Q4 2024 Lument Finance Trust Inc Earnings Call
Speaker Change: Good morning. Thank you for joining the Lument Finance Trust Sport Quarter 2024 Earning Scall. Today's call is being recorded and will be made available by a webcast on the company's website. I would now like to turn the conference over to Andrew Tsang with investor relations and Lument Investment Management. Please go ahead.
Speaker Change: Thank you. Good morning, everyone. Thank you for joining our call to discuss Lument Finance Trust's fourth quarter, 2024 financial results.
Andrew Tsang: With me on the call today, Jim Flynn, our CEO , Jim Briggs, our CEO , Jim Henson, our president, and Zach Halpern, our Managing Director of Portfolio Management.
Andrew Tsang: On Wednesday, March 19, we filed their 10K with the SEC and issued a press release to provide details on our recent financial results.
Andrew Tsang: We also provided supplemental earnings presentation, which can be found on our website.
Speaker Change: Before handing the call over to Jim Flynn, I'd like to remind everyone that certain statements made during the course of this call are not based on historical information. May constitute forward looking statements within the meetings section 27 a of the Securities Act of 1933, section 20 on E of the Securities Exchange Act of 1934.
Andrew Tsang: Such far-reaching statements are subject to various risks and uncertainties that could cause actual results to differ materially from those contained in the far-reaching statement.
Andrew Tsang: These risks and uncertainties are discussed in the company's reports filed with the SEC in particular the risk factors section of our form time yet.
Andrew Tsang: It is not possible to predict or identify all such risks, and listeners are cautioned not to place undi reliance on these four-looking statements.
Andrew Tsang: The company undertakes no obligation to update any of these horror-loving statements.
Speaker Change: Further, it's very non-yet financial measures will be discussed on this conference call.
Speaker Change: Presentation of this information is not intended to be considered an isolation, nor is it substituted for the financial information presented in accordance with the app.
Speaker Change: for conciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with Gap to be accessed through our filings with the FCC.
Speaker Change: For the fourth quarter and fiscal year 2024, we reported gap net income of $0.7 per share and $0.34 per share of common stock respectively. For the fourth quarter and fiscal year 2024, we reported distributed earnings of $0.10 and $0.44 per share of common stock respectively.
Speaker Change: This past December , we declared a poorly dividend of each sense per share with respect to the fourth quarter, the additional one-time special dividend of nine cents per share, bringing our cumulative dividend declared for 20 to 40 cents per common share.
Speaker Change: I will now turn the call over to Jim Flynn, please go ahead [inaudible]
Jim Flynn: Thank you, Andrew. Good morning, everyone. Welcome to Lument Finance Trust Erdner's call for the fourth quarter of 24. Appreciate everyone joining us today.
Jim Flynn: We'll start with a quick view of the overall market. The broader macroeconomic environment continues to be shaped by...
Jim Flynn: Geopolitical uncertainty, financial market volatility, and to a lesser degree today inflation.
Jim Flynn: As we answered 2024, we anticipated multiple rate cuts over the course of the year, but given the resilience of the economy and the ongoing inflationary pressures, most of those cuts did not materialize, and now it's clear that interest rates will remain elevated.
Jim Flynn: With inflation currently moderating and the economy cooling, the Federal Reserve has certainly projected to make two clubs in 2025.
Jim Flynn: Despite the volatility we are encouraged by increasing stability in commercial real estate, particularly Capuzzi, which have begun to normalize after a period of dislocation.
Jim Flynn: Redfield Growth is anticipated in nearly all major measures this year and beyond, and transaction volumes, while below historic norms have also picked it up in recent months.
Jim Flynn: We believe the positive momentum for lending activity that we saw in late 2024 relative to earlier in the year will continue in 2025.
Jim Flynn: Although we remain cautious, we are optimistic that as market conditions continue to stabilize, opportunities to deploy capital-attractive risk-adjusted returns will emerge.
Jim Flynn: On the asset management side, we continue to prioritize proactive asset management across our portfolio to drive positive outcomes. Our credit risk ratings have remained largely stable, reflecting discipline, underwriting and ongoing borrower engagement, and while we've made modest increases to specific reserves, these adjustments have improved and in line with our expectations for the portfolio performance.
Jim Flynn: Managing our existing book of credit remains a core focus and our team continues to work closely with all borrowers to maximize recovery values and ensure that assets perform in line with our underwriting expectations.
Jim Flynn: We remain confident in our ability to effectively navigate this environment and outsmize outcomes for all shareholders.
