Q3 2022 TPG RE Finance Trust Inc Earnings Call
Greetings and welcome to the TPG real estate financial Trust.
Third quarter 2022 earnings conference call.
At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation if anyone.
One should require operator assistance during the conference. Please press.
Four zero on your telephone keypad as a reminder, this conference is being recorded it is now my pleasure to introduce your host Ms. Deborah Ginsberg General counsel. Thank you Debra you may begin.
Good morning, and welcome to TPG Real estate Finance Trust conference call for the third quarter 2022.
I'm joined today by Doug Burkhardt, Chief Executive Officer, not Coleman, President and Bob Foley, Chief Financial Officer, Doug and Bob will share some comments about the quarter and then we'll open up the call for questions.
Yesterday evening, we filed our Form 10-Q and issued a press release and earnings supplemental.
Resignation of our operating results all of which are available on our website in the Investor Relations section.
I'd like to remind everyone that today's call may include forward looking statements, which are uncertain and outside of the company's control actual results may differ materially for a discussion of some of the risks that could affect results. Please see the risk factors section of our Form 10-Q, and our Form 10-K.
Do not undertake any duty to update these statements.
I'll also refer to certain non-GAAP measures on this call and for reconciliations you should refer to the press release and our Form 10-Q.
I turn the call over to Doug Burkhardt, Chief Executive Officer of TPG Real estate Finance Trust.
Thank you Deborah and good morning, everyone. Thank you for joining the call.
As I complete my second quarter as CEO I am excited about the opportunity ahead for crts, we find ourselves in the midst of an attractive time to be a lender and given our liquidity position. The real time information flow, we see as part of the TPG real estate divesting platform I believe <unk> is well positioned to take advantage of the current macroeconomic and you'll see.
The investing landscape.
Over the past quarter. The market continued further along the same trend lines tightening financial conditions slow capital markets activity reduced available liquidity widened loan spreads and reduced real estate values across nearly all nearly all property types.
As we head into the end of the year, we anticipate an acceleration of these trends as risk appetite continues to weaken further.
Furthermore, transaction activity remains muted due to a widening gap between where buyers and sellers will transit.
And the first two quarters of the year <unk>.
Deliberately reduced our investment activity and bolstered our liquidity as we anticipated the continued effects of natural conditions on real estate debt and equity markets.
As we conclude the third quarter, we have begun to opportunistically deploy capital on attractive terms, while maintaining sufficient liquidity to mitigate the effects of further market deterioration in risk manage our current portfolio.
Given the continued pressure on real estate values, particularly within the office sector. We've adjusted the risk rating on certain loans and increased our seasonal reserve. The very same conditions that foster an attractive lending environment do create challenges for our existing investments Fortunately our real estate platform has investing in asset management experience that spans multiple economics.
Michael and is well positioned to drive resolutions that will maximize shareholder value and position us to redeploy capital into an opportunity rich in that environment.
Yeah.
From a liquidity perspective, we ended the quarter with $571 million of total liquidity. We continue to take the same measured approach and balancing the deployment of capital while maintaining ample liquidity in the context of the broader economic backdrop.
As evidenced in our Q3 originations, which I'll speak about in a moment, we continue to diversify our funding away from the CRE CLO market, while maintaining attractive blended cost of funds for the company at a spread of 200 basis points and an advanced rate of 79%.
Over the past quarter, we continued to grow the portfolio with an investment bias towards multifamily exposure, we made investments of $984 million across 10 loans with a weighted average credit spread of $3 52, a blended LTV of 65% and worth noting that over 70% of these new investments were multifamily loans.
And 80% of the loans where acquisition finance.
It is also worth noting that 100% of our QC investments were financed via non mark to market structures.
And the spot ROE of these investments at closing exceeded 12%.
Given the recent contraction in liquidity the ability to execute newly funded non mark to market financing last quarter is a testament to the depth and breadth of tpg's relationships with the bank community.
In addition.
In the past quarter, we received repayments totaling $371 million 80, 82% of which were office loans. So as a result, as you think about our current portfolio. We over the past 12 months, we've nearly doubled our multifamily exposure to approximately 44% of the portfolio, while reducing our office exposure.
A third down to 28% of the total portfolio.
Yeah.
Similar to the last few quarters, you should expect that TRT X will continue to focus on lending in sectors with attractive long term fundamentals, such as multifamily and industrial as real estate values reset lower and liquidity contracts across debt markets CRT X can command more spread at a lower depth basis compared to prior vintages, given our conservative liquidity profile.
Our lender friendly environment combined with the depth and breadth of the TPG investment platform, we expect to take full advantage of this opportunity for the tier TX shareholders over the coming quarters with that I'll turn it over to Bob to provide more detail on our results.
Doug and good morning, everyone. Thank you for joining three quick data points book value per common share declined quarter over quarter by $1.75 to $14.28 from $16.03 due to the $132 $3 million increase in our system reserve.
Diluted distributable earnings per share for the three quarters. Just ended covered our 24 cents per share quarterly dividend at a ratio of one one times, we earned <unk> 19 per share in the quarter for the quarter.
Our current quarterly dividend of <unk> 24 cents per common share generates an annualized yield of six 7% to book value and 11, 4% to yesterdays closing stock price of $8.44.
I'll cover five topics. This morning first changes to our seasonal reserve.
Net interest margin and our return during the third quarter to being 100% interest rate sensitive on both sides of our balance sheet, our capital strategy, our leverage and our liquidity further.
First regarding the Cecil Reserve, we recorded a net increase in our seasonal reserve of $132 $3 million to $225 6 million or 300.
Third 90 basis points as compared to 180 basis points for the preceding quarter. This expense as unrealized noncash and does not reduce distributable earnings.
The increase was comprised of 71.1 million relating to the general seasonal reserve.
And 61.2 million related to four individually assessed office loans, all with risk ratings of five.
And managements judgment. This significant increase was warranted by the rapid and material weakening of the debt capital markets and the investment markets were office properties, which we have observed since we downgraded eight office loans at the end of the first quarter of this year and that pace is especially accelerated during the past four months.
We are cognizant of market reality, but this morning's message should not ignore.
Some positive trends for example office as a share of our total office portfolio of our total portfolio has declined 28% of commitments from 43% one year ago due to loan repayments asset management and targeting new loan investments in multifamily and industrial properties.
Of our year to date loan repayments of $1 billion, a full 45% were office loans.
In the past 12 months, our office borrowers have infused $204 million into their loans be a partial principal repayments replenishment of interest reserves and borrower funded interest payments capital improvements and leasing commissions.
Included in this amount is a $62 million partial principal repayment on our largest office loan and office property here in Midtown Manhattan.
For the office loans that contributed most to the general reserve increase all are performing and have a risk rating of four or better.
Approximately 82% of our four and five risk rated loans to which much of our seasonal reserve increase relates are financed on a non mark to market basis.
We believe our current CSO reserve accurate really accurately reflects our risks based on what we currently know observe and expect from the economy capital markets and the performance of our loans.
Regarding net interest margin and September 2022 we again became 100% rate sensitive on both sides of our balance sheet is the last of our high rate floor loans became out of the money or the related loan was repaid.
Quarter over quarter net interest margin did declined 7.6 million because growth in interest income lagged growth in interest expense due to loan repayments that occurred early in the quarter new loan investments that occurred late in the quarter and a few high rate floors that didn't become out of the money until the August reset date.
During the quarter LIBOR surged to $3, one 4% from $1 79%.
At quarter end, our weighted average rate floor was 0.85% and the rate on our highest floor was two 3%.
Turning to capital strategy low cost non mark to market financing from a diversity of Counterparties remains the foundation of our financing strategy.
