Q3 2021 Ladder Capital Corp Earnings Call
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Good afternoon, and welcome to ladder capital Corp's earnings call for the third quarter of 2021 as a reminder, today's call is being recorded.
This afternoon latter released its financial results for the quarter ended September 30th 2021.
Before the call begins I'd like to call your attention to the customary safe Harbor disclosure in our earnings release regarding forward looking statements. Today's call may include forward looking statements and projections and we refer you to our most recent Form 10-K for important factors that could cause actual results to differ materially from these statements and projections, we do not under.
Take any obligation to update our forward looking statements or projections unless required by law. In addition, ladder will discuss certain non-GAAP financial measures on this call, which management believes are relevant to assessing the company's financial performance. The company's presentation of this information is not intended to be considered in isolation or as a substitute for the finance.
All information presented in accordance with GAAP. These measures are reconciled to GAAP figures in our supplemental presentation, which is available in the Investor Relations section of our website at.
At this time I'd like to turn the call over to ladders President Pamela Mccormack. Please go ahead.
Thank you and good evening everyone.
For the third quarter ladder generated distributable earnings of $17 million or 14 cents per share.
I'm pleased to report that we had another quarter of strong loan origination supplemented by additional gains from our conduit securitization and real estate equity businesses.
After resuming making loans in March we expect to end this year by having originated the highest annual volume of balance sheet loans in a lot of history.
Year to date through September 30th we originated $1 $5 billion of balance sheet loan draw.
Driving both portfolio and earnings growth.
Approximately one third of our loan origination were me to repeat let a borrower's, reflecting the value of our franchise and strength of our relationship.
In the third quarter, we originated twenty-three balance sheet loans totaling $578 million.
75% of those loans are collateralized by multifamily manufactured housing industrial in suburban office properties.
In addition, we have a strong and growing pipeline with over $1 2 billion of additional loans under application.
The composition of our balance sheet loan portfolio remains consistent with prior quarters.
And we ended September with a $2.8 billion portfolio, primarily comprised of lightly transitional balance sheet loans with a weighted average loan to value of 67%.
Furthermore, we continue to expect that won't production to comfortably outpaced repayments over the coming quarters.
After experiencing robust payoff last year, 45% of our balance sheet loan portfolio is now comprised of post COVID-19 origination.
Our remaining loan portfolio is performing very well with a 100% collection demonstrating the strength of our conservative underwriting and the success of our proactive asset management process.
We continue to focus on the middle market, where we're seeing constructive credit trends and opportunities to lend in high growth markets that are experiencing positive demographic shifts and strong fundamentals.
Our strategy allows us to achieve compelling risk adjusted return while building a diverse loan portfolio comprised of granule alone with an average loan size of approximately $20 million.
In our conduit business during the third quarter, we originated $50 million of new loans, and securitized $73 million of loans for a gain of $2.4 million.
We are also continuing to build our pipeline of conduit loans, which we will target the sale or securitization over the coming quarters.
And our real estate equity segment, we sold three assets generating $8 $4 million of gains above on depreciated book value.
Further illustrating the embedded value in our real estate portfolio.
Turning to our capitalization.
At September 30th and after buying back $7.6 million of stock, we had total liquidity of over $1 billion and our adjusted leverage stood at one six times net of cash.
And 1.1 times net of cash and securities, which we intend to continue to amortize down endorsed though.
During the quarter, we close to 600 million dollar amount of CLO at a cost of LIBOR, plus 155 basis points.
While we plan to continue to take advantage of the CLO market as an additional source of attractive financing available for ladder.
We remain committed to the unsecured corporate bond market.
Which commitment is accompanied by our high quality pool of unencumbered assets, primarily comprised of cash and first mortgage loans.
Looking forward, we expect continued portfolio and earnings growth.
In addition, we are well positioned to benefit from a potential rising rate environment, both by way of our large and growing portfolio of floating rate loans as well as a significant base of fixed rate liabilities.
In short, we expect a strong origination momentum and the long term investment in our capital structure to bode well for later in the coming quarters and years.
With that I'll turn the call over to Paul.
Thank you Pamela as discussed in the third quarter ladder generated distributable earnings of $17 million or <unk> 14 per share.
As Pamela mentioned, our originations and pipeline are very strong and complemented by the $600 million managed CLO that we closed in the third quarter.
The CLO financing has an 82% advance rate a weighted average all in cost of LIBOR, plus 189 basis points and provides for a two year reinvestment period with an expected weighted average duration of approximately four years.
The offering was heavily oversubscribed attracted a broad range of leading institutional investors and provides a lot or a highly attractive cost of capital and a flexible nonrecourse and non mark to market format.
Turning to our corporate bond financing.
In September we redeemed 466 million, a 5.25% bonds at par that were due to mature in 2020 to the.
The bonds were effectively refinanced with our June offering of $650 million that had an eight year tenor of 475% coupon with the ability to call the bonds after three years.
Our nearest bond maturity is now October 2025.
Unsecured bonds and nonrecourse funding sources continue to be a cornerstone of our capital structure.
Our recent successful offerings in both markets have further solidified and lengthened our liability structure or reducing our usage of mark to market financing.
We are one notch away from an investment grade rating with two of the three major rating agencies, we remain committed to the unsecured bond market and conservative liability management as we continue our March towards becoming an investment grade rated company as of September 30th approximately 87% of our capital structure is comprised of equity unsecured bonds and nonrecourse non.
Mark to market debt.
Furthermore, our more expensive crisis or a financing continues to amortize aggressively.
Timing of this works well with our deployment of capital into new loan origination and our goal for a fully deployed balance sheet in the coming quarters.
Complementing the strength of our capital structure, our our three segments, which continue to perform well our $2 $8 billion balance sheet loan portfolio was 97% first mortgage loans diverse in terms of collateral and geography with less than a two year weighted average remaining duration.
During the third quarter loan origination activity outpaced payoffs as we added a net $280 million in balance sheet loans, our balance sheet loan portfolio continues to perform well as we received 100% interest collections during the third quarter and the general portion of our seasonal reserve decreased to 50 basis points.
The decrease was driven by a significant portion of our balance sheet loan portfolio now being comprised of 2021 originations with new valuations and.
The overall improvement in the macroeconomic outlook.
Furthermore, we reduced our nonaccrual loan balance by $12 million as one of the hotel loan paid off at par during the quarter.
The payoff included the collection of all default interest and late fees due.
Moreover, no new loans were added to nonaccrual status.
As Paolo mentioned, our conduit business generated $2 4 million of distributable gains with.
With the contribution of $73 million of first mortgage loans to a securitization during the quarter.
Our $1 $2 billion real estate portfolio is diverse and granular and includes a 163 net lease properties.
Which represents two thirds of the segment continued to perform well during the quarter with 100% rent collections.
The sale of two of our net lease properties contributed $6 million to distributable earnings generating a combined return on equity of 16, 7% over our whole period.
The sales further demonstrate the embedded value in our real estate portfolio.
Also during the third quarter, we successfully sold in Oreo student housing property generating a $2 $3 million gain above our original basis.
And we acquired a student housing property with a joint venture partner for $20 million.
Turning to our securities portfolio.
As of September 30th our $725 million securities portfolio of 85% AAA rated almost entirely investment grade rated with a weighted average duration of approximately two years.
This portfolio continues to benefit from strong natural amortization in liquidity as the majority of the positions of front pay bombs.
Also as of September 30th our unencumbered asset pool stands at $2 8 billion that is comprised of 78% cash and first mortgage loans.
Size and quality of our unencumbered asset pool continues to provide bladder excellent financial flexibility.
During the third quarter, we repurchased 694000 shares of stock at an average price of $10.94.