Jim Flynn: While the managers lending affiliate Lument continues to actively deploy capital into new law investments with a focus on multi-family, backed by strong sponsors, LFT's investment activity during the quarter was modest, primarily limited by the available reinvestment capital.
Jim Flynn: Our 2023 Secure Financing Vehicle, LMS 23-1, remains in this reinvestment period into July of this year, and we expect a source needle on assets as investment capacity becomes available.
Jim Flynn: During the period, we also had significant payoffs of season loans in the portfolio.
Jim Flynn: In terms of our financing strategy, as our 2021 Securization continues to deliver, we have dedicated significant time with our lending partners and advisors to explore options to be financed to our best and portfolio.
Jim Flynn: and recognition of the fact that our portfolio today is primarily comprised of season assets.
Jim Flynn: We expect some low borrowers to exit our loans at the time anticipated in their underwritten property business plans. We believe it prudent to continue to defer the execution of a CRE cell CLL or similar discretization transaction.
Jim Flynn: Until such time that we have more visibility into those low-resolutions.
Jim Flynn: In the interim, we have engaged in active discussions with select counterparties for other forms of potential security financing, including banks provided warehouse facilities, which provide us with the flexibility to better manage both our performing loan portfolio and the handful of more challenge assets, and expect to provide additional details in the coming quarter as these conversations progress.
Jim Flynn: We expect such secured finance and will allow us to remain highly flexible from a liquidity perspective and position ourselves to achieve positive asset management outcomes for our existing portfolio without sacrificing significant economics.
Jim Flynn: That said, we continue to believe that a securization transaction later this year remains a viable potential option as obtaining non-marked market match terms, feared financing, as always, is an attractive economic priority for the company.
Jim Flynn: As we look ahead, we remain committed to our core investment strategy of deploying capital into transitional floating-made mortgages, with a particular emphasis on middle market multi-family assets.
Jim Flynn: Multifamilies and the Fundamentals were made strong, supported by robust demand, constraint supply, and resilient rental trends.
Jim Flynn: We continue to leverage the original underwriting and asset management expertise of our manager and its affiliates to identify and capitalize on compelling investment opportunities.
Jim Flynn: Our ability to navigate to current environment, truly manage our liquidity and optimize capital deployment on a lever basis will be seen to delivering long-term value to our shareholders.
Jim Flynn: With that, I'd like to turn the call over to Jim Briggs who will provide details on our
Thanks, Jim. Good morning, everyone.
Speaker Change: Last evening, we filed our annual report on Form 10K and provided a supplemental investor presentation on our website, which will be referencing during our remarks.
Speaker Change: Supplemental Investor presentation has been uploaded to the webcast as well for your reference. On pages 4 through 7 of the presentation, you'll find key updates and earning summary for the quarter.
Speaker Change: The fourth quarter of 24 reported net income to common stockholders of approximately 3.6 million or $0.7 per share. We also reported distributable earnings of approximately $0.4 million or $0.10 per share.
Speaker Change: Two items I'd like to highlight with regards to the Q4 P&L.
Speaker Change: A Q4 net interest income was 9.4 million, which is relatively flat to the 9.5 million recorded in Q3. The weighted average coupon and average outstanding UPB, the portfolio declined sequentially, largely due to declines in the so-for benchmark rate and the deleverging of our 2021 securitization.
Speaker Change: These reductions in that interest income were largely offset by increased exit fees related to loan payoffs.
Speaker Change: They off-starred Q4, totaled 144 million as compared to 51 million in the prior quarter with the company recognizing approximately 1.1 million of exit fees during Q4 compared to approximately 150,000 in Q3.
Speaker Change: Our total operating expenses were largely flat, quarter-on-quarter, so we recognized the expenses of 2.8 million Q4 versus 2.9 million in Q3.
Speaker Change: The primary difference between our reported net income and distributable earnings.
Speaker Change: was a 1.8 million net increase in our allowance for credit losses. I'll walk through the components of that.
Speaker Change: As of December 31st, we had six loans risk-graded to five, including four assets downgraded to five and key four. All six loans were collateralized, five loans were collateralized by multi-family assets, one of those loans are collateralized by public care.
Speaker Change: Henson will provide a bit more detail on the six in his remarks.
Speaker Change: We evaluated those six vibrated loans individually to determine whether asset-specific reserves for credit losses were necessary.
Speaker Change: And after analysis of the care value of the underlying collateral, we increased our specific reserves to 3.7 million as of 1231.
Speaker Change: and increase of 2.9 million versus the prior quarter. Our general reserve for credit losses decreased by 1.1 million during the period, primarily driven by payoffs of forming loans and the move of four assets to specific evaluation.
Speaker Change: In terms of basis points of reserve on the general pool, that was flat quarter on quarter [inaudible]
Speaker Change: We ended the fourth quarter with an unrestricted cash balance of $69 million and our investment capacity through our two secured finance was fully deployed.
Speaker Change: Funkin's total equity at the end of the quarter was 238 million, total book value of common stock was approximately 170 million.
Speaker Change: or $3.40 per share, decreasing sequentially from $3.50 per share as of September 30 as a result of aggregate dividends, including the nine-cent special common dividend paid on January 15th.
Speaker Change: As a REIT, we are required to distribute at least 90% of our taxable income in order to meet re-testing requirements. Our 9-cent special dividend declared in December was calibrated to distribute 100% of our taxable income so that the company will not be taxed at the corporate rate for any of its 2024 taxable income.
Speaker Change: The 19th Special Dividend also largely tracks the annual difference between distributable income and gap income of 10 cents, which was driven by unrealized provisions for credit losses during 24, which does not impact taxable or distributable incomes.
Speaker Change: Went out to earn the call over to Jim Henson to provide details to the company's investment activity in portfolio performance during the quarter.
Thank you, Jim.
Speaker Change: During the fourth quarter, LFP experienced $144 million of loan payoffs and acquired one new loan asset with an initial principal balance of $13 million and a weighted average coupon of sofa plus 375 basis points.
Speaker Change: As of December 31, our portfolio consisted of 65 floating rate loans with an aggregate unpaid principal balance. We're approximately 1.1.
Speaker Change: Billion dollars. 100% of the portfolio was indexed to one month so far and 92% of the portfolio was collateralized by multi-family properties.
Speaker Change: As of the end of the fourth quarter, our portfolio had a weighted average floating note rate of a sofa plus 358 bassist points.
Speaker Change: and an unamortized aggregate purchase discount of $3.5 million.
Thank you.
Speaker Change: The CRE CLO Securization Transaction, we issued in 2021, provided effective leverage of 75% to our loan assets and a weighted average cost of funds of so far plus 171 basis points.
Speaker Change: The LMF financing completed in 2023 provided the portfolio with effective leverage of 83% at a weighted average cost of funds of SOFR plus 314 basis points.
on a combined basis.
Speaker Change: The two securitizations provided are a portfolio with effective leverage of 78% and a weighted average cost of funds of SOFR plus 226 basis points as of quarter end.
Speaker Change: As of December 31st, approximately 64% of the loans in our portfolio were risk rated a 3 or better, compared to 60% at the end of the prior quarter.
Speaker Change: Our weighted average risk rating remained relatively unchanged, improving modestly to 3.5 versus a 3.6 at the end of Q3.
Speaker Change: We had six loan assets risk rated a five with an area principal amount of $98 million, or approximately 9% of the unpaid principal balance of our investment portfolio.
Speaker Change: One was a $15 million loan collateralized by two multi-family properties in Philadelphia, Pennsylvania.
Speaker Change: This loan asset was rescrated by due to monetary default.
Speaker Change: during Q4, the company recognized approximately $432,000 of cash received from the borrower as a reduction in a carrying basis of this loan.
Speaker Change: Another five-risk-rated asset was a $32 million loan collateralized by a multi-family property in Dallas, Texas that was in technical default.
Speaker Change: Both of those loans were also risk-graded five at the end of the third quarter.
Speaker Change: The third five-risk-rated asset was a $20 million loan collateralized by property in Orlando, Florida. That was in monetary default.
Speaker Change: The fourth five risk-graded asset was a $15 million loan collateralized by a multi-family property in Santa and Antonio Texas. That was in technical default.
Speaker Change: The fifth risk-graded loan was a $6 million loan collateralized by two multi-family properties in the land of Florida, MSA, that was a monetary default.
Speaker Change: and the six-risk-rated asset was a 10-and-a-half-metall alone, collateralized by a multi-family property in Colorado Springs that was in monetary default.
Speaker Change: During the fourth quarter, we were successful in achieving positive outcomes on two of the four loans that were 5 rated as of September 30th.
Speaker Change: He's included a $20 million loan collateralized by multi-family properties in Augusta, Georgia.