Quarter end non mark to market financing comprised 75% of our financing consistent with prior quarters and our long standing policy target.
We have revived our old school pre C. L O era approach to loan syndications and since the beginning of the year. We gave a range senior financing with four new Counterparties. The result, 100% of our third quarter investment activity was financed on a non mark to market basis, we've continued to diversify our debt funding base and only 25.
Percent of our funded liabilities have any sort of mark to market feature with which one exception is limited to credit based marks.
During the quarter, we extended the maturities of one credit facility. The majority of our remaining maturities fall in 2025 and beyond our two C. L. OS with open reinvestment periods are extremely valuable to us.
Current weighted average spread is 179 basis points, which by our estimate is roughly 120 basis points tighter than comparable new CRE CLO issuance today.
The maturities of those CLO are tied to the maturities of the underlying loans, which is a helpful hedge against loan extension risk.
Our target leverage remains at $3 75 to one as compared to our actual debt to equity ratio of 3.1 as of September 30th. This leaves room to increase leverage and prudent fashion is suitable investment opportunities are sourced by our team.
We have $1 8 billion of financing capacity under existing secured credit agreements, an additional $286 6 million of reinvestment capacity in our clo's that leverages already reflected in our debt to equity ratio of three one to one plus we have the proven ability in the current market to source non mark to market financing.
From new and existing Counterparties, we remain comfortably in compliance with our financial covenants rig.
Regarding liquidity at quarter end cash on hand was $236 1 million and reinvestment capacity in our CLO was $286 6 million.
The latter requires no paired equity or debt to fund new investments, we're well positioned to simultaneously play offense and defense, which our team capably demonstrated in the third quarter and with that we'll open the floor to questions operator.
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Okay.
Thank you. Our first question is from Steve Delaney with JMP Securities. Please proceed with your question.
Good morning, everyone. Thanks for taking the question.
Just curious on obviously the specific reserve on the Dallas flown in the subsequent foreclosure there and be a fourth quarter or deed in lieu of I should say could you comment on generally the.
Conditions with that property or conditions with the borrower.
At June 30 was four rated it.
September 35 operated and now you own it I'm just kind of in that specific case, you know what changed I guess here over the last the last three to four months with the actual conditions in the property. Thank you.
Hi, Good morning, Stephen and thanks for your.
Thanks for your question.
We did take title via negotiated deed in lieu of that office property, which is located in near North Dallas.
And what changed is the borrower the former borrower, which is a very large institutional.
Bonser had sought to sell the property.
It was a late life investment in one of its funds and it was unable to reach agreement with the the best of the bidders there.
It had identified through a formal and broad marketing process. So you know at the end of the day, the borrower opted not to infuse more capital.
And we took the property back shortly after quarter end as we disclosed.
It's a solid property I would say not much changed at property operations during the quarter. It was really the borrowers assessment that it couldnt close a deal with a perspective purchaser and.
It was not prepared to infuse more capital to be clear it had infuse substantial capital in the deal prior to the end of September .
We are in advanced discussions with the purchaser.
For that property and we would expect it to close before the end of the year.
Oh Wow okay.
So my follow up question was going to be like what's their current rent roll and cash flow, but it sounds like.
At this point you don't you hope not to be operating the property you know well enter into next year it sounds like.
That's correct I mean, it's it's a solid property, it's got solid in place cash flow to our basis, but.
But we have identified a buyer and you know we have an interim property manager and we would expect to.
The out of it barring any unforeseen changes by the end of the year.
Got it excellent that's helpful and Bob just one quick follow up for you.
Liquidity 570 million sounds like a lot of money, but you know over half of that is is tied up in the clo's. It's good to have it there but it's.
It's not money that you can spend today I'm just curious if that level of $237 billion. If if you expect to grow that just because of the uncertainty in the market. It sounds like your financing is pretty solid, but you know I guess at some point are there situations like what happened in Dallas, where where you may have.
Something finance that you have to take it awful awful lot. Thanks.
