Q3 2025 KKR Real Estate Finance Trust Inc Earnings Call

Speaker #3: Good day and welcome to the KKR Real Estate Finance Trust Q3 2025 Financial Results Conference Call. All participants will be in a listen-only mode.

Operator: Good day, and welcome to the KKR Real Estate Finance Trust Inc. Third Quarter 2025 Financial Results Conference Call. All participants will be in a 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 a touch-tone phone. To withdraw your question, please press star, then two. Please note that this event is being recorded. I would now like to hand the conference over to Mr. Jack Switala. Please go ahead.

Speaker #3: 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 the touch tone phone .

Speaker #3: To withdraw your question , please press star . Then two . Please note that this event is being recorded . I would now like to hand the conference over to Mr. Jack Switala .

Speaker #3: Please go ahead .

Speaker #4: Great . Thanks . Operator and welcome to the KKR Real Estate Finance Trust earnings call for the third quarter of 2025 . As the operator mentioned , this is Jack Switala .

Jack Switala: Great. Thanks, Operator, and welcome to the KKR Real Estate Finance Trust Earnings Call for the third quarter of 2025. As the Operator mentioned, this is Jack Switala. This morning, I'm joined on the call by our CEO, Matt Salem, our President and COO, Patrick Mattson, and our CFO, Kendra Decius. I'd like to remind everyone that we will refer to certain non-GAAP financial measures on the call, which are reconciled to GAAP figures in our earnings release and in the supplementary presentation, both of which are available on the Investor Relations portion of our website. This call will also contain certain forward-looking statements, which do not guarantee future events or performance. Please refer to our most recently filed 10-Q for cautionary factors related to these statements. Before I turn the call over to Matt, I will go through our results.

Speaker #4: This morning , I joined on the call by our CEO , Matt Salem . Our president and COO , Patrick Mattson and our CFO , Kendra Decius .

Speaker #4: I'd like to remind everyone that we will refer to certain non-GAAP financial measures on the call , which are reconciled to GAAP figures in our earnings release and in the supplementary presentation , both of which are available on the Investor Relations portion of our website .

Speaker #4: This call will also contain certain forward looking statements which do not guarantee future events or performance . Please refer to our most recently filed 10-q for cautionary factors related to these statements .

Speaker #4: Before I turn the call over to Matt , I will go through our results for the third quarter of 2025 . We reported GAAP net income of $8 million , or $0.12 per share .

Speaker #4: Book value as of September 30th , 2025 is $13.78 per share . We reported a distributable loss of $2 million due primarily to taking ownership of our Raleigh multifamily property and prior to net realized losses , D was $12 million , or $0.18 per share .

Jack Switala: For the third quarter of 2025, we reported GAAP net income of $8 million, or $0.12 per share. