Q4 2022 TPG RE Finance Trust Inc Earnings Call
Greetings and welcome to the T. P. G R E Finance Trust fourth quarter.
2022 earnings conference call.
At this time.
The funds are in a listen only mode.
Brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host.
Deborah Ginsberg, Vice President Secretary and General Counsel.
Thank you Debra you may begin.
Yeah.
Good morning, and welcome to TPG Real estate Finance Trust conference call fourth quarter and full year 2022.
I'm joined today by Delta card, Chief Executive Officer, 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-K and issued a press release and earnings supplement though.
A presentation of our operating results all of which are available on our website in the Investor Relations section.
I'd like to remind everyone that today's call may include forward looking statements, which are uncertain and outside of the company's control.
Actual results may differ materially.
A discussion of some of the risks that could affect results. Please see the risk factors section of our 10-K, we do not undertake any duty to update these statements and we will also refer to certain non-GAAP measures on this call and for reconciliations you should refer to the press release and our 10-K with that ill turn the call over to Denver card Chief Executive Officer of TPG.
Sure.
Deborah I appreciate it.
Good morning, and thank you all for joining the call today.
The real estate market continues to adjust to.
To a myriad of challenges and opportunities.
On one hand, tighter financial conditions reduced liquidity and greater dispersion of risk appetite across property types and markets have put pressure on values, but on the other hand, a strong labor market and Brazilian economy continues to support a positive outlook on the long term fundamental real estate valuation.
Fortunately for TRT exit, we identified and began to prepare for tightening financial conditions. During the first half of 2022, as we bolstered our liquidity profile and increase our selectivity for new investments.
For <unk>. This past quarter was no different in that we continue to selectively invest with a cautious eye on liquidity.
Proactively risk managing our existing portfolio.
In 2022, TRT extra originated or acquired $1 $7 billion of new loans, approximately 80% of which were multifamily industrial or self storage three sectors. We continue to target given their long term fundamental pillars. In addition, we've been very disciplined on the nature of our finance.
Today, 65% of our 2022 investments were financed on the non mark to market basis.
Furthermore, over the past year, we strategically increased our multifamily and industrial exposure by 62%, while reducing our office exposure by over 32%, which is the greatest year over year reduction of office exposure amongst our peers.
In the aggregate loan principal payments for the year 2022, equaled $1 5 billion and our repayments attributable to our office loans comprised 44% of that number.
While we continue to acknowledge the dislocation of the lending markets and pressure on value within certain sectors and geographies, particularly office properties you can see from our quarter over quarter see some reserve reduction of approximately $11 million.
Stable portfolio risk ratings that we have anticipated these challenges and are actively working to address their impact on our portfolio.
We continue to work collaboratively with our borrowers to maximize shareholder value our strategy for resolution remains the same what do we modify extend awful close our focus is to maximize shareholder value in the most efficient manner possible given the facts and circumstances presented.
From a liquidity perspective, we continue to risk manage from a position of strength our year end liquidity exceeded $590 million.
And for new investments, we had substantial liquidity via four main sources.
One the a note market.
Number two existing series CLO reinvestment capacity at both <unk> four and that's all five.
Potential new public and private CRE, CLO transactions and our existing secured credit facilities.
Over the past year is a testament to the diversity in our funding sources, we have executed on each of the four aforementioned financing options.
While maintaining an industry, leading debt cost of funds of 203 basis points over the applicable benchmark rate across our liability structure.
Our teams investing in asset management experienced benefits from two distinct attributes number one our leadership group with an average of 25 plus years of experience investing across multiple economic cycles combined with two full integration into the broader TPG real estate ecosystem with an oversight of 20 billion.
If AUM across multiple investment strategies.
Given the disruption in real estate markets being aligned with a leading global alternative investment alternative asset management firm combined with tremendous information flow from a broad reaching real estate equity and credit platform allows TRT extra prudently navigate the current market.
