from the line of Charlie and Lucia from J P. Morgan. Please go ahead, Tony your lives and nickel.
Hey, good morning, everybody. Thanks for taking the questions. I was wondering you know with the risk ratings that are disclosed in the 10-K.
And there's over 3 billion of loans and risk rated for a higher which assumes that there is a risk.
A loss on those loans.
Could you just talk to them and how we can think about quantifying that risk and the context.
On the $18 billion portfolio, and and also with a specific loan reserves and.
What macroeconomic drivers might lead towards a principal loss.
Sure so starting with thinking about how we address the risk rating for a risk rating, which we moved a number of our hotels and other most affected assets.
And the first quarter as Covid was coming in really reflects and interruption or a decline and that that's a plan, but not really a principal loss. The five risk rating would be assets, where we are thinking that that you know maybe a possibility of assets that are impaired.
And you're thinking about the magnitude and I would look at a four it's more as underperforming business plan, but not necessarily expecting a loss and the other thing I would really note is we made a move of the portfolio, which reflects a pandemic earlier and the year and since then we have not seen any material change to the negative.
And the credit performance with a portfolio and inversely really what we've seen is continued performance from our sponsors.
Over a $500 million and equity coming in and sponsors writing checks every.
On chat to carry the assets and increasing tailwind as far as fundamentals for hotels in particular.
We look at you know coming out of the pandemic, increasing adoption of a vaccine pent up consumer demand.
Seeing the possibility of a recovery on the horizon.
And we think that will ultimately benefit the hotel, which comprise most of the four rated assets and in the meantime, the sponsors are taking a similar approach that we are which is knowing that this is and interacted period, but they believe in a long term value of the assets and so.
And that's the way, we conceptualize with a four and five rated assets and on a five yeah. We think that the impairments we took our adequate.
And there's been no material change on those assets and we're really focused on the ongoing stable performance of the portfolio and and really the new loans were making which are very high quality from a credit perspective.
Okay. Thanks, Katy I appreciate that and a quick follow up on a hotel portfolio. Since you mentioned it and you don't see any distinctions and collateral performance between leisure focused and sort of corporate travel focused hotels and and I guess broadly speaking how are you guys thinking about that and that's an asset class and a 'twenty 'twenty one.
Yeah.
And kind of a performance today, and we really aren't seeing a distinction and the assets. We lent on originally where high quality assets are high quality assets strong markets very strong sponsors and business plans that we think makes sense for the assets. We never did a lot of group convention focused assets are our collateral is more focused on the leash on market.
And on select service.
As far as we think about the recovery I think youre right.
And that we expect a recovery to take hold earlier from.
We're a leisure focused assets and that's great you know for US we have a lot of hotels and Hawaii, where we think.
Travel will bounce back and you know I think the sponsors are feeling that way as well.
Okay.
Thanks very much.
Okay. Thank you. Your next question comes from the line a Stephen laws from Raymond James. Please go ahead, Stephen Your line is a nickel.
Hi, good morning.
I appreciate the color so far.
A question can you talk about you know as you're looking at the new origination from the pipeline and underwriting those can you talk about a.
On what differences you may have underwriting loans today versus pre COVID-19 and.
And maybe would be helpful to compare to say like a one three which was originated a few months before COVID-19 hit and you know if that loan was underwritten today, how much would the V. R. L. P b and origination have changed today versus when that loan was originated in Q4 of a 19.
And 19.
So I think I'll start with what stays the same which is every loan we originated and we are pulling information from across the Blackstone platform and really getting the latest information real time data and what we're seeing.
And our lending portfolio, and and our bar and our ownership portfolio across the platform and and that gives us I think a real advantage in terms of assessing credit sales.
As we look at assets today, you know, we're pulling and all of that information and.
We're looking at where we see a recovery, taking hold and where we see the most activity and as I mentioned, we're looking at a lot of multifamily and life Sciences deals. Our pipeline is very strong and those sectors looking at both growth markets and more core markets, where we see very high quality real estate at attractive base sales.
So I think that's that's how we're looking at the new pipeline and the loan you referenced the headquarter is a peloton. So we're feeling great about the credit a bad at that and it's it's also and Hudson yards, where we're seeing the most activity in terms of tenant activity and a new leases through COVID-19. So we feel very good about the credit there.
Okay, and then as a follow up on the on the financing side.
How much a call.
Cost is it to you know as you move more of your financing from warehouse to non Mark to market. You know you are giving up.
80 basis points is it 50, and you somewhat quantify that for us and and maybe what a target.
Mix is on a non mark to market right.
Hey, Stephen it's Doug that's a great question I think we've had a very good fortunate in terms of our market timing and and.
And the shift to a greater proportion of CLO financing and particular hasnt represented a material increase and cost and that's.