Speaker Change: and a $17 million loan collateralized by a multifamily property in Brooklyn, New York.
Speaker Change: We received full recovery of principal on both of these investments.
Speaker Change: Thanks to the diligent efforts of our manager's asset management team.
Speaker Change: There are no existing specific reserves on these two resolved assets.
Speaker Change: We continue to work closely with borrowers on the six vibrated assets that we're outstanding at the end of the year.
Speaker Change: With that, I will pass it back to Jim Flynn for closing remarks and questions.
Speaker Change: Thank you, Jim. I would like to take the opportunity to thank Jim Henson for his dedication, sage advice, and support of the LFP platform.
Speaker Change: We wish Jim the best in his retirement and I'd also like to welcome Greg Calvert as our
Speaker Change: being part of a large organization with a well-capitalized parent as the yard gives us the opportunity to have a deep bench of experienced professionals.
Speaker Change: Briggs had a more than 30-year career in real estate, primarily on the investment in credit sides, and he will be a great addition to our team in 2025.
Speaker Change: Lastly, I want to thank all of our guests. We appreciate your time and your interest in our platform. I look forward to hearing from you and with that, I'll ask the operator to open the call to any questions.
Speaker Change: Thank you, and ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: To ask a question, you may press the store followed by the number one on your cellphone keypad. If you're using a speaker phone, please pick up your headset before pressing any keys. To withdraw your question, please press the store followed by the number two. Once again, please press the store one to join the queue.
Speaker Change: Your first question comes from the line of Stephen Laws with Raymond James, please go ahead.
I'm sorry. I'm sorry. I'm sorry. I'm sorry.
Stephen Laws: Hi, good morning. Appreciate the comments and the prepared, appreciate comments and prepared remarks wanted to touch on the 21 CLO.
Stephen Laws: How does that, given it's paid down, how does that currently compare from a blended financing cost to current market conditions for a new CLO and, you know, around your comment, some of you're considering...
Stephen Laws: You know, some financing lines and other options but as you look to the, you know, maybe doing another securitization or deal later this year is, is that a, you know, would you collapse the SL1 from 21 and roll the collateral in, kind of how do you think about managing the financing side of the balance sheet through the year?
Yeah, so obviously we are, um...
Stephen Laws: You know, we're looking at all of those things. We are...
Stephen Laws: You know, looking to basically refinance the portfolio as we move forward here in the coming quarters. FNL 1 today is about 75% advance at a cost of 171 over sofa.
Stephen Laws: That the cost is still attractive, but the leverage obviously is lower. We've seen deals going off in the mid to high 80s on an advanced rate.
Stephen Laws: So in terms of you know how we're looking at the portfolio as we said we are working with
Some of our partners, too.
Stephen Laws: Consider some alternatives that give us a little more flexibility in the short terms.
around, you know, dealing with some of these assets that, you know, that we...
Stephen Laws: We're working through with existing borrowers or potentially new borrowers and do expect it to move forward with one or more of those types of financing arrangements as you move through the year.
Stephen Laws: I'm sorry, the Q2 event for what's the difficulty of that? Well, I got the first question, a year-to-date originations, and where are I'm at at the end of Q1? So can you talk about portfolio, how much just run-off repayments versus originations in Q1?
Stephen Laws: So on the origination side, we've had very LFT has had very few because we don't have any capacity at FL1 and that LMF has been minimal.
Stephen Laws: We've had about 25 million of payoffs, and they're in due expect more in the coming quarters here. They're on the origination side. [inaudible]
Stephen Laws: You know, again, just broadly at the at the parent level in terms of what we're seeing.
You know, we've got [inaudible]
somewhere around 400 or 500 billion that we've originated since.
Stephen Laws: Pollock, October-ish. The beginning of 2024 was was pretty light. Across the industry, it's picked up significantly while it's not back to the levels it was.
Stephen Laws: Even forgetting about P kind of normal level, I would say it's not quite there, but we are seeing, you know, significant opportunity and we are making those loans we have them on our
Stephen Laws: The manager's balance sheet. So opportunity is there and we feel good about that.
Stephen Laws: And in our book, you know, we've continued to manage it. We have a very experienced management team, both in special and REO, and we've been able to get to a positive resolution.
Stephen Laws: in LFPs book and across most of the parents book wherever we've needed to. The biggest challenge we have and have had are one of the biggest challenges is just the timing of those things.
Stephen Laws: One, not controllable by us, and two, just take a bit longer than you'd like, which is why we're moving toward or evaluating.