Our board of directors increased the authorization level of our share buyback program to $50 million effectively adding $15 million in buyback ability to the previous outstanding authorization.
On depreciated book value per share was $13.78 at quarter end, our GAAP book value per share was $11.98 based on $125 5 million shares outstanding as of September 30th.
We declared a <unk> 27 per share dividend in the third quarter, which was paid on October 15th.
We expect our dividend to remain unchanged in the fourth quarter of 2021.
For more details on our third quarter 2021 operating results. Please refer to our quarterly earnings supplement which is available on our website as well as our 10-Q, which we expect to file tomorrow.
I'll now turn the call over to Brian.
Thanks, Paul as I was preparing remarks for this call I realize just how similar my thoughts were to what I spoke about at our last earnings call. It's apparent that we are in the final stage of our pandemic response business plan that we set forth about 18 months ago.
With our earliest corporate bond maturity now not until 2025, we've built a strong foundation to finance our planned increase in earning assets in the years ahead.
As we enter the end of 2021, we have plenty of liquidity and are lightly leveraged. This combination will provide us with plenty of runway to increase our loan portfolio in the years ahead and continue the earnings momentum now underway at ladder.
I think the second and third quarters will look similar to the next four quarters as we follow our simple business plan of investing our cash into newly originated balance sheet loans at a pace that exceeds the pace of loan payoffs each quarter.
This growth in lending will be accompanied by growth in earnings and we expect the positive earnings momentum that began in the second quarter to continue.
As we invest our cash on hand, our earnings momentum should persist as we continue to sell our securities and select real estate assets to supplement quarterly earnings and provide additional capital for reinvestment into higher yielding commercial mortgage loans.
We currently have $2.8 billion of unencumbered assets and a 130 million of those assets are securities.
Over the next year I would anticipate net loan growth and increased earnings as we become fully invested using modest leverage as evidenced by our large and growing pipeline of loans under application. We are seeing plenty of opportunities to lend safely in a post pandemic world.
We've constructed our balance sheet to benefit from rising interest rates and we expect to prevail in the near term with a substantial amount of fixed rate unsecured longer term debt as a differentiating feature at ladder.
By extension, we think inflation is here and won't be as transitory as many think there are so many clear signs of this that theyre almost too numerous to count while commodity prices can move up and down rapidly shelter costs as in apartment rental rates and home prices don't react nearly as fast in a normal economy.
The recent cost of living adjustment announced for the social security recipients of the United States at 5.9% was the largest in 40 years. So that part of the government is seeing things differently than the fed.
I'll end here by saying that higher rates are growing floating rate loan portfolio and strong markets for selling mortgage backed securities and real estate should pave the way for continued earnings growth at ladder I'll now go to Q&A.
At this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Tim will indicate your line is in the question queue. You May press star two to remove your question from the queue for participants using.
It may be necessary for you to pick up your handset before pressing the star keys, one moment, while we poll for questions.
Our first question comes from the line of Tim Hayes with B T. E. G. You May proceed with your question.
Hey, Good evening guys first question here, just actually maybe one or two around the pipeline a $1 2 billion clearly youre looking at a lot of different loans right. Now would you be able to first comment on how much of that do you expect to close in the first quarter or how much has been close versus sterling.
The process of closing and then maybe just a little bit of color on the asset breakout you know this past quarter it looked like.
You mentioned suburban office as some of the loans you were doing and I think the allocation of the portfolio went up a bit. So I'm just curious if you guys are.
Taking.
If you're finding opportunities to get a little bit more spread there given that some lenders are still cautious in office or <unk>.
Any other details around that would be helpful. Thanks.
Tim This is Brian can you clarify for me I think you asked about the first quarter, but did you mean, the first month of the fourth quarter.
Or did you one point.
I'm, sorry, I must have.
So the first and fourth quarter.
Okay.
So just to repeat the question with less mumbling or Atlanta.
