Q1 2021 TPG RE Finance Trust Inc Earnings Call
Greetings and welcome to TPG Real estate Finance Trust first quarter 2021 earnings conference call. At this time, all participants are in a listen only mode.
Question and answer session will follow the formal presentation, if anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded.
I'd now like to turn the conference over to Deborah Ginsberg General Counsel. Thank you you may.
To begin.
Good morning, and welcome to TPG Real estate Finance Trust conference call for the first quarter of 2021 I'm joined today by Matt Coleman, President, Bob Foley, Chief Financial Officer, Peter Smith, Chief Investment Officer, Matt and Bob will share some comments around the corner quarter excuse me and then we'll open up the call for quest.
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Yesterday evening, we filed our 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.
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-Q and 10-K, 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 and our 10-Q with.
With that I turn the call over to Matt Coleman President of TPG Real estate Finance Trust.
Thank you Deborah good morning, and thank you for dialing in CRT exit a busy and productive first quarter.
As we reported last night, we generated GAAP net income attributable to common stockholders of $24 $2 million for the quarter or <unk> 30 per diluted common share.
On distributable earnings of $21 $7 million or 27 cents per diluted share.
Book value increased to 16 61 per share that's up from $16 50 at the end of Q4 2020, Inc.
In part because we reduced our <unk> reserve by $4 million to $58 $8 million at quarter end.
418 basis points of total loan commitments.
During the first quarter, we made substantial progress on the strategic goals and initiatives that we articulated on our last call.
First we said that we were going to restart the originations engine and we've done that we.
We closed a $45 million multifamily loan in Indianapolis prior to quarter end and we subsequently closed a $47 million multifamily loan in St. Petersburg, Florida immediately following quarter end.
Additionally, we have under term sheet seven loans with an aggregate commitment amount of $589 million split roughly equally between multifamily and life Sciences.
Recent macro metrics show the strength of the continuing recovery manifesting and robust real estate capital markets increased investor optimism abundant liquidity and relatively high levels of transaction volume.
Against that backdrop, we have an active originations pipeline with more than five $5 billion of first mortgage loan opportunities under consideration.
And we have substantial liquidity to support our investing activity with more than $290 million of unrestricted cash on the balance sheet as of March 31, and.
And approximately $310 million of cash in cielo is available for investment in eligible collateral.
In today's highly competitive lending markets TPG sponsorship remains a competitive advantage for us, giving our teams access to the firm's intellectual capital deep sets of relationships and networks and powerful market insights as.
As we've reentered the lending markets our disciplined view on credit has remained the same on.
Our focus is on quality assets markets and sponsors.
And these remain core principles for us.
With respect to our second area of strategic focus we're continuing to optimize our capital structure and we made important progress on this front during the first quarter.
We price and closed <unk> 2021 S. All four.
<unk> two 5 billion dollar manage CRE CLO with a 24 month reinvestment period.
Weighted average interest rate at issuance of LIBOR, plus 160 basis points, that's before transaction costs.
Importantly, that's all four includes an approximately $309 million ramp almost all of which is planned to be utilized in connection with our already identified pipeline.
Following the closing of US all 484% of our liabilities are now non mark to market up from about 45% in early 2020.
64% as of year end 2020.
Finally, we've continued our active asset management initiatives and our portfolio is performing very well.
We reduced our seasonal reserve as I mentioned by $4 million at the end of the first quarter, reflecting the resiliency of the loan portfolio borrower support where needed and are increasingly optimistic view of macroeconomic conditions.
Trust collections for the quarter exceeded 99% with our one defaulted retail loan in southern California, being our sole non accrual loan.
As a result, Q1 risk ratings were stable compared to Q4 $2023 one.
As we've explained before our strategic plan for 2020. One is that the intersection of intersection of the initiatives I've just gone through active asset management of the loans on our portfolio.
Robust originations focused on compelling underlying credit.
And optimizing our capital structure, we're proud of the progress that we've made in the first quarter and we look forward to updating you on further accomplishments as we move forward.
With that I'll turn the call over to Bob to discuss our first quarter results in more detail.
Okay.
Thanks, Matt and good morning, everyone. We hope.
Everyone, especially our guests on the West coast enjoyed this more civil I start time.
10, a M eastern.
