Q4 2021 Trinity Capital Inc Earnings Call
Okay.
Good afternoon, My name is Leo and I will be your conference operator today at.
At this time I would like to welcome everyone to Trinity Capital's fourth quarter and full year 2021 earnings conference call.
Our hosts for todays call are Steve Brown, Chairman and Chief Executive Officer Kyle.
Kyle Brown, President and Chief investment Officer.
David <unk>, Chief Financial Officer, and Sara Standard General Counsel.
Jeremy harder Chief Credit Officer, Michael Tester, Chief Accounting Officer, and Ron <unk> Senior managing director are also present.
Today's call is being recorded and will be available for replay beginning at eight PM Eastern time.
A replay of the webcast is available on affinity capital's Investor Relations website.
It is now my pleasure to turn the call over to Sarah Stanton. Please go ahead.
Thank you Leo and welcome everyone to Trinity Capital Earnings Conference call for the fourth quarter and full year of 2021.
<unk> fourth quarter and full year 2021 financial results were released today after market close and can be accessed from Trinity's Investor Relations website at IR Dot Trinity cap dotcom.
A replay of the call is available at <unk> webpage or by using the telephone number provided in today's earnings release.
Before we begin I would like to remind everyone that certain statements that are not based on historical fact made during this call, including any statements relating to financial guidance may be deemed forward looking statements under federal Securities laws.
Because these forward looking statements involve known and unknown risks and uncertainties. There are important factors that could cause actual results to differ materially from those expressed or implied by these forward looking statements.
We encourage you to refer to our most recent SEC filings for information on some of these risk factors Trinity capital assumes no obligation or responsibility to update any forward looking statements.
Please note that the information reported on this call speaks only as of today March 3rd 2022. Therefore, you are advised that time sensitive information may no longer be accurate at the time of any replay listening or transcript reading.
With that allow me to introduce Trinity capital, Chairman and CEO , Steve Brown.
Thank you Sarah and thank you to everyone joining us today.
I wanted to take just a moment at the top of this call and mentioned that we have been watching as the tragic events in eastern Europe have unfolded and our thoughts are with those people who have been affected by these events.
While we continue to monitor the events, we're not aware of any of our portfolio companies that are currently affected by this situation.
Now turning to Trinity's exciting performance. This past year 2021 was a transformational year for Trinity capital since our IPO early in the year, we have driven exceptional portfolio growth and generated record new commitments in the fourth quarter. We built upon our already strong performance as we continue to execute.
<unk> successfully against our business strategy doing what we said, we would do and delivering on key financial and operating metrics.
<unk> continues to benefit from a favorable BC operating environment as we are seeing a large volume of strong credit opportunities. The deal flow in the growth market has been very active which is fueled originations and record net portfolio growth for Trinity since entering the public markets.
The venture capital ecosystem was exceptional this past year with record funding and strong fund raising activity.
Our business model and strategy at Trinity ensures that we are built for and.
Any economic cycle. The steps, we have taken in 2021 to optimize our capital structure, while continuing a rigorous and conservative underwriting process will ensure that we have the right portfolio companies and our book to weather any potential downcycle.
We continue to build an industry, leading unique venture lending and equipment finance platform that sets us apart and meets the evolving needs of our portfolio companies and prospective partners.
Our extensive network in both the VC and equipment finance industry, combined with our technology and operational expertise solidifies, our leading market position.
While the team will go into greater detail on the quarter and year end results I wanted to share just a few of the key performance highlights.
Our growing portfolio contributed to the strong operating performance in Q4, allowing us to declare a dividend of <unk> 36 per share an increase of nine 1% above the prior quarter and in line with our goal of increasing our dividend as we grow our platform.
We have now increased our dividend for four straight quarters.
We delivered a record year in both commitments and deployments nearly doubling our 2020 deployments with just under $560 million funded for the year. We also grew the portfolio net of payoffs each quarter with our highest net portfolio gains coming in Q4 at over $150 million.