Financing options that give us flexibility with that environment.
Great. Appreciate the comments this morning. Thank you.
Speaker Change: And your next question comes from the line of Steve DeLaney with Citizens Bank, please go ahead.
Thank you. Good morning, everyone. Thank you for taking the question.
Speaker Change: Obviously a little activity in terms of downgrades with the new five risk ratings.
and it looks like you did boost your specific reserves.
Speaker Change: First, let me make sure I have the numbers right on the five rated loans.
Speaker Change: Am I correct, it's specific reserves, and I assume they're on the five rated loans with 3.7 million as of year in 2024. Is that the correct level? Yeah, that's that's right, Steve.
Speaker Change: Okay, and so, look, these are, you've got what, six loans, 98 million, you know, so 15 million or so average loan size that it would seem. It's where, yeah.
Speaker Change: You know, everything runs nicely through Gap, but then as we're modeling for this year and trying to come up with distributable EPS, give us some sense of like from your where you sit internally your expectations of timing of resolution.
Speaker Change: Are you going to get asked it? Well, first quarter is already done and we're not talking about anything. Well, if that's of course you're reporting on 4Q.
Speaker Change: Is it going to be more back-end weighted in 2025 in terms of the resolutions?
Speaker Change: as we want to try to start loading some realized losses into our distributable earnings estimates. I guess I'm just trying to get a sense. I know you can't be specific, but how we should sort of look at 2025, which respect to those realized losses. Thanks.
Thank you, Steve. Look, obviously...
Speaker Change: That's a difficult question to answer as you know, given where we are. Yeah, no, given where we are, I mean, is would I would I wait toward the back end versus say in the second quarter or early third? I would because...
Speaker Change: You know, from a modeling and perspective and that's how we're thinking about it. We're similarly to you and how we manage.
Speaker Change: The Book in the Portfolio. That being said, and what we've seen, and I think this is a little bit related to the market, right? We've seen things starting to loosen up where people are. [inaudible]
Speaker Change: wanting to get to resolutions. And I mean sponsors, in particular, whether those resolutions are them wanting to walk away and just doing it, or whether they think there's actually opportunity for them to continue to create value at these assets.
The timeline of getting those done.
is difficult and in some cases
Speaker Change: You know, if we have a borrower that is not negotiating with us or not, in a way to...
Speaker Change: You know, discussing a real resolution, you know, we've had to move towards foreclosure and other
Speaker Change: You know, remedies in order to either bring them to the table or from our perspective, let's bring someone to the table who would. So I still we still have.
You know, we have had...
Speaker Change: Assets that have had reserves where we've resolved them and gotten paid back in full, including default interests and other fees and expenses. I suspect that will be the case for some of our assets here. But we also have assets that have been challenged in a greater way than we anticipated.
I do think that we are-
Speaker Change: You know, relative to the market, our book is still fairly healthy.
We have not [inaudible]
Modified Loans [inaudible]
with sponsors.
Speaker Change: through PICS and AB structures and other types of tools that we've seen in the market. We do think there's opportunity for us to bring in new sponsors into some of our deals, perhaps offering them stellar financing or other opportunities.
Speaker Change: or other structures that could make it a more attractive asset to a new sponsor who wants to take over the asset time is a big one. So a new sponsor would want to say how much time do I have because the further out that horizon goes, the more likely they're getting a attractive asset. So...
Speaker Change: In terms of resolutions into the first part of your question, I do, I would put it back weighted. In terms of our time and our discussions, we are kind of on a daily basis trying to
Speaker Change: either with the existing sponsor group or a neat sponsor trying to put these assets in a place that says, okay, these are now performing assets.
Speaker Change: But you know, we're hopeful that we can continue to have positive resolutions as we have in the past, have in the past.
Speaker Change: Thanks, that's helpful. It's a contact for the way you do it, and I hear you loud clear. Just a quick follow-up. Your loan portfolio is about 1.1 billion on roughly 240 million to capital. Jim Flynn, you talked about a new kind of state of the arts, CLO.
Speaker Change: As you look at, apart from this credit resolution issue we were talking about earlier, but just looking at the court folio in more of a macro sense.
Speaker Change: Is there with a new improved financing structure, let's just say mid 2025, you know, CLO, I assume?
Speaker Change: Do you see potential for expanding the portfolio slightly with existing capital base with some improved financing structure?
Speaker Change: I mean, the short interest, yes, I think that
Speaker Change: You know, we've, during this now, it's been a couple of years, we've maintained a higher liquidity than, you know, we have in the past and the historical past for a good reason. We are delabbering.