How much of how much of the pipeline do you expect to close in the fourth quarter.
ARINC Pamela I'm going to punt that one over to you. If you don't mind Yeah. No problem. So we have you know probably at this point over 1 billion. Two I think our goal is to close you know somewhere between.
Between $801 billion by quarter end.
And it looks a lot like the same composition I think your other question was what does it look like it's the same composition, where primarily multifamily office and mixed use and it looks a lot like everything we've done year to date.
Okay fair enough.
But I guess, just maybe harping on that part B of that question just the the suburban office are you doing anything in urban markets on the office side are you finding certain types of you know.
Office assets that arent, receiving as much attention from the capital side and are providing opportunities to lend at a little bit wider spreads same on maybe on the hotel side or is are most of them were your lending kind of in the more defensive.
Range, where where competition is a little stiffer.
Okay sure I'll take that one.
No we don't target CLO, specifically, so we all often times you know drifts into areas, perhaps that don't fit right into a typical CLO at the current moment, but we do focus on credit and basis are we always focus on dollars per foot dollars per room for hotels dollars per unit for apartment buildings. So we're definitely seeing.
In some openings that are better than they've historically been a it'd have to be a little bit cautious with the answer because there's a few cities that are you know still pretty cautious around in particular I would say from my own personal view.
San Francisco and Chicago in the office side concern me and we're not overly aggressive in chasing anything there.
New York City is interesting.
It has opened up much nicer than I thought it would the residential areas of New York are quite crowded the business side of New York isn't quite back, but given the way rents are moving in New York City, while we think it's a matter of time here until we wind up back in a hybrid scenario and while New York does have some of the same problems.
Chicago and San Francisco, New York has the one benefit of getting a new mayor.
In November.
And we're very hopeful feeling throughout the city that are perhaps the new mayor will focus a little bit more on crime then the last one.
But we're also seeing in some of the lower tax States, California, I'm, Sorry, Florida, Texas we.
We are seeing plenty of activity there when you look at an office building in Florida. It looks like it's on sale compared to New York, and or California, and it just looks like it should be relatively easy to grow into these things and the other thing that we're saying that we're very very happy about is most of the loans that we're doing our acquisitions there they're not refinances.
Of a slow down business plan because of Covid, what we're seeing is somebody actually putting new capital up acquiring an asset with a business plan and getting a new loan from us and that's generally a safer place to be lender in and so the the office market is definitely yielding more than the multifamily market. The multifamily market is a little over <unk>.
In my opinion, but it does have some.
Technicals that are going in the right direction fundamentals are supportive, but that goes along with that inflation conversation that I mentioned there so.
Yes, we did do two hotel loans in the quarter.
Strangely one of them was even in Chicago, but you know these are special situations, you really have to underwrite the.
The value of the property as opposed to where you think you know the cash flows might be.
But if you look at 'twenty hotels, when you do too that's fine.
We're not actively seeking to do high yielding hotels Oh, we it is expensive capital for us and we don't want to own a lot of it but we're happy to own some of it.
So as Pamela mentioned were really it looks to me like the portfolio is shaking out in the neighborhood of 35%.
Office and then the rest almost all of it is Oh is multifamily and mixed use and when I say mixed views, it's mostly multifamily there they might very well be a retail component of our office component, but the lion's share of the cash flows and a mixed use property at ladder are coming from all the apartments.
That's some good color. Thanks for clarifying there in tackling my all my questions that I packages in the one I'll I'll drop off there and hop back into queue. Thanks, guys sure.
Our next question comes from the line of seven laws with Raymond James You May proceed with your question.
Hi, good afternoon.
Brian I guess the first question you know second quarter in a row you guys have harvested, but you know a decent amount of gains from real estate sales can you talk about.
How are you.
The remaining assets, there and whether we're going to continue to see gains.
How we should think about that in the quarters ahead.
Sure.
