Q2 2024 Great Ajax Corp Earnings Call
Good day and welcome to the Great Ajax Second Quarter 2024 Earnings Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.
Operator: All participants will be in listen-only mode.
Operator: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note that this event is being recorded. I would now like to turn the conference over to Emma Bolling. Please go ahead.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After days, presentations, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two.
After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your telephone keypad. To withdraw your question, please press star, then 2. Please note this event is being recorded.
Operator: Please note, this event is being recorded.
Operator: I would now like to turn the conference over to Emma Bowling. Please go ahead.
I would now like to turn the conference over to Emma Bolling. Please go ahead.
Emma Bowling: Thank you and good morning, everyone. I would like to thank you for joining us today for Great Ajax's second quarter 2024 earnings call. Joining me today are Michael Nierenberg, Chairman, CEO and President of Rhythm Capital and CEO of Great Ajax, and Mary Doyle, Principal Financial Officer of Great Ajax. Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Great Ajax website, www.GreatAjax.com. If you've not already done so, I'd encourage you to download the presentation now.
Emma Bolling: Thank you and good morning everyone. I would like to thank you for joining us today for Great Ajax's second quarter 2024 earnings call. Joining me today are Michael Nirenberg, Chairman, CEO, and President of Rhythm Capital and CEO of Great Ajax, and Mary Doyle, Principal Financial Officer of Great Ajax. Throughout the call, we are going to reference the earnings supplement that was posted this morning on the Great Ajax website, www.greatajax.com. If you've not already done so, I'd encourage you to download the presentation now.
Emma Bolling: Thank you and good morning everyone. I would like to thank you for joining us today for Great Ajax's second quarter 2024 earnings call. Joining me today are Michael Nirenberg, Chairman, CEO and President of Rhythm Capital and CEO of Great Ajax and Mary Doyle, Principal Financial Officer of Great Ajax.
Emma Bolling: Throughout the call, we are going to reference the earnings supplement that was posted this morning to the Great Ajax website, www.greatajax.com. If you've not already done so, I'd encourage you to download the presentation now.
Emma Bolling: I would like to point out that certain statements made today will be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results. I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC. In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement. And with that, I will turn the call over to Michael.
Emma Bowling: I would like to point out that certain statements made today will be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results. I encourage you to review the disclaimers in our press release and earnings supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC.
Emma Bolling: I would like to point out that certain statements made today will be forward-looking statements. These statements, by their nature, are uncertain and may differ materially from actual results.
Emma Bolling: I encourage you to review the disclaimers in our Press Release and Earnings Supplement regarding forward-looking statements and to review the risk factors contained in our annual and quarterly reports filed with the SEC.
Emma Bowling: In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliation of these measures to the most directly comparable gap measures can be found in our earnings supplement.
Emma Bolling: In addition, we will be discussing some non-GAAP financial measures during today's call. Reconciliations of these measures to the most directly comparable GAAP measures can be found in our earnings supplement. And with that, I will turn the call over to Michael. Thanks, Emma. Good morning, everyone.
Emma Bowling: And with that, I will turn the call over to Michael.
Michael Nirenberg: Thanks, Emma. Good morning, everyone.
Michael Nierenberg: Thanks, Emma.
Michael Nierenberg: Good morning, everyone, and for those of you that are joining us this morning, we appreciate the dialing in. Today's call is really about the future.
Michael: For those of you that are joining us this morning, we appreciate you dialing in.
Michael Nirenberg: And for those of you that are joining us this morning, we appreciate you dialing in. Today's call is really about the future. When we first embarked on this from the Rhythm perspective, we looked at this vehicle and thought, let's look back at the playbook that we established back at Fortress in 2013, when we saw dislocations in the MSR market. And based on that, we created a vehicle that we seeded with a billion dollars of capital.
Michael Nierenberg: When we first embarked on this from the rhythm perspective, we looked at this vehicle and thought, let's look back to the playbook that we established back at Fortress in 2013, where we saw dislocations in the MSR market. And based on that, we created a vehicle that we seeded with a billion dollars in capital. And then today, that vehicle is known as Rhythm Capital, which has 7.2 billion of equity capital, large balance sheets, and as a world class asset manager. We are going to look to do the same playbook, with the difference this time, looking at the commercial real estate market and the dislocations we see there and the huge needs for capital.
Michael: Today's call is really about the future. When we first embarked on this from the rhythm perspective, we looked at this vehicle and thought,
Speaker Change: Let's look back to the playbook that we established back at Fortress in 2013.
Michael Nirenberg: And then today, that vehicle is known as Rhythm Capital, which has $7.2 billion of equity capital, a large balance sheet, and is a world-class asset manager. We are going to look to do the same playbook with the difference this time, looking at the commercial real estate market and the dislocations we see there and the huge needs for capital. So we're going to leverage the very same investment teams that came from Fortress with us here, and we're really excited about the challenge as we look ahead.
Speaker Change: where we saw dislocations in the MSR market.
Speaker Change: And based on that, we created a vehicle that we seeded with a billion dollars of capital and then today, that vehicle is known as Rhythm Capital, which has 7.2 billion of equity capital, a large balance sheet.
Speaker Change: and is a world-class asset manager. We are going to look to do the same playbook with the difference this time, looking at the commercial real estate market and the dislocations we see there and the huge needs for capital.
Michael Nierenberg: So that came from Fortress with us here. And we're really excited about the challenge as we look ahead. The needs for capital and the commercial real estate market, I don't think it's something that we need to go into a huge depth on, but there are huge needs. When you look at the landscape around commercial real estate REITs, this vehicle today is clean. It has no legacy commercial real estate assets.
Speaker Change: So we're going to leverage the very same investment teams that came from Fortress with us here and we're really excited about the challenge as we look ahead.
Michael Nirenberg: The needs for capital in the commercial real estate market, I don't think it's something that we need to go into huge depth on, but there are huge needs. When you look at the landscape around commercial real estate REITs, this vehicle today is clean.
Speaker Change: The needs for capital in the commercial real estate market, I don't think it's something that we need to go into a huge depth on, but there are huge needs when you look at the landscape around commercial real estate REITs.