Q4, net investment income was $10 6 million or <unk> 39 per share exceeding our declared dividend by <unk> <unk> per share.
Our credit quality in the portfolio remained strong with 98, 3% of our debt investments at cost performance.
A major goal for 2021 was to strengthen our balance sheet and increase our funding capabilities to manage the growth that we are currently experiencing while also positioning the company for continued growth in 2022.
That end, we made several moves in Q4, including issuing $75 million of $4, 25% notes due in December 2026, adding our keybank credit facility and initiating an ATM program.
<unk> these moves will drive our cost of capital down while increasing our capacity to fuel our growth.
Additionally, we announced the appointment of two new members to our board of directors effective December seven.
Both bring highly relevant experience and will be an immediate value and guiding Trinity as we execute on our strategic plan.
With regards to the RIAA progress as we have stated previously in Q3 2021, we filed an application with the SEC for Exemptive relief to.
To form a registered investment advisor.
Prove we believe the RIAA will.
Financial flexibility per center, Gestic investment opportunities and create additive earnings to our public internally managed BDC we.
We do not have a set time line and we'll continue working with the SEC on our application.
Trinity is off to a historic start in 2022 last month, we announced the sale of our equity investments and Lucent group and matter Port, where we booked over $50 million unrealized gains to put this number in perspective, our record financial results for 2021 produced $52 million and combine.
Net investment income and net realized gains.
These sales bolster our ability to scale, our venture lending capacity and are in alignment with our long term capital structure strategy.
These transactions have set the stage for a strong 2022 financially for Trinity and we are equally excited to be able to share. This historic this historic gain with our shareholders. As we said in February our board is evaluating our dividend distribution plan for 2022, and we plan to offer an update on that front later this month.
Before I hand, the call over to Kyle I would like to read or reiterate what a great year. It has been for our business our team and our portfolio companies Trinity's unique business model and asset class have established Trinity as a leader in our market. The momentum we have generated will fuel our continued growth as a public company and finally most.
Accordingly, we pride ourselves on being a people and culture focused organization as a result, it is clear that Trinity is now a destination for top talent in this space and we will continue to add the best people in the industry as we scaled the platform. We are excited to execute on our strategic objectives for this year and we will maintain.
A deliberate and disciplined approach to offering capital solutions to growth stage companies across our industry with that I'll now turn the call over to Kyle Brown, our president and Chief investment Officer for some further thoughts on our progress in more detail on the market.
Thanks, Steve and good afternoon, everyone 2021 was an exceptional year in terms of growth and foundational in terms of the path, we've laid out the quarters and years to come.
I want to dig into some 2021 highlights which include consecutive quarters of meaningful portfolio growth.
<unk> to our operations through team expansion and fortifying our balance sheet through several strategic debt raises and subsequent capital deployment as well as establishing consistency maximize maximizing our returns to shareholders through our quarterly dividend.
Our impressive performance is largely attributable to our people here at Trinity, our incredible team and their commitment to fostering and maintaining long standing relationships in the VC space has been critical.
But a critical driver for our business investing in our team continues to be a priority as we make new hires expanding our team and coverage across the country.
<unk> now has boots on the ground in Austin, The Bay area in Boston deepening our relationships in these regions and as a result opportunities have subsequently continued to grow which is a leading indicator for future fundings.
Our outstanding results were highlighted by a record $757 million in new commitments for 2021 with $247 $9 million in new commitments originated in Q4 alone.
In 2021, we funded total gross investments of $558 million, an increase of 115% year over year.
During the quarter the company originated approximately $197 5 million in gross fundings, leading to net portfolio growth on a cost basis, $159 1 million and expanding our investment portfolio to $797 million.
On a cost basis at year end, our portfolio had a fair value of $873 5 billion, an increase of 76, 9% year over year.