With respect to operating results, we reported yesterday for the quarter ended March 31st GAAP net income of $32 million GAAP net income allocable to common shareholders of $24 $2 million or <unk> 30 cents per diluted share and distributable earnings formerly known as core earnings of $21 7 million or 27 cents per diluted share in.
That covered our common dividend at a ratio of 1.4 times.
Net interest margin declined quarter over quarter by $2 $7 million due to fourth quarter loan repayments and the charge offs of approximately $500000 of deferred financing costs associated with loans that were contributed to TR T X 2021 F. L four which as Matt said closed on March 31, and our operating.
Fences remained consistent with pre COVID-19 levels books.
Book value per share increased to $16 61 per share up 11 cents for two reasons first earnings outstripped dividends paid on our common and preferred stock and second because we released $4 million of our general seasonal reserve or five pennies per share.
Our seasonal reserve declined primarily due to steadily improving operating performance, especially under our hood in our hotel loans, which at quarter end represented about 15% of our portfolio combined with improved macroeconomic assumptions that drive our seasonal model.
At quarter end, our seasonal reserve was 118 basis points of our total loan commitments versus 127 basis points for the prior quarter.
With regard to capital markets TRT acts as a leading CRE CLO issuer and collateral manager based on $4 $4 billion of CRE CLO issuance. Since 2018, we have a strong track record across three separate transactions, a large base of repeat investors familiar with and confident in our ability to prudently originate.
Carefully asset manage and transparently report on our institute are institutional quality loans and our TPG affiliation is also very helpful. Accordingly.
Accordingly in late March we issued a 1.25 billion dollar managed CRC L. C. R. E C. L O with a 24 month investment period, and a $308 9 million dollar ramp feature which allows us to contribute new multifamily loans were up to six months from closing since April 1st we have used $83 four.
The ramp and expect it will be full fully utilized by June if not sooner.
F. L. Four is important because it further strengthens our already solid balance sheet. It lengthens the duration of our liabilities. It increases to 84 per cent a ratio of non mark to market liabilities and through a combination of high advance rate and low cost of funds. It enables us it enables high quality loan originations at.
Market competitive loan spreads that produce risk appropriate roe's consistent with pre COVID-19 levels.
Augment our CRE CLO in support of loan originations. We continue to have approximately $3 2 billion of committed credit facilities with seven distinct seven distinct counterparties.
During the quarter, we extended our $500 million credit facility with Morgan Stanley and we are currently in discussions with Goldman Sachs and the bank of America about doing the same with their credit facilities during the third quarter of this year.
With regard to credit risk ratings remained unchanged at 3.1 quarter over quarter in fact, they've been consistent since early 2020.
Hotel performance continues to improve affordable multifamily properties continue to perform well and office is holding steady.
Pages, 11, and 12 of our earnings supplemental provide extensive disclosure regarding interest collections pick interest and loan modifications.
The takeaways, we collected 99.4% of scheduled interest of which only 1.2% was non cash pick interest.
Pick balance at quarter end was $5 5 million only 12 basis points against our $4 6 billion dollar loan portfolio.
Pik interest accrued and recognized during the first quarter was $816000 down 13% from the prior quarter, reflecting a decline in loan modifications that involves pick interest keen.
Literally we have executed 24 loan modification since April one 2020, primarily involving hotel properties, but only 11 remain in effect today, our borrowers continue to support their properties with capital capital infusions when necessary all of our modified loans are performing in accordance with their terms.
Our sole retail loan remains in default and carries a 10 million dollar specific loan loss reserve, we have one Oreo investment in Las Vegas in both instances our asset management team supported by the broader TPG real estate team is pushing steadily toward timely positive resolutions.
With regard to liquidity at March 31, cash on hand was $298 million net of cash held to comply with our financial covenants and the F. L for cash ramp was $308 9 million.
Additional liquidity May result, later this year if loan repayments increase in response to borrowers success in achieving business plans robust fixed income cap fixed income markets and a growing volume of investment sales transactions.
With regard to leverage at quarter end, our debt to equity ratio was 2.72 to one in line with the previous four quarters. We do expect that ratio returned to the normal range of three on a quarter to three and a half times, because we originate new first mortgage loans and utilize our secured credit facilities to fund originations when our clo's are fully invested.
We see several drivers of earnings in the current fiscal year, including growth in the loan portfolio fueled by our current liquidity and financing capacity redemption of the series B preferred stock remains a top priority for us and is an important benefit to our common shareholders.
Cost savings are expected to be substantial but will vary depending upon the capital source or sources used to fund the redemption.
We will incur one time costs in connection with any full or partial redemption, we undertake in.
The third important factor refinancing our current hotel borrowings still on a non mark to market basis, but at a materially lower coupons.
So with that we'll open the Florida questions operator.
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Your first question is from Stephen laws with Raymond James. Please proceed.
Hi, good morning.
Bob I appreciate the the late start time, but but also other pick disclosure on the timely filing on the Qs I appreciate all of that low touch on the quarter can you can you kind of connect the dots on the other part of the equation it sounds like.
On a pretty robust pipeline around 600 million if I did my math correctly. The ramp feature for the CLO is still has about $215 million remaining.
Now what are what are your projections per second half repayments and kind of where do you see the portfolio running from a you.
You know total leverage or when we back out the not the 86% non recourse you know kind of where do we see total leverage running go forward basis.
Now would you like to comment on the repayments or.
Sure I think and repay it with respect to repayments Stephen we have had no repayments in the first quarter. We had we had a modest level of projected payments in the first quarter I don't think there's very much to read into that was a very it was very small and so I think there's there's just some.
Loan specific idiosyncrasies, there our overall projected repayments for the year.
Remain just north of $950 million for the year.
Where they've been historically within a range.
And thats consistent with our previous estimates.
I think a little more back ended as we now sit here in May and look at the look at the remaining time left in the year, but the overall projections haven't changed.
With respect to leverage on the other components of your question I'll, let Bob address those.
Sure so with respect to leverage Stephen and everyone else on the call I think that.
The C. L OS are very attractive because they provide cheap funding they're very stable.
And.
Frankly advance rate dominates over cost of capital when it comes to Levered ROE so being able to continue to lever the substantial portion of our loan investment portfolio on an advance rate in excess of 80%. It's currently around 83 per cent.
On average is is to us a very attractive.
Because its stable and long term.
As I said, we will use more of our pretty substantial repo capacity to fund additional investments during the year on that will bring up.
Our overall debt to equity.
Our ratio advance rates on repo are typically five to seven points lower than they are.
On the Clo's.
And their cost of funds as we discussed last quarter in this current market environment remains higher materially higher than clo's. So in the aggregate when you blend those together I think you'll see in a more equilibrium status. Once we're more fully deployed you know that our total debt to equity is going to look more on the range of three on it.
Quarter to one or so which if you look historically as you know within the range, although towards the high end of the range of where we've operated historically.
And I think you'll see that it is difficult to predict.
Precisely we've talked many times about the fact that the pace of originations is one thing.
And with respect to with respect to part of your question. The pace of repayments is another important variable but of course, we have less control over that.
Great that's helpful and that leverage given your high mix of a CLO.
That's high end of the range too so what is the high end.
You know touching base on the Las Vegas can you give us an update on maybe timing of a resolution there.
How you guys plan to look at.
Exit strategies on that.
Sure, let me make some specific on that.
We don't intend to be long term holders of Las Vegas land on the other hand.
We will do those take those steps and undertake actions that are value maximizing within an acceptable timeframe. So.
We're actively engaged with the sales brokerage community to think about optimal exit strategy and timing.
We have engaged a third party property manager to help with ongoing operations, but I would say overall.
Our our views on timeline to disposition have not changed which is that.
You should expect at least some partial resolution.
In the intermediate term and we don't intend to be long term holders of that lab.
Great I appreciate the comments there thanks for taking my question.
Thank you.
Our next question is from Tim Hayes with B T. I G. Please proceed.
Yeah, Hey, good morning, guys hope you're doing well.
I guess just want to touch on the pipeline a little bit more and you know I completely understand that the ROE. We are earning on loans that will go into the CRE CLO or probably superior to those that will be financed otherwise given the attractive cost of funds and advanced rates there, but just curious.
What kind of an all in coupons on on loans in the pipeline look like and what the ROE vs.
You believe youll be able to achieve once the ramp up feature has been fully utilized.
That kind of compares to the portfolio average.
Yeah sure.
Good morning, Tim I hope you're well.
And if you if you look at our loans are under term sheet now.
We're looking at at a weighted average spreads that are a little bit north of 360 basis points and I think as I said, it's a it is a competitive market out there.
And I think we are probably not alone in seeing spread and overall yield compression.
That being said as we've as we've commented on it as you alluded to the financing markets have remained very attractive.
And robust for us as borrowers as well and so I think you're seeing a little bit of a change in the in the composition of returns, but if you look at our loans that are signed up now.
We're not seeing returns on equity that are materially different than pre COVID-19 levels I'll, let Bob perhaps address.
Financing post ramp and the impact that that could have on on ROE is.
Yeah.
Thank you, Matt I'm, Tim we agree with you that on a on an individual granular loan basis.
Loan it frankly at any spread financing the CLO is going to generate a higher levered Roe.
Then financed on repo, but you know this.
This is a 5 billion dollar company and I think we should all look at what the Levered returns are as you know across the company as a whole and the reality is given the size of our loans. The average size is slightly north it's right around $90 million, we typically cut our loans into participations on a portion of that that loan is likely.
To be in one or more of our C. L O's and.
The controlling participation would typically remain on one of our credit facilities and that's a common practice throughout the interest throughout the industry.
But clearly as we you know as we fill our CLO theres still available to us as loans repay for those deals that have opened reinvestment periods, which would be F. L for our newest CLO in F. L. Three through.
October and November of this year and then you know we look to the credit facilities to be a supplement to that but at this point I know, it's less than 20% of our total liability base. So you know roe's today are comparable to what they were pre COVID-19.
Credit spreads have changed a bit LIBOR floors are currently different Peter can comment on that they're lower.
But we feel comfortable with our ability to continue to to engineer a appropriate risk adjusted ROE for the company and its shareholders.
Okay. That's helpful. Bob I appreciate it and you know one of your peers I'm curious, how how long terms and structures on these loans.
<unk> to maybe pre COVID-19 levels as well because one of your peers recently noted that youre seeing more lender friendly terms on on new loans, which you know kind of the same same observations on spreads as you guys as well, but you.
As mentioned on attachment points, where we're coming in a bit and you know I don't I don't believe they send me the amount covenants I'm just curious how structure, you've held up or trending in the pipeline that you're seeing.
Peter do you want do you want to address what you're seeing on the Mark Yeah.
What we're seeing on our own pipeline.
Yeah sure I think our structure is still holding in relatively a relatively well.
Sure we lost a year during COVID-19, but you know in 2019 in the first quarter of 2020 that was and still a relatively competitive market.
Thank you.
You know, we do a lot of repeat business. So we've already determined what the structure is in.
Generally you know people.
People are getting you know relatively niche market turns at low interest rate market terms and low interest rates and so they're not necessarily as focused on on structure and if you've already gone through as I said on the repeat borrower side of the world if you've already gone through on.
Highly structured deal that those those things sort of stick sell for a lot of our deals we're not seeing really much actually perhaps from really any deterioration that's on structure and our sponsors generally get at their institutional type sponsors and their experience they kind of know what's going on in a yeah.
Sign documents accordingly.
Got it got it okay. Appreciate the color there as well.
And then you mentioned just the preferred the series B preferred you have outstanding and how Thats. Our goal is to complete the redemption of the securities and cash.
Wondering if you could provide maybe a target range on when you might look to do that and I understand the capital markets might play a big role on that and we don't have crystal balls, but if.
Yes.
We.
Stating that kind of where we're at right now.
The capital markets backdrop, just a target range for you guys to pay down on those or redeem those preferred.
Yes, as you noticed it's very hard to to engage in transaction timing prognostication on there a number of factors some of which we control.
Some of which we don't control it it's certainly our corporate goal over the course of the year.
Perhaps sooner to redeem the preferred security.
Yeah.
As we said on the last call. It will you know we will do it when the capital markets are you know per.
Permit or support it and B you know at the time that we think is optimal for us in terms of.
Replacing that capital with a.
A much more efficient cost of capital there there are make whole arrangements I think.
Readers, who are and listeners who are familiar with the company are familiar with those are but there is a make whole and so we want to optimize.
The timing.
And the cost of capital used to.
The redemption.
Net totally makes sense can respect that for sure.
But my last question is just kind of part b to that and it has to do with the dividend and obviously dividend coverage is very strong right now and things seem to be trending in the right direction. Bob you you highlighted a couple of catalysts kind of her for earnings power here, which one includes the series B preferred stock redemption, but then also.
The pipeline is very robust you're growing the portfolio and you have some good liquidity to do that so that all bodes well for earnings power in place dividend coverage very strong you know can you maybe just give us an update on how you're thinking about positioning that dividend and you know at what point whether it's.
After the completion of kind of addressing the series B Preferreds, you know at what point, you would look to maybe right size it.
More in line with with your core earnings power.
Sure at the answer that question is clearly the result of a combination of vectors and you've just mentioned most of them, we and the board discuss and study that.
Issue all the time I think that we want and I think the market once our.
A an increase in the dividend and that's what we're focused on be for it to be clearly stated and a sustainable increase and probably a smoothed one as well so I think that the redemption of the series B preferred stock is probably the biggest.
Most material driver of that perhaps tied buyers slightly followed by deployment.
So I think those will be two leading indicators of when you might expect new news on an.
An adjustment to the dividend, but right now our focus is on ensuring that we're comfortably covering the current state of dividend and making rapid and firm progress.
Toward creating a higher and more sustainable dividend.
Okay. Thanks for the color I appreciate it yeah.
Yep.
Yeah.
Our next question is from.
Charlie I missed it.
From J P. Morgan. Please proceed.
Good morning, guys. Thanks for taking the questions I appreciate all the color. So far just wanted to kind of pull up a bit you know looking at the map of office loans on slide nine now it looks like there's a fair amount of exposure to New York, San Francisco, Atlanta, and Los Angeles.
The large urban centers.
And I realize that office is probably the biggest question Mark right now in terms of you know that longer term outlook, really, but but but thinking beyond.
You know sort of the initial leases on the book today for your tenants that you are lending against.
I'm just curious to hear your thoughts.
On both collateral performance and also the origination outlook for those urban markets you know given.
Is it pretty wide disparity in terms of the regional impacts from COVID-19.
Yeah. Good morning, Charlie I'll I'll start with that and then Peter can add his color as well.
First as it relates to collateral performance the office.
Portfolio that we have is is all entirely performing.
And paying a 100% interest collection.
In accordance with their terms.
We have as we've as we've talked about before specifically with respect to New York City Office, we are reasonably limited exposure.
North of 17% measured by fully funded commitments.
And as we've talked about with with each other individual credits, we like the the lease coverage that we have in our in our tenant credit quality.
If you look at our underlying performance rent collections over the last 12 months across our office portfolio would have been at 90 plus percent. So performance has been very strong.
Ah as you allude to.
Office is an asset class that we are approaching with caution right now we do have one office deal under application.
On Fort Lauderdale market, a very strong sponsorship.
COVID-19 recovery story that we like are some.
Some development potential, perhaps but a credit that we like.
It is however, an asset class for all of the reasons that you alluded to and uncertainty about.
Emerging office usage as we as we come out of the pandemic that we're approaching with caution.
With that let me ask Peter to provide his color as well.
Yeah, you touch on a few things, we're certainly not running around trying to.
Find a lot of office deals to do on primarily just because we don't really know at this but the Oh you know what the end game is going to be how much space people are going to need in and.
While we are being very cautious on what we look at on the office side of the World. We are focusing on sort of growth markets, where there where there is a good story, where you have a lot you know Sun belt States, where you have a lot of.
An increase in population and whatnot and I think about what we've seen sort of historically from looking at our own book and also talking to a lot of land landlords on asking asking a ton a ton of questions. As you know net no. None other tenants right now are really for the most part extending their leases long term. There's a lot of them are doing a lot of <unk>.
Short term renewals and whatnot just to sort of figure it out so what we're seeing I think is when people start going back which is happening now.
Faster in certain parts of the country, but when people start going backward, we're targeting sort of like a September time on where we'll probably see a lot more people going into the office.
People are going to reassess their their space needs and figure out how their spaces working for them. Then so I think theyre going to a lot of decisions are going to be made with respect to duration of new leases and 2022.
And discussing with our landlords that are signing leases in new leases and whatnot.
Trying to focus on holding you know holding the face, France within five or 10% of pre COVID-19 levels and dealing with them.
Basic spending a little more money on on T is for Capex and then also a little more free right.
But I think 2022 is where people are well aware of these tenants are really going to decide what their space needs. They're gonna be on having to use is if people are going to be working four days a week in the office or three not really quite share, but also I mean, you know that.
Positive on on this is is a lot of these companies there.
There are reducing their space, because you know something that attack not because they're they're losing a ton of money I mean, I think when people buy companies are doing poorly and losing a lot of money I think they cut space a lot faster so.
So I think we're going to see a lot of I think people are going to be surprised at how many tenants renew or.
Our only slightly downside.
That's kind of on site.
Yeah and.
So to wrap that up I think if if you look at our current pipeline and this is disclosed in our supplemental really on the first from page three which is the highlights page.
Half of.
Half of our pipeline right now is multifamily 49% to be precise life Sciences has been and we expect will continue to be a pretty substantial.
A component of our origination.
Origination activity going forward and as both Peter and Matt said.
Given the uncertainty on the office space that the bar for New office loans for Us is pretty high on only one.
<unk> loan that.
We have signed up right now is cleared that bar.
It's very helpful color. Thanks, so much guys I appreciate it.
As a reminder to star one on your telephone keypad, if he would like to ask a question. Our next question is from Steve Delaney with JMP Securities. Please proceed. Thanks.
Hey, good morning, folks and congratulations on the progress on financing and modifications.
I was I was wondering Matt if you could you've got the $600 million pipeline and I think most of that was under term sheet do you have a sense give us a range of how much might close by June 30 get a little sense for the per.
Full through on that.
Yeah, I think that.
Essentially all of that Steve should should close by the end of the quarter.
Right.
I think we.
The question is how much how much additional you can we can re sign up.
Well.
I mean, now and then that could close Peter you should you should jump in if you see any outliers.
But these are all reasonably quick executions.
Great. That's that's better than I expected that I would here, but.
Thank you for that for the clarity.
Five modifications in the in the first quarter, a 400 million of loans is there a common theme there is pretty much. The same type of thing that you were doing in the second half of last year. Just basically you know maybe deferring some interest in asking for some fresh cash how would you describe.
Rob that the latest modifications thanks.
I would say that there is a there is a tunnel shift.
We're feeling like we're entering a more normalized state and that's not to say that we're totally out of the woods with respect to the pandemic.
But I do think what's changed is the nature of the request there are fewer requests that have to do with run rate operations.
Fewer requests to repurpose reserves or accrue interest for example.
And more about adjusting milestones for extension tests.
On to deal with the pace of execution on underlying business plan. So.
I think that there is a I don't know if that if that totally captures it but I am trying to convey that I think there's a there's a sense of an atmosphere shifts that we're feeling around the modification requests.
Yeah, I mean, I sense, it's more it's less about defense and more about offense from the sponsor.
It sounds like maybe there's yeah, there's a real there's a real sense of I think are coming out of this in a in a real sense of getting closer to a more a path toward normalcy.
Okay, well, that's that's great color, Thanks, and just one quick one Bob on.
At the end of year and you estimated that the warrant dilution was about three and a quarter per cent stock thankfully is up 17%. This year I'm assuming that increases the dilution do you have an estimate force either March 31 are currently sort of book, how you would peg you know on adjustments to the.
So the 16 61 figure.
Yeah, It would be down last quarter, the dilutive effect was slightly more than 3% and with the run in the stock price. If you were to do it on the stock price deep Pea screen price last night.
It would be you know above 4% and approaching.
5% dilution, okay four to five per cent. Okay. Thank you all for the comments.
I appreciate it.
You betcha.
Yes.
We have reached the end of our question and answer session I would like to turn the conference back over to management for closing remarks.
Thank you.
To conclude we're excited about our progress in our first quarter accomplishments. We obviously, thank all of you for your interest in TR T X and will next speak at our next quarter end and perhaps sooner at various investor conferences. During Q2. Thank you.
Thank you. This concludes today's conference you may disconnect your lines at this time and thank you for your participation.
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