Q4 2023 Goldman Sachs BDC Inc Earnings Call
Austin Neri: Good morning. This is Austin Neri, a member of the investor relations team for Goldman Sachs BDC, Inc., and I would like to welcome everyone to the Goldman Sachs BDC fourth quarter 2023 earnings conference call. Please note that all participants will be in listen-only mode until the end of the call, when we will open up the line for questions. Before we begin today's call, I would like to remind our listeners that today's remarks may include forward-looking statements. These statements represent the company's belief regarding future events that, by their nature, are uncertain and outside of the company's control. The company's actual results and financial condition may differ, possibly materially, from what is indicated in those forward-looking statements as a result of a number of factors, including those described from time to time in the company's SEC filings.
Good morning. This is Austin theory, and member of the Investor Relations team for Goldman Sachs BDC, Inc, and I would like to welcome everyone to the Goldman Sachs BDC, Inc. Fourth quarter 2023 earnings Conference call. Please note that all participants will be in listen only mode until the end of the call. When we will open up the line for questions before we begin today's call I would like to remind arlo.
First that todays remarks may include forward looking statements. These statements represent the company's belief regarding future events that by their nature are uncertain and outside of the company's control.
Company's actual results and financial condition may differ possibly materially from what is indicated in those forward looking statements. As a result of a number of factors, including those described from time to time in the company's SEC filings.
Austin Neri: Yesterday, after the market closed, the company issued an earnings press release and posted a supplemental earnings presentation, both of which can be found on the homepage of our website at www.goldmansachsbdc.com under the investor resources section, and which include reconciliations of non-GAAP measures to the most directly comparable GAAP measure. These documents should be reviewed in conjunction with the company's annual report on Form 10-K filed yesterday with the S.U. This conference call is being recorded today, Thursday, February 29, 2024, for replay purposes. I'll now turn the call over to Alex Chi, Co-Chief Executive Officer of Goldman Sachs BDC. Thank you, Austin. Good morning, everyone.
Audiocast is copyrighted material of Goldman Sachs BDC, Inc, and May.
Not be duplicated reproduced or rebroadcast without our consent.
Yesterday after the market close the company issued an earnings press release and posted a supplemental earnings presentation, both of which can be found on the homepage of our website at www Dot Goldman Sachs BDC Dot com under the Investor Resources section and which includes reconciliations of non-GAAP measures to the most directly comparable.
GAAP measures. These documents should be reviewed in conjunction with the company's annual report on Form 10-K filed yesterday with the SEC. This conference call is being recorded today Thursday February 29th 'twenty 'twenty four for replay purposes, and now I'll turn the call over to Alex Chi Co Chief Executive Officer of Goldman Sachs BDC, Inc.
Alex Chi: Thank you Austin good morning, everyone and thank you for joining us for our fourth quarter and 2023 fiscal yearend earnings conference call.
Alex Chi: And thank you for joining us for our fourth quarter and 2023 fiscal year-end earnings conference call. I'm here today with David Miller, our Co-Chief Executive Officer, Tucker Greene, our Chief Operating Officer, and Stan Matuszewski, our Chief Financial Officer. I will begin the call by providing an update on the Goldman Sachs private credit platform before providing a brief overview of our fourth quarter results and then discussing the current market environment in more detail. I'll then turn the call over to David and Tucker.
Alex Chi: I'm here today with David Miller, our co Chief Executive Officer, Tucker Green, our Chief operating Officer, Stan Olszewski, our Chief Financial Officer.
Alex Chi: I'll begin the call by providing an update on our Goldman Sachs private credit platform before providing a brief overview of our fourth quarter results and then discuss the current market environment in more detail.
David Nathan Miller: I'll, then turn the call over to David and Tucker.
Speaker Change: As described by portfolio activity performance before handing it off to scan take us through our financial results and then finally, we'll open the line for Q&A.
Alex Chi: And then, we'll open the line for Q&A. So with that, I'd like to provide a brief update on the Goldman Sachs private credit platform and the positive impact on GSBD of being part of it. We're proud to announce that next week marks the second anniversary of our platform integration process. This endeavor brought all of Goldman Sachs' private credit origination and underwriting capabilities, as well as various pools of capital with track records that stretched back over 28 years under a single roof within our asset management business. As you may recall, historically, our BDC complex, including GSBD, operated as a separate and distinct platform on the public side of the house that was walled off from the rest of the firm and could not take full advantage of being part of the Goldman Sachs ecosystem. In these two short years, GSBD has been able to take advantage of the full origination capabilities of the broader private credit platform and its scale, enhance our infrastructure, and improve I'd like to highlight just a few examples.
Speaker Change: So with that I'd like to provide a brief update of the Goldman Sachs private credit platform and the positive impact on G. S P D or being part of it.
Speaker Change: We're proud to announce that next week marks the second anniversary of our platform integration process.
Speaker Change: This endeavor brought all of Goldman Sachs's, private credit origination and underwriting capabilities as well as various pools of capital with track records that stretch back over 28 years under a single roof within our asset management business.
Speaker Change: As you may recall, historically, our BDC complex, including G. S. P. D operated as a separate and distinct platform on the public side of the house that was walled off from the rest of the firm they could not take full advantage of being part of the Goldman Sachs ecosystem.
Speaker Change: In these two short years G. S. P. D has been able to take advantage of the full origination capabilities of the broader private credit platform and its scale.
Speaker Change: Enhance our infrastructure and improve upon our underwriting capabilities I'd like to highlight a few examples.
Alex Chi: Amidst the volatile market and muted deal environment, the Goldman Sachs private credit platform remained active, deploying $12 billion in 2023. The Direct Lending Americas platform comprised the majority of activity, with over $6 billion deployed. Furthermore, taking advantage of the broader scale and origination capabilities, GSBD served as agent or lead lender on well above the majority of its new deals in 2023. And second, the team has spent the past two years actively upgrading GSBD's portfolio quality. As a point of reference, in the fourth quarter of 2021, just prior to the integration, GSBD had 89.3% at fair value in the first lien scene of secured loans, whereas as of the fourth quarter of 2023, that figure stood at 95.3% at fair value. At the same time, in the fourth quarter of 2021, second lien loans comprised 8.2% of the portfolio at fair value versus the fourth quarter of 2023, where second liens made up only 1.9% at fair value.
Speaker Change: Amidst a volatile market and muted deal environment, the Goldman Sachs private credit platform remained active they're blowing $12 billion in 2023.
Speaker Change: Direct lending Americas platform comprised the majority of activity with over $6 billion deployed.
Speaker Change: Furthermore, taking advantage of the broader scale and origination capabilities G. S. P. D served as agent or a lead lender and well above the majority of its new deals in 2023.
Speaker Change: Second the team has spent the past two years actively upgrading G. S. P D portfolio quality.
Speaker Change: As a point of reference in the fourth quarter of 2021, just prior to the integration G. S. P. D had 89, 3% at fair value in first lien senior secured loans, whereas as of the fourth quarter of 2023 that figure stood at 95, 3% at fair value.
Speaker Change: At the same time in the fourth quarter of 2021 second lien loans comprised eight 2% other portfolio at fair value versus the fourth quarter of 2023 were second liens made up only one 9% at fair value.
Alex Chi: This is the result of actions we've discussed in previous quarters, whereby repayments in junior lean positions have allowed us to redeploy capital into attractive opportunities higher up in the capital structure, and we proactively took marks on legacy junior positions. Finally, our integration has allowed for the significant expansion of our overall deal funnel to provide more proprietary and unique direct lending opportunities for GSBD. For example, since 2004, Goldman Sachs private credit has been the leading lender to the middle market wireless power sector, deploying close to $7 billion of capital with no losses to date. During the quarter, the Goldman credit platform served as a lead arranger on a senior security facility to Skyway. Founded in 2005, Skyway is a Florida-based wireless power operator with 445 power plants in its portfolio.
Speaker Change: This is a result of actions we discussed in previous quarters, whereby repayments in junior lien positions have allowed us to redeploy capital into attractive opportunities higher up in the capital structure and we proactively took marks on legacy junior positions fine.
Speaker Change: Only our integration has allowed by the significant expansion of our overall deal funnel to provide more proprietary and unique direct lending opportunities with G. S. P D for.
Speaker Change: For example, since 2000 and for Goldman Sachs Private credit has been the leading lender to the middle market wireless tower sector deploying close to $7 billion of capital with no losses to date.
Speaker Change: During the quarter Goldman Sachs private credit platform served as a lead arranger on a senior secured facility to skyway.
Speaker Change: Founded in 2005, Skylake is a Florida based wireless tower, operator, with 445 towers in its portfolio.
Speaker Change: Saudi continues our long standing Goldman Sachs' relationship with the Skyway team, which began with the financing of the skywave first portfolio in 2011 before its sale to American tower, followed by the financing of multiple subsequent tower portfolios, including the current one.
Alex Chi: The facility continues a longstanding Goldman Sachs relationship with the Skyway team, which began with the financing of Skyway's first portfolio in 2011 before its sale to American Tower, followed by the financing of multiple subsequent tower portfolios, including the current one. This is but one example of a new set of investment opportunities made available to GSBD as a result of our integration efforts. Harrington is another example of an investment in the quarter where GSBD utilized the scale of the broader Senior Direct Lending platform to provide a commitment for the entire facility that allowed the sponsors to win the asset, and we served as lead arrangers. Harrington is a California-based specialty distributor of precision food control products across a variety of industry sectors.
Speaker Change: This is but one example of a new set of investment opportunities made available to G. S. P D, resulting from our integration efforts.
Speaker Change: Harrington is another example of an investment in the quarter with E. S. P. D utilize the scale or the broader senior direct lending platform to provide a commitment for the entire facility that allowed this module to win the asset and we served as lead arranger.
Speaker Change: Arrington is a California based specialty distributor of precision fluid control products across a variety of industry sectors.
Speaker Change: We are proud that we've been able to capitalize on the thesis that we communicated to our shareholders and lenders when we integrated G. S. P D and we remain committed to leveraging the broader private credit platform for the benefit of G. S. P D shareholders in the quarters and years ahead.
Speaker Change: As we announced after the market closed yesterday, our board declared a first quarter 45 cents per share dividend payable to shareholders of record as of March 28 2020 for.
Alex Chi: We are proud that we've been able to capitalize on this thesis that we communicated to our shareholders and lenders when we integrated GSBD, and we remain committed to leveraging the broader private credit platform for the benefit of GSBD shareholders in the quarters and years ahead. As we announced after the market closed yesterday, our board declared our first quarter 45 cents per share dividend payable to shareholders of record as of March 28, 2024. This marks the company's 36th consecutive quarter of a 45 cent per share dividend, totaling $16.20 per share since our IPO, excluding the special dividends we paid in 2021 post the merger with MMLC. The net asset value was $14.62 per share as of December 31, 2023.
Speaker Change: This marks the company's 36 consecutive quarter of a 45 cents per share dividend totaling $16 20 per share since our IPO, excluding the special dividends, we paid in 2021 post their merger with LLC.
Speaker Change: Net asset value was $14 62 per share as of December 31, 2023.
Speaker Change: This increase was primarily attributable to net investment income exceeding our quarterly dividend, partially offset by net realized and unrealized losses for the quarter.
Speaker Change: We had previously expressed confidence that your volumes would increase as the year progressed and the trend. Indeed continued in the fourth quarter as it did in the third quarter.
Speaker Change: During the fourth quarter, we reviewed more than 150 investment opportunities across our direct lending Americas platform and deployed capital at strong levels as David will expand upon in a bit.
Speaker Change: While we acknowledge that recent deal volumes have improved from recent lows in the past several quarters. We've also witnessed greater competition in the direct lending space, resulting in spread tightening over the past several months.
Alex Chi: This increase was primarily attributable to net investment income exceeding our quarterly dividend, partially offset by net realized and unrealized losses for the quarter. We had previously expressed confidence that deal volumes would increase as the year progressed, and the trend indeed continued in the fourth quarter as it did in the third quarter. During the fourth quarter, we reviewed more than 150 investment opportunities across our Direct Lending Americas platform and deployed capital at strong levels, as David will expand upon in a bit. While we acknowledge that recent deal volumes have improved from recent lows in the past several quarters, we've also witnessed greater competition in the direct lending space, resulting in spread tightening over the past several months. We anticipate that as the overall deal environment improves, supply and demand for private credit will align to support spread premiums and title lending terms in line with historical private credit underwriting experience.
Speaker Change: We anticipate that as the overall deal environment improves supply demand for private credit will align to support spread premiums entitled lending terms in line with historical private credit underwriting experience.
Speaker Change: At the same time, it's worth considering that while the broadly syndicated loan market is also reopened although primarily for near term refinancings. This is a dynamic that's more impactful to the upper middle market to larger cap segments, whereas G. S. P. D is more focused on the core middle market.
Speaker Change: With that let me turn it over to my co CEO, David Miller. Thanks.
