Q2 2023 MidCap Financial Investment Corporation Earnings Call
To answer session. Following the speakers prepared remarks.
I would like to ask a question at that time simply press star one on your telephone keypad. If you would like to withdraw your question. Please press star two.
Now I'll turn the call over to Elizabeth Besen Investor Relations manager for Midcap Financial investment Corporation's. Please go ahead ma'am.
Operator, Thank you everyone for joining us today speaking on today's call are <unk>, Chief Executive Officer, Nick <unk>, President and Greg Hunt, Chief Financial Officer, Howard Weil, Chairman as well as additional members of the management team are on the call and available for the Q&A portion of today's call I'd like to advise everyone that today's call and webcast are being recorded please.
Note that they are the property of Midcap financial investment Corporation and that any unauthorized broadcast any form is strictly prohibited information about the audio replay of this call is available in our press release I'd like to also call your attention to the customary safe Harbor disclosure in our press release regarding forward looking information today's conference call and webcast may include forward looking statements you should refer.
One of our most recent filings with the SEC for risks that apply to our business and that may adversely affect any forward looking statements. We make we do not undertake to update our forward looking statements or projections unless required by law to obtain copies of our SEC filings. Please visit our website at www Dot Midcap financial IC Dot Com I would also like to remind everyone that we've posted a supplemental.
Financial information package on our website, which contains information about the portfolio as well as the Companys financial performance.
Throughout today's call, we will for it to make a financial investment Corporation is either MSI or the BDC and we will use midcap financial to refer to the lender headquartered in Bethesda, Maryland at this time I would like to turn the call over to our Chief Executive Officer Tanner Powell.
Thank you Elizabeth.
Good afternoon, everyone and thank you for joining us today I'll begin today's call by highlighting our results for the June quarter and will then provide our thoughts on the current environment. Following my remarks, Ted will cover our investment activity and portfolio and will also provide an update on credit quality Lastly, Greg Woods will review our financial results in detail. We will then open the call to your questions beginning with our <unk>.
We're very pleased with our performance for the June quarter, given our strong net investment income a slight increase in net asset value per share and stable credit quality net investment income per share for the June quarter was 44.
Well above the current 38 dividend as we continue to see the benefit of higher base rates on our floating rate assets.
We are particularly pleased with these results when considering the relatively relatively muted transaction environment, which resulted in below normal prepayment income.
At the end of June NAV per share was $15 20, an increase of <unk> <unk> from the end of March which reflects earnings in excess of the dividend stable credit quality and includes approximately <unk> <unk> per share accretion from the stock from stock buybacks. We are pleased to report that we continue to observe relatively stable credit quality in our portfolio.
We're seeing that most of our portfolio companies are able to handle higher interest costs, we constructed our portfolio to withstand challenging periods. As a reminder, our corporate lending and other portfolio, which makes up 92% of our portfolio. Primarily consists of first lien top of the capital structure loans is well diversified by borrower and the industry is largely.
Sponsor backed and has what we considered to be robust documentation and financial covenants at the end of June 96% of our corporate lending that portfolio on a cost basis or 97% on a fair value basis had one or more financial covenants, Let me let me.
Next let me give you a brief update on Merck's as discussed previously we are focused on reducing our investment in <unk>, while we don't expect paydowns to occur evenly we believe aircraft sales and servicing income should allow for the pay down of third party trade level debt and <unk> equity and debt investment in merck's, Although <unk> did not sell any aircraft in its portfolio.
During the June quarter, Merck's, repaid $3 5 million to MFC, which applied to the revolver, which was applied to the revolver at the end of June our investment in <unk> totaled $193 million, representing approximately 8% of our total portfolio at fair value.
Turning now to the market environment, the heightened volatility that we saw in the first quarter stemming from the regional banking crisis subsided as the quarter progressed, despite ongoing concerns about inflation higher interest rates and fears about recession against this backdrop new issue volumes were slow driven primarily by slower M&A activity, partially offset by add on <unk>.
<unk> is sponsors pursue bolt on acquisitions, we still see financial sponsors, particularly those focused on the middle market seeking financing solution financing solutions in the private credit market, we continue to observe more lender friendly pricing and terms on new commitments compared to prior vintages, although we are seeing the pace of increases.
<unk>.
Moving to the dividend our board of directors declared a dividend of 38 per share to shareholders of record as of September 12, 2023 payable on September 28 2023.
A 30 eights and dividend represents an <unk>.
<unk> dividend yield of 10% at math on that.
At current base rates, we are well positioned to generate net investment income in excess of this dividend level. We believe our portfolio will continue to earn above the current dividend and a normalized rate environment, Our board and management team continue to evaluate potential dividend increases versus retaining earnings with that I will turn the call over to Ted.
Thank you Tanner and good afternoon, everyone beginning with investment activity as a reminder, <unk> is focused on investing in loans sourced by mid cap financial an affiliate of Apollo Global which provides <unk> with a large pipeline of investment opportunities mid cap financial has a leading middle market lender with one of the large.
Just direct lending teams in the U S with close to 200 investment professionals.
Midcap financial with active during the June quarter closing approximately $4 4 billion of new commitments.
Specific to <unk>, new corporate lending investment commitments during the quarter totaled $79 million all first lien across 15 different borrowers for an average new commitment of $5 2 million as we continue to emphasize diversification by borrower, 17% of new commitments were made to existing portfolio companies, we continue to observe.
Favorable pricing at lower leverage levels for newly originated loans.
<unk> average spread on new commitments was 681 basis points with an average OID of approximately 266 basis points. This translates into a very attractive weighted average yield of approximately 12, 5% based on current base rates. The weighted average net leverage of new commitments with three seven times.
In terms of funded investment activity gross fundings, excluding revolvers for the corporate lending portfolio totaled $73 million higher interest rates and a lack of new deal activity led to a slowdown in repayment activity.
Sales and repayments totaled $58 million net revolver fundings totaled $11 million and we also received a $3 $5 million Paydown for Merck's as Tanner mentioned in aggregate net fundings for the quarter totaled $22 million.
Turning to our investment portfolio at the end of June our investment portfolio had a fair value of $2 41 billion and was invested in 150 companies across 25 different industries corporate lending and other represented 92% of the total portfolio at Merck's accounted for 8% of the total portfolio on a fair value basis 95.
Percent of our corporate lending portfolio was first lien.
We continue to have conservative weighted average attachment and net leverage on our corporate loans.
0.1 times and five five times, respectively. Both of these metrics were flat compared to the prior quarter, which we consider to be another indication of our portfolio is stable credit quality at the end of June the average funded corporate lending position was $15 4 million or approximately 0.7% of the total corporate and other lending.
Folio.
<unk> is focused on lending to the core middle market or mid cap financial has a has strong long standing relationships with sponsors and borrowers and a proven track record across cycles.
As of the end of June the median EBITDA of MF Ice's corporate lending portfolio of companies was approximately $55 million. We believe the core middle market offers attractive investment opportunities across cycles and does not compete directly with either the broadly syndicated loan market or the high yield market.
The weighted average yield at cost of our corporate lending portfolio was 11, 7% on average for the June quarter compared to 11, 3% last quarter driven by an increase in base rates. These yield figures or an average of the beginning at the end of the quarter at the end of June the yield of the corporate lending portfolio at cost was <unk> <unk>.
Seven 9% up from 11, 5% at the end of March the weighted average spread across the corporate lending portfolio was 614 basis points up one basis point compared to last quarter.
Turning to credit quality, our portfolio of companies continue to have solid fundamental performance with positive revenue and EBITDA growth, we're not seeing any signs of overall credit weakness, although we have observed a deceleration in top line growth and some margin pressure, we've not seen a meaningful increase in covenant breaches or a pickup in amendment activity.
We believe our credit quality has benefited from midcap financials strong sourcing and underwriting capabilities based on data since mid 2016, which is the approximate date upon which we began utilizing our co investment order <unk> annualized net realized and unrealized loss rate on loans sourced by mid cap financial has.
<unk> low at approximately one basis point.
The weighted average net leverage of the companies in our corporate lending portfolio was five four or five times unchanged compared to the prior quarter as mentioned the net leverage on new commitments was three seven times well below the portfolio average.
Moving to interest coverage the weighted average interest coverage ratio was two one down from two three times last quarters last quarter with four companies below one times.
If we utilized June 30 base rates the interest coverage would be one six times compared to one seven times last quarter and that stress test scenario.
In the coming quarters.
Excuse me we are closely monitoring these situations, which we believe are manageable as these companies either have strong current liquidity or the underlying businesses are performing well, we want to underscore that we have not increased pick income to create interest coverage importantly, <unk> benefits from midcap financials large dedicated portfolio management team.
