Q3 2021 New Mountain Finance Corp Earnings Call
[music].
Good morning, and welcome to the New Mt. In Finance Corporation set quarter of 2021 earnings Cold all the participants within decent only mode should you need assistance. Please seek medical.
Conference Bash Honey my pressing the stock he followed by diesel after.
After today's presentation, there will be an opportunity to ask questions.
To ask a question you may place to start than one on your telephone keypad to withdraw your question. Please press Star then too please.
Please note that T V didn't is being recorded I would now like to hand over to conference to Rob a heavily please go ahead.
Thank you and good morning, everyone and welcome to New Mountains bananas corporations third quarter earnings call for 2021.
On the line with me here today are steep glinski chairman of N N F C and C E O of New Mountain capital, Jon Klein, President and C. O O a N N F C.
She lives Patchy C F O a N.
We hope that everyone is doing well and that you and your families remain in good health.
He was going to make some introductory remarks before he does I'd like to ask a shiraz to make some important statements regarding today's call.
Thanks, Rob Good morning, everyone before we get into the presentation I would like to advise everyone to today's call and webcast of being recorded.
Note that they are the property of New Mountain Finance Corporation and at any unauthorized broadcast in any form is strictly prohibited.
Information about the audio replay up this call is available you know in November 3rd earnings press release.
I would also like to call your attention to the customary safe harbour disclosure in our press release and on page two of the slide presentation regarding forward looking statements.
Today's conference call and webcast may include forward looking statements and projections and we ask that you referred to our most recent filings with the SEC for important factors that could cause actual results to differ materially from those statements and projections.
We do not undertake to update all of forward looking statements old projections unless required to by law.
To obtain copies of our latest SEC filings and to access to slide presentation that will be referencing throughout the school. Please.
Please visit our website at Www Dot GNU mountain financed dot com.
At this time I'd like to turn the call over to Steve Kalinsky Nmfc's Chairman will give some highlights beginning on page five with a slide presentation Steve.
[noise]. Thanks.
It's great to be able to address all of you today is both the chairman of N M. F C and is a major fellow shareholder.
I will start by covering the highlights of the third quarter.
Net investment income for the quarter ended September 30th.
Was 31 cents per share.
All the covering our dividend 30 cents per share that was paid in cash on September 30th.
And above our prior guidance.
The regular dividend for Q4 2021.
Was against set at 30 cents per share based on estimated net I I a at least 30 cents per share, which will be payable on December 30th to shareholders of record as of December 16th.
Our September 30th net asset value was $13.26 per share.
A slight decrease of seven cents per share from the June 30th and a b a 33 per share.
Reflecting relatively stable marks across the horses.
You minor idiosyncratic credit movements.
As we discussed that previous earnings calls risk control has always been part of New Mountains bounding mission.
Our firm has a whole now manages over 35 billion in total assets with a team of over 190 people.
And as you can see from slide 36 in the back has continued to grow material and number and strength over the last 12 months.
<unk> the firm has over 58000 employees at our private equity portfolio companies and feel.
We have never had a bankruptcy or missed an interest payment in the history of our private equity work, while generating over $52 billion of estimated total enterprise.
For all stakeholders.
We have applied that same team strength and focus on defense of growth industries to NMFC Endarch credit efforts.
The great bulk of Nmfc's loans are in areas that might best be described as repetitive tech enabled business services, such as enterprise software.
Our companies often have large installed client basis of repeat users who depend on their service day in and day out.
These are the types of defensive growth industries that we think of right ones in all times, and particularly attractive in difficult times.
We'll believe our portfolio continues to be well positioned due to this defensive growth investment strategy and as evidenced by an average <unk> fault loss nine basis points a year since we began our credit operations in 2008.
We place to new borrowers partial amount accrual for this quarter.
Totalling just $18 million a fair value on our 3 billion dollar portfolio.
Our portfolio company risk ratings of otherwise remained unchanged since our August 5th 2021 earnings call, which Rob will cover in more detail on the heat map.
Our stock price has also recovered nicely.
From a low of $5.02 per share on April 2020 to $14.06 per share.
Last friday's close.
Turning to page six we are pleased to announce today several positive structural changes expected to benefit NMFC shareholders.
Burke.
We are permanently reducing our maximum potential management fee.
From 1.75%.
The 1.4% on assets.
In addition, while we previously announced that are actual management fee will be 1.25% on assets through December 31st 2022.