We are I would say an interested seller in our real estate portfolio, because we happen to think it has appreciated greatly.
That could be because it performed so well in a pandemic it could be because we have more than 10 years left on the leases and it could be because several of the companies that we backed as a private entity are now public was audited financials, but the necessity based nature of what we've invested in over the prior 10 years is really paying off right now and.
So we own them at very attractive levels, a lot of our cash flows are higher now because we've.
<unk> taken some increases in rent and are the if you look at the guys who buy net lease Reits fare for a living there are much lower yielding so their there's there is they have appreciated rather dramatically and.
And so from our perspective, we will harvest gains when it seems like it's it's a fair price. We always go into every transaction with a view towards where would we sell this and when and when we start to exceed those prices.
Unless there's a reason for it but we think is going to change how we will become a seller. The other thing that we did two and unfortunately, we had a period in time, there where our stock was trading well below book value and so anytime you see that you say to yourself alright, whereas the problem here. So as you know we piled up a cash hoard of about $2 billion to convince the market that.
That probably wasn't a problem we have.
Our securities portfolio that people worried about a little bit they don't worry about it anymore and that seems fine we had a real estate portfolio that doesn't get a lot of mention but these are really the silent heroes of the portfolio. These things generate double digit returns day in and day out we had no problems with him during Covid and if we want to take some gains we can we have the same.
<unk> labels in multiple properties. So for instance, we have a grocery store, that's private and we own seven or eight of those and we sold one of them.
We own some wholesale clubs and where we owned eight or nine of those and we sold three of them and the point there really is well if we sold three of them at a 30% gain probably the other five are up 30% also and that is largely what we're finding out. So we did some checking here and there and we wanted to make sure. We had it right that you know we thought the cap rates were.
And in fact, they are so I would expect to continue to see some some sales from us, but I don't think you should expect to see wholesale selling them I think that the we're taking modest gains we're not there's no real rush.
Sometimes we get a price from somebody we want to sell to and then they decided not to buy it and you don't hear about it but we're relatively convinced we've got embedded gains that are quite sizable on that portfolio.
Great appreciate the color there and then as a follow up maybe just some questions on the portfolio kind of comparing the last two supplements looks like.
The allocation of loans greater than 100 million doubled from like 6% to 13%.
Sure.
South of the United States increased 600 basis points. So.
Know how targeted was that versus coincidental. It seems like an appetite there for larger loans given how much liquidity you guys have on sidelines. So maybe can you touch on that those two shifts or our trends and the characteristics of the portfolio.
Sure well, we're very positive on certain parts of the country, mostly driven by state as opposed to.
The southeast in general.
And property types, you know, we feel pretty good about and when you're lending below replacement costs, especially with an office building that is really a generally a safe place to go unless youre going to have a tectonic shift in how office properties are used but frankly in some of these office buildings in downtown Miami I think if if housing.
Prices continue with some of these things will even convert to apartments at some point, but you know these things are in the couple of hundred dollar a foot range when youre seeing apartments at one and 2000, a foot trading so Ah theres plenty of crossover possibilities, there, but I wouldn't say I would actually call it more coincidental than anything else and I think a lot of that.
Has to do with the fact that some of the larger competitors of ours that do traffic in in 100 million dollar plus our office mortgages are sitting back a little bit because they've got a rather large portfolio from the pre COVID-19 days and obviously you know some tenancy.
Shaky, what we're doing is we're getting into the we see or seem here and we're able to we know how to where we were in large banks for many years and their real estate portfolio. So are we.
Where we're getting a chance to take a look at the loans that we don't usually compete for and it's not because we can't compete for them. We're able we've always held that the middle market has a safer and higher yielding.
Analysis for us so we'd rather do 10 trades at $15 million and $150 million loan I know that that sounds crazy, but it sounds like you need a lot of people, but it does actually keep you pretty safe.