David Nathan Miller: Thanks, Alex during the quarter, we originated $166 2 million in new investment commitments to 14, new and four existing portfolio companies.
David Nathan Miller: Sales and repayment activity totaled $224 million, primarily driven by the full repayment and exit of investments in seven portfolio companies.
David Nathan Miller: In particular as we continued to upgrade the quality of the portfolio. We are pleased with the full repayment of one junior lien position and exit of two equity positions, which will allow us to continue redeploying capital into new first lien oriented opportunities.
David Nathan Miller: At the same time, it's worth considering that while the broadly syndicated loan market has also reopened, although primarily for near-term refinancings, this is a dynamic that's more impactful on the upper middle market, the larger cap segments, whereas GSBD is more focused on the core of the middle market. With that, I'll turn it over to my co-CEO, David Miller. Thanks, Alex.
David Nathan Miller: Turning to portfolio composition.
David Nathan Miller: As of December 31, 2023.
David Nathan Miller: Total investments in our portfolio were $3 4 billion at fair value.
David Nathan Miller: Comprised of 97, 2% in senior secured loans, including 91.1% first lien 4.2% in first lien last out unit tranche and 1.9% in second lien debt as well as the negligible amount in the unsecured debt.
David Nathan Miller: During the quarter, we originated $166.2 million in new investment commitments to 14 new and four existing portfolio companies. Sales and repayment activity totaled $224 million, primarily driven by the full repayment and exit of investments in seven portfolio companies. In particular, as we continue to upgrade the quality of the portfolio, we are pleased with the full repayment of one junior lien position and the exit of two equity positions, which will allow us to continue redeploying capital into new first lien oriented opportunities. Turning to portfolio composition, As of December 31, 2023, total investments in our portfolio were $3.4 billion at fair value, comprised of 97.2% in senior secured loans, including 91.1% first lien, 4.2% first lien last out unit tranche, and 1.9% in second lien debt, as well as a negligible amount in unsecured debt, and 2% in a combination of preferred and common stock and warrants. As of quarter end, the company held investments in 144 portfolio companies operating across 38 different industries.
David Nathan Miller: And 2% and a combination of preferred and common stock and warrants.
David Nathan Miller: As of quarter end the company held investments in 144 portfolio companies.
David Nathan Miller: Running across 38 different industries.
David Nathan Miller: The weighted average yield of our investment portfolio at cost at the end of Q4 was 11, 8% as compared to 11, 6% from the prior quarter.
David Nathan Miller: The weighted average yield of our total debt and income producing investments at amortized cost remained at 12, 6% at the end of Q4.
David Nathan Miller: I will now turn the call over to Tucker Green to discuss our overall credit quality.
Tucker Greene: Thank you David the weighted average net debt to EBITDA of the companies in our investment portfolio increased to six one times from five nine times during the third quarter. This increase is primarily attributable to a single position that had a dip in EBITDA, which we believe is onetime in nature.
Tucker Greene: Excluding this one time move weighted average net debt to EBITDA would've been five nine times importantly, our portfolio companies have both top line growth and EBITDA growth year over year on a weighted average basis.
Tucker Greene: The weighted average interest coverage of the companies in our investment portfolio at quarter end remained flat at 1.5 times, a sofa rates decreased very slightly for the quarter. We continue to monitor interest coverage sensitivity I'd underwrite for new investments and for each name in the portfolio.
Tucker Greene: The weighted average yield of our investment portfolio at cost at the end of Q4 was 11.8% as compared to 11.6% from the prior quarter. The weighted average yield of our total debt and income-producing investments at an amortized cost remained at 12.6% at the end of Q4. I will now turn the call over to Tucker Greene to discuss our overall credit quality. Thank you, David.
Tucker Greene: The underlying borrowers EBITDA growth combined with lower rate increases has provided stability to the coverage ratio.
Tucker Greene: And finally, turning to asset quality.
Tucker Greene: Some are 31 'twenty to 'twenty three.
Tucker Greene: One portfolio company was placed on nonaccrual status L. C. G. Vitamin block LLC also known as specialty dental a first lien position representing less than 1% of fair value.
Tucker Greene: Further certain investments in three portfolio companies.
Tucker Greene: We removed from nonaccrual two of which were due to repayment and one due to an improvement in performance as of December 31, 2023 investments on nonaccrual status remained consistent at two 3% of the total investment portfolio at fair value compared to two 3% as of September 30th 2023 and decrease.
Tucker Greene: The weighted average net debt to EBITDA of the companies in our investment portfolio increased to 6.1 times from 5.9 times during the third quarter. This increase is primarily attributable to a single position that had a dip in EBITDA, which we believe is one-time in nature. Excluding this one-time move, the weighted average net debt to EBITDA would have been 5.9 times. Importantly, our portfolio companies have both top-line growth and EBITDA growth year-over-year on a weighted average basis. The weighted average interest coverage of the companies in our investment portfolio at quarter end remained flat at 1.5 times as SOFR rates decreased very slightly for the quarter.
Tucker Greene: To three 8% of the total investment portfolio at amortized cost.
Tucker Greene: From 4.2% as of September 30th 'twenty to 'twenty three.
Tucker Greene: With respect to underperforming credits in the portfolio. It is worth noting that our upgraded platform also includes embedded workout resources and expertise.
Tucker Greene: To address the aforementioned underperforming credits that were predominantly originated prior to the integration of note. Our restructuring team. Currently has an average of 13 years of industry workout experience.
Now I'll turn the call over to Stan Madagascar, you to walk through our financial results. Thank.
Tucker Greene: We continue to monitor interest coverage sensitivity at underwrite for new investments and for each name in the portfolio. The underlying borrower's EBITDA growth, combined with lower rate increases, has provided stability to the coverage ratio. And finally, turning to asset quality, as of December 31, 2023, one portfolio company was placed on non-accrual status, LCG Vardeman Black LLC, also known as Specialty Dental, a first lien position representing less than 1% of fair value. Additionally, certain investments in three portfolio companies were removed from non-accrual, two of which were due to repayment and one due to improvement in performance.
Stan Madagascar: Thank you Tucker we ended the fourth quarter of 2023 with total portfolio investments at fair value of $3 4 billion outstanding debt of $1 8 billion and net assets of $1 6 billion, our ending net debt to equity ratio as at the end of Q4 was 1.11 times, which continues to be below our target leverage of one <unk>.
Stan Madagascar: Two five times at quarter end, approximately 47% of the company's total principal amount of debt outstanding was in unsecured debt and we had $724 million of capacity available under our secured revolving credit facility.
Stan Madagascar: Previously mentioned during the quarter, we executed an extension of the maturity of our secured revolving credit facility from May 2027 to October 2028.
Stan Madagascar: As a reminder, we have two separate unsecured notes due February 2025, and January 'twenty 'twenty six respectively as.
Stanley Matuszewski: As of December 31, 2023, investments in non-accrual status remained consistent at 2.3% of the total investment portfolio at fair value compared to 2.3% as of September 30, 2023, and decreased to 3.8% of the total investment portfolio at amortized costs from 4.2% as of September 30th, 2023. With respect to underperforming credits in the portfolio, it is worth noting that our upgraded platform also includes embedded workout resources and expertise to address the aforementioned underperforming credits that were predominantly originated prior to the integration. Of note, our restructuring team currently has an average of 13 years of industry workout experience. I will now turn the call over to Stan Matuszewski to walk you through our financial results. Thank you, Tucker.
Stan Madagascar: As we mentioned on last quarter's call we plan to address these maturities at the appropriate time.
Stan Madagascar: Before continuing to the income statement as a reminder, in addition to GAAP financial measures. We will also reference certain non-GAAP or adjusted measures.
Stan Madagascar: This is intended to make the company's financial results easier to compare to results prior to our October 2020 merger with M. MLC. These.
Stan Madagascar: These non-GAAP measures remove the purchase discount amortization impact from our financial results.
Stan Madagascar: For Q4, GAAP and adjusted after tax net investment income were $61 8 million and $60 7 million, respectively, as compared to $72 9 million and 69.7 million respectively in the prior quarter.
Stan Madagascar: On a per share basis GAAP net investment income was 56 cents excluding.
Stan Madagascar: Excluding the impact of asset acquisition accounting in connection with the merger with MLC adjusted net investment income for the quarter was 55 cents per share equating to an annualized net investment income yield on book value of 15%.
Stanley Matuszewski: We ended the fourth quarter of 2023 with total portfolio investments at a fair value of $3.4 billion, outstanding debt of $1.8 billion, and net assets of $1.6 billion. Our ending net debt to equity ratio as at the end of Q4 was 1.11 times, which continues to be below our target leverage of 1.25 times. At quarter end, approximately 47% of the company's total principal amount of debt outstanding was in unsecured debt, and we had $724 million of capacity available under our secured revolving credit facility.
Stan Madagascar: Importantly, we would note that while total investment income declined between the third and fourth quarters. The decline was driven by lower nonrecurring recurring investment income, resulting from a decrease in repayment related activity. Despite an increase in recurring investment income.
Stan Madagascar: Finally, the pic percentage of our total investment income decreased slightly quarter over quarter and is only slightly up year over year remaining in the single digits.
Stan Madagascar: Distributions during the quarter remained consistent at 45 per share.
Stan Madagascar: Our spillover taxable income is approximately $118 million or $1.08 per share on a per share basis, which we believe provides continued stability on a consistent dividend since inception.
As Alex mentioned net asset value per share on December 31, 2023 was $14.62 as compared to $14.61 last quarter.
Stanley Matuszewski: As previously mentioned, during the quarter, we executed an extension of the maturity of our secured revolving credit facility from May 2027 to October 2028. As a reminder, we have two separate unsecured notes due February 2025 and January 2026, respectively. As we mentioned on last quarter's call, we plan to address these maturities at the appropriate time. Before continuing to the income statement, as a reminder, in addition to GAAP financial measures, we will also reference certain non-GAAP or adjusted measures. This is intended to make the company's financial results easier to compare to results prior to our October 2020 merger with MMLC. These non-GAAP measures remove the purchase discount amortization impact from our financial results. For Q4, GAAP and Adjusted After Tax Net Investment Income were $61.8 million and $60.7 million, respectively, as compared to $72.9 million and $69.7 million, respectively, in the prior quarter. On a per share basis, GAAP net investment income was $0.56.
Stan Madagascar: With that I'll turn it back to Alex for closing remarks, Thanks, Dan and thanks, everyone for joining our earnings call.
Alex Chi: We remain optimistic about the performance of our portfolio the current environment.
Speaker Change: Look for deployment into attractive opportunities.
Alex Chi: With that let's open the line for Q&A.
Alex Chi: If he would like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off July your signal to reach our equipment again. Please press star one to ask a question.
Alex Chi: Well go first to Finian O'shea with Wells Fargo Securities.
Finian O'shea: Hey, everyone. Good morning.
Finian O'shea: Alex we were interested on some of your.
Finian O'shea: Earlier comments on the private credits.
Integration and she's right.
Speaker Change: <unk> Q&A please.
Speaker Change: Your line is open Sir.
Alex Chi: Hi can you hear me.
Speaker Change: Can you hear me I can hear you Sir.
Speaker Change: Alex.
Speaker Change: Okay.
Speaker Change:
Speaker Change: Can't hear the Goldman team operator.
Speaker Change: Yes, I am here can you hear me.
Speaker Change: I can that's fine.
Speaker Change: [laughter].
Speaker Change:
Okay can anyone hear me.
Operator: This is the operator, yes, I can't hear you Mr. O'shea.
Speaker Change: And the team here me.
Operator: And it pairs not give me just a moment.
Stanley Matuszewski: Excluding the impact of asset acquisition accounting in connection with the merger with MMLC, adjusted net investment income for the quarter was $0.55 per share, equating to an annualized net investment income yield on book value of 15%. Importantly, we would note that while total investment income declined between the third and fourth quarters, the decline was driven by lower non-recurring investment income, resulting from a decrease in repayment-related activity, despite an increase in recurring investment income. Finally, the PIC percentage of our total investment income decreased slightly quarter over quarter and is only slightly up year over year, remaining in the single digits. Distributions during the quarter remain consistent at $0.45 per share; our spillover taxable income is approximately $118 million or $1.08 per share on a per share basis, which we believe provides continued stability on our consistent dividends since inception. As Alex mentioned, the net asset value per share on December 31, 2023 was $14.62, as compared to $14.61 last quarter.
Operator: Yeah.
Operator: Yeah.
Operator: Yeah.
Operator: Yeah.
Operator: Yeah.
Operator: Yeah.
Speaker Change: The house would like you to a new microphone you can press star six two of Newt.
Operator: Yeah.
Operator: I don't know.
Operator: I muted.
Operator: You are not sir.
Speaker Change: Oh, okay.
Speaker Change: Okay.
Speaker Change: The house would like you to when you do your microphone you can.
Speaker Change: Darcy mute.
Speaker Change: <unk>.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: A dial in dialogue.
Speaker Change: Okay.
Speaker Change: I can hear you now thank you turn we can hear you now.
Speaker Change: Alright.
Speaker Change: Yeah.
Speaker Change: Harris <unk> Harris.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Alright, Alright, why don't we start over there.
Speaker Change: That.
Speaker Change: Experiencing technical difficulties here.
Speaker Change: Okay does extend how are you.
Speaker Change: Good good.
Speaker Change: Yeah.
Speaker Change: Thanks for having me on and we'll.
Speaker Change: We will start the Q&A.
Speaker Change: So Alex we were.
Alex Chi: Interested in some of your initial comments on that.
Alex Chi: The integration.
Alex Chi: There are historically three credit franchises.
Alex Chi: With distinct strategies. So does does this mean, it's all collapsed into one strategy now or is there or else like what's new about the way the platform works.
Alex Chi: Yeah.
Speaker Change: That's a good question.
Speaker Change: Again, it's all part of one platform now and to your point just for historical reasons, we had three different.
Alex Chi: With that, I'll turn it back to Alex for his closing remarks. Thanks, Stan. And thank everyone for joining our earnings call. We remain optimistic about the performance of our portfolio, the current environment, and the outlook for deployment into attractive opportunities. With that, we're opening the line for Q&A. If you would like to ask a question, please signal by pressing star 1 on your telephone. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach your eardrums.
Speaker Change: Arms of Goldman Sachs that were in the private credit direct lending business and then two years ago, we brought it altogether.
Speaker Change: With respect to the various vehicles that we have they continue to pursue their own distinct strategies. So for example, we have other pockets of capital.
Speaker Change: The large cap senior drove lending space and that continues.
Speaker Change: <unk> has and will continue to focus on the core middle market and then we have other pockets of capital that's focused on edge on hybrid special sits et cetera. So it all brings it together, it's all on the private side here at Goldman and so it just allows us to take advantage of the broader ecosystem as I mentioned, where we can get the <unk>.
unknown: Again, please press star one to ask a question. We'll go first to Finian O'Shea with Wells Fargo Security. Hey, everyone. Good morning. Alex, we were interested in some of your earlier comments on the private credits integration and she's open to online Q&A, please. The line is open.
Speaker Change: For the benefit of all the sourcing and origination and the army of bankers that we have talking to companies and sponsors every single day and it just brings a full weight of the firm.
unknown: Hi, can you hear me? Can you hear me? I can hear you, sir. Thank you. Alex.
unknown: Um, I can't hear the Goldman team operator. Yes, I am here. Can you hear me? Icahn, that's Finn. Okay, can anyone hear me?
Speaker Change: It allows us to have a wide funnel as we've talked about proprietary deals and.
Operator: This is the operator. Yes, I can hear you, Mr. O'Shea, but can the team hear me? It appears not. Give me just a moment. The host would like you to unmute your microphone. You can press star six to unmute. I don't think I'm muted. You are not, sir.
Speaker Change: The benefit of just really strong due diligence.
Speaker Change: At the same time, it's one team. So we now have three different teams.
Speaker Change: So in the U S. We have about 80 investment professionals and they are all focused on origination and core underwriting than when we source.
Speaker Change: Ill.
Speaker Change: We know exactly where it's going to go based upon the various vehicles and the strategies that we have so we just want to be a direct lending solutions provider to our borrowing clients.
unknown: Transcribed by https://otter.ai, We're going to try dialing in from the phone. Hello, I can hear you now. We can hear you now. All right. Can you hear us?
Speaker Change: Sure like within the other strategies, what's the what's the benefit of.
unknown: All right. All right. Why don't we start over? Sorry about that. I'm experiencing technical difficulties here. Okay, how are you?
Speaker Change: Uh huh.
Speaker Change: Our core middle market deal.
Speaker Change: How much more more capital do you have.
unknown: Good, good. Thanks for having me on. And we'll start the Q&A. So Alex, we were interested in some of your initial comments on the integration. There are historically three credit franchises with distinct strategies. So does this mean it's all collapsed into one strategy now? Or is there or else, like what's new about the way the platform works? That's a good question.
Speaker Change: To say Lee to lead a deal or to drive terms any all of the above like like like what helps.
Speaker Change: Sure.
Speaker Change: No. It's a great question.
Speaker Change: Well so first of all what we Couldnt do before.
Speaker Change: If the large cap.
Speaker Change: Pocket of the firm originated a deal that was call. It core G SPD focus area of $50 million to EBITDA.
Alex Chi: And again, it's all part of one platform now. And to your point, just for historical reasons, we had three different arms of Goldman Sachs that were in the private credit direct lending business. And then two years ago, we brought them all together. With respect to the various vehicles that we have, they continue to pursue their own distinct strategies.
Speaker Change: It was just it was too small for the large cap.
Speaker Change: We could not refer DSD just even if we wanted to just weren't allowed to fill in when we obviously collapsed at GSP. They need now gets the benefit of that origination.
Speaker Change: All of that as we've also talked about Gee SPD <unk>.
Alex Chi: So, for example, we have other pockets of capital that are in the large cap senior drug lending space, and that continues. GSBD has and will continue to focus on the core metal market. And then we have other pockets of capital that focus on MEZ, on hybrid special sits, etc. And so it all brings it together.
Speaker Change: It's its own vehicle as its capital as you know.
Speaker Change: When we were an increasingly competitive environment where scale matters.
Speaker Change: For example, the Harrington deal that I just talked about.
Speaker Change: We have other pockets of capital that can speak for that deal and its entirety. So that allowed us as a platform to go into that sponsor and say we can underwrite the entire deal will give you the commitment for the entire financing. So he can go win at sell side auction and that's exactly what we did see SPD got an allocation to that so that's how they go to market now.
Alex Chi: It's all on the private side here at Goldman. And so it just allows us to take advantage of the broader ecosystem, as I mentioned, where we can get the full benefit of all the sourcing and the origination and the army of bankers that we have talking to companies and sponsors every single day. And it just brings the full weight of the firm to bear. And it just allows us to have a wide funnel, as we've talked about, proprietary deals, and the benefit of just really strong due diligence. At the same time, it's just one team. So we don't have three different teams.
Speaker Change: Okay. So if I if I come by if I take this.
Speaker Change: You can do larger deals and I think you were in the in the commentary you also flagged.
Speaker Change: I like the nonaccrual as a pre integration credit does this mean, you're going to move up in EBITDA in a in a meaningful way.
Speaker Change: No.
Speaker Change: Yes, that's something we could explore at some point in the future, but as I mentioned in terms of.
Alex Chi: So in the U.S., we have about 80 investment professionals, and they're all focused on origination and core underwriting. And then when we source a deal or an investment, we know exactly where it's going to go based upon the various vehicles and strategies that we have. So we just want to be a direct lending solutions provider to our borrowing clients. So how much like within the other strategies, what's the benefit of, of like, a core middle market deal, how much more capital do you have? to say lead a deal or drive terms and all of the above, like what helps the court, go ahead, sure. No, it's a great question. So So first of all, what we couldn't do before was if the large cap, pocket of the firm, originated a deal that was called core GSBD focus area $50 million at EBITDA. It was just, it was too small for the large cap.
Speaker Change: The criteria for the size that we stuck to Fuji SPD, it's really at the businesses with EBITDA of up to $200 million.
Speaker Change: So that's why you just really haven't seen the EBITDA moved up meaningfully it ticked up a little bit in the fourth quarter, but it's still in around the $50 million to $55 million EBITDA range for the portfolio with Engie SPD, we have other pockets of capital.
Speaker Change: That can pursue large cap.
Speaker Change: As well as as well as mid market at the same time <unk> is just will always be focused on and will continue to be focused on.
Speaker Change: On the middle market.
Speaker Change: Okay. That's helpful and last one for me on this thread.
Speaker Change: The other two groups historically saw.
Speaker Change: First origination from the investment bank sponsor.
Alex Chi: We could not refer it to GSBD, even if we wanted to; we just weren't allowed to. So when we obviously collapsed it, GSBD now gets the benefit of that origination. On top of that, as we've also talked about, GSBD has its own vehicle, has its capital, as you know. But when we're in an increasingly competitive environment where scale matters, for example, the Harrington deal that I just talked about. We have other pockets of capital that can speak for that deal in its entirety. So that allowed us as a platform to go to that sponsor and say, we can underwrite the entire deal, give you a commitment for the entire financing, so you can win that sell-side auction. And that's exactly what we did.
Speaker Change: Sponsor coverage leverage finance et cetera.
Speaker Change: Is that going to bring.
Speaker Change: The BDC franchise does that come into that fold or are we now going to source.
Speaker Change: From the investment bank.
Speaker Change: So first of all.
Speaker Change: I appreciate that it's certainly an advantage too.
Speaker Change: Do you have the investment bank, they're originating.
Speaker Change: The best opportunities for us, but still the vast majority of the deals that we've originated or early directly off the platform.
Speaker Change: And he said that.
Speaker Change: We get a tremendous amount of referrals that come in from investment banking and private wealth. They cover the largest family owned enterprises in the world.
Speaker Change: If you look at just over the course of the year.
Speaker Change: Where we had the full year of the benefit of integration.
Speaker Change: Roughly about a third of new deals that we did with Engie S. P. D came from this one Goldman Sachs advantage as we'll talk about that.
Alex Chi: GSBD got an allocation to that. And so that's how we go to market. Okay, so if I, if I combine, if I take this... you can do larger deals. And I think you were in the commentary, you also flagged the non-accrual as a pre-integration credit. Does this mean you're going to move up in EBITDA in a meaningful way? Now.
Speaker Change: So we're not certainly relying upon investment banking to source for us, but it certainly provides additional flow.
Speaker Change: To be a lot more selective about what we choose to do.
Speaker Change: Awesome. Thanks, so much.
Speaker Change: Excellent.
Speaker Change: We'll go next to Aaron <unk> with Citi.
Aaron: Thanks you.
Alex Chi: Now, look, that's something we could explore at some point in the future. But as I mentioned, in terms of the criteria for the size that we've stuck to for GSBD, it's really up to businesses with EBITDA of up to $200 million. And so that's why you just really haven't seen the EBITDA move up meaningfully. It ticked up a little bit in the fourth quarter, but it's still in or around the $50-$55 million EBITDA range for the portfolio within GSBD. We have other pockets of capital that can pursue large cap, as well as as well as the mid market at the same time. GSBD is just going to always be focused on, and will continue to be focused on, the middle market. Okay, that's helpful. And the last one for me on this thread.
Aaron: I think you mentioned in your prepared remarks that you.
We're seeing kind of activity you're expecting there.
Aaron: Expectations for spread tightening or are you seeing.
Aaron: From a competitive standpoint.
Aaron: Banks reentry into lending or.
Aaron: So primarily just direct lenders.
Aaron: Okay.
Aaron: So we're certainly seeing.
Aaron: The BSL market reopening we have around leverage finance department within banking, that's certainly active.
Aaron: But what we're also seeing is that that's really a large cap phenomenon.
Aaron: We have our own large cap vehicles, and we're certainly seeing additional competitive pressure from that standpoint. In addition to the large amount of private capital. That's just been raised overall.
Aaron: We have not seen banks really get back into the core middle market, which is where <unk> plays and so although we have seen a bit of spread compression over the course of the year and quarter over quarter. It has not been the magnitude of what we've seen in the large cap side of the business.
Alex Chi: The other two groups historically sourced origination from the investment bank. Sponsor Coverage, Leverage Finance, etc. Is that going to bring The BDC franchise, does that come into that fold? Are we now going to originate?
Alex Chi: from the Investment Bank. So, first of all, I appreciate that it's certainly an advantage to have the investment bank there originating. Investment opportunities for us, but still, the vast majority of the deals that we've originated are really directly off the platform. Having said that, we get a tremendous amount of referrals that come in from investment banking and private wealth management, covering the largest family-owned enterprises in the world. If you look at just over the course of the year, where we had the full year of the benefit of integration, roughly a third of new deals that we did within GSBD came from this one Goldman Sachs advantage, as we'll talk about. So, we're not certainly relying upon investment banking to source deals for us, but it certainly provides additional flow and allows us to be a lot more selective about what we choose to do. Awesome. Thanks so much.
Aaron: Okay.
Aaron: And then.
Aaron: You had mentioned that.
Aaron: I think one company EBIT.
Aaron: From a broader perspective.
Aaron: In your.
Aaron: All the other companies are you seeing continued EBITDA growth.
Aaron: It's starting to slow.
We're certainly seeing continued EBITDA growth. So if you look at the fourth quarter on an LTM basis.
Aaron: Our top line.
Aaron: The portfolio grew on a weighted average basis about 16, 5% and on an EBITDA basis grew about seven 5%, but what's also interesting is if you look at EBITDA margins quarter over quarter.
Aaron: Certainly seeing how appetite companies are passing along price increases to their customers. So EBITDA margins actually expanded about 130 basis points in the fourth quarter or the third so we aren't really happy to see that.
Operator: Transcribed by https://otter.ai, We'll go next to Arren Cyganovich with Citi. Thanks. I think you mentioned in your prepared remarks that you're seeing kind of activity or expecting activity to pick up in expectation of some sort of spread tightening. Are you seeing, from a competitive standpoint, banks reentering lending, or is this still primarily? We're certainly seeing the BSL market reopening.
Speaker Change: It's helpful. Thank you.
Speaker Change: Thank you.
Speaker Change: Well go next to Mark Hughes with Jewish.
Speaker Change: Okay.
Mark Douglas Hughes: Yes. Thank you good morning.
Mark Douglas Hughes: Looking at your spread or rating just looking at the.
Mark Douglas Hughes:
Mark Douglas Hughes: What percentage of the portfolio kind of the one through four little bit of movement.
Alex Chi: We have our own leveraged finance department within banking that's certainly active. But what we're also seeing is that that's really a large cap phenomenon, that we have our own large cap vehicles, and we're certainly seeing additional competitive pressure from that standpoint, in addition to the large amount of private capital that's just been raised overall. But we have not seen banks really get back into the core middle market, which is where GSBD is playing.
Mark Douglas Hughes: In there.
Mark Douglas Hughes: High quality, but a little bit of erosion.
Mark Douglas Hughes: Is that.
Mark Douglas Hughes: Kind of the higher for longer.
Mark Douglas Hughes: Interest.
Mark Douglas Hughes: The coverage issue what.
Mark Douglas Hughes: What would account for the little bit of movement.
Mark Douglas Hughes: Do you think that.
Speaker Change: Got it.
Speaker Change: It gets worse.
Speaker Change: Is it sort of stabilize from here given the interest rate environment, given the economy, how do you see that.
Alex Chi: So although we have seen a bit of spread compression over the course of the year, quarter over quarter, it has not been the magnitude of what we've seen on the large cap side of the business. And then you had mentioned that you had one company that had done an EBITDA, but you know, from a broader perspective, in your portfolio companies? Are you seeing continued growth, or is it starting to slow? We're certainly seeing continued EBITDA growth. So if you look at the fourth quarter on an LTM basis, our top line for the portfolio grew on a weighted average basis about 16.5%. And on an EBITDA basis, it grew about 7.5%. But what's also interesting is that if you look at EBITDA margins quarter over quarter, we're certainly seeing how our portfolio companies are passing along price increases to their customers. So EBITDA margins actually expanded 130 basis points in the fourth quarter over the third. So we were really happy to see that. Thank you. We'll go next to Mark Hughes with Truett. Yeah, thank you. Good morning.
Speaker Change: I think with respect to the portfolio there might be some movements on the named to name, but in terms of the overall quality of the portfolio.
Speaker Change: We really haven't seen that.
Speaker Change: It's actually quite stable.
Speaker Change: We moved one name.
Speaker Change: Leading to 283.
Speaker Change: And we took a mark on that on that particular position, but we also moved the number of names.
Speaker Change: Non accrual as well as we exited those investments two of them. Another one actually we put back on accrual which is based upon good performance.
Speaker Change: Oh yeah.
Speaker Change: Wouldn't call out anything idiosyncratic about our portfolio. It just it just really quarter over quarter just based upon the answers that we've talked about.
Speaker Change: Understood and then on your net investment activity.
Speaker Change: Like more opportunity that you're looking at hedging the ease of repayment activity here lately. How do you think that's going to shake out in the near term is it still kind of a push or a.
unknown: Looking at your spread of ratings, just looking at the percent of the portfolio, kind of the one through four, a little bit of movement in there, still high quality, but a little bit of erosion. Is that the kind of the hire for longer just interest coverage issue, what would account for the little bit of movement? And then do you think that kind of hits it?
Speaker Change: When do you start to get ahead of that.
Speaker Change: Look in terms of activity, we remain quite optimistic about the second half of this year.
Speaker Change: Lots of different factors, which I'm sure you've heard from us as well as other managers in the space right.
Speaker Change: Private credit continues to be driven really by private equity activity.
unknown: It's worse, you know, that Should it stabilize from here, given the interest rate environment, given the economy? How do you see that? I think with respect to the portfolio, there might be some movements from name to name, but in terms of the overall quality of the portfolio, we really haven't seen much movement. It's actually quite stable.
Speaker Change: Add on activity.
Speaker Change: Well now and just the sheer amount of dry powder that's out there in addition.
Speaker Change: There is a significant amount of the company.
Speaker Change: That are owned by private equity firms that really just has to be monetized late last year was the second lowest.
unknown: As you saw, we moved one name from rating two to rating three, and we took a mark on that particular position. But we also moved a number of names off of non-accrual as well. As we acted on those investments, two of them and another one, actually, we put back on accrual just based upon good performance. So I wouldn't call out anything idiosyncratic about our portfolio.
Speaker Change: Amount of distributions from private equity firms therapies in a quarter century.
Speaker Change: So in order for private equity firms to really raise the next one we're going to have to do.
Speaker Change: <unk> capital so.
Speaker Change: At the same time, just going back to <unk> question.
Speaker Change: We had the benefit of speaking with our investment bankers.
Speaker Change: Sell many companies to private equity firms and they will tell us that the backlog of companies that they then.
unknown: It's just it's just really a quarter of a quarter just based upon the dynamics that we've talked about. Understandable. And then on your net investment activity, sounds like more opportunities that you're looking at. You've had some decent repayment activity here lately. How do you think that's going to shake out in the near term? Is it still kind of a push?
Speaker Change: Mandated to sell just continues to sit at near record levels. So for all those reasons, we remain optimistic.
Speaker Change: If rates do start to come down later in the year.
Speaker Change: That should signal more confidence so that will also just opened the floodgates a bit more on M&A activity and we will get our share of that.
Alex Chi: Or when do you start to get ahead of that? Look, in terms of activity, we remain quite optimistic about the second half of this year. Lots of different factors, which I'm sure you've heard of from us as well as other managers in the space, private credit continues to be driven really by private equity activity, leveraged buyouts, add-on activity. It's well known, just the sheer amount of dry powder that's out there.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: As a reminder, if you do have a <unk>.
Speaker Change: Question that is star one extra day.
Speaker Change: Well go to our next question from Robert Dodd with Raymond James.
Robert Dodd: Hi, guys one on the repayment activity in the quarter, obviously that was up pretty significantly, but the repayment fees accelerated OID etcetera.
Robert Dodd: Or was that just coincidental or was there any effort by you too.
Alex Chi: In addition, there is a significant amount of companies that are owned by private equity firms that really just have to be monetized. I believe last year was the second lowest amount of distributions from private equity firms to their LPs in a quarter century. So in order for private equity firms to really raise the next fund, they're going to have to distribute capital. At the same time, just going back to Finn's question, we have the benefit of speaking with our investment bankers, who sell many companies to private equity firms.
Robert Dodd: Excellent.
Robert Dodd: And coverage.
Robert Dodd: Some of the older assets, which would have allowed us.
Robert Dodd: <unk>.
Robert Dodd: To migrate out of the portfolio I mean, let's say part of the rotational just coincident.
Speaker Change: Yes, Hi, Robert Yes, it's just coincidence I'd say last quarter, we had some investments that exited that were some larger investments with Ah.
Speaker Change: A greater amount of OID, which was unamortized.
Speaker Change: Some deals that had come over in the MLC merger that had large unamortized balances and that was really what was kind of driving up.
Alex Chi: And they will tell us that the backlog of companies that they've been mandated to sell just continues to sit at a near record level. So, for all those reasons, we remain optimistic. If rates do start to come down later in the year, that should signal more confidence. And so, that'll also just open the floodgates a bit more on M&A activity, and we will get our share of that. Thank you. As a reminder, if you do have a question, that is star number one. We'll go to our next question from Robert Dodd with Raymond James. Hi guys.
Speaker Change:
Speaker Change: Nonrecurring income last quarter.
Speaker Change: We did still see some accelerated amortization of repayment related.
Speaker Change: Interest income this quarter, but it just wasn't to the magnitude.
Speaker Change: Coincidentally with the handful of investments last quarter with the larger balances on advertise.
Speaker Change: Got it got it thank you Leslie.
Speaker Change: I mean, you all are below target right now I mean, obviously with rates where they are you.
unknown: On the repayment activity in the quarter, that was pretty significant, but the repayment fees, accelerated OID, et cetera, were down. Was that just coincidental, or was there any effort by you to, how do I put it, encourage some of the older assets, which would have lower accelerated OID, to migrate out of the portfolio? I mean, is this a part of the rotation or just coincidence?
Speaker Change: We could be pushing the envelope on leverage to.
Speaker Change: To the Juicy could you settings, while unacceptable.
Speaker Change: Is is that should we expect leverage to ramp up rapidly.
Speaker Change: Now let's.
Speaker Change: Tip it depending upon the market activity or is the intent to ramp it up a little slow.
Speaker Change: As as maybe as rates come down.
unknown: Yeah, hi, Robert. Yeah, it's just a coincidence. I'd say last quarter, we had some investments that exited that were some larger investments with a greater amount of OID, which was unamortized. Some deals that had come over in the MMLC merger that had large unamortized balances, and that was really what was kind of driving up that non-recurring income last quarter.
Speaker Change: Okay.
Speaker Change: Hey, Robert It's David No I think Youll see us.
David Nathan Miller: Take that up slightly I don't think youre going to see a rapid increase as you know it's one that two five is our target leverage so I think youll see us in future quarters, probably approach that.
David Nathan Miller: That level, but it's going to bounce around up and down a little bit from our target level dependent on activity in the portfolio.
unknown: We did still see some accelerated amortization and repayment-related interest income this quarter, but it just wasn't to the same magnitude, coincidentally, with the handful of investments last quarter with the larger balances unamortized. Got it. Thank you. On leverage. I mean, you are below target right now. I mean, obviously, with rates where they are, you don't need to be pushing the envelope on leverage to produce earnings while in excess of the dividend, right?
Speaker Change: Got it. Thank you and then on the last one for me on the unsecured side. Obviously, you guys have maturities until 'twenty five 'twenty six but.
Speaker Change: Would you be looking to to potentially come to market that opens up in maybe maybe this year to increase your unsecured mix will pre fund the 25%. If you did would you be looking to do that fixed rate.
Speaker Change: It would be but would you be looking to swap that.
David Nathan Miller: So, is that, yeah, should we expect leverage to ramp up rapidly, or is it going to be relatively slow, depending on the market and activity? Or is the intent to ramp it up a little slower, maybe as rates come down, as kind of an off-cut? Hey, Robert, it's David.
Speaker Change: To manage the exposure to.
Speaker Change: Rate differentials or are you going to stay with your historic pattern.
Speaker Change: Unsecured stays fixed.
Speaker Change: Yes, I mean look we're actively monitoring the market as you point out we have some 2025 maturity. So I think youll see us address those at the right time as far as fixed versus floating and we're going to evaluate that at time based on where the curve is and what is most beneficial to our investors depending on when.
David Nathan Miller: No, I think you'll see us take that up slightly. I don't think you're going to see a rapid increase, as you know, 1.25 is our target leverage. So I think you'll see us, in future quarters, probably approach that level, but it's going to bounce around up and down a little bit from our target level, depending on activity in the portfolio.
Speaker Change: When we execute a transaction.
Speaker Change: Okay. Thank you.
Speaker Change: There are no other questions at this time.
Speaker Change: Thank you very much everybody.
unknown: Got it. Thank you. And then on the last one for me, on the unsecured side, obviously, you don't have maturities until 25, 26, but would you be looking to potentially come to market if that opens up maybe this year to increase your unsecured mix or pre-fund the 25s? And hypothetically, if you did, would you be looking to do that at a fixed rate? Well, it would be fixed, but would you be looking to swap it to manage the exposure?
Speaker Change: I appreciate it thank you.
Speaker Change: Yeah.
Speaker Change: This does conclude today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: [music].
unknown: Late differentials? Or are you going to stay with the historic pattern of unsecured space? Yeah, I mean, look, we're actively monitoring the market. As you point out, we have some, you know, 2025 maturity. So I think you'll see us address those at the right time. You know, as far as you know, fixed versus floating, we're going to evaluate that at the time based on, you know, where the curve is and what's most beneficial to our investors, depending on when we execute a transaction.
Speaker Change: Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: [music].
unknown: Okay, thank you. There are no other questions at this time. Thank you very much, everybody. Appreciate it. Thank you. This does conclude today's conference call. Thank you for your participation.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: [music].
Operator: .. Subs by www.zeoranger.co.uk! Like, Comment, and Subscribe! The Ultimate Parody Site!