We are now extending that for an additional year through December 31st 2023.
We're also extending our dividend protection.
So through December 31st 2023.
We pledged to reduce our incentive or incentive fee. If it is needed to fully support the 30 cents per share dividend.
For example in Q3 are pre incentive fee net I I was 39 cents per share, which provides approximately 1.3 times coverage against R 30 cents per share dividend.
Given our strong earnings profile, we do not currently anticipate needing to use this pledge, but want shareholders to have greater confidence in the dividend.
Next [laughter].
We are launching an at the market or a T M stock program.
Which will allow us to regularly issue a nominal amount of primary shares at market prices. When we are trading at or above book value.
We are hopeful about the prospect of raising incremental capital and a low cost just in time matter that reduces cash drag and may be accretive to the extent, we can issue shares above book value.
This program allows us to Opportunistically raise equity overtime and May also increase liquidity of our stock while being small enough.
In volume to avoid impacting the stock price in any material way.
The a T M program should make us less reliant on large traditional follow on offerings to raise equity and to that effect, we will not do a traditional follow on offering for at least the next 90 days as we look to kick off this a T M program post earnings call.
Additionally, while we have had great success preserving book value for our first 10 years as a public company.
We are focused on finding ways to ensure nmfc's book value has the opportunity to continue to be stable or appreciate in the decades to come.
Therefore, we are pleased to announce that NMFC will have the opportunity to further its access to other platforms within new mountain by allowing Coinvestment from time to time, and new mountain capitals, private equity and strategic equity deal flow, which Rob will address in more detail.
This further differentiates NMFC from its competitors as we will have access to defensive growth companies across private and public credit <unk>.
Net lease and now equity.
Together, new mountain professionals have invested over $623 million personally into NMFC, a new mountains credit activities.
I N management remain as Nmfc's largest shareholders. We have continued to add to our personal positions in the last 12 months and Rob John and I have never sold a share.
With that let me turn to call back to Rob.
[noise]. Thank you Steve.
As Steve mentioned, we are thrilled with the opportunity to co invest and certainly mountain private equity and strategic equity deals in a way that we hope protects and enhances nmfc's book value over time.
New mountain capital as a top quartile performing P E firm at our option and subject to the approval of Nmfc's investment Committee and board of directors, we expect to invest $3 million to $5 million alongside New mountains, private equity and strategic equity funds in certain deals.
We believe this provides NMFC shareholders unique access to top tier private equity Coinvestment and we hope that the potential gains associated with these investing can overtime help upset any potential credit losses.
We completed our first investment in September a 5 million dollar investment in Homrich Berg National independent wealth management firm.
We expect that over time this program will represent 2% to 4% of our total assets. We look forward to keeping shareholders updated on future Coinvestment, New mountains private equity in strategic equity funds.
Cause we have throughout the Covid crisis, we continue to have extensive conversations with both company management and sponsors and update each portfolio companies scores on our heat map using the same criteria discussed in the past and as outlined on page nine.
While our book value was down slightly our portfolio has remained generally unchanged from a risk ratings standpoint the.
The updated heat maps show the net positive migration this quarter as summarized on pages and pages 10, and 11 with $121 million a positive migration.
Offset by $61 million of negative migration.
Additionally, there was $227 million of net positive intra green migration.
One specialty chemicals business that migrated to Orange last quarter has now migrated to read this business as say some market and execution challenges, but we successfully restructure the business during the quarter such that we now control the equity and are in the process of enacting several initiatives that we expect to result in the near term improvement that's.
Said given the restructuring.
Mark down the fair value of this asset and place $11 million of it on non accrual.
The other negative mover going from green to yellow is a business services company focused on providing outsourced services to utility customers that has faced some COVID-19 headwinds as well as the sun setting of a few large contracts.
The sponsor remains optimistic about the business and has some initiatives underway to right size the cost structure or the top line should benefit as the impact of Covid hopefully continues to recede.
On the positive side benefit the dental practice management business that we have discussed in private quarters has continued to improve and is now in the green category as the underlying operating metrics continued to trend in the right direction.
Finally, the hospitality management business has migrated to orange from Red travel has resumed and many of its key markets.
Overall, we remain pleased with the asset quality and credit trends across the portfolio.
The updated heat map is shown on page 12, as you can further see from the heat meant given our portfolio strong bias towards defensive sectors like software business in federal services and Tech enabled health care. We believe the vast majority of our assets are very well positioned to continue to perform no matter how the public health.