Michael Nirenberg: It has no legacy commercial real estate assets, and as we look going forward, what we're going to do is migrate from what I would call reperforming residential assets, sell down on those, or sell those down other than the stuff that we need to keep for risk retention, and reinvest in current cash-flowing commercial real estate assets, which we've already begun to do so. The deal closed, I believe, on June 11th when Rhythm took over the management contract, and as we go forward, you know, full staff here at Rhythm focused on this business on the commercial real estate side.
Speaker Change: This vehicle today is clean. It has no legacy commercial real estate assets.
Michael Nierenberg: And as we look going forward, what we're going to do is migrate from what I would call re-performing residential assets, sell down on those or sell those down. Other than the stuff that we need to keep for risk retention and reinvest into current cash flowing commercial real estate assets we built, which we've already begun to do so.
Speaker Change: and as we look going forward what we're going to do is migrate from what I would call re-performing residential assets, sell down on those or sell those down.
Speaker Change: Other than the stuff that we need to keep for risk retention, and reinvest into current cash flowing commercial real estate assets, which we've already begun to do so.
Michael Nierenberg: The deal close, I believe, on June 11th, when Rhythm took over the management contract. And as we go forward, you know, full staff here at Rhythm focused on this business around the commercial real estate side. As we think about the commercial real estate investing environment, we think it's some of the best investment opportunities that we've seen, even looking back to the Great Financial Crisis. Whether you look at office or you look at some of the other things, particularly where spreads are, for example, even on triple ACM BS where, you know, over the course of the past couple of weeks, it's made a few different investments there as we've sold down some of the legacy residential side.
Speaker Change: The deal closed, I believe, on June 11th, when Rhythm took over the management contract, and as we go forward, full staff here at Rhythm focused on this business around the commercial real estate side.
Michael Nirenberg: As we think about the commercial real estate investing environment, we think it's some of the best investment opportunities that we've seen, even looking back to the great financial crisis, whether you look at office or you look at some of the other things, particularly where spreads are, for example, even on AAA CMBS, where over the course of the past couple weeks, we've made a few different investments there as we've sold down some of the legacy residential side The one thing I want to be clear about is that it's going to take time to get this vehicle back to a place where it's cash flow positive, and it's growing in a meaningful way, but we're very confident that with our existing team, we're going to be able to do that.
Speaker Change: As we think about the commercial real estate investing environment, we think it's some of the best
Speaker Change: Best investment opportunities that we've seen, even looking back to the great financial crisis, whether you look at office or you look at some of the other things.
Speaker Change: particularly where spreads are, for example, even on AAA CMBS where, you know, over the course of the past couple of weeks, we've made a few different investments there as we've sold down some of the legacy residential side.
Michael Nierenberg: The one thing I want to be clear about is it's going to take time to get back, get this vehicle back to a place where it's cash flow positive. It's growing in a meaningful way, but we're very confident that with our existing team, we're going to be able to do that.
Speaker Change: The one thing I want to be clear about, it's going to take time to get this vehicle back to a place where it's cash flow positive, it's growing in a meaningful way, but we're very confident that with our existing team, we're going to be able to do that.
Michael Nirenberg: As we think about the dividend and we think about earnings, obviously, and Mary Doyle, who is the CFO of Great HX, is sitting with us. She'll talk a little bit about the financials this morning, but as we look at where we are, look at the dividend policy, yesterday we had a board meeting, and the board voted to keep the dividend the same. We will be evaluating the dividend quarter to quarter as we think about the ability to grow earnings.
Michael Nierenberg: As we think about the dividend and we think about earnings, obviously, and Mary Doyle is who's the CFO of Great Ajax is sitting with us. We'll talk a little bit about the financials this morning, but as we look at where we are, look at the dividend policy. Yesterday, we had a board meeting. The board voted to keep the dividend the same. We will be evaluating the dividend quarter to quarter, as we think about the ability to grow earnings. The vehicle will need more equity over time, and the if that equity will likely be hopefully raised in and around what will call opportunistic investments.
Mary Doyle: As we think about the dividend and we think about earnings, obviously, and Mary Doyle, who's the CFO of Great Ajax, is sitting with us.
Speaker Change: She'll talk a little bit about the financials this morning, but as we look at where we are, look at the dividend policy, yesterday we had a board meeting. The board voted to keep the dividend the same. We will be evaluating the dividend quarter to quarter as we think about the ability to grow earnings.
Michael Nirenberg: The vehicle will need more equity over time, and that equity will likely be, hopefully, raised in and around what we'll call opportunistic investment. So as you think about that, if the dividend yield where we could raise equity is in and around, call it 6 to 7 percent, and we're able to deploy capital at 12, it is going to be hugely accretive for shareholders. For the quarter, when you look at the overall numbers, there were losses due to asset sales as the balance sheet continues to get turned over, as well as some mark-to-market issues. Mary's also going to talk about book value and how to think about that in the context of what was reported versus actual mark-to-market. That's kind of my opening comments.
Speaker Change: The vehicle will need more equity over time and that equity will likely be hopefully raised in and around what we'll call opportunistic investments.
Michael Nierenberg: So, as you think about that, if the dividend yields where we could raise equity is in and around, call it six to seven percent, we're able to deploy capital 12 is going to be hugely accretive for shareholders. For the quarter, you know, when you look at the overall numbers, there were losses due to asset sales as the balance sheet continues to get turned over, as well as some market issues.
Speaker Change: So, as you think about that, if the dividend yield where we could raise equity is in and around, call it 6 to 7 percent, we're able to deploy capital at 12, it is going to be hugely accretive for shareholders.
Speaker Change: For the quarter, you know, when you look at the overall numbers, there were losses due to asset sales as the balance sheet continues to get turned over, as well as some mark-to-market issues. Mary is also going to talk about book value and how to think about that in the context of what was reported versus...
Michael Nierenberg: Mary is also going to talk about book value and how to think about that in the context of what was reported versus actual market.
Michael Nierenberg: That's kind of my opening comments. We'll now flip to the supplement, which has been prepared and which is posted online. Mary again, Mary will take the financial side; I'll take the some some comments. If you start on page three, like I pointed out in the opening remarks. Rhythm Capital today has seven plus billion of equity capital, you know, with give or take a 40 billion dollar balance sheet. We own Scope, they're asset management, which is a large world class asset management business. And really, you know, the great Ajax vehicles going to be focused again on commercial real estate opportunities as well as some other opportunistic investments that we may see come across the platform, and we see plenty.