Yeah, I think a good follow on question, Steve I think two sub questions. Let me take part two first.
You know there may be instances and there have been instances in the past, where we've had loans and C. L. O's.
We have elected to buy out and we've used cash on the balance sheet or other sources of financing to do that.
We've been doing that for years.
And sometimes those loans are sold sometimes they're paid off sometimes there are amended and put back into CLO.
The first part of your question had to do with the utility of the cash available for reinvestment in those C. L. O's.
You know the eligibility criteria for putting new loans into those CLO, we understand very clearly because we negotiated with them.
And I think what you will see and what you would have seen steadily as our ability to originate or acquire new loans and put them directly into C. L. O's.
Or to move existing loans financed elsewhere in our.
Panoply of financing arrangements into C. L o's.
Or are we have a credit facility are among a group of five or six banks, where we can warehouse for up to 80 days recently closed loans and then migrate them into CLO. So that that cash is actually pretty useful and immediately available virtually immediately available.
Got it so it sounds like the money in the Clo's is it's definitely could be put to work here over the next couple of months.
Yeah, and if you look historically.
We will have cash on the balance sheet at the end of the quarter cash and C. L O's and you'll see that it's typically deployed.
Very quickly.
Alright, Thank you both for the comments.
Thank you Steve.
Okay.
Thank you. Our next question is from Don <unk> with Wells Fargo. Please proceed with your question.
Hi, can you talk a little bit about the.
There were two new npls from nonperforming loans and.
Where are those that asked.
How are they financed.
Sure Good morning, Dan and thanks for joining so.
We have four or five risk rated loans actually may step back for a minute about 82% of our.
You know risk loans are financed on a non mark to market basis. They may be in C. L owes more likely they're in single asset or small pool node on node financings that are non mark to market and nonrecourse with single Counterparties.
And so that's the case in three of the four instances the fourth instance property that Steve inquired about earlier is actually currently held unlevered.
Okay.
You had two new NPL this quarter is that right.
We have two loans that are on non accrual that's right.
Okay.
And I guess can you talk a little bit about your expectation for nonperforming loans next quarter.
Do you feel like you've kind of captured everything or are there some office launch it.
Four rating in kit quickly moved to five based on kind of what we're seeing.
Yes sure.
Great question I would say first of all our seasonal reserve really reflects our view of potential losses during the life of that loan I would say one.
I would say to you know I've I've highlighted in prior quarters that we do have.
A portion of office funds that I'll do have either a near term extension or potential final maturity coming up over the next year and I think they were really what we saw over the past quarter is illustrative of how that can play out to use. The one example that that Bob mentioned, one of our largest office exposure.
In New York City.
You know that that was a loan that had a balance of $288 million going into the quarter. We received a pay down in excess of $60 million to satisfy that extension.
So that's again, an example of where we're seeing borrowers infuse more capital and then on the other side is I think what again not to be too repetitive, but Bob mentioned about <unk>.
The asset in North Dallas, where you had a borrower who ultimately decided to not remain committed to the asset and we're looking to quickly resolve that.
Got it.
Okay.
Okay.
Thank you. Our next question is from Eric Hagen with P. T. I G. Please proceed with your question.
Hey, Thanks. Good morning Hope you guys are well I wanted to follow up on the office a follow up on the office portfolio can you say what the average remaining lease term is in the portfolio or any maybe.
Maybe any mitigating risk in cases, where there is a near term more near term lease maturities concentrated in the portfolio and just how you're thinking about that as well.
And its connectivity to the seasonal reserve more generally.
Sure Good morning, Erik Thanks for joining.
I can't provide an exact walt for the portfolio as a whole right now but can offer some.
General.
Indications and then.
Can talk very briefly about how that informs our seasonal reserve.
But before saying that I I would say that generally speaking office performance is pretty good.
Changing in the market environment and has changed.
Quickly ill.
Is valuation multiples applied to net cash flow from properties and that's really.
What we see in the markets today, and that's been a heavy influence in our decision to increase our seasonal reserve.
To the level it is at September 30th.
In terms of of office, Walt CBD Wildstar typically you know five to seven years in suburban waltzer typically three to five as we look across our portfolio.
We don't see particular.
You know near term holes or impending holes.
We're more focused from a risk management standpoint on the broader trends in demand.
Demand for space and actual leasing absorption.
Yes.
I think I'd add to Bob's point again, it's a little bit less about the micro and more about the macro right now I mean, we're just seeing liquidity drawing up across really all property types to varying degrees and I would say that office is the sector that has probably been hardest hit sort of the double whammy of both you know secular trends and then also just the.
The move higher in rates.
And I think that what you're seeing and hearing from us as we think through our seasonal reserve is just trying to reflect the fact that it's really more about the capital market's activity appetite for core real estate appetite for office lending has has really tapered off into the end of the year and I think that's really driving more of our views.
Around Cecil and then, particularly some of the uncertainty in terms of our current office exposure.
Gotcha that's helpful detail. Thank you.
Maybe going back to with the CLO for just a second are there any conditions, which could drive you to buyout loans other than four.
Delinquency.
There's some other trigger related to the capital structure of the loans themselves, which would.
Drive this need or desire to control the deal ahead.
Theyre being an actual delinquency.
Hum about that the answer is no slashdot really.
Typically the way the indentures are written.
There needs to be either a triggering a credit related triggering or event or the expectation of.
A an impending a credit event and with that the collateral manager, which has us can can remove alone.
And also I'd say on.
On the CLO front of me. These are really valuable liquidity tools for us and I would bear in mind that we have.
Three outstanding series C. L O F L three four and five.
F L four and five both both have.
Outstanding reinvestment capacity at full force capacity.
Last through the end of the first quarter, and then and then fell five into the.
Yeah, beginning half of the of the beginning of 2024.
Really what we have within those vehicles is.
On a blended.
On a blended cost of funds basis, <unk> is that an advance of 83% and plus 160 spread in adult life is at 84% advance in a to a to spread but what that really means is that we know we have an increasing amount of liquidity options available to the company. So over the past quarter with what you know.
With our nearly $1 billion of investments all of those investments were financed via non mark to market structures, but we've been sort of holding that CLO re investment capacity in our back pocket a bit.
And then really first exploiting both the a note or node on node market.
First and then and then second potentially looking at the CLO for fancy option. So you know again.
Those dealers remain a really valuable.
Financing valve for us as we think through liquidity in the near term.
That's great detail. Thank you guys very much.
Yeah. Thank you Eric.
Okay.
Thank you. Our next question is from Rick Shane with Jpmorgan. Please proceed with your question.
Hey, guys. Thanks for taking my questions. This morning.
Good morning, Rick one thing in looking at the originations for the third quarter.
Interestingly enough three loans all in your top 10, all designated as bridge loans.
I'm curious when you think about bridge and bridge by your definition means.
More immediate draw less milestones.
I assume that those business plans really are more reliant upon marketing and absorption and price appreciation.
I'm curious given.
Where we are in the market how to think about that as opposed to what might be more value added.
Enhancements by sponsors.
Sure Yeah happy to cover that so I would say.
Over the over the past quarter again as you highlighted we roughly.
Had direct originations and and secondary loan purchases roughly 50 50 of R. R.
The loans that we purchased those were.
Those were all 100% performing loans at a at a pooled LTV of approximately 61%.
And those loans, we were able to buy at a discount given that the seller needed a certain amount of liquidity on those loans and those loans tended to be I would say of.
Marginally more advanced in terms of where they were in their business plan relative to our typical direct origination and I think perhaps theyre just closer to a potential refinancing or capital markets exit. So you know again, we viewed that that acquisition as.
As an opportunity, where we were able to buy a portfolio of low leverage performing loans that had.
Basically our blended D M. When you when you account for the discount at which we bought them of about $5 78, and we were able to finance those with term nonrecourse non mark to market financing.
But again at the heart of your question as you know these these loans were definitely I would say more stabilized relative to what we typically are originating which which we really like at this point in the cycle.
Got it no and look I understand that was actually going to dovetail into my second question. It looks like specifically there is San Francisco.
Multifamily that you got in a pretty healthy OID.
With a maturity next year. So obviously there is some near with the fully extended maturity next year. So there's some execution risk there given.
What's going on in San Francisco, but.
I look for example.
The largest loan on your books now is a July 22.
Multifamily in San Jose Rage relatively high L. T V.
That doesn't that looks like a directly originated loan.
Im just curious given and again hard to differentiate whats going on in San Francisco, which I'm really aware of versus San Jose, where it's probably a little bit different.
But what the execution for alone that appears to be more marketing and absorption driven in a challenging market how to think about that.
Yeah sure. So you know the.
The moment you are mentioning within San Jose Yeah that was it.
A newly acquired asset.
Oh tree and Mg properties, and we like the fact that that was fresh cash acquisition into that deal one and I would say too yeah. That's that's an asset where it really is just about leasing up and burning off concessions. So again I would say it's later in its business plan.
And I think frankly at that loan were to come to the market.
Even 12 months ago, I would say that the borrowing costs on that likely would have been 100 to 125 basis points tighter and I think frankly likely would not have gone to someone like TRT excuse more of a traditional lender it probably would've gone into a a nearly stabilized type financing.
So we view that as an opportunity to get exposure to newly built multifamily.
And again with what the business plan that was frankly later in its cycle rather than a full lease up of our elevate.
They can asset.
Got it.
Actually really helpful and good debt. Good context. This is again this is sort of that theme of like as as we've been highlighting it has as the liquidity picture has changed there are there are loans that again I would describe as very close to a stabilization point that otherwise would've been going into a SaaS deal or a conduit deal and right now they are basically coming to lenders like <unk>.
He acts and saying and effectively bridging that with us until so I would describe it just really like to have it be more succinct. My response I would say, it's more of a bridge towards capital market stabilization in our bridge towards a really heavy business plan, it's going to take three years to four years and that's kind of I think more of what you saw in Q3 from us and I think probably youll, you'll probably continue to see as.
The MBS market continues to be choppy and inexpensive in terms of in terms of where loans can execute.
Great that's very helpful thematic Lee.
And I apologize for asking one last question.
As you know we have a pretty broad coverage universe, and we cover a lot of consumer finance names in.
One thing we heard during the quarter is that there is a divergence between consumer performance based upon a borrower based upon borrowers who are homeowners who were more resilient and renters, who has faced such.
Persistent inflation in.
In terms of rent increases.
Now.
Risky do you think is this sort of industry shift towards multifamily how much risk is it creating if we're going to start to see some reversal of that really persistent long term trend in terms of rental inflation.
Yes, sure. It's a great question and obviously given that it's 44% of our portfolio.
Think about that frequently and I would say really a couple of things one is.
We continue to like the multifamily space driven primarily by the fact that we do think there is there are very positive long term fundamentals and we're still seeing.
Rent growth continuing in really across our portfolio. So we're not really seeing any slowing and I think that that rental growth has been really driven by the fact that again to your point.
Residential borrowing rates closing into 7%, we expect to see more and more demand into the rental space.
I would say secondly in terms of given that again, we're not the equity where the debt and we're generally coming in at roughly 65 approximately LTV from.
Given our discount to values.
The available financing that really still remains within multifamily, we still feel really confident about the multifamily sector as a space, where we want to be orienting our are investments, but at the same time. We are as we think about exit cap rates and if you think about valuation we are reflecting the fact that without question rising benchmark rates are.
Sidney out cap rates I mean, you can see it with where the apartment Reits are trading at approximately a 6% implied cap rate.
We are seeing transactions live as those that are looking for financing spot and we're starting to see private market cap rates. If generally speaking, perhaps cap rates were being modeled into the four and a half to four and three quarters range, we're seeing cap rates being modeled close to about 100 basis points wider.
Or how should I shouldn't say modeled actually that's where we're seeing acquisition activity is approximately 100 bps wider in terms of private markets. So again I think public markets.
Have have come out wider but again, we're looking at really all the available financing channels. When we think about how are the ones that got taken out and then we're just simply put we're just underwriting higher cap rates on the accident to reflect the fact that again.
So again I think I think asset valuation is clearly down within multifamily, but again we.
We feel confident that it's going to be buoyed by just the long term structural demand for housing.
Okay, Great. That's helpful and thank you for taking for letting me take someone absolutely morning.
Thanks, a lot. Thank you Rick.
Thank you. Our next question is from parents again of it with Citi. Please proceed with your question.
Thanks, Yeah, I just wanted to follow up on on the cap rate.
<unk> for office.
It seems to me that it's more of a liquidity driven issue is in the <unk>.
The office performance and cash flows for those properties are generally pretty good.
And is there is the cap rate just a function of the fact that the liquidity, so weak or eventually kind of tighten a bit.
Or do you feel like that this is just kind of a new.
Level that everybody just has to get used to.
Well I mean, I think if it as you can imagine this is somewhat circular I would say that the lack of financing has also been a major contributor to widening cap rates, but that's really been in conjunction with just a broader drop in demand for office space just given all the trends that we're kind of seeing in this.
Post Covid world.
So I'd say, it's really a mix of both I think.
As I think about perhaps how our borrowers are thinking about it.
They're definitely looking at what do they think is the long term demand picture for each specific asset in that market and it's it's getting increasingly hard I would say to speak about office.
And in general because I think that each of these loans in each of these stories is just very idiosyncratic and kind of loan specific so.
But again.
I would say that on the office side it feels like.
Very likely there'll be pressure around capital markets activity for a longer period of time.
And I can see I can see the other sectors is in multifamily industrial life Sciences kind of bouncing back quicker relative to office seems to just have a longer term structural demand issue that that's also being exacerbated by the fact that oh.
Available financing is getting harder and harder to identify.
Okay, and then I guess.
Terms of some specifics the fifth largest loan comes due in March of next year. Its an office property in New York, It's a three rated.
What's the risk there the there's a Houston property. That's five rated that is I guess.
You already mentioned this but it's it's.
Past due does that get extended.
And then there's.
Another.
New York property, it's your.
It was about a $54 million one that's also coming due in February .
Given these liquidity issues or are these all likely to become <unk> in.
And maybe you could just talk a little bit about some of the nuances between them.
Sure.
So, let's see if I can remember those and take those in order. So the nearest term maturity is an office building here in New York, which is in January of next year first quarter.
And.
That's actually one of our five rated loans so.
The borrower has been working to sell that property and there will either be a property sale and a resolution of our loan or there won't be.
The next is an office building in New York that matures later in the first quarter there was an option to extend there.
Strong institutional borrower.
Don't want to predict fully anything but the likelihood is that that's going to.
But the bar will satisfy the requirements to extend alone that property actually has some very strong credit tenancy in it.
And then the third loan that you mentioned is an office building in Houston that I mentioned earlier, where the borrower market at that property to sell.
And.
In all likelihood.
That loan will be amended and.
And extended.
Based on the very good market intelligence that we got.
From the marketing process for the borrower undertook.
Alright, thank you.
Yep.
Thank you there are no further questions at this time I'd like to turn the floor back over to Doug Burkhardt for any closing comments.
Yeah again, just want to thank.
Thank you everyone for dialing into the call. This morning, and look forward to continuing to update you guys on the progress of your tier TX. Thank you.
This concludes today's conference you may disconnect your lines at this time. Thank you for your participation.