<unk> and economic landscape develops.
We continue to spend significant time and energy on our remaining red and Orange names, which now only represents 6% of our portfolio at fair value.
We played the $7 million of one other long standing red asset on non accrual this quarter.
This is the education products business that we've highlighted in the past which faces.
Some secular and COVID-19 induced headwinds as well as some operational challenges.
I believe that is the impact of the pandemic hopefully continues to repeat in the months ahead majority of a red and orange credits benefit materially.
Page 13 of the view of our credit performance based on underlying portfolio company leverage relative to L. T M EBITDA and shaded to the corresponding color of the heat map.
As you can see the vast majority of our green rated positions have shown results that are very consistent with our underwriting projections exhibiting either very minor leverage increases or in many cases level decreases.
On the lower right side of the page we show a group of eight companies that have more than two and a half turns a negative leveraged drift most of which correspond to a yellow orange and red rated names. These.
These companies represent a small portion of our portfolio that have underperformed, partially due to adverse conditions caused by the well documented volatility in certain parts of the economy.
From a liquidity perspective, we believe that all the companies have adequate resources to pursue their posts COVID-19 business plans and have a reasonable prospect for improved performance in 2022.
Page 14 outlines the quarter over quarter change net asset value.
In Q3 Naff decreased by 713, 26, which is in line with our free Covid down.
The net asset value movement was driven by the continued increase in the fair value of two net these assets, which was offset by the specialty chemicals name that migrated from orange to red.
Looking forward, we anticipate further positive price movement in our green yellow and Orange rated loans, which if our risk assessment is correct. So to continue to recover in coming quarters as the world normalizes and if they recovered a par would increase book value an additional 31 cents per share to a book value of 13 57.
We believe the opportunity for value creation across our restructured and equity portfolio as evidenced by the recent partial monetization of Ah Mentum provides additional upside from here we.
We have included an illustrative sensitivity analysis, showing the impact of a 10% change in fair value of our risk rating restructured.
Excuse me of a red risk rating restructured and equity assets.
Each 10% change in fair value would result in change to Nab, a 32 cents per share and we continue to believe there is more upside and downside in this portfolio.
Page 15 shows that we continue to manage our statutory leverage ratio at a very comfortable level.
Gross debt in net asset value, both decreased slightly resulting in a flat statutory leverage ratio of 1.19 times or 1.13 times net of available cash.
Our intention remains to manage the business any statutory leverage ratio net of cash of 1.0 to 1.25 times.
With that I will turn it over to John to discuss market conditions and other elements of the business.
Thanks, Rob we.
We are pleased to report that overall conditions and the direct lending market continued to be very healthy transaction.
Transaction volume has reached a record level and we have seen rapidly increasing deal sizes direct lending transactions in excess of $1 billion are now commonplace.
Performance trend across a variety of industries remain quite strong which is created a backdrop for very high sponsor purchase prices, resulting in very attractive loan to value ratios for lenders.
Companies with many within many of our core defensive growth sectors, such as software healthcare technology field services and technology enabled business services have particularly strong tailwind and continued to attract substantial investment from our sponsor clients and.
Interests spreads and alone structures across the joke direct lending market are consistent with what we observed last quarter, reflecting the ongoing competitive lending environment increasingly there is a very tight pricing range for direct lending solutions as most deals that we evaluate have very similar spreads regardless of credit quality.
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Given this dynamic we believe there is little incentive to stretch on credit quality, which plays very well into our strategy of financing best in class companies in defensive industries.
Turning to page 17, we show how potential changes in the base rate could impact Nmfc's future earnings as you can see the vast majority of our assets are floating rate loans, while our liabilities are 56% fixed rate and 44% floating rate.
Nmfc's current balance sheet mix offers are shareholders consistent and stable earnings in all scenarios, where LIBOR remains under 1%.
If base rates rise above 1% as many expect.
There is meaningful upside to Nmfc's net investment income. We believe this positive interest rate optionality offers material value to our shareholders compared to that offered by fixed rate debt investments.
Page 18 addresses Nmfc's historical credit performance on the left side of the page we show the current state of the portfolio, where we have $3 billion of investments at fair value with $42 million or about 1% of our portfolio currently on non accrual.
On the right side of the page, we present nmfc's cumulative credit performance since our inception in 2008, which shows that across $8.8 billion of total investments we have $651 million that had been placed on our watch list with $276 million of that amount migrating into non accrual.