Mary Doyle: actual mark-to-market.
Speaker Change: That's kind of my opening comments. We'll now flip to the supplement which has been prepared and which is posted online.
Michael Nirenberg: We'll now flip to the supplement which has been prepared and which is posted online. Again, Mary will take the financial side, and I'll make some comments.
Speaker Change: Again, Mary will take the financial side. I'll take some comments. If you start on page 3, like I pointed out in the opening remarks,
Michael Nirenberg: If you start on page 3, like I pointed out in the opening remarks, Rhythm Capital today has $7 plus billion of equity capital, give or take a $40 billion balance sheet. We own Sculptor Asset Management, which is a large, world-class asset management business. Really, the Great Ajax vehicle is going to be focused again on commercial real estate opportunities, as well as some other opportunistic investments that we may see come across the platform, and we see plenty. The same team that got us here on the Rhythm side is going to be the very same team, plus some, that's going to be focused on Great Ajax.
Mary Doyle: Rhythm Capital today has 7 plus billion of equity capital.
Speaker Change: You know it.
Speaker Change: give or take a $40 billion balance sheet. We own Sculptor Asset Management, which is a large, world-class asset management business.
Speaker Change: And really, you know, the Great Ajax vehicle is going to be focused, again, on commercial real estate opportunities, as well as some other opportunistic investments that we may see come across the platform, and we see plenty.
Michael Nierenberg: The team, the same team that got us here on the rhythm side, is going to be the very same team plus some that's going to be focused on great Ajax on the commercial real estate side. Just a side note, when we look at the amount of real estate professionals we have here at rhythm. There's about 30 folks between rhythm and, you know, an up go that we own 50% of a green barn, so we have a lot of real commercial real estate expertise around the house. This is not something we take lightly, and we're really excited again about the prospects as we look at that going forward. On the sculpture side, sculpture has about 35 folks, as well 35 to 40 folks in the real estate business, and there were a class commercial real estate investor.
Speaker Change: The team, the same team that got us here on the rhythm side, is going to be the very same team, plus some, that's going to be focused on Great Ajax.
Michael Nirenberg: On the commercial real estate side, just a side note, when we look at the number of real estate professionals we have here at Rhythm, there are about 30 folks between Rhythm and an OPCO that we own 50% of at Greenborn. So we have a lot of real commercial real estate expertise around the house. This is not something we take lightly.
Speaker Change: On the commercial real estate side just a side note when we look at the
Speaker Change: A lot of real estate professionals we have here at Rhythm. There's about 30 folks between Rhythm and an opco that we own 50% of at Greenborn. So we have a lot of commercial real estate expertise around the house.
Michael Nirenberg: And we're really excited, again, about the prospects as we look at that going forward. On the Sculptor side, Sculptor has about 35 people as well, 35 to 40 people in the real estate business, and they're a world-class commercial real estate investor. I'll let Mary talk a little bit, or as much as she wants, actually, about the financial highlights on page four, and then we'll get back into a couple more slides and then open up for Q&A. Okay?
Speaker Change: This is not something we take lightly, and we're really excited again about the prospects as we look at that going forward. On the Sculptor side, Sculptor has about 35 folks as well, 35 to 40 folks in the real estate business, and they're a world-class commercial real estate investor.
Mary Doyle: I'll let Mary talk a little bit or much more to actually about the financial highlights on page 4, and then we'll get back into a couple of other slides and then open up for Q&A.
Speaker Change: I'll let Mary talk a little bit, or as much as she wants actually, about the financial highlights on page 4 and then we'll get back into a couple other slides and then open up for Q&A. Mary? Sure.
Mary Doyle: Mary.
Mary Doyle: Thank you, Michael. We reported a Gatman at a loss of $12.7 million; this is considerably lower than the first quarter of 2024 and is also driven by mark to market losses as well as some additional realized losses on the sale of mortgage loans.
Mary Doyle: Sure. Thank you, Michael. We reported a gap net loss of $12.7 million. This is considerably lower than the first quarter of 2024 and is also driven by mark-to-market losses as well as some additional realized losses on the sale of mortgage loans. If you look at the balance sheet, you can see that we are continuing to contract on the asset side and build up cash reserves ready to deploy in the commercial real estate strategy that's being discussed. Earnings available for distribution also came down versus the loss last quarter.
Mary Doyle: We reported a gap net loss of $12.7 million. This is considerably lower than the first quarter of 2024 and is also driven by mark-to-market losses as well as some additional realized losses on the sale of mortgage loans.
Mary Doyle: If you look at the balance sheet, you can see that we are continuing to contract on the asset side and build up cash reserves ready to deploy in the commercial real estate strategy that's being discussed. Earnings available for distribution also came down versus the loss last quarter, and just to note that earnings available for distribution is what we previously referred to as operating income in last quarter's release. We have some transaction costs, and as we continue to restruct for the balance sheet, we do still have a negative net interest margin, and that's driving most of that loss.
Speaker Change: If you look at the balance sheet, you can see that we are continuing to contract on the asset side and build up cash reserves ready to deploy in the commercial real estate strategy that's being discussed.
Mary Doyle: And just to note that earnings available for distribution is what we previously referred to as operating income in last quarter's release. We have some transaction costs, and as we continue to restructure the balance sheet, we do still have a negative net interest margin, and that's driving most of that loss. We are declaring a common stock dividend of $0.06 per share.
Speaker Change: Earnings Available for Distribution also came down versus the loss last quarter. And just to note that Earnings Available for Distribution is what we previously referred to as Operating Income in last quarter's release.
Speaker Change: We have some transaction costs, and as we continue to restructure the balance sheet, we do still have a negative net interest margin, and that's driving most of that loss.
Mary Doyle: We are declaring a common stock dividend of six cents per share, and of note, if you look at the balance sheet, you can see that we've continued to grow our cash cash balance from the year end, notwithstanding redeeming our convertible debt in April of 2024. Book value at $5.56 per share, as most of you know, most of our assets are carried at amortized cost. We did move a chunk of the loan portfolio to share value, which is driving losses, but we are at an amortized cost value of $5.56. If we went to a full share value valuation, we'd be at around $4.20, and that is marking mostly the asset side of the balance sheet.
