Q1 2024 ACRES Commercial Realty Corp Earnings Call
Operator: Good day, ladies and gentlemen, and welcome to the first quarter 2024 Acres Commercial Realty Corp earnings conference call. Currently, all participants are in a listen-only mode. Later, we will conduct a question and answer session with instructions to follow at that time. If anyone requires assistance during the conference, please press star then zero on your touch-tone telephone. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Kyle Brengel, Vice President of Operations. You may begin.
Good day, ladies and gentlemen, and welcome to the first quarter 2024 acres of commercial Realty Corp earned.
Speaker Change: <unk> Conference call. Currently all participants are in a listen only mode. Later, we will conduct a question and answer session with instructions to follow at that time.
Speaker Change: If anyone requires assistance during the conference. Please press Star then zero on your Touchtone telephone.
Speaker Change: As a reminder, this call is being recorded.
Speaker Change: I'd now like to introduce your host for today's conference Cal Branco, Vice President of operations you may begin.
Kyle K. Brengel: Good morning, and thank you for joining our call. I would like to highlight that we have posted the first quarter 2024 earnings presentation on our website. This presentation contains summary and detailed information about the quarterly results of the company. Before we begin, I want to remind everyone that certain statements made during this call are not based on historical information and may constitute forward-looking statements. When used in this conference call, the words believes, anticipates, expects, and similar expressions are intended to identify a forward-looking statement.
Cal Branco: Good morning, and thank you for joining our call I would like to highlight that we have posted the first quarter 2024 earnings presentation to our website. This presentation contains summary, and detailed information about the quarterly results of the company.
Kyle K. Brengel: Before we begin I want to remind everyone that certain statements made during this call are not based on historical information and May constitute forward looking statements when.
Speaker Change: When used in this conference call. The words believes anticipates expects and similar expressions are intended to identify forward looking statements.
Kyle K. Brengel: Although the company believes that these forward-looking statements are based on reasonable assumptions, such statements are based on management's current expectations and beliefs and are subject to several trends, risks, and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties are discussed in the company's reports filed with the SEC, including its reports on Forms 8K, 10Q, and 10K, and in particular, the risk factor section of its Form 10K.
Speaker Change: Although the company believes that these forward looking statements are based on reasonable assumptions such statements are based on management's current expectations and beliefs and are subject to several trends risks and uncertainties that could cause actual results to differ materially from those contained in forward looking statements.
Speaker Change: These risks and uncertainties are discussed in the Companys reports filed with the SEC, including its reports on forms 8-K, 10-Q, and 10-K and in particular the risk factors section of its Form 10-K.
Kyle K. Brengel: Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The company undertakes no obligation to update any of these forward-looking statements. Furthermore, certain non-GAAP financial measures may be discussed on this conference call. However, our presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with GAAP. Reconciliations of non-GAAP financial measures, the most comparable measures prepared in accordance with generally accepted accounting principles, are contained in the earnings presentation for the past quarter. With me on the call today are Mark Fogel, President and CEO, and Eldron Blackwell, ACR's CFO. Also available for Q&A is Andrew Fentress, Chairman of ACR. I will now turn the call over to Mark.
Speaker Change: Listeners are cautioned not to place undue reliance on these forward looking statements, which speak only as of the date hereof.
Speaker Change: <unk> undertakes no obligation to update any of these forward looking statements.
Furthermore, certain non-GAAP financial measures may be discussed on this conference call.
Speaker Change: Our presentation of this information is not intended to be considered in isolation or as a substitute to the financial information presented in accordance with GAAP.
Speaker Change: Reconciliations of non-GAAP financial measures. The most comparable measures prepared in accordance with generally accepted accounting principles are contained in the earnings presentation for the past quarter.
Speaker Change: With me on the call today are Mark <unk>, President and CEO, and Alger and Blackwell PCR CFO.
Kyle K. Brengel: Also available for Q&A is Andrew Fentress, Chairman of ACR I will now turn the call over to Mark.