I'm incredibly excited about the prospects for TRT X, we have been frontloaded and acknowledging the stress in the real estate markets, while positioning ourselves to benefit from an attractive lending environment. This proactive approach will could will serve our shareholders well as the current cycle of balls.
Thank you Bob. Please go ahead, thanks, Doug Good morning, everyone and thanks for joining us on this morning's call, especially those of you with school aged children trying to enjoy a school holiday week.
First our operating results GAAP net income for the fourth quarter was $32 $6 million or 42 cents per diluted share, reflecting the benefit of rising benchmark rates on net interest margin, which increased $4 $7 million or 16% quarter over quarter.
Higher benchmark rates and a balance sheet that is 100% rate sensitive a strong tailwind for net interest margin and net earnings.
Distributable earnings was $23 3 million or <unk> 30 per share quarter over quarter increase of 53%.
Due to net interest margin expansion and a decline in loan write offs in comparison to the prior quarter.
Credit performance will be the key determinant of distributable earnings in future quarters.
Our dividend coverage was one five times for the quarter and $1 one seven times for the year.
Book value per share increased quarter over quarter by 20.
The $14 44, and 48 cents per share on the strength of the seasonal reversal of approximately $11 million and distributable earnings that outstripped by <unk> <unk> per share our dividend per share of <unk> 24 cents.
Our seats, our reserve declined by approximately $11 million.
Quarter end, our reserve rate was 395 basis points as compared to 390 basis points for the prior quarter.
We continue to thoughtfully utilize the TPG ecosystem, our ample liquidity are 74% non mark to market financing base and a highly experienced investment capital markets and asset management teams to support opportunistic lending and preemptive asset management to drive value creation and earnings for our.
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Regarding liquidity, we had $590 9 million of it at year end, including $231 7 million of cash $297 2 million of CLO investment cash plus undrawn capacity under our credit facilities.
Two of our three Clo's are open for reinvestment F. O four through March of 2023, and that's O five through February of 'twenty 'twenty four east term non mark to market nonrecourse liabilities with a weighted average credit spread of 100, and 180 basis points are immensely valuable to us and supporting new loan.
<unk> optimizing our current financing arrangements and sustaining or boosting investment level auto.
$67 4 million of our yearend CLO reinvestment cash has since been utilized across seven different investments.
Unfunded commitments under existing loans for $426 1 million or only seven 8% of our total loan commitments, which is comparable to prior quarters. This low level reflects our historical discipline in targeting bridge and light transitional loans with quick to complete business plans and small proportions of deferred fundings.
Regarding credit rising rates continue to pose a headwind all property types.
The pace of return to office remains a sustained challenge to the office sector.
Nonetheless, our weighted average risk rating remained unchanged quarter over quarter at three point too and the dispersion of ratings across our portfolio was largely unchanged measured by amortized cost 75% of our loans were rated three or better 20% were fours and 5% were fives.
Our seats the reserve declined by approximately $11 million or 5% due primarily to $336 5 million of our repayments plus the conversion to Oreo of one office alone all of which enabled reserve releases.
Our general reserve decreased by $23 2 million due to par loan repayments in the general reserve population and the reclassification of one office loans at a specific reserve.
This was offset by the model based impact of higher short and long term interest rates worsening macroeconomic factors and the challenging operating and valuation environment for commercial real estate.
Our specific reserve covering four loans increased by $12 $2 million due to macro and asset specific factors in a one loan change in the composition of the specific reserve loan population.
The office loan converted the Oreo in early October was by mid November sold to an investor at a price roughly equal to its carrying value. We recovered 95% of our U P D as compared to our carrying value net of diesel at the prior quarter and roughly 85% of U P. P. We provided to the purchaser of 59 million.
The first mortgage financing on market terms and that loan is term financed on a non mark to market basis, our new borrower invested $29 3 million of fresh cash equity to acquire the property.
Our asset management team delivered an excellent result here after multiple quarters of thoughtful work.
Rate caps or another popular topic, we require our borrowers to purchase rate caps and at quarter end, roughly 90% of our loans measured by loan commitment amount at borrower owned rate caps with a weighted average strike rate of $2 71 per cent.
By comparison current term sulfur is 4.56%.
Regarding the loan portfolio for the quarter, we received repayments and full of $294 $4 million and a near record $1 3 billion of full repayments for the year of which 38% were office loans that excludes partial repayments of $209 5 million of which $176 7 million related to office.
As Doug mentioned year over year, our office exposure declined by 32% to 29% from 42% of our portfolio we.
We do believe higher rates and challenging real estate fundamentals are likely to slow repayment speeds in 2023.
A $1 7 billion in 2022 investment activity reflects our view since mid 2022 that the lending market is quite attractive.
Lower advance rates excuse me wider spreads and lower attachment points.
For 2023, our investment stance remains opportunistic.
We intend to match our investment volumes to loan repayments.
We remain laser focused on low cost non mark to market nonrecourse term funding at year end 73, 5% of our secured financing was non mark to market.
For the full year, we arranged $1 8 billion of non mark to market term debt capital, including $1 1 billion of CLO funding via our fifth CLO.
726 point, some $726 3 million excuse me of non CLO term financing, which was a mix. It nobody I know syndicated senior loans or a note financing and included several new Counterparties we.
We continue to collaborate with Tpg's capital markets franchise to mine existing and new capital relationships to form term non mark to market accretive financing.
We also added during the year of $250 million secured revolving credit facility, which we later upsized to $290 million.
Our leverage remains modest our total debt equity ratio was 297 to one down from $3. One three to one at the previous quarter end and we remain in compliance with all of our financial Covenant covenants with that we'll open the Florida questions operator.
Thank you.
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One moment, please while we poll for questions.
Yeah.
Yes.
We have a first question from the line of Stephen laws with Raymond James. Please go ahead.
Yeah, Hi, good morning.
I'm just wondering if you start.
With the four loans that have a specific reserve you know can you can you give us an idea.
Current thoughts around resolution timeline for those that maybe are any additional details I think.
It was mentioned in the prepared remarks, there was one new office one debt that had a reserve move from general specifics for some color around that bone as well please.
Absolutely so.
Right now we're carefully evaluating the most with the most effective path towards resolution.
That may take the form of a loan sale that could take the form of.
Foreclosing them on their own that asset.
But generally speaking we're gonna be thoughtful in terms of maximizing recovery and given our collective view on it.
The fact that the office market doesn't seem to be getting better anytime soon we expect to be resolving these as quickly as we can while maximizing shareholder value.
Yeah.
Great.
And.
Maybe shifting to run rate EPS Bob.
As I think about.
Kind of where we move I think in the Q or the K, it's a little over a million dollars of prepayment income in Q4, you know portfolio was down a touch but I think in your prepared remarks, you mentioned you know kind of flat outlook is repay as originations match repayments and there maybe some benefit from increasing rates, but can you can you maybe give us any other considerations when you can think of.
As we look at our run rate Etfs.
Before any write offs or realized losses occur.
Well, Stephen I think I think you've hit the principal topics.
M G&A is pretty level.
Clearly higher rates and rising rates are are helpful to NIM and we would expect a little more expansion there.
Thank the the volume of one timers that you referenced is.
You know I would say unusual we typically don't have a lot of them. We had one loan for the quarter just ended they repay it a little sooner than we expected.
But that was only only a million four so I think that what we envision is a pretty stable.
NIM.
The outlook the question will be credit, which you alluded to in your comments.
Great well I appreciate the comments this morning and.
Congrats on a nice quarter, obviously the market was so impressed with the results as well thanks for your time.
Thanks, Stephen Thanks, Stephen appreciate it.
Thank you we'll take our next question from the line of Rick Shane with J P. Morgan. Please go ahead.
Thanks, everybody for taking my questions Hey, Bob.
Bob can you talk a little bit about the mechanics of the general seasonal reserve.
I know that a lot of its data driven by historical.
The information I think everybody uses trap.
But would love to.
Think about some of the inputs that could change because that's that is I assume fairly backward booking and think about some of the macro inputs and overlays you put on top of that and how we could think about that evolving over the rest of the year.
Sure. Thanks for the question Rick It's a good one I would start by.
Reminding all of us that you know.
So which came into effect a little more than three years ago at the beginning of 2020.
Is intended to cause registrants to record reserves that reflect the expected loss over the life of each well. So it's really a prospective view of the world not an historical one so while historical data is useful and informative and youre right, we subscribe to a data serve.
As do many of our public peers that provides historical loss data on.
More than 125000 loans extending back to the late 19 nineties.
The real issue or the real important inputs are.
Things like loan to value and debt service coverage.
The.
Amount of equity that a borrower has them alone and then a number of macro inputs, including short and long term rates GDP growth unemployment and so on so.
You know a company's forward view as expressed through their forecasting tool, whether it's the loss given default model or they use the warm method, which some companies do is in my view a bigger driver of establishing the general reserve than our historical data.
Sets.
With which is perhaps one of the reasons why.
In the old days it was about building reserves and it was more historical I think what you're seeing in the new Cecil order is that certainly we I can't speak for others. We're focused on what do we think is going to happen in the future and our objective is to fairly status use a reserve based on that which is I think one of the reasons why you saw our.
Cecil Reserve frankly be.
Larger sooner than some of our peers.
Thanks for your question.
Yeah. Thanks.
Just pull the thread a little bit further.
We have a pretty broad coverage universe, and we're dealing with a number of companies.
Who have adopted Cecil reserving and consumer finance land the.
The key macro number that everybody focuses on is unemployment and typically will get updates on companies unemployment outlooks and how that impacts their seasonal reserve.
Is there something that we should be asking for updates on that is that is it sort of focused is unemployment.
For you or how should we think about what what changes you've made to your economic outlook this quarter.
Well I think that.
For consumer.
Finance oriented companies employment is clearly an important driver I think for commercial real estate lenders.
We're probably as a sector more focused on things like GDP growth and rates I mean rates are an important driver.
Of short term issues like interest coverage and clearly have an influence over time on cap rates, which.
Fluids.
Financing or sales exits or any lender.
So in my view.
Those are probably the factors that people should focus on more clearly and that information is available to all of us on this call everyday on Bloomberg.
Got it okay terrific. Thanks, Bob.
Thanks, Rick Thanks, Rick.
Yeah.
Thank you we'll take our next question from the line of Steve Delaney with JMP Securities. Please go ahead.
Oh, Hello, Doug and Bob and congrats on a strong reporting.
Stephen Laws mentioned nice to see the market reward the shares this morning, so congrats on that.
You know the portfolio work that you provide us on page nine it's very helpful and the drop you know that about 300 million or so India actually closer to 400 million you mentioned the office loan that went to our yoga and was subsequently sold was that a big piece of that.
Shrinkage, if you will in the loan portfolio in the fourth quarter.
Okay.
Well from a purely numerical standpoint.
It reflected about $89 million in commitment.
And what we would call about 81 million of net exposure. So it was meaningful but not.
The whole story there were other important repayments and Doug can elaborate more on that Oreo conversion in sale in particular, but there were several other sizeable loans that repaid including the largest loan I think that we paid in the fourth quarter fourth quarter was $113 million for rated hotel loan and in southern California, but I think doug's better.
Equipped to her.
Yes.
The drivers behind that migration.
Hey, Doug Dobrinja apart from yeah.
So the reason I asked was your initial comments.
When I saw the decline I was wondering if there's sort of a managed.
A reduction in the portfolio just to for risk management and building liquidity, but then you you said I took your comments Doug to say pretty much going forward, we should expect that repayments come in and that there are attractive opportunities to put that money back to work. So I came in thinking that maybe this is true shrink strategy and now I'm hearing.
Well clearly that's just more of a stability approach.
No. It's definitely more of a stability approach I think we're just trying to strike the right balance of one put on gas one foot on break in terms of originations and repayments and look I think that we've been we've been I think very front footed and as.
As I've mentioned in my in my remarks, I mean, we've had the largest year over year reduction in terms of office exposure relative to all of our peers. So I think we've been really frontloaded and at one and then two I think you know from a liquidity perspective.
We are investing for current.
Position of strength right now and I think given our ample liquidity and our and our and our various sources of financing.
That really does allow us to take advantage of right now, which actually is a very attractive lending market.
And just even in the.
In the past.
Since the since the quarter began for example, we basically have about $123 million of new financings into Q1 of which is closed.
The other which was just under term sheet. So.
In terms of kind of like you know playing offense, we are definitely out there quoting and taken advantage of what we think is a pretty attractive lending market.
And very interesting to hear your comment on a notes I don't recall hearing any of your peers mentioning you know their senior participations and obviously, it's it's a product that's been out in the market forever, but it's.
It's interesting and I guess, you know banks are certainly part of that I guess as well, maybe it's insurance companies, but it is it is the current sort of the re setting of interest rate levels is this a matter of absolute return being so much more attractive on an.
A note today than it was before the fed started tightening.
Yeah, I mean, I think as we if I did kind of loosely bucket our I'll call. It. The three main sources of financing liquidity that being a notes our existing secured credit facilities and then CRE CLO is generally speaking sure right now the most attractive area for us from a borrowing perspective.
Is likely within the a note market, we actually for some new relationships over the past two quarters with some you know some banks that are you know.
Again generally speaking is where we are finding that sort of best available rate is within the bank market I think that's really driven by two reasons. One is the direct lending market has slowed.
And then number two banks banks are generally under certain certain amounts of capital pressure and in these instances.
Of an a note financing with us they view it as a way for them to still deploy.
Capital add at attractive terms, but not be the direct lender, but rather be a lender to a lender. So I think part of that is a bit of risk aversion on the side of the banks, but then as these were sort of like walk our way to the other buckets.
We still have.
Ample capacity within our existing secured credit facilities and the and then on the CRE CLO market, which as you know I think very transparent in terms of where cost of funds are that that's probably the least attractive path right now in terms of public series CLO executions, but.
What we have done and what we did execute in Q3 of 'twenty two what we would describe as a private CRE CLO, where we basically had.
A bank provide financing.
That I would say has series heel CRE CLO like structural enhancements, but technically its just in the form of a loan.
But again I would say we.
You know I highlighted in my remarks that we've been able to find liquidity in really all three of those the first that I mentioned was which again is a huge advantage for us is that we still have reinvestment capacity within two of our three series Clo's.
Right and then again that's not.
That's where you like you know what allows us to be out there I would say actively quoting knowing that you know on the back end, we really have a variety of options in terms of available financing.
That's great color on financing and NBA notes. Thank you very much I appreciate it.
Sure. Thank you.
Thank you to take next question from the line of Eric Hagen with B T. I G. Please go ahead.
Hey, Thanks, Good morning, I Hope you guys are well a couple of follow ups on the on the reserve and just the credit in general can you say how much of a general reserve you're holding against the risk rated four loans that are on the watch list.
And then I'm, hoping that you can give some detail on a few of the larger risk for loans like a few of the ones that you show on page 15 of the deck like how strong is it the debt coverage.
And those assets currently like what are the conditions that have driven them to show up on that list.
And what are the conditions that can get them to migrate to two of five yeah. Thanks.
Sure So oh.
Oh, I think providing some context generally speaking on four and five rated loans is important just just given where we are in the economic cycle and then.
I'll turn it over to Bob to perhaps provide a little bit more context relative to your question.
But to speak generally.
For risk weighted loans.