Of nearly 60 investment professionals, which helps us identify and address issues. Early it is also important to note that midcap financial leads and serves as administrative agent on the majority of our deals which provides meaningful downside protection as agent. We are in active dialogue with the borrowers and have enhanced the information flow, which allows us to be proactive.
And resolving problems and credits as problem credits as issues arise.
We're also monitoring near term maturities to identify any potential risk of repayment. So that we can address any issues early and proactively work with borrowers to help them meet their liquidity needs.
As part of our investment process, we are mindful of the specific fund, making an acquisition as we believe sponsors are more likely to support businesses in funds with greater remaining duration. We continue to have very low levels of non accruals no investments were placed on nonaccrual status during the quarter at the end of June investments on nonaccrual status totaled seven.
<unk> 5 million or 0.3% of the total portfolio at fair value with that I will now turn the call over to Greg to discuss our financial results in detail.
Thank you Ted and good afternoon, everyone beginning with our financial result, net investment income per share for the June quarter was 44.
As we continue to benefit from higher base rates on our floating rate assets and improved net interest margin prepay.
Prepayment income declined quarter over quarter due to lower prepayment activity prepayment income was approximately $600000 compared to $2 6 million last quarter.
Fee income also declined compared to the prior quarter fee income was approximately $1 million in the June quarter compared to $2 2 million last quarter.
Income remains very low representing approximately one 2% of total investment income for the quarter.
GAAP net income per share for the quarter was 39.
NAV per share at the end of June was $15 20.
An increase of <unk> since the end of June the <unk> increase reflects net investment income of 44.
Which is <unk> <unk> above the 38 dividend <unk> <unk> per share and net loss on the portfolio and approximately one <unk> accretion from stock buybacks additional details on unrealized net gains and losses are shown on page 16 in the earnings earning supplement.
Total expenses for the quarter were $39 8 million up $1 5 million compared to last quarter, primarily due to higher interest expense gross management fees totaled $4 3 million essentially flat quarter over quarter. As a reminder, <unk> base management fee was reduced to $1 75.
On equity beginning January of 2023, among listed Bdcs <unk> management fee is the lowest.
And we are the only BDC to charge management fees on equities and equity, which we believe provides a greater alignment and focus on net asset value.
<unk> incentive fees totaled $6 1 million for the quarter as a reminder, our incentive fee on income is 17, 5% and includes a total return hurdle with a rolling 12 quarter look back we believe our fee structure is best in class amongst listed Bdcs and provides.
A strong alignment of interest with our shareholders.
For the quarter, we generated an annual ROE based on net investment income of 11, 6%.
An annual an annualized ROE based on net income of 10, 2%.
Moving on from a balance sheet perspective, our net leverage stood at one four times at the end of June as highlighted last quarter. In April we were pleased to extend the maturity of our senior secured revolving credit facility by over two years to April 2028. We also are pleased that kroll affirmed.
Our investment grade rating in June .
During the quarter, we repurchased approximately $2 $3 million of stock, which had a one accretive impact on NAV per share. This concludes our prepared remarks, operator and please open up the call for questions.
Yes, Sir at this time, if you would like to ask a question. Please press the star.
Please proceed starkey followed by the one key on your Touchtone phone you may remove yourself from the queue at any time by pricing start to once again that is star one to ask a question.
We'll pause for a moment to allow questions to queue.
Okay.
Sure.
Our first question comes from Orange.
<unk> with Citi.
Thanks.
You can just talk a little bit about how your conversations with equity sponsors are right. Now what are you seeing any kind of loosening up in terms of.
<unk> activity I know its August now, so I imagine seasonal slowdown happening, but just in general relative.
Since we have some better lender friendly type of terms today.
Sure.
Thanks for the question are in so in terms of I'll try to handle it in two aspects as it relates to I think which is primarily whats your question's getting at in terms of overall overall activity notwithstanding.
Kind of a summer doldrums, which we notably encounter in August we are seeing a modest tick up from earlier in the year.
Off of a relatively low base I think that Theres, a Bain report being capital report that came out that said LBO volume was down 50% in the second quarter, we're seeing a modest uptick.
And in a more in a greater willingness to engage.
From LBO sponsors the second aspect of our conversation of sponsors.
Rates to those companies, where either they are trying to do something strategic <unk> things are moving sideways and we continue to see a very healthy level of support from the sponsors and in particular in this type of environment one of the ways.
That sponsors are electing to try and counter.
<unk>.
The bid ask spread if you will in terms of.
Expectations of multiples is by completing add on acquisitions and that dialogue has been very very healthy and shows continued equity support for the underlying borrowers.
Thank you.
Our next question comes from Kyle Joseph with Jefferies.
Hey, good afternoon. Thanks for taking my question just on the portfolio yield side obviously.
Been expanding how much of that is base rates and how much of it.
It's brand new that I know you mentioned it.
Still kind of a more lender friendly environment out there.
Yeah. Thanks, Thanks Kyle.
In terms of.
The spread let's just talk spread.
If you disaggregate it there.
In the quarter.
We.
<unk> deployed at 681, and OID of just over two five points, which reflects what we've seen for a number of quarters, which is very attractive.
The environment for private credit lenders notwithstanding the downdraft in M&A private credit is able to service a disproportionate share of M&A, that's getting done and.
And more broadly against that backdrop. It continues to be lender friendly to my response to Orange question, we're seeing if I were to.
Look at the deals that are being screened today there might be a slight.
Tightening in terms of spread as M&A picks up and people are feeling better.
About <unk>.
<unk> there is some level of stabilization, which is enabling sponsors to make make better decisions into our risk appetite has improved as we get further from some of the strengths that we saw earlier this year not to say that.
All has been mitigated, but generally speaking banks and markets are feeling.
A little bit better relative to what was a relatively low base for much of the first half of the year.
Very helpful. Thanks.
And one follow up for me.
Mentioned kind of thinking volatility negatively impacted.
Stepping back from a from a longer term perspective with potentially higher capital requirements that banks do you see that in the longer term opportunity for.
Mid cap it off in the BDC sector as a whole.
Absolutely I'm, sorry, I shouldnt draw the distinction there I think Kyle when we see periods of volatility, which in this case earlier this year happened to be.
Related to banking stress there was more broadly.
A reticence to transact and it wasn't necessarily a function of whether banks, we're able to provide that financing or not but can you just saw reduced volumes, which were more connected to volatility and has less to do on whether or not the banks, we're providing it.
We and our peers have stressed and we are huge believers and we continue to benefit very much from a secular trend that has private credit taking share from the banking system.
As we roll forward and expect that to continue.
Got it thanks very much for answering my questions.
Our next question comes from Sean Paul Adams Raymond James.
Hey, guys.
Thank you guys sure.
The amount of companies you guys better below onex.
Interest coverage ratio.
<unk>.
You guys have the exact numbers about the portion of the total portfolio that those companies represent and your and maybe share some thoughts on your total outlook for.
Your general portfolio.
Interest coverage might.
Decline later in the year.
Yeah sure.
And thanks for your question.
<unk>.
I'll start with your outlook, which is.
If if base rates to state the obvious if base rates continue to increase.
Our borrowers as well as everyone else as borrowers are going to face increased pressures.
We've run a number of different stress test scenarios around what those numbers could look like in different types of situations.
As to the existing.
Portfolio, you know the ones that we have that are <unk>.
About one times now in some cases.
Sponsors are putting an equity to cover that in other cases they are still.
Liquidity.
And we're in active dialogue with us.
Got it thank you I appreciate it.
Yeah.
Our next question comes from Melissa Wedel J P. Morgan.
Good afternoon.
And thanks for taking my questions today.
First question to start with some of the capital return.
And comments you made on the call.
Last quarter, you talked about.
A potential special dividend.
At some point.
Based on the comments you made.
About the board of value continuing to evaluate sort of over earning.
Whether to pay that out versus retain it.
I guess my question would be is the board still thinking about a potential.
Payout in the form of a special or has that conversation evolved.
Yeah.
This is Howard.
Thank you.
Effectively.
Everything's on the table.
Meaning.
We have.
It is a cornerstone of our of the goal for US is to have stable NAV.
We are helped by that by over earning the dividend. We also have.
Both requirements, obviously to pay out a certain amount of income as well as sort of a desire obviously to return to the shareholders.
<unk>.
Some excess return and so.
The answer is if you do this over a longer period of time and we were out earning what is our core dividend 67, a share each quarter as we were the last two quarters, there's sort of a room for both.
So.
But it's a year, it's effectively a decision I would say as much as we the thing Thats sort of has been decided as a decision that we will sort of make it at the end of the year. So that like will we will retain it for now.
And then make a decision a year about the size of what we may or may not too. So I know thats not that definitive.
But we're just sort of trying to like balance all things and obviously, if if if base rates continue to go up or even they went up in July obviously, just now and there is some art and our fee income builds off a.
A very low base, we could even out earned the dividend by even more incentive it is even more more room for for both options.
Okay understood I appreciate it.
Delving into the framework.
Helpful.
Terms of the share repurchase activity that you did.
Noticed that.
Obviously, it ticked up.
Lastly, purchase activity was about a year ago.
We think about.
We're moving forward and the capital allocation choices that you have in front of me that early attractive investment environment.
You've got net leverage kind of.
Where it is.
I think towards.
Mid point of your target range.
That's right.
<unk>.
Okay.
How should we think about you guys evaluating those opportunities for appetite for additional share repurchase versus.
Deploying capital Thank you.
Attractive environment.
Yes.
It's the buying back of shares is a.
It's definitely a function of the things you said obviously.
However, we are and how much capital you have.
But more importantly is comparing against alternative investments and we bought back those shares much earlier in the quarter at markedly lower prices than we're at today.
And so.
Which changes sort of the return on that buyback multiple hundreds of basis points. So it does change that metric. So we're always looking at it and so obviously if yields on assets or opportunities went down that could change the appetite at this price because we still think that it's a good value, but when there are these lending opportunities.
At this level based on where we've traded two now that balance is different so I think the answer is.
We will buy back shares when it is clearly accretive to the shareholders versus all other options.
Right paying paying dividends, making a different loan delevering.
And we felt that was the case at the level, we were able to buy shares very early in this quarter.
Thank you that's really helpful.
Just a reminder to ask a question. Please press star one our next question comes from Paul Johnson K B W.
Yes, good evening guys. Thanks for taking my question.
So I guess just with everything that's occurred I guess in the first half of this year.
And based on kind of what youre seeing from sponsors behavior and appetite for deals today.
Do you think that we've reached or maybe we're approaching an inflection point in.
In terms of just kind of risk appetite from sponsors and.
If that is the case I guess, what do you guys kind of expect for the remainder of the year and maybe more so like 2024 are you expecting a big year or just kind of a slower recovery to normalization.
Yeah sure. Thanks, Paul and let me make a quick comment before opining on your question I think one of the parts of our story that we try to stress quite a bit is that were $2 $4 billion of a $30 billion business and that affords us.
And nice.
Strategic advantage in that in any given quarter. There is plenty of volume and as we called out in our prepared remarks mid cap the broader mid cap. The Bethesda Midcap did $4 4 billion of originations in the given quarter and that gives us a dynamic where we're less sensitive to that.
As inflows in deal volume.
In terms of the inflection point, what we hear from sponsors in our discussions and not to key in half answered by any stretch of imagination, but what we have seen while there is some volatility the dispersion from the.
As introduced and there are some modicum of.
Stabilization, while things, where we are and that's not to say that no one's discounting the potential for higher rates and at least being able to say that I've got something that's unlikely to go up materially from from here has enabled sponsors when they digest the implications to <unk>.
<unk> ability to pay, particularly if it's a sponsor to sponsor buyout that enables.
Models to be able to be run with a greater degree of confidence.
And precision and so I think that's the impetus currently as well as also some distance from the stresses that we saw earlier in the year as well as some upside too.
Economic prints, but it would be it would be very premature to call. The inflection point as data on the on the <unk>.
On the.
On the frontline is changing but certainly.
Some modicum of.
Upper pre there and that's what we've sort of seen in the kind of post.
Quarter end period with.
With some modestly higher M&A volume and activity levels.
Got it thanks for that I understand.
It's always difficult to predict.
Another question is just a little more specific to merck's.
I'm trying to kind of understand.
As I do understand these are obviously fixed fixed rate fixed payment leases on the underlying aircraft.
This is obviously a portfolio company that's in run off with you guys, but you know.
In terms of aircraft leasing comparable lease rates I guess is high with permit.
For any sort of borrower in the market what are the current I guess set of comparable rates that are available to lessees and what I'm sort of getting at is.
Are any of these borrowers when they go to renew leases.
I don't know if it's possible to refinance leases are these.
Being done at higher fixed payments is that driving a longer average life of the asset pushing out that sort of termination data I'm just curious how that works.
Yes, absolutely.
And.
What could be a very long long answer I'll try to be.
Right.
First and foremost is with respect to the assets that we have in the.
The books to today.
Yes, they are fixed leases, but we have fixed debt.
<unk> costs against those and then so then as you play it forward and we look at kind of a <unk> buyer analysis or we look at transitioning those leases you'll ultimately a plane is in economic instrument utilized by airlines to make money and in the same way you see.
Plane tickets going up.
To kind of recover the broader increase in interest rates and ultimately because of the long duration of a lot of leases.
There is a lag there may be even more significant than what you would otherwise see in maybe the leveraged loan market, but notwithstanding that does adjust and you will see that.
Become.
Reflected in.
And how does the.
The lease rates.
One quick comment also one of the aspects that gives us some cautious optimism in terms of reducing our exposure in merck's right. Now is that it is generally speaking a good yield environment for leasing companies.
Given the increasing demand as well as well documented and at this juncture actually domestic.
Revenue passenger miles are actually above COVID-19 levels.
Nationally is lagging slightly and overall, we're at 96%, but importantly, with Asia, having recently come back online we would expect.
Increases in demand there and that's on the other side of the equation in terms of supply we continue to see issues with Airbus and Boeing to deliver significant amounts of lift and as a result.
Put aside the question you asked about lease rates and interest rates. Notwithstanding we are seeing a healthy environment for lease rates and lease seen on account of the supply demand dynamics, which we hope will support.
Our disposition efforts at mercy to reduce that exposure.
Thanks for that I appreciate that.
Interesting dynamic and.
Obviously, there's conversations gone a lot longer but I appreciate the abbreviated answer and Thats all for me.
Thank you our final question comes from Kenneth Lee RBC capital markets.
Hey, good afternoon, and thanks for taking my question.
I wasn't sure whether this was discussed already but wondering if you could just talk about.
Any amendment activity, you've been seeing in the portfolio, whether they're just routine or whether they're out of the ordinary. Thanks.
Yes sure.
So the activity level.
On the amendment side of things has not picked up materially.
We do have most of our borrowers and most of our transactions.
Set of covenants in them.
And so when borrowers come back in.
Want to grow.
We've mentioned before they're looking to do accretive acquisitions.
Or if there are things, where covenants are getting tight and sponsors want to be proactive.
That brings us to the table to have those discussions and our stance when when we've been doing that is.
Is looking too.
Derisk <unk> get enhanced economics around it and so.
If if a sponsor is looking for additional cushion on our leverage Covenant for example, we're going to put.
We made grant that cushion, but they were gonna have step downs.
And then it also provides the opportunities for fees and we can also.
Look at the at the spreads as well so.
The bigger picture is we have covenants. So we are in dialogue.
The tone and the pace of amendments has not increased.
Materially.
It's kind of at the same pace as it has been over the last several quarters.
But when it does occur we view that.
As an opportunity as well to either de risk or enhance the economics.
Gotcha Gotcha very helpful. There.
And then just one follow up if I may and this is just a follow up question from earlier one about originations.
Given that you see a lot of the potential deal flow from the broader mid cap origination platform.
Perhaps a little bit less depending upon deal flow there or M&A activity.
Would it be fair to say that the key constraints to originations over the near term would be.
More on the underwriting finding appropriate deals the appropriate returns leverage constraints.
More so than broader industry trends.
Yes.
We've mentioned mid cap close on over 4 billion of.
New commitments in the last quarter, we get to look at those.
Look to see what fits into our portfolio from a diversification standpoint.
And obviously from from a yield and structure standpoint.
So in terms of constraints to new activity, it's certainly not the top of the funnel because because we did that via midcap, what we've continually.
Expressed in terms of leverage is there.
Range of one four to one six and a desire to stay at the lower end of that range and so you've kind of seen us in between one four and $1 45 over the last several quarters and.
So as we think about deploying into new capital we're balancing.
Our desire to be in that leverage range with the attractive opportunities are out there.
Got you very helpful. There. Thanks again.
We have no further questions in the queue at this time I would now like to turn the call back over to today's speakers.
Thank you operator, and thank you everyone for listening to today's call on behalf of the entire team. We thank you for your time today. Please feel free to reach out to US. If you have any other questions and please have a good evening.
This does conclude today's program. Thank you for your participation you may disconnect at anytime.