Been a function of the fact that the tenor of the loans has increased and we've been able to really issue and very large scale and a fixed cost and securitization when you spread those across a longer tenor and a bigger notional.
Actually much more efficient and some of the more variable costs and a credit facility execution.
I think and in terms of target allocations.
And where we are now is is feels like a pretty good place to be the strategy is really working concert between syndications bilateral credit facilities and securitization.
But I think there is a lot a room to grow the proportion of securitization in the European portfolio overall.
And it's.
I think a in terms of a target we might expect to see that 50% number that Tony referenced across the entire portfolio as opposed to.
Specifically in the U S portfolio.
Great. Thanks for taking my questions today.
Thank you and your next question comes from Doug Harter from Credit Suisse. Your line and the cool Duncan. Please go ahead.
Good morning, everyone. This is Josh on for Doug Thanks for taking the question and <unk>.
See transaction volumes picking up can you give us a sense of where you're seeing loan spreads on new loans today and how those compare to the current portfolio.
Sure.
On a loan spreads today.
We're really seeing a loan spreads roughly consistent with where we were a pre pandemic and similarly on the financing side, you know those to really move and staff and so we're seeing very consistent net spreads on our new originations relative to where we were originated and you know last year. This time last year.
Yeah.
Got it thanks, and then just one on the LIBOR floors can you give us any sense of where floors are being set on new originations.
And trying to.
And it helps us get a sense of the difference between the floors on those new loans and on loans paying off thanks.
Yes, my work flow is typically and and and the current market as well a really sad close to where LIBOR is currently at clothing and so that's what we're seeing on a new originations.
And Josh Hey, it's Doug and I thought I might just add to that.
We like LIBOR floors that are right at the money.
As much as we like LIBOR floors at a rate in the money because our balance sheet overall is asset sensitive and since we're running a floating rate book, we like our debt.
Floating rate as well.
So alright and and.
In terms of matching assets and liabilities. So that's a that's a good place for us to be in terms of asset liability management, and and as Tony and Katie both mentioned the Rois that we're generating and this new origination environment are consistent with the Rois that we have in the portfolio now and that we've generated historically.
Great. Thanks, Don appreciate it.
Thank you and your next question comes from Jade Rahmani from K, B W and alive and the cool Jade. Please go ahead.
Yes.
Thank you very much and a good to speak with you all.
And I was wondering on the 100% interest collections and I know that's contractual interest collections and obviously, there's been a 49 loan modifications totaling $6 5 billion, which is about 40% of the portfolio. So.
And there are four indicating that the nature of the contract has changed how do you think that interest collections compared with what may have taken place on a portfolio prior to either any modifications or the onset of the pandemic and investors have a sense of that.
And I say that that's a great question and we included some specific disclosure on that and there really is and our modifications we've had less than 1% interest deferral. So virtually no deferrals and modifications really had been characterized by sponsors putting in additional equity and that's giving them a little bit more time interim.
And the execution of the business plan that is the vast majority of what we're doing the interest a barrel has been almost nonexistent. Our sponsors have been wanting to continue to support their assets and show their long term commitment to the business plan.
And so when you say interest deferral and put a finer point on it.
Would that encompass a reduction in interest rate on.
Or would you say that the 100% interest collections with include loans that have on there.
Taken a reduction in interest rates.
We really have not seen a.
And I can't think of it.
I really can't think of any examples of that that's not the way the conversations have gone with a sponsors.
So and so it's Jay.
Steve.
We haven't had any.
Significant reductions in rates and any on any of our on any of our loans were really.
Collecting the same amount of interest currently now than we were before the onset of Covid.
Jade, it's Doug just to put a finer point on that you can see that in our financials.
So you know if you.
Look at our top line.
And you'll see you know in particular.
With regard to the LIBOR floors, and the performance of the loans in general and you'll see that we've had consistent interest collections and absolute dollars.
Thanks, and I'll get back in the queue.
Thanks, John.
Thank you. Your next question comes from Steve Delaney from JMP Securities Your line and a cool Steve. Please go ahead.
Hi, Good morning, everyone Hope you are all well Katie you mentioned, the five loans and a.
New originations and <unk> and the roll forward it looks like about 500.
500 million funded.
So what was a total commitment amount on those five loans, if you have that handy.
The total commitment amount on the loans that we closed in the fourth quarter. A was about 229 million and then we had that included a couple of advisors and then you know to your point as we've had consistently we have future fundings on our loan portfolio, as well, which had which create.
It's a really great sort of a tailwind for the stability of the portfolio and we.
Had a future fundings that a reasonably predictable pace.
Adding to our new originations and creating more income for the portfolio.
Interesting. Okay. So if you have a 229 was related to the five and the 500 million.
And <unk> million and I saw was included and included future fundings on prior originations. So looking at the 229 million five loans. That's about a 50 million average I think your portfolio is closer to 150 is that just have to do with the fact that you had more multifamily and.