The composition of our portfolio remained relatively consistent throughout 2021 with manufacturing once again, making up over one quarter of our total portfolio portfolio professional scientific and technical services made up 18, 5% followed by information, making up 12, 3%.
Diving deeper into our portfolio composition at fair value of approximately 63, 2% of our debt portfolio or $551 9 million is comprised of secured loans and 21, 1% or $184 1 million is invested in equipment financing.
Equipment financing remains a growth lever for us demonstrated by a sequential increase in Q4 up 68, 4% on a cost basis compared to Q3 of 'twenty one.
Balance of our portfolio of approximately $137 5 million is comprised of equity and warrants.
Structurally gross deployments during the quarter were $197 $5 million across 25 portfolio companies.
$121 million in gross deployments across 11, new portfolio companies and $76 5 million in gross deployments to 14 existing portfolio companies.
Gross deployments were partially offset by $41 7 million in principal repayments of which $24 6 million was from early repayments and $17 1 million was from normal amortization.
We received an additional $8 3 million in proceeds from the liquidation of several equity and warrant positions.
Finished the year with a backlog of $243 million and provides us with visibility into potential funding opportunities in 2022.
Public listings continues to dominate the VC exit market in some of our portfolio companies took advantage of this trend in Q4 and subsequent to quarter end one portfolio completed a traditional IPO before companies entered into definitive agreements to go public via spec.
On November 10th Presto, Inc announced the planned business combination have been to CCM acquisition Corp on.
On November 11th back Blaze, Inc. Completed its initial public offering and began trading its common stock under the NASDAQ under the stock symbol <unk> on.
On December 13th footprint International holding Inc announced the planned business combination with Kors holding eight.
On February 3rd subsequent to the end of the quarter Greenlight Bioscience, Inc announced the completion of its T spec merger with environmental impact acquisition Corp, and began trading on.
Well on the NASDAQ under the stock symbol G. RNA finally on March 2nd subsequent to the end of the quarter were getting co announced the completion of its dis back merger with Supernova partners acquisition company too and began trading on the NASDAQ under the stock symbol or GTI.
In February we exited our positions and lucid and matter for these positions represented a combined investment at a cost of approximately $9 million.
I agree and net proceeds from these sales were approximately $59 8 million.
We are thrilled with this result, as we feel it points to the overall quality of the companies we partner with <unk>.
Lucid matter matter port represent our ability to find and source investments that are great for our portfolio companies and great for us while also showing the potential upside that is possible through our warrant portfolio.
This capital will fuel our long term strategy and most importantly, enhance our ability to maximize returns for shareholders.
Turning to thrive in a competitive and fast pace environment, making the vibrant VC industry. The perfect catalyst for our success 2021 was a record breaking year for VC industry with fundraising topping $100 billion in 2021 for the first time ever in over 17000 deals closed while I can't predict what the future will bring I do know that our team will remain committed to doing.
What we do best creating long term value for our shareholders.
Now with that I will turn the call over to Mr. Longe, Chief investment Chief Financial Officer to discuss our financial performance in more detail.
Thank you Kyle and thank you to everyone for joining us today.
As Stephen Kyle emphasized we had a very busy and successful year at Trinity.
Not only did we break records quarter after quarter in terms of commitments and fundings, but we've also taken the opportunity to strengthen our team enhance our balance sheet and building a strong and resilient venture lending platform as we enter 2022.
I will take this opportunity to walk you through our financial results for the fourth quarter of 2021, as well as highlighting certain key operating results for the year.
Cal provided an overview of the portfolio earlier, but I wanted to briefly touch on our loan composition.
Approximately 74% of our secured loan portfolio is in floating rate securities as compared to 37% at the end of 2020.
Over the course of 2021, we strategically repositioned our secured loan portfolio to focus on floating rate securities, leaving us prepared for the expected rise in interest rates in 2022.
As a reminder, our equipment financings are generally structured as fixed rate loans.
Turning to our operating results. During Q4, we recorded total investment income of $23 6 million, an increase of $1 $8 million or eight 3% over the $21 $8 million of total investment income recorded during the third quarter.
The increase was attributable to higher interest income of $2 $5 million on a larger loan portfolio and $1 million of higher one time fees offset by approximately $1 $7 million of lower accelerated income as early payoffs were $49 million lower as compared to Q3.
Income from early repayments will fluctuate quarter to quarter based on the amount of principal repayments and the vintage of the loans repaid.
Our effective yield on the portfolio for Q4 was 15, 2%, which was a decrease from Q3, primarily driven by the lower accelerated income from early payoffs.
While core yields which includes excludes fees and accelerated income from early repayments increased slightly to 13, 2%.
Comparing 2021 with 2020 total investment income increased by 49, 5% to $82 $2 million in 2021 was $55 million in 2020.
Our record year of originations helped drive the significant increase while we maintained our consistently high effective yield across the portfolio.
We incurred a total of $6 2 million of interest expense and amortization of deferred financing costs on our various debt facilities as compared to $5 1 million in Q3.
The increase was attributed to the higher expense from our August 2026 notes, our December 2026 notes and higher borrowings under our credit facilities.
Yeah.
For Q4, our weighted average cost of debt, including interest and fee amortization was six 7%, which was a 40 basis point decrease from seven 1% in the previous quarter.
The decrease was primarily driven by the lower cost of our debt under our four 375% August 2026 notes and four 2% December 2026 notes.
Our SG&A expenses were approximately $6 8 million during Q4 as compared to approximately $5 $6 million during Q3.
The increase of approximately $1 $2 million or 21, 4% was primarily driven by a full quarter of expenses related to restricted stock grants and an excise tax expense.
As a result of this operating activity net investment income for the fourth quarter was $10 6 million or 39 basic share as.
As compared to $11 $1 million up 42 cents per basic share in the preceding quarter.
For the full year 2021, we recorded net investment income of $39 million.
Representing NII of $1 50 per basic share or $1 33 per share on a diluted basis.
This compares with $23 $4 million in NII for 2020, or NII of $1 29 per share on both a basic and diluted basis.
We recorded net unrealized depreciation of $37 $1 million attributed to $36 $5 million of unrealized depreciation in our equity and warrant portfolio and $6 million and our debt portfolio.
We recognized net realized gains of $7 $5 million in Q4 split between $2 $7 million from our equity portfolio and $4 $8 million from our warrant portfolio.
We will continue to prudently realized gains from our investments in 2022 as demonstrated by the $58 million and net realized gains from the sale of our equity investments in lucid a matter port which comp provided color on earlier in this call.
Net assets increased by approximately 11, 9% to $446 $5 million or NAV of $16 40 per share compared to Q3 net assets of $399 million or NAV of $14 70 per share.
The quarter over quarter increase of $1 70 per share and NAV was primarily the result of unrealized depreciation as well as net investment income that exceeded our declared dividend by <unk> <unk> per share.
Our Q4 2021 NAV per share also compares very favorably to $13 <unk> per share reported at the end of 2020.
As Steve mentioned, the strong performance of our investment portfolio continued in the fourth quarter with over 98, 3% of our portfolio performing at cost.
We currently have two portfolio companies on nonaccrual with a carrying cost of $12 $9 million and a fair value of $5 1 million.
And then just <unk>, 7% of the fair value of the debt investment portfolio.
Moving to liquidity available liquidity as of December 31, 2021 was approximately $255 million, including approximately $32 million in unrestricted cash and cash equivalents and a borrowing capacity of approximately $223 million under our credit facilities subject to existing terms.
<unk> conditions.
Regarding our credit facilities.
Facility with credit Suisse.
Matured on January eight 2022, and certain investments pledged as collateral under that credit facility will be pledged as collateral under the key bank credit facility.
Effectively increasing available borrowing capacity under the Keybanc facility.