Typically are our assets, where we either have some concern over the performance of the collateral or there could be a technical default, but they're really over overarching principles that we don't view there to be significant risk of.
Principal loss.
Whereas within the five rated bucket is where we do acknowledge that there is risk of principal loss and so I think those really are the two kind of guideposts in terms of trends I think that it is worth highlighting that.
Within the four rated population just over the past three months.
Two two of the four rated loans that that that we had actually paid off.
And then a third of the four rated loans went to a thought so I think that's like a pretty good proxy for.
For us are not necessarily earmarked as you know kind of headed towards a five and recent data suggests that two of our last three four rated loans.
That were resolved just paid off at par.
And that was one hotel loan and that was one office alone one of which that paid off in Q4, and the other which was which just paid off in Q1.
Eric with respect to your specific question, we don't disclose more.
Our peers.
With respect to the general reserve individual.
Reserve amounts per loan.
The pronouncement isn't in the guidance isn't drafted and that way, we pool loans in accordance with the guidance and then.
Established reserves.
So.
Unfortunately, we can't provide you that specific of an answer but clearly you can see what the.
The reserves are with respect to before.
Before.
Specifically identified loans not loan by loan but in the aggregate.
That's clearly disclose.
Okay.
Yeah No. That's that's helpful detail I appreciate that you guys mentioned the goal of reinvesting what comes back to through repayments can you talk about how the current environment allows you to maybe negotiate better loan terms.
You were getting say a year ago, like where would you see that show up in the.
Kind of value of what you're putting on today.
Yeah sure I mean, I think it's got to start from the top I mean first of all you know spreads spreads are.
Generally wider it obviously varies I would say by property type two just to kind of bucket. The world. Instead of two two universes I would say within multifamily and industrial is where we're generally seeing loan spreads approximately 75 to 100 basis points wider than a year ago and then.
As you get into hotel, particularly you could probably see loan spreads over over 100 to 150 basis points wider for example, we just closed a hotel loan in the beginning of the first quarter, which is priced at so for plus 510 at.
And approximately 60% loan to cost loan so new acquisition, where were getting paid so for five years and I think as you know relatively attractive that that will probably would've been.
Somewhere in the mid to high threes about about a year ago. So so so that's that's sort of the comment on spreads and then.
In terms of structure.
The short version is that simply put there are just fewer lenders competing for those loans. So we feel like we have more leverage to kind of.
Gather more and more structural features I would say specifically around.
Cash.
Low triggers get yield triggers and really any other.
Government is where we just have on the margin more.
More more leverage too.
Protect protect our our balance sheet, but again I think it's it's very case specific but you know from a leverage perspective, just I would sort of view it as you have.
Seeds are down anywhere from 5% to 15% and then loan spreads are probably wider 100 to 150 bps, that's probably the simplest way to describe the current market.
That's really helpful. That's it for me thank you.
Thank you Eric.
Thank you we'll take our next question from Atlanta.
Dan.
Picking of itch with Citi. Please go ahead.
Thanks.
Had some some loans look like they've matured in January and in February I apologize, if you've already addressed this but.
How are those moving there I think like four and five rated loans.
How are you handling those situations.
Okay.
Well, we've had a couple of.
Scheduled maturities as you can see in the mortgage schedule.
We've had we had one office loan in southern California.
Four rated which repaid.
I think in earlier earlier this month in February we.
We had one or two loans.
Extended.
Borrowers.
Satisfied.
Conditions precedent to an extension so they generally extend for a year.
And then we have one or two loans with shorter term extensions, where either the borrowers working on an exit strategy or we're working with the borrower.
And collaborative but commercially reasonable way.
<unk> two <unk>.
Extend alone, but again only on terms that makes sense for the company and its shareholders.
Yes.
On that point, you could probably look to do.
The asset that was resolved in December which you know Bob provided some context for during his remarks as I think a very good proxy for our ability to asset manage in this market.
That was an asset that.
Ultimately wanted to default we foreclosed.
And.
Relative to our carrying value of approximately 85 cents. We ultimately recovered approximately 95 cents through you know through a sale to a local buyer so.
I pulled that out because I think it really highlights number one the sort of pace at which we resolve that loan and then number two.
Obviously, we were pleased at the at the at the relative resolution proceeds.
When compared to our carrying value so.
I would try to use that as a relatively good proxy for how we how we expect to be asset managing.
Loans that sit within our five rated bucket.
Okay. Thanks, and then I guess with the extensions what are what for the sponsors.
Generally do they put cash in or how did they achieve that kind of amendment and then.
I would just I would suppose that.
If that's the case then that would be generally a good sign that the sponsors or are you now.
They are willing to stick with the properties.
I mean, you know as I mentioned in my remarks that we are working collaboratively.
Collaboratively with with all of our borrowers.
And.
Where I would say all of our sort of general approach has been.
Modifying and extending.
We're not going to give that out for free that that's almost always going to come with some amount of.
Either paydown and or increase in terms of economics. So generally speaking if we are going to be modify and extending.
We do want to see substantial equity coming in from the borrower.
To basically get our basis down and also show their commitment to the asset.
Got it alright, thank you.
And just and that can take many forms for example for the year just ended I think across the portfolio as a whole our borrowers infused roughly $200 million of fresh cash.
You know some in the form of principal payments.
Replenishing interest reserves some of it buying the caps that are required by typically in our loans in order to extend them. So.
For the majority of the loans that.
Are coming due where we're seeing borrowers step up and support but the form of that support is clearly situation specific.
And frankly last thing some loans borrowers just you know if they qualify for the extension by right and it expense.
Okay. Thank you.
Thank you you take next question from the line of Don Vendetti with Wells Fargo. Please go ahead.
Yes, and you could think about office.
Dr. Bob are first let's just say, there's a fault landing when do you think you'd have some sort of visibility.
On the risk of the office portfolio would it be sort of.
Mid this year you feel like you could kind of bracket the risk or is this a situation that is just going to play out over you know a year plus.
Yeah, I mean, it's that's a great question and I think it's really kind of goes back to our approach.
You know what.
We're solely focused on maximizing shareholder value that may take the form of anything again that could be a modification that could be your principal pay down that could be an extension that could be a note sale that could be.
For clothing. So the reason why I highlight that myriad of pads as well just solely focused on maximizing shareholder value.
And I think from a timing perspective, we are I would say pursuing all of those pads with a general eye on the fact that our view is that office is more likely to choose not improve in the near term. So on the margin that we are trying to move quickly and that's why again I would sort of go back to park.
The asset that we resolved in Q4 as I think a very good proxy for it.
Our ability to asset manage and the pace at which we do it you know that was basically all kind of transpired within one quarter I do acknowledge that some assets may take longer than just within a quarter to resolve but we're generally speaking we've been I think very front footed relative to competitors and.
And I spoke to you we won't be able to quickly resolved.
While maximizing shareholder value.
Got it.
Buyer of that office property.
You had mentioned with a local buyer what are the what's the sort of business plan what did they see that the other borrower was unable to execute on our handle.
And sorry.
I should've been more clear which is that.
The buyer itself has has experienced across the U S and happen to know that market very well.
But I would say the the principal strategy for the buyer was just to focus on leasing up the space I think the prior the prior owner had frankly lost some momentum on that front and this is a good example, where you know you have a new buyer coming in with 30 Approx.
The $30 million of fresh cash equity behind us and with that cash equity infusion there, they're mostly focused on leasing up the remaining space in that in that office asset.
Okay. Thanks.
Okay.
Thank you ladies and gentlemen, we have reached the end of the question and answer session and I'd like to turn the floor back over to Doug Burkhardt for closing comments over to you Sir.
Yeah again, just wanted to thank everyone for taking the time this morning, and look forward to keeping you updated over the next few quarters. Thank you very much.
Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.
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