However, once in a while you know through repeat customers or or for various other reasons when perhaps our competitors are little more busy on any given day, we do see some openings in and will step in there.
When we first opened ladder them, the Michigan area was having a hell of a time because of the auto companies were in trouble and we were one of the largest lenders in Michigan and it wasn't because we were targeting Michigan interest there were no banks in Michigan at that time that were actively lending I would argue a lot of the same thing happened in Florida.
And so we just happen to have $200 million loans in Florida, and we're actually pretty comfortable in New York too, but you you won't you usually see us on the trophy buildings, you'll see us in the in the <unk>.
The garment center, the financial district, the B buildings that arent, so pretty but very affordable rents, especially when compared to some of the some of the a properties.
And of course that notwithstanding a couple of large loans or our average loan size is still well below $25 million on the portfolio.
Yeah, I did notice that really changed much sequentially, even though the the 100 million plus doubled.
It's a mix but.
Putting that all Pamela and thank you for the comments this evening.
And also Steve I'd, just point out to that one when the question comes about like how much do you think youre going to close in the quarter that Pamela just answered obviously at ladder, its a little bit different than some other places, which we close to $200 million alone we're going to be on the high side of things and if that loan doesn't close will be on the normal side of things, which you know to me.
The first quarter, we I don't remember the numbers about $800 million in the second quarter and I think this quarter. We are we closed $530 million or something like that so I thought this quarter was a little slow actually and I know that one of the reasons. It was a little slow was I believe it or not we're getting caught in the supply chain.
Also Fedex and overnight carriers don't often times deliver overnight and sometimes real estate closings have to wait a few days because of that so there is it's tough to close quickly right. Now so we're trying to become more efficient in the closing process, but some of it is beyond our control.
Sure I appreciate the comments, Brian Thank you.
Yep.
Our next question comes from the line of Steve Delaney with JMP Securities. You May proceed with your question.
Thanks, and I hope everybody at ladder is well and congrats on the broad progress here for the second straight quarter.
Like to start with the loans.
Sale gains that Pamela mentioned.
And Pamela you mentioned, a figure of 2.4, which looks like it works out to kind of a three plus percent gain on sale on the 73.
But Paul the.
Income statement the GAAP income statement. So it shows $3 3 million of a gain on sale that where theres. Some loans in there that werent conduit loans that were sold in the court.
The impact is the hedging Steve.
So I say the.
The gap will show the gross amount.
These hedges associated with those sales.
Got it that they are in another line.
In there and so that's that's gross and then not including the hedges. So Pam will figure out was okay. Okay. Great three 3%. Okay. That's helpful. And then maybe while we're on that same kind of comparison.
So on the Triple net lease sales of $8 million to distributable and then the GAAP gains or 17.8 is the delta there something to do with recapture of depreciation exactly exactly that's although that's always a good guess, yes [laughter] amount of DTA.
Okay.
Okay, well the 17 was nice but that will take the eight for sure.
No problem. Okay. That's very helpful. Thanks for that and then the last thing just to wrap up that cash it's really nice to see it come down 300 million quarter over quarter, I guess I'm thinking out you know Brian asked after you know your your.
Using C O lows now and you're getting great advance rates in fact, I see you might be doing another CLO west L. Three and November even even bigger.
But we're with everything that's going on where do you see kind of cash settling in a range, Chris Muller mentioned to me. So it looked like pre Covid you guys usually carried at least at quarter end you showed about 100 million of cash, but now you know obviously, we're still we're well over half million just curious where you know as we model out.
Six 912.
Months from now where we're cash might settle.
I think it'll probably still be in that hundred million dollar area.
Admittedly there was a pretty unique situation that took place when the U S government turned off the U S economy.
I can't say it won't happen again, but Uh huh.
I hope not but I think you really also have to I know ive learned a lesson. If you have to really keep an eye on what what can hurt you you know what on a mark to market basis, what can really move in price in and so to the extent that.