Our leverage increased to approximately 104% from 78% in the prior quarter driven by our additional borrowings during the fourth quarter.
As a reminder, we target a long term leverage ratio ranging between 115 and 135%.
Finally regarding our dividend on December 16, 2021, we declared a cash dividend at <unk> 36 per share for the fourth quarter of 2021 that was paid on January 14th 2022, and which generated coverage of 108, 3%, while our GAAP earnings for the quarter.
We anticipate declaring a dividend for the first quarter of 2022 later this month subject to approval by our board of directors.
As we have highlighted throughout this call 2021 was an exciting year for Trinity capital.
Active capital markets combined with a thoughtful and strategic scaling of our venture lending capacity contributed the most successful year in our history we.
We have built a resilient high yielding portfolio and have a strong balance sheet as we turn our focus to 2022.
With that I will open the call for questions operator.
At this time, if you'd like to ask a question.
Star one now on your telephone keypad.
To withdraw yourself from the queue you May press the pound key once again to ask a question. It is star one on your <unk>.
<unk> key pad.
Yeah.
Yeah.
We'll take our first question from Ryan Lynch. Okay. VW. Your line is open.
Hey, good afternoon, and thanks for taking my questions.
Congrats on the nice quarter and more importantly, congrats on a really nice 2021.
The first question that I wanted to dig into to make sure that I'm understanding the math correctly on the exit of matter and matter reported boosted.
If I look at the combined fair value of those two investments as of 12 31, I get like a $79 million fair value you guys talked about your exit price in Q1 of around $60 million. So does that mean that we should expect a basically a $19 million decrease in the fair value.
Upon exit given just given kind of the sell off some of those those investments in the first quarter.
Yes, Ryan this is Steve that is correct.
And I'll, maybe have Jerry sort of just comment on.
How we value that at the end of the at the end of the quarter and then subsequently what yeah sure no the $19 one.
That is correct, Ryan and of course when valuation perspective.
We traded securities.
Marked with a small discount for lack of marketability, but.
Following standard accounting guidelines, there so youre thinking about it right. It's $19 one is going to be the difference.
Just wanted to make sure accounting so that correctly obviously.
Very successful investments.
Foreign asset.
The one thing the other thing I wanted to touch on <unk> was just there was very little prepayments.
In this quarter.
I would've thought just from such an active quarter and we would've seen seen more prepayments in the quarter and we've heard other bdcs in the past talk about.
When the market is really active like this.
<unk> seen big Big levels are strong levels of prepayments.
That can be a concern for us.
So the quality of our portfolio when everything's transacting pretty freely so what would you say to something like that if people were concerned by by the low level of prepayments in a pretty active market in the fourth quarter.
Yes, Brian I think that the prepayments are going to vary quarter to quarter, we actually had a fair amount of prepayments as youll recall in Q3, we were able to outpace that with our originations and net add to the portfolio.
I think it just worked out that in Q4, we didn't have as many and we also had obviously large originations and added meaningful amounts of the portfolio on a net basis. So.
No concerns with the quality and the credit quality of the portfolio right now and don't think that that one quarter revert as indicative of anything negative at all.
Yeah. Ryan This is Jerry I would agree with that and we also talked to Kyle mentioned in his prepared remarks.
A small handful of companies that are planning their exit via public offerings. So those things take some time.
As you know.
Get through the SEC approval and destock process. So.
Payments, we have limited visibility they come and go I wouldn't read anything negative into it from a credit quality standpoint.
Okay, and then just one last one for me and I'll hop back in the queue.
$20 million net.
That's fine.
Fundings over 250 million or $250 million of commitments in the fourth quarter. Those are really large numbers kind of a two part question can you just talk about.
Can it be investments in the growth that you've made in the infrastructure of <unk> to be able to layer on $200 million.
Gross fundings.
In a single quarter, and then I'd love to just hear there's obviously a lot of.
A lot of things that the market is thinking about right now.