Of the Nonaccruals only 79 million have become realized losses over the course of our 12 plus year history.
The chart on page 19 tracks the company's overall economic performance since it's IPO in 2011.
As you can see at the top of the page since our initial listing NMFC has paid 903 million a regular dividend as to our shareholders, which have been fully supported by $910 million of net investment income.
On the lower half of the page we focus on below the line items, where we show that Simpson since inception, we have cumulative net realized and unrealized losses of just $46 million highlighted in yellow, which consists of $17 million of net cumulative realized losses and 29.
Of net cumulative unrealized losses.
Is important to highlight that this aggregate loss remains a modest fraction of total dividend payouts to date and as we look forward. We remain very focused on reversing these losses, primarily through potential gains on our equity positions.
[noise] pays 20 shows a stock chart detailing nmfc's equity returns since IPO, while the performance of our stock was impacted by fears around the pandemic over the course of the last year, we have seen material improvement in our share price, reflecting the quality of our investments and the consistent earnings that these investments <unk>.
Generate.
Since our IPO over 10 years ago, NMFC has a compounded annual return of 11%, which represents a very strong fixed income return during a period of time, we're short term risk free rates have averaged less than 1%.
Additionally, as shown Nmfc's performance has materially exceeded that of the high yield index as well as an index of BDC peers that had been public at least as long as we have.
Turning to our investment activity tracker on pages 21, and 22 this quarter, we saw record originations as well as record repayments.
While portfolio exits slightly outpaced originations, we were very pleased with the quality and diversity of our originations, which included a mix of lead mandates club deal flow and add on investments to existing portfolio companies.
We continue to have great success targeting it in accessing deals with a niches of the economy, where our knowledge and conviction is the highest.
Since quarter N as shown on page 23, we continued our sourcing momentum with four new financings during the month of October net.
Net of repayments, we expanded our book by $78 million, which places us within our target leverage range looking.
Looking ahead towards year, and we expect our deal flow to fully absorb any proceeds from ordinary course loan repayments as well as any incremental capital raised through our new ATM program.
Turning to page 24, both are originations and our sales in repayments for weighted towards first lien assets there were slightly more activity than usual within the preferred stock category, where we opportunistically made several new investments and we successfully exited a material investment in E. A preferred stock.
Collecting over $20 million a accrued pick income.
Overall, we plan to maintain an asset mix that is consistent with our quarter and portfolio, where nearly two thirds of our investments inclusive first lien S. L. P. A net lease our senior in nature.
On page 25, we showed that the average deal of Nmfc's portfolio was stable from Q2 Q3 at approximately 8.8%.
While the environment is competitive the available spreads in the marketplace remain supportive of our net investment income target.
Turning to page 26, we have detailed breakouts of Nmfc's industry exposure.
The center <unk> Pie chart shows overall industry exposure, while the surrounding pie charts give more insight into the very significant diversity within our healthcare software and services portfolio. As you can see we have successfully avoided nearly all of the most troubled sectors, while maintaining high exposure to the most defense.
I've COVID-19 resistant sectors within the U S economy.
Finally, as illustrated on page 27, we have a diversified portfolio with our largest corporate obligate representing 3.6% of fair value.
And the top 15 investments inclusive M. A R. S. L. P funds accounting for 36% of fair value with that I will now turn it over to our CFO Shiraz Cadgy to discuss the financial statements and key financial metrics Trust.
Thank you John.
For more details on our financial results in today's commentary please.
Please refer to the Form 10-Q that was filed last evening with the SEC.
Now I'd like to turn your attention to slide 28.
Portfolio has $3 billion in investments at fair value September 30th 2021, and total assets of $3.2 billion.
My total liabilities of 1.9 billion of which total statutory debt outstanding was 1.5 billion, excluding $300 million withdrawn SBA guaranteed debentures.
Net asset value of $1.3 billion or $13.26 per share was down seven cents from the prior quarter.
September 30th our statutory debt to equity ratio was 11921 and as previously noted net of available cash on the balance sheet. The pro forma leverage would be 113 to one.
On slide 29.
Our historical leverage ratios.
In our historical Nev adjusted for the cumulative impact of special dividends.
Slide 30 [noise].
We show a quarterly income statement results, we believe that our NII is the most appropriate measure of our quarterly performance.
The slide highlights that while realizing unrealized gains and losses can be volatile below the line. We continue to generate stable net investment income above the line.
Focusing on the quarter ended September 30th we are.
Total investment income of $68 $2 million.
2 million dollar increase in the prior quarter due to higher fee income this quarter.
Total net expenses, where approximately 37 8 million slight increase quarter over quarter.
This results in third quarter NII of $30 $4 million.31 per weighted average share, which exceeded our Q3 regular dividend 30 cents per share.
And as a result of net unrealized depreciation in the quota for the quarter ended September 30th with an increasing net asset resulting from operations of $22 million.
As discussed the investment adviser has committed to a management fee of 1.25% for the 20th 21, 2022, and 2023 calendar years.
We have also pledged to reduce our incentive fee if an as needed during this period to fully support the 30 cents per share dividend.
It is important to note that the investment adviser cannot recoup fees previously waved.
Furthermore, the investment adviser has permanently reduced its base management fee from 1.75% to 1.4%.
A size 31 demonstrates how total investment income is recurring in nature and predominantly paid in cash.
As you can see 87% of our total investment income is recurring and cash income increased to 83% of this quarter.
As John mentioned during the quarter, we received a full pay down on our large E. B pick preferred asset that resulted in cash received of almost $21 million in life to date pick income.
We believe this consistency shows the stability and predictability if only investment income.
Turning to slide 32 is briefly discussed earlier and I for the good quota exceeded our Q3 dividend.
Based on preliminary estimates, we expect our queue for 2021, and I will be at least 30 cents per share prior to any fee waivers and when you designate protection program.
Given that our board of directors has declared a Q4 2021 dividend of 30 cents for sure which will be paid on December 30th to hold as a regular on December 16.
On slide thirty-three with highlight out various financing sources.
Taken into account SBA guarantee debentures, we had almost $2.3 billion of total borrowing capacity at quota and.
Would have a $400 million available on a revolving lines subject to boring based limitations.
As a reminder, both a wells Fargo and Deutsche Bank credit facilities covenants I generally tied to the operating performance of the underlying businesses that we learned to rather than tamoxifen investments at any given time.
Finally on slide 34, we shall leverage maturity scheduled as we have diversified our debt issuance. We have been successful at Laddering, all maturities to better manage liquidity.
We have limited near term maturities and over 75% of our debt matures after 2025.
Also given out recent investment grade rating from Moody's we continued to explore the unsecured debt market to further let al maturities in the most cost efficient manner.
With that I would like to turn the call back over to run.
Thanks for us in closing we are optimistic about the prospects for NMFC in the months and years ahead.
A long standing focus on lending to defensive growth businesses supported by strong sponsors should continue to serve as well once again. Thank you for your continuing support and interest wish you all good health and look forward to maintaining an open and transparent dialogue with all of our stakeholders in the days ahead.
I will now turn things back to the operator to begin Q&A operator.
We will now begin the question and answer session to ask a question you May present start then one on your telephone keypad you can't using a speaker phone. Please pick up the handset before pressing the Keith.
We can all your questions <unk> two a.
At this time, we will close momentarily <unk>.
The first question cause I'm pulling Johnson from K B W. Please go ahead.
Good morning, guys. Thanks for taking my questions.
So one question is I look on your investments for the quarter on slide 21, and 22 and this might not be <unk> anything new but you know it appears that there's maybe not you know a major spread difference between the second lien.
<unk> loans and and the first lien loans made during the quarter need and even some of the preferred investments, but I'm just curious in today's world, if you're not getting compensated unnecessarily in terms of returns for a second lien or subordinated type of.
Investments like we used to in the past.
What makes you comfortable with with those types of investments today.
Sure Paul It's good question and there are a couple things I just want to know at the outset. For example, one of the perfect stock investments that we made with 7% by was purchased it at 87 and a half cents. So that that would be just one one note to make and then there were some other preferred stocks that were.
Definitely higher spreads.
But I think I think your your comment about the spread difference between Unitranche and secondly is a good one it's one we've actually noted on prior calls that the incremental return on second lien.
Versus the first lane is is less than ever and so our mindset is to be just incredibly selective about which second liens, we invest in and we only.
Pursue a second lien investment when we just have you know amazingly high conviction about the quality of the business and the enterprise value cushion both.
Both as represented by the the multiple the sponsor pay but also our internal view of the enterprise value. We just want to make sure that that cushion is is very.
Very substantial and so our mindset is that there are great secondly, and investments out there to be made you just have to just be incredibly selective on credit quality and that's that's what we've done and that's what we'll continue to do.