And it was a specific focus to maybe a <unk>.
Spread risk around or to make smaller loans or is that just coincidental.
Great question, and I would say, it's pretty idiosyncratic, we had a smaller loans and a portfolio. We obviously have larger loans and a portfolio. We're always very very focused on strength of sponsorship and large sponsors tend to do large loans. In this case, a number of the loans, we did where with a very strong.
And you know high quality, well capitalized private equity sponsor that just happens to have a lot of multifamily, which was a little bit more granular. So a very consistent with a quality of the assets and the quality of a sponsor we look more on the pipeline and looking forward. We are seeing a very large loans consistent with our historical levels. So we don't anticipate.
It's a paid any change to the strategy. This is really just a little bit of a idiosyncratic situation of what class in the fourth quarter versus what we expect to close on the first quarter.
Thanks very much.
Okay.
Your next question comes from Matthew Howlett from Ruth you alive and the cool Matthew. Please go ahead.
Thanks for taking my question.
Office sector and it does your largest concentration maybe you could just take a minute to comment on your thoughts on the office market generally and particularly in the major cities with the world might look like.
And then maybe.
Closure, what lease up rates look like you mentioned Pendleton, but generally would have a lease up rates look like on a portfolio. Thanks.
Sure so as far as office, we believe that it's a vaccine becomes more widely distributed and the perception of safety them free of people will return to offices and employers to look for a resumption of the creativity and collaboration and talent development that really is best done in the office and work from home will have.
And some impact on the margin, but we've always been most focused on opposite that catered a tenants that are growing.
<unk> markets talent centre, a knowledge based businesses life sciences content creation and those activity, it's really cannot be done at home, they're passed out and the office and we think that'll make a portfolio resilience.
I think today, a modern office amenity is more a flexible space. It's also a more important than ever and that also is something that we've always been focused on and making our loans as far as our portfolio and I've mentioned peloton. Our largest office exposure is a future headquarters a pfizer and we have a lot of loans on the west side, a L a where the content.
Creation dynamic and it's very strong and Hudson yards Midtown Atlanta.
National and other locations, where we're continuing to see a tenant take up.
And new leases signed even through Covid.
We feel very good about how we position the portfolio, which was really on the back of what we saw as the overall macro trends toward more and knowledge center and industry as being the growing office users and the future.
Great. Thank you.
Thank you and you a final question comes from Jade Rahmani from K, B W and alive and the cool Jade. Please go ahead.
Hi, Jade a are you.
Thank you very much and you hear me.
Thank you Mary.
Great.
I know we've done a compare the BSL portfolio to see MBS, but from the MBS is a market that does provide the most granular and transparent information looking at the January statistics and December.
And so modest improvement and delinquency trends, but grace period loans have uptick and.
And I'm wondering if you're seeing that as any potential.
You know a warning sign of a a.
On a future increase in credit a impact.
That made me a transpire over the next couple of months.
I think theres, a real distinction between the types of assets and loans that are in a C. MBS market and the loans that we are making with our borrowers the types of assets that we're looking for.
And I think the divergence that we see is really and the quality of sponsors.
And is a b assets the business plan for the assets.
Average that we pursue on our loans, which as you know low to mid sixties.
And I think that really has been reflected in the performance. If you look at the performance of the MBS market through the last year or versus the performance of our portfolio. There is a very significant distinction and.
And what we've seen there and I would expect that distinction to continue.
Yeah.
Okay.
Understood and I appreciate that a definitely have.
A notice the difference and the.
Loan size that'd be a M. T carries a much much greater loan sizes, suggesting more sponsorship behind these loans more equity as well as the shorter nature of the business plan and so there's more capex and place and also noting the focus on newer vintage assets, what you've talked about this last question would be 60 cents of a distribute.
Earnings this quarter with a two and a half a cent decline and interest income, but with a pipeline next year.
And in place that you mentioned.
Do you expect the earnings to ramp up you know back to maybe the average over the past few quarters and thereby cover the current dividend is there any comment you can provide us with that.
Yeah, Hey.
Jade it's.
Doug I think.
We weathered 'twenty and 'twenty.
Very well and and I think that was a great validation of our business model and to your question our earnings power.
And we currently have a very good array of accretive capital markets options available to us and I think that we're very well positioned to grow the portfolio in terms of a pipeline that JD referenced and those.
Capital markets options available to us and in turn.
We would expect earnings to grow.
With the portfolio growth.
Okay.
Thanks very much.
Thanks, David.
And let's start with you a last question and I would like to give me a call back to Weston Tucker for a final remarks.
And thanks, everyone for joining us this morning, and if you have any follow ups. Please let me know after the call take care.
Goodbye.
And thank you everyone that concludes your conference call for today you may now disconnect. Thank you for joining and enjoy the rest of your day.
Okay.
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