In terms of interest rates inflation geopolitical stuff I just wanted to hear if you could provide a little bit of an outlook on what you guys are seeing in terms of capital deployment in the first quarter.
Yes, Colin you want to touch on the growth so yeah. So.
We built this team to scale Brian .
So we continue to up to higher kind of ahead of the plan.
We continue to do that.
We've also our system is built for scale.
We've talked about how we differentiate ourselves from our peers not doing kind of a cradle to grave approach, but having teams and systems, where we can really file a lot of opportunities through it. So we've hired in advance.
And we this is not a surprise to us.
The tide has risen a bit with venture activity in general but this is this is not a surprise to us we are hiring the best people in the world are executing on the plan.
And the system was built to handle the type of volume.
Yeah.
Okay, and then on the hour.
For Q1.
So we had I mentioned in the remarks, but we had record opportunities.
And heading into Q1 and with with also a record commitments.
<unk>.
$247 9 million in Q4. These are these are trends that lead to fundings typically and we expect that to continue.
Okay.
I appreciate there this afternoon and a nice quarter.
Thanks, Thanks Ryan.
Okay.
We will take our next question from Finian O'shea of Wells Fargo.
Hi, guys good afternoon, especially Jordan lots on the line for <unk> today.
I wanted to ask a question about new credits this quarter looks like you guys put on about $31 million, just some cryptocurrency mining companies.
It seems like that could be a vertical where you could almost put as much money.
And as you wanted to so it was just really curious about how you guys think.
About sizing.
Those positions relative to the rest of the portfolio. Thanks.
Yes. Good question. This is Steve we've been thinking a lot about that and talking about that for a long time and Jerry you might just touch on sort of how we think about the current portfolio relative to what we funded more equipment base, but that's more in touch on that sure happy to so yeah as Steve mentioned these are equipment financings.
You know the portfolio companies that we've on boarded.
They are leaders in their space, a very strong balance sheets, and most importantly, very strong equipment and excellent relationships with their equipment providers that we feel.
As unacceptable credit risk, particularly with our equipment financings, which amortize straight out as you know.
So.
As you mentioned, yes, you could probably deploy about as much money as you wanted in that space, we're being very selective.
Alright. Thank you guys. That's all for me.
Thanks, Ken.
We'll move next to Casey Alexander of Compass point.
Hi.
I was just wondering I know you'd like to get the equipment financing as a percentage of the total portfolio up to a little bit higher number and you did have a successful quarter for deployments there, but we've heard from other folks that are in this business that some of the supply chain restrictions have actually.
Given them a problem getting some money to work in the actual equipment itself cannot be delivered on.
On a timely basis have you seen that you have demand.
For equipment financing, but you're not actually putting the money out because the equipment can't get to the end destination.
I don't know Casey if we've rarely seen.
Our funding to our equipment financings delayed.
Through supply chain issues, certainly some of our portfolio companies and manufacturing space.
Facing and working through.
Supply chain challenges.
And we've got that reflected accordingly in our portfolio risk assessments. So.
We haven't really seen a slowdown of the funding of equipment, though to answer your specific question.
I kept my my next question for.
David is the team is being built to scale, so you're kind of bringing the guys. In ahead of the actual production that you expect them to produce there should we expect to see.
Some of the comp expenses move.
Ahead of some of the production that that we would expect from those folks that are coming on.
Yes, I think Thats, a fair assessment Casey, we will be hiring over the course of the year and we've already started to into this quarter as well.
In order to be able to do that but you will also be using technology to.
Monitor some of the portfolio and the systems and so on as well, but you can't expect compensation expense to be going up during the course of this year.
Okay, Great I expect I would imagine that you'll give us more detail on that at the analyst day later on this month.
Yes, we will.
Alright, great. Thank you very much for taking my questions and.
Really nice move in NAV this quarter congratulations.
Thank you.
Okay.
We'll take our next question from socket sure Benton B Riley Securities.
Hey, good afternoon, and thank you for taking my question here and congrats on the quarter.
My question is going to relate to kind of the dividend strategy and also with <unk> 22 dividend kind of subject to approval for later this month, but any changes in strategy are you going to focus on just the recurring kind of a regular dividend boosted with the special.
Just help us understand how you're thinking about that especially given the recent monetization in the equity portfolio.
Yeah.
Good question Circus, thanks for that.
So.
We're going to continue to think about our dividend strategy, our normal core dividend strategy. The same way we have we're growing our business. We're scaling our business we have intended to increase our earnings and our dividend.
We plan to continue that as you know, we typically meet with our board sort of middle of the last months of the quarter, which is coming up here will do the same and we will consider both our normal dividend strategy and we will consider this extraordinary gain that we had and talk about what would be an appropriate.
Level of dividend or distribution and the timing on that we're excited to consider that we will be talking about that with our board and we will let the market know as soon as we've made that decision sort of middle of the month.
Understood that's helpful and we'll wait for that update and I guess as we kind of step back and look at the current environment.
Clearly a public markets have seen a lot of volatility as we speak with folks on the private side, they're saying that the ball hasn't really creeped in there yet, but I guess as you step back and look at the VC ecosystem.
Seeing venture debt become I suppose more so than the conversation as opposed to kind of the equity as in our company's now kind of coming back and saying Gee you know at these valuations I'd, rather talk to the venture debt lenders as opposed to kind of raising equity.
Your your thoughts or sensors around what's happening you're real time.
So I would say the answer would be yes, we have seen that there has not been major trends, though.
That theme in mind.
I'd say its been pretty consistent we're lending.
We're lending capital to private companies backed by private companies and typically in that growth states. The valuations are not necessarily directly.
Correlated to the values of the companies we're funding so.
We have not seen that we've not really seen that yet.
Although it will come up from time to time, it's not something kind of driving the market right now.
Understood I'll hop back in the queue for someone else. Thank you.
Thanks Sarkis.
And once again that is star one if you would like to ask a question, we'll move next to Christopher Nolan of Ladenburg Thalmann.
Hey, guys congratulations on the quarter and congrats on those gains that's quite impressive.
My question turns on capital structure for Trinity.
You're already covering the dividend with earnings and your leverage ratio is somewhat low what's the appetite right now for taking the leverage higher given your growth prospects.
And this is Dave.
We are targeting to be about $1 two five on our leverage were only up one at the end of the year.
So obviously, we would like to take advantage because I think we get better returns for our shareholders as we continue to use leverage so and at the.
The investors can anticipate that that will be our strategy.
But David do you anticipate making them reach net leverage.
Threshold this year.
Well, yes, we will I would believe we would hit that clearly we have great goals for origination and if that's the case, we're going to have to fund it through debt and equity. So you can anticipate that we would would be approaching that target.
Great and I guess on the dividend if you're going to take the leverage up like that then we should assume that the dividend is going to go up along with it is that.
Part of the strategy here.
That would be a forward looking statement.
Yeah.
Clearly if we you know we will target to distribute 90% to 100% of our earnings and as we grow the portfolio as we did in the fourth quarter and hope to do so in the future. We would anticipate that earnings and distributions would go up.
Alright, that's all subject to the marketplace.
Great. Thanks.
Thanks, Chris.
And once again Thats star one on your telephone keypad.
Yeah.
And it appears that we have no further questions at this time I'd be happy to return the call to our host for any concluding remarks.
Thank you.
Thanks for everybody joining us today, we really are excited about Trinity the year that we had.
And I would just say we're most excited about the people and this team that we're building it as best in class were very excited about where we're headed at Trinity. Thank you for your support and we'll look forward. Later this month to give you a great update about things to come thanks again.
Yeah.
This does conclude today's program you may now disconnect your lines and everyone have a great day.
Hum.
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Uh huh.
Mhm.
[music].
Yes.