Mary Doyle: And of note, if you look at the balance sheet, you can see that we've continued to grow our cash balance from the year end, notwithstanding redeeming our convertible debt in April of 2024, at a book value of $5.56 per common share. As most of you know, most of our assets are carried at amortized cost. We did move a chunk of the loan portfolio to fair value, which is driving losses, but we are at an amortized cost value of $5.56. If we went to a full fair value valuation, we'd be at around $4.20, and that is mostly the asset side of the balance. Total stockholders' equity at quarter end was $253.6 million.
Speaker Change: We are declaring a common stock dividend of $0.06 per share. And of note, if you look at the balance sheet, you can see that we've continued to grow our cash-to-cash balance from the year-end, notwithstanding redeeming our convertible debt in April of 2024.
Speaker Change: Book value at $5.56 per common share. As most of you know, most of our assets are carried at amortized cost. We did move a chunk of the loan portfolio to fair value, which is driving losses. But we are at an amortized cost value.
Speaker Change: of 556. If we went to a full fair value valuation, we'd be at around 420, and that is marking mostly the asset side of the balance sheet.
Mary Doyle: Total stockholders' equity at quarter end is $253.6 million. We expect to grow that over time. We might take some incremental hits as we continue to sell loans, as all part of the longer-term strategy to grow cash, ready to deploy into higher yielding assets to improve our net interest margin.
Speaker Change: Total stockholders' equity at quarter end is $253.6 million. We expect to grow that over time. We might take some incremental hits as we continue to sell loans. That's all part of the longer-term strategy to grow cash ready to deploy into higher-yielding assets to improve our net interest margin.
Michael Nirenberg: We expect to grow that over time, but we might take some incremental hits as we continue to sell loans. That's all part of the longer-term strategy to grow cash ready to deploy into higher-yielding assets to improve our net interest margin. Thanks, Mary, for the update. Folks, we'll now flip to page 5 just to talk a little bit about the transaction between Rhythm and Ajax. Rhythm just took over the management contract from Great Ajax. Again, same team.
Michael Nierenberg: Great, thanks very much for the update.
Michael Nierenberg: We'll now flip to page 5. This to talk a little bit about the transactions of Rhythm and AJAX. Rhythm just took over the management contract from Great AJAX. Again, same team. Some of the actions that were taken in the second quarter, Mary alluded to selling down loans. Some of the stuff happened prior to us, quite frankly, getting involved. We regained $100 million for the convertible senior notes. Again, I think the overall story for us as a team and as a business is looking ahead for the future and how we reap position in the company.
Speaker Change: Great. Thanks, Mary, for the update. Folks, we'll now flip to page 5 just to talk a little bit about the transaction of Rhythm and Ajax. Rhythm just took over the management contract.
Michael Nirenberg: Some of the actions that were taken in the second quarter, Mary alluded to, selling down loans. A lot of this stuff happened prior to us, quite frankly, getting involved. We redeemed $100 million of the convertible senior notes.
Speaker Change: from Great Ajax. Again, same team. Some of the actions that were taken in the second quarter, Mary alluded to, selling down loans. A lot of this stuff happened prior to us.
Speaker Change: quite frankly, getting involved. We redeemed $100 million for the convertible senior notes.
Michael Nirenberg: And again, I think the overall story for us as a team and as a business is looking ahead to the future and how we reposition the company. Page 6 just talks about the commercial real estate opportunity. We look at it this way, we are a commercial real estate REIT without any legacy issues. I think that is a huge deal as we think about the growth going forward and absolute yield levels and absolute spread levels.
Speaker Change: And again, I think the overall story for us as a team and as a business is looking ahead for the future and how we reposition the company. Page six, this talks about the commercial real estate.
Michael Nierenberg: Page 6 has talked about the commercial real estate opportunity. We look about, we are a commercial real estate REAP without any legacy issues. I think that is a huge yield. As we think about the growth going forward in absolute yield levels, in absolute spread levels, we do believe we are going to be able to grow this, not just grow it, but actually generate real earnings and hopefully grow the dividend over time. Environment, as we discussed, very, very attractive commercial real estate investing environment, and then overall the breadth of what we do here at Rhythm, I think, is where we're happy to match up against anybody in the business.
Speaker Change: opportunities. You know, we look about, we are a commercial real estate REIT without any legacy issues. I mean, I think that is a huge deal.
Speaker Change: As we think about the growth going forward and absolute yield levels and absolute spread levels
Michael Nirenberg: We do believe we're going to be able to grow this, not just grow it, but actually generate real earnings and hopefully grow the dividend over time. The environment, as we discussed, is a very, very attractive commercial real estate investing environment. And then overall, the breadth of what we do here at Rhythm, I think we're happy to match up against anybody in the business. Page 7 just gives you a little bit of an illustrative future state portfolio.
Speaker Change: We do believe we're going to be able to grow this, not just grow it, but actually generate real earnings and hopefully grow the dividend over time.
Speaker Change: environment you know as we discussed very very attractive commercial real estate investing environment and then overall the breadth of what we do here at Rhythm I think is you know we're happy to match up against anybody in the business
Michael Nierenberg: Page 7 just gives you a little bit of an illustrative future state portfolio. Talks about commercial real estate securities, loans, MEZ loans, other investments. We're going to target absolute yield levels from an IRR perspective of something between give or take a lower to mid teams type number for this vehicle, and we're confident we're going to get there.
Speaker Change: Page 7 just gives you a little bit of a
Speaker Change: illustrative, you know, future state portfolio talks about commercial real estate securities, loans, MES loans, other investments.
Speaker Change: We're going to target absolute yield levels from an IRR perspective of something between give or take a lower to mid-teens type number for this vehicle and we're confident we're going to get there.
Operator: With that, I'll turn it back to the operator, and then we could open up for some Q&A. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speaker phone, please pick up your hands up before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two.
Michael Nirenberg: It talks about commercial real estate securities, loans, MES loans, and other investments. We're going to target absolute yield levels from an IRR perspective of something between, give or take, a lower to mid-teens type number for this vehicle, and we're confident we're going to get there. With that, I'll turn it back to the operator, and then we can open up for some Q&A.
Speaker Change: With that, I'll turn it back to the operator and then we can open up for some Q&A.
Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Eric Hagen with BTIG. Please go ahead.
Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad.
Speaker Change: If you are using a speakerphone, please pick up your handset before pressing the keys.
Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.
Operator: At this time, we will pause momentarily to assemble our roster.
Operator: Our first question comes from Eric Hagen with BTIG. Please go ahead.
Speaker Change: Our first question comes from Eric Hagan with BTIG. Please go ahead.
Michael Nirenberg: Hey, good morning. I hope all is well. Can we start by repeating the impact of marking the whole book to fair value and just looking at the balance sheet? What is the balance of the legacy RPL portfolio right now and what's in commercial real estate? Thank you, guys.
Eric Hagen: Hey, good morning. Hope as well.
Michael Nierenberg: Can we start by repeating the impact of marking the whole book to fair value and just looking at the balance sheet? What is the balance of the legacy RPL portfolio right now and what's in commercial real estate? Thank you, guys. On the book value question, full mark to market takes us in and around four bucks. I think Mary alluded to something around 423. What I would tell you is that on all the assets that we have on balance sheet today to mark to market, I think we feel very good about the marks where things are.
Eric Hagan: Hey, good morning, hope all is well. Can we start by repeating the impact of marking the whole book to fair value and just looking at the balance sheet, what is the balance of the legacy RPL portfolio right now and what's in commercial real estate? Thank you guys.
Michael Nirenberg: On the book value question, Eric, full mark-to-market takes us in at around $4.23. What I would tell you is that on all the assets that we have on the balance sheet today, they're mark-to-market. I think we feel very good about the marks where things are.
Speaker Change: So on the book value question, Eric, full mark-to-market takes us in and around $4. I think Mary alluded to something around $4.23. What I would tell you is that on all the assets that we have on balance sheet today, they're mark-to-market. I think we feel very good about the marks where things are.
Michael Nierenberg: That doesn't mean you know you'll have a gain or a loss going forward, but I think we feel very good, particularly in light of what's happening in the credit markets.
Michael Nirenberg: That doesn't mean you'll have a gain or a loss going forward, but I think we feel very good, particularly in light of what's happening in the credit markets. As far as total going forward, there'll be some securities and some loans that are going to be sold. Charles, what's the total going to be about between loans and securities to clean up the balance sheet? It's about $194,000.
Speaker Change: That doesn't mean you'll have a gain or a loss going forward, but I think we feel very good.
Speaker Change: particularly in light of what's happening in you know in
Michael Nierenberg: As far as total going forward, there'll be some securities and some loans that are going to be sold to us. What's the total going to be about between loans and securities to clean up the balance sheet? It's about 120 million. We've got 120 million of assets that are left to be sold, and yeah, so it's not much.
Speaker Change: in the credit markets.
Speaker Change: As far as total going forward, there'll be some securities and some loans that are going to be sold. Charles, what's the total going to be about?
Michael Nirenberg: About 120 million assets that are left to be sold, and you know, so it's it's it's not much.
Charles: Between loans and securities to clean up the balance sheet. It's about a hundred and About a hundred twenty million of assets that are left to be sold And okay, you know yeah, so it's it's it's not much
Michael Nirenberg: Okay, got it. And then on the commercial real estate side, are we talking mostly securities initially, and what's the balance there right now? What kind of returns are you guys getting? Thank you, guys.
Michael Nierenberg: Okay, got it.
Michael Nierenberg: And then on the commercial real estate side, are we talking mostly securities initially, and what's the balance there right now? What kind of returns are you guys saying?
Speaker Change: Okay, got it And then on the commercial real estate side are we talking mostly securities? Initially, and what's the balance there right now? What kind of returns are you guys?
Michael Nierenberg: Thank you, guys. Currently, we've made, I think we've made about three investments. You know, they're mostly AAA CNBS, highly liquid securities. We'll use those as a placeholder now with a levered return of something probably 12 plus something between 12 and 15%. And like I said, I think we've got three tranches of AAA CNBS.
Michael Nirenberg: Yeah, currently we've made, I think we've made about three investments, you know, they're mostly AAA CMBS, highly liquid securities. We'll use those as a placeholder now with a levered return of something, probably 12 plus, something between 12 and 15 percent. And like I said, there are, I think we've bought three tranches of AAA CMBS.
Speaker Change: Currently we've made, I think we've made about three investments
Speaker Change: You know, they're mostly AAA, CMBS, highly liquid securities
Speaker Change: We'll use those as a placeholder now with a levered return of something probably 12-plus.
Speaker Change: something between 12 and 15 percent and like I said there's I think we've got three tranches of AAA CMBS.
Michael Nierenberg: Is it reasonable to expect that by the end of the year, that 120 million left to be sold from the RPL portfolio will be, you know, okay. All right, great. Thank you guys so much. Appreciate it.
Michael Nirenberg: Is it reasonable to expect that by the end of the year, the $120 million left to be sold from the RPL portfolio will be, you know, okay, alright, great? Thank you guys so much. I appreciate it.
Speaker Change: Is it reasonable to expect that by the end of the year that $120 million left to be sold from the RPL portfolio will be, you know, okay. Alright, great.
Michael Nierenberg: Thanks, Eric.
Stephen Laws: Our next question comes from Stephen Laws with Raymond James.
Operator: Our next question comes from Stephen Laws with Raymond James. Please go ahead.
Speaker Change: Thank you guys so much, appreciate it.
Eric Hagan: Thanks, Eric.
Michael Nierenberg: Please go ahead.
Speaker Change: Our next question comes from Stephen Laws with Raymond James. Please go ahead.
Michael Nirenberg: Good morning Michael and Mary. I'm curious Michael, as you look at the legacy assets, you know, and you think about it maybe in percentage terms, you know, how much capital, existing capital, will be needed to support kind of the first loss pieces or risk retention that you'll need to keep and how much, what percentage of that capital will be freed up to go into new targeted investment?
Stephen Laws: Hi, good morning, Michael and Mary. I'm curious, Michael, as you look at the legacy assets, you know, and you think about it maybe in percentage terms, you know, how much capital of existing capital will be needed to support kind of the, you know, first law's pieces or risk retention that you'll need to keep. And how much, what percentage of that capital will be freed up to go into new targeted investments? So there shows the quick. Stephen, just so we understand the question, your question is how much capital is allocated to the risk retention securities we're not able to sell?
Stephen Laws: Hi, good morning Michael and Mary.
Stephen Laws: Curious, Michael, as you look at the legacy assets,
Stephen Laws: And you think about it maybe in percentage terms, you know, how much capital, existing capital will be needed to support kind of the, you know, first loss pieces or risk retention that you'll need to keep and how much, what percentage of that capital will be freed up to go into new targeted investments?
Michael Nirenberg: So, Steven, just so we understand the question, your question is how much capital is allocated to the risk retention securities we're not able to sell, and then how much is going to get released against the $120 million that we intend to sell? Is that the question?
Stephen Laws: So there shows a quick
Stephen Laws: Stephen, just so we understand the question, your question is how much capital is allocated to the risk retention securities we're not able to sell, and then how much is going to get released against the $120 million that we intend to sell. Is that the question? Yes.
Michael Nierenberg: And then how much is going to get released against the 120 million that we intend to sell? That's a question. Yeah.
Michael Nierenberg: Yes, there was the risk retention assets that have approximately 15 to 16 million worth of equity capital that sit against them and you know the non risk retention assets along with some of the RPL and the L securities are probably in and around, let's just call 35 to 40 million dollars worth of equity capital. Great.
Michael Nirenberg: The risk retention assets have approximately $15 to $16 million worth of equity capital that sits against them, and the non-risk retention assets, along with some of the RPL and MPL securities, are probably in and around, let's just call it $35 to $40 million worth of equity capital.
Stephen Laws: The risk retention assets have approximately...
Stephen Laws: [inaudible]
Michael Nirenberg: Great and then to appreciate that to follow up on Eric's question you know as you think about you know whether it's 12 or 24 months out you know do you expect this to be largely CRE whole loans so you know how big of a mix will securities be you know and I guess along those lines from an investment sourcing standpoint do you feel you have everyone you need between the Green Barn and Sculptor teams or do you need to build out that origination effort?
Michael Nierenberg: And then to appreciate that to follow up on Eric's question, you know, if you think about, you know, whether it's 12 or 24 months out, you know, do you expect this to be largely searing whole loans, you know, how big of a mix will securities be, you know, and I guess along those lines from an investment sourcing standpoint, do you feel you have everyone you need between the the green garden and sculptor teams, or you need to build out that origination effort. Yeah, I think I'm just, just so we're clear, you know, at the rhythm levels, sculptor, you know, sculptor is a world class what I would really.
Speaker Change: Great and then to appreciate that to follow up on Eric's question you know as you think about you know whether it's 12 or 24 months out you know do you expect this to be largely CRE whole loans so you know how big of a mix will securities be?
Speaker Change: and I guess along those lines, from an investment sourcing standpoint, do you feel you have everyone you need between the Green Barn and Sculptor teams, or do you need to build out that origination effort?
Michael Nirenberg: Yeah, I think, just so we're clear, you know, at the Rhythm level, Sculptor is a world-class, what I would call, real estate investor, investment business, and they'll continue to do that across our entire business from a platform perspective here at Rhythm and Sculptor. I believe that we see pretty much everything that comes out in the real estate space, so we don't need anything new.
Speaker Change: Yeah, I think, just so we're clear, you know, at the rhythm level...
Speaker Change: [inaudible]
Michael Nierenberg: Investor investment business, and they'll continue to do that across our entire business from a platform perspective here at Rhythm and Sculptor. I believe that we see pretty much everything that comes out in the real estate space, so we don't need anything new.
Speaker Change: You know, Sculptor is a world-class, what I would call, real estate investment business and they'll continue to do that.
Speaker Change: Across our entire business from a platform perspective here at Rhythm And Sculptor, I believe that we see pretty much everything that comes out in the real estate space, so we don't need anything new
Michael Nirenberg: On the, as we go forward and think about this vehicle at the, you know, from a Rhythm management perspective, if you look at page seven, we give a little bit of a potential future state portfolio which has some CMBS, some senior loans, some potential MES loans, and then some opportunistic investments. Everything is kind of geared around a mid-teens type return, and part of it's going to be what the market gives us, right?
Michael Nierenberg: As we go forward and think about this vehicle at the, you know, from a rhythm management perspective, if you look at page seven, we gave them a little bit of a potential future state portfolio, which has some CNBS, some senior loans, some potential mes loans, and then some opportunistic investment, everything kind of year around a mid teens mid teens type return. And part of it's going to be what the market's going to give us, right? If you get a couple Fed rate cuts and the curve steepens out here, I think credit spreads overall will continue to do better.
Speaker Change: on the
Speaker Change: As we go forward and think about this vehicle from a rhythm management perspective, if you look at page seven, we gave a little bit of a potential future state portfolio, which has some CMBS, some senior loans, some potential MES loans, and then some opportunistic investments. Everything kind of...
Speaker Change: geared around a mid-teens, mid-teens type return.
Michael Nirenberg: If you get a couple Fed rate cuts and the curve steepens out here, I think credit spreads overall will continue to do better, and, you know, by default, the assets that we're going to have on the balance sheet should do better, and that should help grow book value as well. So I think it's a little bit of a TBD, but the one thing we're all clear about is that, you know, this is almost like a blank canvas with 250 million in equity and that the goal is going to be to grow this, not only from an equity perspective but really from an earnings standpoint. So we earn out of the hole that the current dividend is paying. But, like I said before, we're going to evaluate the dividend quarter to quarter. Great Well, certainly.
Speaker Change: and Part of it is going to be what the market is going to give us, right? If you get a couple Fed rate cuts and the curve steepens out here, I think credit spreads overall will continue to do better. And you know, by default, the assets that we're going to have on balance sheets should do better and that should help grow book value as well. So.
Michael Nierenberg: You know, by default, the assets that we're going to have on balance, he should do better, and that should help grow book value as well.
Michael Nierenberg: So I think it's a little bit of a TBD, but the one thing so we're all clear about is that, you know, this is a, almost like a blank canvas. With some amount with 250 million of equity, and that the goal is going to be to grow this not only from an equity perspective, but really from an earnings standpoint. So we earn out of the whole that the current dividend is paying, but like I said before, we're going to evaluate the dividend quarter to quarter.
Speaker Change: I think it's a little bit of a TBD, but the one thing so we're all clear about is that you know this is a almost like a blank canvas with someone met with 250 million of equity
Speaker Change: and that the goal is going to be to grow this, not only from an equity perspective, but really from an earnings standpoint so we earn out of the hole that the current dividend is paying. But like I said before, we're going to evaluate the dividend quarter-to-quarter.
Michael Nirenberg: Great, well, certainly a good time to be active in lending and CRE right now, and yeah, good luck with the transition, and thanks for the comments this morning, Michael.
Stephen Laws: Great, well certainly a good time to be active when they can see you right now, and you know, good luck with the transition, and thanks for the comments this morning, Mark. Thank you.
Speaker Change: Great, well certainly a good time to be active lending in CRE right now and good luck with the transition and thanks for the comments this morning Michael. Thank you.
Jason Stewart: Again, if you have a question, please press star, then one. Our next question comes from Jason Stewart with Janie Montgomery Scott; please go ahead.
Operator: Again, if you have a question, please press star then 1. Our next question comes from Jason Stewart with Jannie Montgomery Scott. Please go ahead.
Speaker Change: Again, if you have a question please press star then 1. Our next question comes from Jason Stewart with Jannie Montgomery Scott. Please go ahead.
Jason Stewart: Okay, good morning. Thank you. Excuse me.
Jason Stewart: Thank you more. Thank you.
Michael Nirenberg: On slide 7, Michael, it sounds like... This is sort of a progression of how the portfolio will grow. When you get down to opportunistic, is that going to be focused on CRE mortgages, or is that platform-based operating businesses? How do you see that evolving through a cycle?
Michael Nierenberg: Excuse me, on slide seven, Michael, it sounds like this is sort of a progression of how to portfolio will grow. And when you get down to opportunistic, is that going to be focused on CRE mortgage or is that platform based operating businesses? How do you see that evolving through cycle? I think it's, you know, we don't know. I mean, we see a ton of stuff, honestly, that comes across, right? If you think about rhythm and the scope of our business, whether it be on the residential side, the commercial side, the consumer side, and everything else that we look at, you know, there are a ton of opportunities that not everything pans out, obviously when you're underwrite them, but there's a ton of opportunities that come across the platform.
Jason Stewart: Okay, good morning. Thank you. Excuse me, on slide 7, Michael, it sounds like...
Jason Stewart: This is sort of a progression of how the portfolio will grow. When you get down to opportunistic, is that going to be focused on CRE mortgage or is that platform-based operating businesses? How do you see that evolving through a cycle?
Michael Nirenberg: I think it's you know we don't know I mean we see a ton of stuff honestly that comes across right if you think about rhythm and the scope of our business whether it be on the residential side the commercial side the consumer side and everything else that we look at you know there are a ton of opportunities that not everything pans out obviously when you underwrite them but there's a ton of opportunities that come across the platform you could envision at some point there could be some M&A activity quite frankly you could have a bank that might come in and say you know we want to sell X amount of loans and we believe in in that portfolio of loans I think the main thing to think about here is we're not just going to be able to grow through earnings. We're going to need more equity capital over time, and to the extent that we need more equity capital, there's got to be something on the other side that makes it accretive for us to come to market to say, okay, we want to raise equity because we're deploying capital at a 15% return.
Speaker Change: I think if, you know, we don't know, I mean, we see a ton of stuff, honestly, that comes across, right? If you think about rhythm and the scope of our business, whether it be on the residential side, the commercial side, the consumer side.
Speaker Change: and everything else that we look at.
Speaker Change: You know, there are a ton of opportunities that...
Speaker Change: Not everything pans out obviously when you underwrite them, but there's a ton of opportunities that come across the platform.
Michael Nierenberg: You could envision at some point there could be some M&A activity, quite frankly. You could have a bank that might come in and say, you know, we want to sell X amount of loans, and we believe in that portfolio of loans. I think the main thing to think about here is we're not just going to be able to grow through earnings; we're going to need more equity capital over time, and to the extent that we hit, you know, that we need more equity capital. There's got to be something on the other side that makes it a creative for us to come to market to say, okay, we want to raise equity because we're deploying capital of 15% return.
Speaker Change: You could envision at some point there could be some M&A activity, quite frankly. You could have a bank that might come in and say, you know, we want to sell X amount of loans and we believe in that portfolio of loans.
Speaker Change: I think the main thing to think about here is we're not just going to be able to grow through earnings, we're going to need more equity capital over time.
Speaker Change: and to the extent that we hit, you know, that we need more equity capital, there's got to be something on the other side that makes it accretive for us to come to market to say, okay, we want to raise equity because we're deploying capital at a 15% return. So if you think about it, again, going back to my earlier example, if you have 6 to 7% cost of capital on the equity side and you're able to deploy it at 15, it should be a home run for shareholders as we go forward. It's going to take time, though, so we're all clear.
Michael Nierenberg: So, if you think about it, again, going back to my earlier example, if you have 6% to 7% cost of capital on the equity side, and you're able to deploy to 15, it should be a home run for shareholders as we go forward.
Michael Nirenberg: So if you think about it, again, going back to my earlier example, if you have 6% to 7% cost of capital on the equity side, and you're able to deploy it at 15%, it should be a home run for shareholders as we go forward. It's going to take time, though, so we're all clear.
Michael Nierenberg: It's going to take time now, so we're all clear. Right, and along those lines, how willing are you to take the blank canvas and this clean balance sheet and acquire something that might be highly distressed, but has some issues to work through. How do you balance those two? You know, I think in our history at Rhythm Slash New Residential, we've demonstrated a willingness to do so. A good example would be Die Tech when we took that at a bankruptcy; it had a lot of hair on it. And it's been a grand slam; you know, a lot of the acquisitions we've done over the years if you look at.
Michael Nirenberg: Right. And along those lines, how willing are you to take the blank canvas of this clean balance sheet and acquire something that might be highly distressed but has some issues to work through? How do you balance those two?
Speaker Change: Right. And along those lines, how willing are you to take the blank canvas in this clean balance sheet and acquire something that might be highly distressed but has some issues to work through? How do you balance those two?
Michael Nirenberg: You know, I think in our history at Rhythm slash New Residential, we've demonstrated a willingness to do so. A good example would be Ditec when we took that out of bankruptcy. It had a lot of hair on it, and it's been a grand slam. You know, a lot of the acquisitions we've done over the years, if you look at, you know we did the Caliber deal. That was a great one. You look at a number of them; we did HLS and HLSS and some subsequent investments with Aquin; those were great ones.
Speaker Change: You know, I think in our history at Rhythm
Speaker Change: A willingness to do so, a good example would be Ditech when we took that out of bankruptcy, it had a lot of hair on it and it's been a grand slam. You know, a lot of the acquisitions we've done over the years, if you look at
Michael Nierenberg: You know, we did the caliber deal; that was a great one. You look at a number of the we did HLS and HLS, and some subsequent investments with Auckland; those were great ones. So yeah, I mean, you know, that's part of our DNA. You know, you're not going to be able to go, you know, regular way to say, okay, you're going to compete against, you know, XYZ, and all the sudden everything's going to be 15 and 20% returns. We're going to have to do some stuff with hair on it for sure.
Speaker Change: We did the Calibre deal, that was a great one. You look at a number of, we did HLS and HLSS and.
Michael Nirenberg: So yeah, I mean, that's part of our DNA. You know you're not going to be able to go the regular way to say okay, you're going to compete against XYZ, and all of a sudden, everything's going to be 15 to 20 percent returns. We're going to have to do some stuff with hair on it for sure.
Speaker Change: Some subsequent investments with Auckland. Those were great ones. So yeah, I mean, you know, that's part of our DNA You know, you're not going to be able to go, you know regular way to say, okay You're going to compete against you know XYZ and all of a sudden everything's going to be 15 to 20 percent returns We're gonna have to do some stuff with hair on it
Michael Nierenberg: Yeah, understood, and last one for me, just more near term in terms of the senior loan focus, is there a geography or an asset class that we should expect you to focus on first. No, I mean, you know, for now we're taking the excess cash and we're deploying a triple ACMBS that are highly liquid. Again, I think we'll look at anything. You know, if you look at some of the investments we made in the real estate space on the rhythm balance sheet, you know, we made an investment. And it was in the press in CXP, which is going to be a property trust as it was a stress portfolio of office.
Michael Nirenberg: Yeah, understood. And last one for me, just more near term in terms of the senior loan focus, is there a geography or an asset class that we should expect you to focus on first? No, I mean, you know, for now...
Speaker Change: for sure.
Speaker Change: Yeah, understood. And last one for me, just more near term in terms of the senior loan focus, is there a geography or an asset class that we should expect you to focus on first?
Michael Nirenberg: For now, we're taking excess cash, and we're deploying it in AAA CMBS that are highly liquid. Again, I think we'll look at anything. If you look at some of the investments we made in the real estate space, on the Rhythm Balance Sheet, we made an investment that was in the press in CXP, which is Columbia Property Trust's portfolio of offices, so I think we'll look at anything. If it underwrites and we feel like the risk-adjusted returns warrant that investment, we'll try to do that.
Speaker Change: No, I mean, you know, for now we're taking excess cash and we're deploying in AAA CMBS that are highly liquid. Again, I think we'll look at anything, you know, if you if you look at some of the investments we made in the real estate space.
Speaker Change: On the Rhythm Balance Sheet, we made an investment, it was in the press, in CXP.
Speaker Change: which is Columbia Property Trust. It was a distressed portfolio of office, so I think we'll look at anything. If it underwrites and we feel like the risk-adjusted returns warrant that investment, we'll try to do that.
Michael Nierenberg: So I think we will look at anything if it underwrite and we feel like the risk risk adjusted returns weren't that investment will try to do that.
Jason Stewart: All right, thank you.
Michael Nierenberg: Thanks, Jason.
Michael Nirenberg: This concludes our question and answer session. I would like to turn the conference back over to Michael Nirenberg for any closing remarks.
Operator: This concludes our question and answer session.
Speaker Change: Great, thank you.
Michael Nierenberg: I would like to turn the conference back over to Michael Nairnberg for any closing remarks. Thanks for dialing in. Thanks for the thanks for the question, guys. We're excited about this one. I mean, I think it's, you know, again, it's a clean canvas in a lot of ways. I don't want to sound like an artist, but, you know, as we look forward, we think the opportunity set put in front of us around this vehicle is going to be something that's going to be special. You know, we want to make sure that we're focused on a commercial real estate space.
Speaker Change: Thanks, Jason.
Speaker Change: This concludes our question and answer session.
Michael Nirenberg: Thanks for dialing in. Thanks for the questions, guys.
Speaker Change: I would like to turn the conference back over to Michael Nirenberg for any closing remarks.
Michael Nirenberg: We're excited about this one. I think it's, you know, again, it's a clean canvas in a lot of ways. I don't want to sound like an artist, but, you know, as we look forward, we think the opportunity set put in front of us around this vehicle is going to be something that's going to be special. We want to make sure that we're focused on the commercial real estate space. We have a lot of expertise around the house, and we look forward to updating you throughout the quarter and on next quarter's call. So have a great rest of the summer, and thanks for dialing in.
Michael Nirenberg: Thanks for dialing in thanks for the thanks for the questions guys we're excited about this one I mean I think it's you know again it's
Michael Nirenberg: It's a clean canvas in a lot of ways. I don't want to sound like an artist, but...
Michael Nirenberg: You know, as we look forward, we think the opportunity set put in front of us around this vehicle is going to be something that's going to be special. You know, we want to make sure that we're focused on the commercial real estate space. We have a lot of expertise around the house.
Michael Nierenberg: We have a lot of expertise around the house. And we look forward to updating it throughout the quarter and on the next quarter's call.
Michael Nirenberg: and we look forward to updating you throughout the quarter and on next quarter's call. So have a great rest of the summer and thanks for dialing in.
Michael Nierenberg: So, have a great rest of the summer, and thanks for dialing in.
Operator: The conference is now concluded. Thank you for attending today's presentation.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Michael Nirenberg: Cut.
Operator: You may now just.
Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.