Mark Steven Fogel: Good morning, everyone, and thank you for joining our call. Today, I will provide an overview of our loan originations, real estate investments, and the health of the investment portfolio, while Eldron Blackwell will discuss the financial statements, liquidity condition, book value, and operating results for the first quarter of 2024. Of course, we look forward to your questions at the end of our prepared remarks.
Mark: Good morning, everyone and thank you for joining our call.
Speaker Change: I will provide an overview of our loan originations real estate investments and the health of the investment portfolio.
Mark Steven Fogel: Alder and Blackwell will discuss the financial statements liquidity condition book value and operating results for the first quarter 2024 of course, we look forward to your questions at the end of our prepared remarks.
Mark Steven Fogel: The Acres team continues to execute on our business plan by selectively originating high-quality investments, actively managing the portfolio, and continuing to focus on growing earnings and book value for our shareholders. Loan payoffs during the period were $80.8 million, and net funded commitments during the quarter were $11.4 million, producing a net decrease in the loan portfolio of $69.4 million. The weighted average spread of the floating rate loans in our $1.8 billion commercial real estate loan portfolio is now 3.78% over the one month benchmark rate.
Mark Steven Fogel: The Akers team continues to execute on our business plan by selectively originating high quality investments.
Speaker Change: Actively managing the portfolio and continuing to focus on growing earnings and book value for our shareholders.
Speaker Change: Loan payoffs during the period were $80 8 million and net funded commitments during the quarter were $11 4 million producing a net decrease of the loan portfolio of $69 4 million.
Mark Steven Fogel: The weighted average spread of the floating rate loans, and a $1 $8 billion commercial real estate loan portfolio is now $3, 78% over the one month benchmark rates.
Mark Steven Fogel: The portfolio generally continues to perform, demonstrating sound and consistent underwriting and proactive asset management. The company ended the quarter with $1.8 billion of commercial real estate loans across 66 individual investments. At March 31st, there were 11 loans rated four or five, which represented 17% of the par value of our portfolio, an increase of 1%, respectively, as compared to the end of the fourth quarter 2023, and our weighted average risk rating decreased from 2.7 at December 31st to 2.6 at March 31st.
Speaker Change: The portfolio generally continues to perform demonstrating sound and consistent underwriting and proactive asset management. The company ended the quarter with $1 $8 billion of commercial real estate loans across 66 individual investments.
Speaker Change: At March 31, there were 11 loans rated four or five which represented 17% of the par value of our portfolio, an increase of 1% respectively as compared to the end of fourth quarter of 2023, and our weighted average risk rating decreased from $2 seven at December 30, 126 at March.
Speaker Change: 31.
Mark Steven Fogel: We acquired, via deed and Lua foreclosure, an office property in Chicago with a basis of $14 million that was valued at $20.3 million upon acquisition. The loan was previously risk rated a 5 in our December 31st financials.
Mark Steven Fogel: We acquired via deed in lieu of foreclosure and office property in Chicago with the basis of $14 million that was valued at $23 million upon acquisition.
Speaker Change: <unk> was previously risk rated a five in our December 31 financials we.
Mark Steven Fogel: We recognized a $5.8 million gain on conversion on accepting the Deed-in-Lieu of Foreclosure and immediately contributed the asset to a joint venture, seeking to maximize its value through a multifamily conversion. We continue to manage several investments in real estate that we expect to monetize at gains in the future. These anticipated gains will be offset by NOL carry forwards, and we expect to retain the equity and reinvest potential gains in our loan portfolio.
Mark Steven Fogel: We recognized a $5 $8 million gain on conversion on accepting the deed in lieu of foreclosure and immediately contributed the asset to a joint venture seeking to maximize its value for you drew a multifamily conversion.
Mark Steven Fogel: We continue to manage several investments in real estate that we expect to monetize our gains in the future.
Mark Steven Fogel: These anticipated gains will be offset by NOL carryforwards, and we expect to retain the equity and reinvest potential gains in our loan portfolio.
Mark Steven Fogel: In summary, the Acres team continues to be focused on the overall quality of the investment portfolio, including investments in real estate, with the goal of improving credit quality and recycling capital into performing categories. We will now have ACR's CFO, Eldron Blackwell, discuss the financial statements and operating results during the first quarter.
Mark Steven Fogel: In summary, the acres team continues to be focused on the overall quality of the investment portfolio, including investments in real estate with a goal of improving correct credit quality and recycling capital into performing categories.
Eldron C. Blackwell: We will now have Acr's CFO elder and black will discuss the financial statements and operating results during the first quarter.
Eldron C. Blackwell: Thank you, and good morning, everyone. Gap's net income allocable to common shares in the first quarter was $556,000, or $0.07 per share. Included in net income is an increase to current expected credit losses or CECL reserves of $4.9 million, or $0.61 per share, as compared to CECL reserves during the fourth quarter of $1.1 million. The increase to the general seasonal reserves is primarily driven by worsening macroeconomic factors due to higher interest rates lasting longer than expected, compounded by an increase in model credit risk.
Eldron C. Blackwell: Thank you and good morning, everyone.
Eldron C. Blackwell: GAAP net income allocable to common shares in the first quarter was $556000 or <unk> <unk> per share.
Eldron C. Blackwell: Included in net income is an increase to current expected credit losses or seasonal reserves up $4 9 million.
Eldron C. Blackwell: <unk> 61 per share as compared to seasonal reserves during the fourth quarter of $1 1 million.
Eldron C. Blackwell: The increase of the general seasonal reserves was primarily driven by worsening macroeconomic factors due to higher interest rates lasting longer than expected compounded by an increase in modeled credit risks.
Eldron C. Blackwell: The total allowance for credit losses at March 31st was $33.7 million, which represents 1.89% or 189 basis points on our $1.8 million loan portfolio at par and comprises $4.7 million in specific reserves and $29 million in general credit reserves. Earnings available for distribution, or EAD, for the first quarter was $0.16 per share as compared to $0.55 per share for the fourth quarter. The difference being a $0.25 run rate decline in net interest income resulting from net payoffs and, to a lesser extent, loan modifications that occurred during the quarter and late in the fourth quarter, as well as a $0.16 decline in real estate operations due to seasonality.
Eldron C. Blackwell: The total allowance for credit losses at March 31 was $33 7 billion, which represents $1, 89% or 189 basis points on our $1 8 billion loan portfolio at par and comprised $4 7 million in specific reserves and $29 million in general credit reserves.
Eldron C. Blackwell: Earnings available for distribution or <unk> for the first quarter was <unk> 16 per share as compared to <unk> 55 per share for the fourth quarter.
Eldron C. Blackwell: The difference being at 25% run rate decline in net interest income, resulting from net pay offs and to a lesser extent loan modifications that occurred during the quarter and late in the fourth quarter as well as a 16% decline in real estate operations due to seasonality.
Andrew Fentress: Gap's book value per share was $27.25 on March 31st versus $26.65 on December 31st. This increase was primarily due to our buyback program, which generated $0.41 of book value per share for the first quarter. During the quarter, we used $2.1 million to repurchase 195,000 common shares at an approximate 61% discount to book value on March 31st. In addition, we used $2.2 million to repurchase 100,000 shares of our preferred Series D securities at an approximate 14% discount to the stated redemption value of $25.
Eldron C. Blackwell: GAAP book value per share was $27 25 on March 31 versus $26 65 at December 31.
Andrew Fentress: This increase was primarily due to our buyback program, which generated 41 book value per share for the first quarter.
Andrew Fentress: During the quarter, we used $2 $1 million to repurchase 195000 common shares at an approximate 61% discount to book value on March 31.
Andrew Fentress: In addition, we used $2 $2 million to repurchase 100000 shares of our preferred series B securities at an approximate 14% discount to the stated redemption value of $25.
Andrew Fentress: There was approximately $5.6 million remaining on the board-approved program at quarter end. Available liquidity at March 31st was $92.1 million, which comprised $84.6 million of unrestricted cash and $7.5 million of project financing available on unlevered assets. Our gap debt to equity leverage ratio slightly decreased to 3.7 times at March 31st from 3.8 times at December 31st. However, our recourse debt leverage ratio remained consistent at 1.1 times at both March 31st and December 31st. And with that, I will now turn the call over to Andrew Fentress for closing remarks.
Andrew Fentress: There was approximately $5 $6 million remaining on our board approved program at quarter end.
Andrew Fentress: Available liquidity at March 31 was $92.1 million, which comprised $84 6 million of unrestricted cash and $7 $5 million of projected financing available on levered asset.
Andrew Fentress: Our GAAP debt to equity leverage ratio slightly decreased to three seven times at March 31 from three eight times at December 31.
Andrew Fentress: Our recourse debt leverage ratio remained consistent at one one times at both March 31 and December 31.
Andrew Fentress: With that I will now turn the call to Andrew <unk> for closing remarks.
Andrew Fentress: Thank you Allison.
Andrew Fentress: The first quarter of 24 was a mixed but net positive quarter for ACR shareholders. However, our operating metrics at the two hotel properties were slightly below expectation. And we know you like to use the word seasonality because we also know that Q1 can typically be a slower part of the calendar, but that does, in fact, drive some of the results. There's been some deleveraging at the portfolio as loans have repaid, driving a lower portfolio return on equity. We expect this to continue throughout the balance of the year as both of our CLOs are outside their reinvestment period. While there were some additional CESA reserves booked, they were largely in the macroeconomic category.
Andrew Fentress: The first quarter of 2004 was a mix, but net positive quarter for HCR shareholders are operating metrics do hotel properties were slightly below expectations and.
Andrew Fentress: And we don't like to use the word seasonality because we also know the Q1 can typically be a slower part of the calendar, but that does in fact drive some of the results.
Andrew Fentress: There has been some deleveraging of the portfolio as loans are repaid driving lower portfolio return on equity.
Andrew Fentress: We expect this will continue throughout the balance of the year as both of our CLO as the outside their reinvestment period.
Andrew Fentress: There were some additional <unk> reserves booked they were largely in the macroeconomic category credit quality remains high.
Andrew Fentress: Credit quality remains high. As you've heard from us in the past, we at Acres are focused on protecting book value. The book is in good shape.
Andrew Fentress: As you've heard from us in the past wheat acres are focused on protecting book value. The book is in good shape, we had a nice win in the Q1 as Mark described monetizing Chicago office for again.
Andrew Fentress: We had a nice win in Q1, as Mark described, monetizing a Chicago office for a game. We'll continue to focus on our portfolio in 2024 and monetizing the assets that were acquired to utilize our NOL. We look forward to the Q&A discussion and answering your questions.
Andrew Fentress: We'll continue to focus on our portfolio in 2024 and monetizing the assets that were acquired to utilize our NOL.
Andrew Fentress: We look forward to the Q&A discussion in answering your questions operator.
Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be answered in the order they are received. Should you wish to decline from the polling process, please press star followed by two. If you are using a speakerphone, please lift the handset before pressing any keys. Your first question comes from Stephen Laws with Raymond James. Your line is now open.
Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session should you have a question. Please press star followed by the wondering your Touchtone phone you will hear three Tom acknowledging your request and your questions will be pulled in the order. They are received should you wish to decline from the polling process. Please press star followed by the.
Operator: If you are using a speaker phone please lift the handset before pressing any keys.
Operator: Your first question comes from Stephen Laws with Raymond James Your line is now open.
Stephen Albert Laws: Hi, good morning. I appreciate the comments so far and the disclosures in the supplement. You know, one thing I noticed with regard to, you know, interest rate caps: they've been providing a lot of protection so far, but it seems like a lot of them will hit maturity or expiration in the next few quarters. You know, can you talk about your expectations for portfolio performance, you know, after those expire, you know, what type of traction you're seeing with the existing sponsors and borrowers as far as buying new caps and supporting assets and maybe any color on how you expect the cap expiration maturity wall to play out over the next two quarters?
Stephen Albert Laws: Hi, good morning.
Speaker Change: I appreciate the comments so.
Stephen Albert Laws: So far in <unk>.
Stephen Albert Laws: And the disclosure in the supplement one thing I noticed with regards to interest rate caps they have been.
Stephen Albert Laws: Finding a lot of protection, so far but it seems like a lot of them hit.
Stephen Albert Laws: Maturity of exploration in the next few quarters.
Stephen Albert Laws: Can you talk about your expectations on portfolio performance. After those those expire what type of traction you're seeing with existing sponsors and borrowers as far as buying new caps and supporting assets, maybe any color on how you expect that.
Stephen Albert Laws: Capex duration maturity wall to play out over the next few quarters.
Mark Steven Fogel: Stephen, this is Mark. Thank you for the question. It's a good question.
Stephen Albert Laws: Yes, Stephen this is mark Thank you for the question.
Stephen: Good question.
Mark Steven Fogel: Our asset management team stays very far ahead of these expiring caps. In most cases, those loans that have expiring caps, if they want to extend, they're required to buy a new cap. And many, many months before those extension options can essentially be executed on, our asset management team is working with the sponsors on acquiring new caps and or creating interest reserve deposits in lieu of the caps. So we're very far ahead of it. We haven't had any issues so far.
Mark: Our asset management team stays very far ahead of these expiring caps in most cases.
Mark Steven Fogel: Those loans that have expiring caps.
Mark Steven Fogel: If they want to extend their required to buy a new cap.
Mark Steven Fogel: And many many months before those extension options can essentially be executed on our asset management team is working with the sponsors on acquiring new caps <unk>, creating interest reserve deposits in lieu of the caps. So.
Mark Steven Fogel: Very far ahead of it.
Mark Steven Fogel: Haven't had any issues to date and we don't expect to in that.
Mark Steven Fogel: At least three to six months out we have a pretty good sense of where we are with respect to those.
Mark Steven Fogel: Executions, an interest reserve deposits.
unknown: Great. Um, you know, we've spoken about this over the past quarters, I know that the longer-term target once you recycle, you know, some of the gains you're able to realize off real estate into 10
Mark Steven Fogel: Great.
Mark Steven Fogel: Okay.
unknown: We've spoken over over the past quarters, and I know the longer term target once you recycle.
unknown: Some of the gains are able to realize off real estate into new <unk>.
unknown: Investments likely senior loans can you talk about.
unknown: The outlook for maybe a return on book or return on book do you think 10% is achievable. When you think about the long term earnings power of the company.
unknown: How do you guys think about.
unknown: Quantifying that at that level.
unknown: That is our target. So our objective is to produce EAD that would pay an equivalent 10% yield at book value. The timing of the achievement of that outcome will be, as you pointed out, driven by the, David Bryant, Unknown Executive, Christopher Muller, Andrew Fentress, Kyle Brengel, Unknown [inaudible] as the two CLOs run off and the repayment, so that's a deleveraging force, but certainly the objective, and we believe our ability to do it is high, that we're going to be able to deliver EAD in a timely manner, of both values.
unknown: That is our target so our objective is to produce.
unknown: It would pay an equivalent 10% yield at book value.
unknown: The timing of that.
unknown: Achievement of that outcome will be as you pointed out driven by the the.
unknown: Pace with which we can.
unknown: Shelby assets and return on the equity back into the loan book.
unknown: And obviously, then getting the company or.
unknown: Over the portfolio Levered.
unknown: At the appropriate level as well.
unknown: So we're we're addressing both of those real time, some of which as I pointed out with respect to the deleveraging is happening.
unknown: As the two silos runoffs in the repayments, so thats a deleveraging for us, but certainly the objective and we believe.
unknown: Our ability to do it is high we're going to be able to deliver it.
unknown: Okay.
unknown: Our book value.
unknown: And then my last question, you know, the NOLs, there's, you know, some have no expiration. Others, you know, I think have a five-year life. Can you talk about how you expect the pace of asset sales to play out? What are your thoughts, as far as the right time to reinstate the dividend? And, you know, how do you think about returning capital to shareholders between, you know, burning off NOLs or repurchasing stock and then, you know, at some point, reinstating a dividend?
Speaker Change: Great and then my last question.
unknown: Nols.
unknown: Some have have no exploration others, I think had a five year life.
unknown: Can you talk about.
unknown: How you expect the pace of asset sales to play out what your thoughts are as far as the right time to reinstate the dividend and.
unknown: How you think about returning capital to shareholders between burning off the Nols or repurchasing stock and then at some point reinstating a dividend.
unknown: Sure, we obviously want to be in a place at the end point where the dividend is reinstated and being distributed. In the meantime, we're returning capital to shareholders through stock buybacks. That continues to be in place, and we're in the market with that program daily as it relates to the pace and timing of the sales and then ultimately the amount of NOLs. We're moving forward as we speak on all of the assets. We don't have exact visibility on the timing, but the processes are underway.
unknown: Sure.
unknown: We we obviously want to be in a place at.
unknown: At the end point, where we are reinstating the dividend is reinstated in and being distributed in the meantime, we're returning.
unknown: Capital to shareholders through stock buybacks.
unknown: That continues to be in place.
unknown: And we're in the market.
unknown: With that program daily.
unknown: As it relates to the pace and timing of the.
unknown: The sales and then ultimately.
unknown: Mt.
unknown: Nols.
unknown: We're moving forward as.
unknown: As we speak on all of the assets.
unknown: We don't have exact visibility on the timing the processes are underway.
unknown: And that ultimately will drive the timing with which we can ramp back to a full dividend. But in the meantime, you know, we continue to return capital shareholders the share we purchased. And I'll just note that since Q3 of 2020, when Acres took over as the manager, the book value per share increase has been 14.4% annualized. That, we think, reflects that statement that we are, in fact, delivering value to shareholders at an attractive annual rate.
unknown: And does that ultimately will drive the timing with which we can ramp back to full dividend.
unknown: Sure.
unknown: But in the meantime, we continue to return capital shareholders through share repurchase.
unknown: And I'll just note that.
unknown: Since the.
unknown: The Q3 of 2020.
unknown: Glenn acres.
unknown: Took over as the manager.
unknown: Book value per share increase has been 14, 4% annualized.
unknown: So.
unknown: That we think reflects that statement that we are in fact.
unknown: Levering value to shareholders.
unknown: How does an attractive annual rate.
Stephen Albert Laws: Great, appreciate the comments and appreciate you quantifying that; the buybacks and other actions you've taken have certainly been quite beneficial to book value. So keep up the good work on that, and thanks for your comments this morning.
Speaker Change: Great I appreciate the comments and I appreciate you quantifying that the buybacks and other actions you've taken it certainly been quite beneficial to book value. So.
Stephen Albert Laws: Keep up the good work on that and thanks for your comments this morning.
Speaker Change: Thanks, Steve.
Operator: Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Chris Mueller with Citizens. Please go ahead.
Stephen Albert Laws: Ladies and gentlemen, as a reminder, should you have a question. Please press star One. Your next question comes from Chris Mueller with citizens. Please go ahead.
Christopher Muller: So looking at the real estate income line, it looks like there was a $1.7 million drop from the fourth quarter in that line. Is that all seasonality there, probably with the hotels mostly? Or is there something else behind that decline quarter over quarter?
Christopher Muller: So looking at the <unk>.
Christopher Muller: Real estate income line. It looks like there was a $1 7 million drop from the fourth quarter in that line is that all seasonality there probably with the hotels, mostly or is there something else behind that decline quarter over quarter.
Eldron C. Blackwell: Hey Chris, this is Eldron. Yes, the majority of that has to do with seasonality of the hotels. We had a little bit of market softening at our HGI hotel in Philadelphia, but other than that, it's seasonality.
Christopher Muller: Hey, Chris This is eldon, yes, the majority of that has to do with seasonality of the hotels, we had a little bit of market softening in our hei hotel in Philadelphia, but other than that it's at.
Eldron C. Blackwell: Seasonality.
Eldron C. Blackwell: Got it. So should we expect that to pick back up in the second and third quarters? We do. Perfect.
Chris: Got it so we should expect that to pick back up in the second and third quarter.
Eldron C. Blackwell: Do.
Christopher Muller: And then I guess with both of the CLOs, the reinvestment periods have now expired. Do you think a CLO makes sense at some point, maybe in the back half of this year? Or do you think that'll be more of a 2025 type of deal you'll look at?
Speaker Change: Perfect and then I guess with both of the CLO is reinvestment periods now expired do you think a CLO makes sense at some point maybe in the back half of this year or do you think that will be more a 2025 type of that youll look at.
Mark Steven Fogel: Chris, it's Mark. It's hard to say, you know; it's really a function of how much product you can contribute to the CLO. So it's a function of production, and obviously where the markets are for CLO execution. So I wouldn't expect anything, obviously, in the first half of this year. I think we'll start to look at it and gauge the market and our book, and determine whether or not the end of the year, first quarter, second quarter of next year makes sense.
Christopher Muller: Chris It's Mark it's hard to say.
Mark Steven Fogel: It's really a function of how much product you can contribute into the CLO. So it's a function of production and obviously, where the markets are for CLO execution.
Mark Steven Fogel: So I wouldn't expect anything obviously in the first half of this year I think it will start to look at it and engage.
Mark Steven Fogel: The market in our book.
Mark Steven Fogel: Determine whether or not the end of year first quarter second quarter of next year It makes sense.
Christopher Muller: Got it. And if I could just squeeze one more question in on Stephen Laws' question. So on the pace and timing of these real estate sales, would you guys be more inclined to maybe accelerate that process if you had the opportunity to quickly deploy capital into attractive investments? Or is that more of an independent process of selling those assets?
Chris: Got it and if I could just squeeze one more in a quick follow up on Stephen laws question. So on the pace and timing of these real estate sales would you guys be more inclined to maybe accelerate that process. If you had the opportunity to quickly deploy capital into attractive investments or is that more of a independent process of selling those assets.
Christopher Muller: Yes.
unknown: We aren't waiting, I guess that's the punchline, and we think that the assets are now in a place that they can be monetized, and so the processes are underway. We agree that the opportunity set of the marketplace is attractive, and that's driving it as well as our desire to just normalize the operations of the Company.
Christopher Muller: We are we're not waiting I guess, it's the pipeline and we think that the assets are now in a place.
unknown: They can be monetized and so the processes are underway.
unknown: We agree that the opportunity set in the marketplace is attractive and that's that's driving it as well as our desire to just.
unknown: Normalize the operations.
unknown: The company.
Christopher Muller: Great, thanks for taking the question.
Speaker Change: Great. Thanks for taking the questions.
Christopher Muller: Yes.
Operator: There are no further questions at this time. I will now turn the call over to management for closing remarks.
Speaker Change: There are no further questions at this time I will now turn the call over to management for closing remarks.
unknown: Thank you, everyone, for attending the first quarter call. We're always available for any follow-up questions that people have. We look forward to speaking to you again with our results for the second quarter. Ladies and gentlemen, this concludes.
Speaker Change: Thank you everyone for attending the first quarter call. We're always available for any follow up questions that people have.
Speaker Change: We look forward to speaking to you again with our results for the second quarter.
Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and ask that you. Please disconnect your lines.
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unknown: Thanks.
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