You've got credit based margin calls and your repo facility and you've got Mark to market Securities you have to travel with little more cash. If you have securities I would imagine as you correctly noted that we're all we're really doing here, which is why I started by saying it sounds awfully similar to the last quarter and I get the feeling we're going to be a broken record here for the next two quarter.
That's fine because all we're doing is moving cash into commercial mortgages and we have lots of it's still where we are and where the payoffs have slowed because I think we had faster payoffs than everybody else.
Because we had shorter maturity dates because as I said, we don't really target Clo's and we keep a keep the.
The activity to whats required so if a guy has a 90000 square foot shopping center with 10000 square foot vacant he doesn't get five years right.
I won't give them, we'll give them 12 months for that so I think youre going to just see us.
So I was kidding around with Pamela when we were writing our our scripts and I'm, saying, it's a lather rinse repeat a.
We're just going to do the same thing, we're just moving cash which earns nothing.
Two commercial mortgage loans, which earn around 5% Unlevered and and we have 1.1 times leverage if you get rid of securities and cash and the reason, we say that is because we're going to get rid of the securities and we have $130 million of of our bonds that are available that are not levered at all.
And so that is 130 million cash we can go to if we needed we have a $250 million revolver, we haven't drawn.
So it looks like this is just going to be a mortgage lending machine for the next 12 months I think and the question really is and I think what the governor will be when we get to a certain size in our portfolio. It is how much are we going to push leverage knowing that we're trying to become an investment grade comes.
So that is where I think the pressure points will come in but I don't see that for nine months.
Well, Brian I, just wanted to add you know you're.
And your data Thats with the lather rinse and repeat handful commercially but I wanted to ask what I think I don't know if you caught this but when he talked about the cash position that in combination with the $266 million Undrawn revolver. So.
That's a point versus the cash yep Yep that makes good sense. Okay. So listen thanks for the comments great Great progress I think it's exactly what the street wants to see and Youre going to see.
Another solid quarter of the basic blocking and tackling and in commercial real estate bridge lending is going to really help the stock price here over the next couple of months, so congrats for that and thanks.
Okay. Thank you.
Yeah.
Our next question comes from the line of Matthew Howlett with B. Riley you May proceed with your question.
Hey, Brian just to follow up on the investment grade how long did it take to get to investment grade and how long would it take you to redo the stack the unsecured debt called built legacy stuff. That's once you get it.
Well if I answer that question there are two or three agencies that'll put me in a jail cell for a year.
And make me wait so I have my own model in my head, it's it's not around the corner, but we're.
We're hoping to do it and in your lifetime.
Yeah.
Very helpful. And then just you're on track to fully extinguished at the legacy CLO from Goldman and the Koch facility, that's still on track to pay down because that's something that's getting a lot.
Yeah, I I'll, let Paul answer, but I know that the Goldman facility I think I check that yesterday, I think that's down to $20 million $23 million and and Paul you can tell them about the Koch facility and when that runs out yeah. All in combined those two facilities have amortized down 60% over 60% now.
Goldman facility, very well could be behind us in the fourth quarter and Koch likely through the first quarter and it'll be behind us.
Most of the costs associated with both of them are gone there already already absorbed.
Got you great well thank you.
Keith.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad, one moment, while we poll for questions.
Ladies and gentlemen, we have reached the end of today's question and answer session I would like to turn this call back over to Mr. Brian Harris for closing remarks.
Okay. Thanks, everybody for joining us this evening and those of you who listen later, we appreciate it ladders on its way and we're going to continue to keep doing what progress you've seen over the last two quarters I suspect it'll just continue on that direction and I would just point out that we're going to make every effort to deliver on our year end earnings report earlier this year.
Hopefully in a I would say around the early to mid part of February. Okay. So I'll look forward to talking to you then other than that I got to get back to work. Thanks al.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation enjoyed the rest of your day.
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