Great Thanks for that.
And then just a broader question just with all the competition going on in the market and then the advent of the Mega tranche deals and taking market share in the in the middle market.
Have you found it uhm anymore difficult I guess to win deals or to secure places in one club deals and such as that has that been any more difficult for you I guess in the current quarter, what you're experiencing now uhm versus the past.
No I mean, I think if anything Paul and Hey. This is this is Rob I actually think it's the opposite as the market has expanded it and frankly as the types of deals that quality sponsors are doing are tend to be more and more in our sector. I. Just think we have more shots on goal than ever.
And whether it's being part of a club and a mega tranche or leading.
Smaller unitranche ourselves.
Participating selectively in a in a in a club up secondly, we we feel like our deal flow is higher than it's ever been and it's also a function of the expanding scale of the new mountain overall platform as I think we've articulated before our current private equity fund is over $9 billion.
Steve pointed out how how large the team has become so our touch points across.
The deal universe is higher than ever as an institution and that's allowing us to have a wider aperture than ever before additionally, our our footprint as an issuer of paper and you've noted this before also given the scale of our private equity platform.
It makes us very important two two.
Reddit funds that want to participate in ardiles, many of whom themselves or sponsor affiliated and so leveraging that have in the marketplace. It really enhances our our access to the deals we Wanna do and the proof is in the putting right Q3 was our highest deal flow.
A quarter ever both at the NMFC level and across the broader credit platform and we're seeing ongoing strength in queue for it. So so access to the best possible deal is really is not on our list of issues or concerns.
Okay. Thanks for that.
Good to know and then.
As far as I know your portfolio's obviously more.
Heavy with the health care, the services and software sectors, which you know.
Don't tend to be an affected.
Affected as much by the inflationary issues or the supply chain issues that we.
Been experiencing this year, but have you seen any of those pressures show up anywhere in your portfolio or has just been something that's almost been kind of nonexistent just because of the more service oriented.
Portfolio that you guys have.
Yeah. It's a good question I I won't say, it's nonexistent, but it's very limited because as you point out where we're not.
The companies, we learnt to or not for sharing physical goods for the most part so so the goods level of inflation the supply chain issues.
The shortages really doesn't affect the types of companies, we learned to what we have to ops. He watches his labor inflation at our companies and labor availability and you know that may be a headwind for for for for equity values at 15 to 20 times, they're they're not at all close to <unk>.
Packing that service capabilities, and we don't we don't foresee that being being an issue that impacts borrowers in a material way, but we are keeping an eye on it and the other thing I would point out is that given that the businesses. We've learned to tend to have high margins and variable cost structures. It's not.
A huge we have plenty of pushing it is not like osf's, 5% margin of Costco up by 3% and you can't pass. It on you know you've eaten into into 60% of your of your cash flow. So so the bottom line is we're not seeing it materially and the monthly numbers, we track and we just think structurally where well protected again.
<unk> that that important issue in the economy today.
Great. Thanks for that and then my last question I just wanted to make sure that we understand this right I think that the fee waiver that you guys extend it as as great. That's a very shareholder friendly move but the.
The new fee structure, the 1.4% essentially coming into place when the when the fee cap expires in twenty-three is that essentially taking the place of the old fee structure, where you were just essentially kind of waving down to get to that kind of one point.
Three 1.4 effective right. So essentially is basically just kind of one fee construct that's replacing the old the structure that was in place.
Yep, that's exactly right I mean, obviously gotten commentary across the years from from you guys and others about how it is difficult to match. The model you know the 175 that netted down to the one three to one for so we've simply just we're getting rid of that construct is now incredibly simple. It's it's 1.4.
The highest possible fee, but obviously you've got the waiver out through 23. The end of 23 at the 125 is the flat rate and of course, you know, we'll we'll keep tracking market conditions and and everything else over the next two years, but that that's right. So it's for modeling purposes. It's 125 through the end of 23.
And then 1.4 flat.
After that.
Okay, great. Thanks for that that's all for me.
Great. Thank you.
Again, you can I have a question. Please press star then one.
Gentlemen to Florida normal questions and this concludes our question and answer session I would now like to turn the conference back over to Rob Hamley for any closing remarks.
Great. Thank you and again I just want to thank all of our stakeholders for participating today and we look forward to speaking to you all through the quarter is warranted and obviously on a call next quarter. The thank you have a great day.
The conference is now concluded. Thank you for attending today's presentation you may now disconnect.
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