Speaker Change: today through the FL1 payoffs and in a normalized market and as we get through
Resolving these assets in a positive way.
You know, I do think-
Again, using that match term financing like a CLO.
Speaker Change: and understanding the size of this entity that we're slightly under levered compared to historical norms and...
Speaker Change: assuming that we are comfortable with our liquidity position, comfortable that we've resolved, you know, the assets that we want to make sure that we...
Speaker Change: Get through, I think that there's a reasonable expectation that the portfolio would grow a bit.
Speaker Change: And even on the resolutions, a lot of what I'm talking about is liquidity, right? We can't control...
Speaker Change: When we need the liquidity, and we might need liquidity for three assets over one quarter, and if we only need it for one, we would think about it differently. So there really is a drag from maintaining that flexibility and that we hope to go away or at least decrease over the coming quarters.
Thank you both for the additional color this morning.
Speaker Change: Thank you and once again if you would like to ask a question, simply press a store followed by the number one on your telephone keypad.
Speaker Change: Your next question comes from the line of Christopher Nolan with Latin Briggs Talman. Please go ahead.
Christopher Nolan: Hi, I'm a question of Lone Law's provision expenses. What's the correlation between your risk rating and provision charges?
Speaker Change: On the specific reserves there, Chris, you know, as his policy, when we specifically evaluate those, we're looking at the fair value of the underlying collateral.
Speaker Change: We look at individually in terms of the general pool for the portfolio, the risk ratings are going to bring with a higher probability of default.
Speaker Change: as you scale up, you know, from Fruse the Force. And as I mentioned in the fives, they're specifically evaluated. So it's also dependent upon, you know, underlying
Speaker Change: You know, loan metrics, that's going to drive risk rating, but it's also going to be driving probability at the fault in in the model that we end and others use for the for the general pull.
Great. Thank you. Yeah. Please.
Speaker Change: But to be clear, for the fives, we're looking at the underlying cloud.
Speaker Change: Okay, interesting. And then in the early market comments, talking about the stability of multi-family
Does the changing market expectation in terms of rate cuts?
Sort of start derailing
Speaker Change: Refinancing and Negotiations for any portfolio companies or so simply, you know, is that really coming affecting it at all or is really the financing all about the cash flow of the property?
Yeah, I...
Speaker Change: Look, obviously any putt in the short-term rates helps current sponsors.
I don't think...
That 25 or 50 basis point club this year is...
Speaker Change: Having a huge impact or will have a huge impact on how people think or act psychologically, I think it's probably a good thing.
and, again, one thing to remember, if we're putting rates...
Speaker Change: The reason for the cuts is either because inflation is completely in check or there's some concern about the health of the economy and whether we're headed toward a recession. So neither, you know, especially the latter is not exactly a positive event.
Speaker Change: But when you also consider multifamily historically, multifamily still performs pretty well in those times of the market people are buying homes last day in their apartments and rent more so.
You know there's kind of a
Speaker Change: Odd dynamic there with the economy versus performance and multi-family. I think the bigger driver is that the 10 year has stayed in the relatively low force here for a few months.
Speaker Change: Most expectations for the year and 10 year have come down a bit over the last quarter and a half Many are some are still up towards five, but consensus is
Speaker Change: More in the four to four and a half range and I think that is the big driver you have a lot of capital that wants to be deployed some international any large checks that want to get back into the US market that are sat on the sideline that's going to drive.
Speaker Change: Some value appreciation, in my opinion, and also just transaction volume going up. So there's a lot of positives there. As you know, you know, deliveries in most markets, not every single market, but in most markets have peaked.
Speaker Change: and we'll continue to run off, and so there's a bit of an absorption issue, but they're still.
Long-term, they supply demanded balance in most markets.
Speaker Change: That's why we're currently seeing rent growth in almost all major metrics and when we're not seeing rent growth there's still projections for rent growth as we move throughout the year.
Speaker Change: You have a lot of all of those signs, I think, for sponsors and people that want either managing an existing asset or thinking about getting back in the market are a bit more bullish and real than maybe they've been in the past year or two.
Okay, thank you.
Thank you.
Speaker Change: Thank you, and I'm showing no further questions at this time. I would like to turn it back to James Flynn for closing remarks.
James Flynn: Just appreciate everyone joining and the interest in the platform and look forward to speaking to you all again next quarter.
James Flynn: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining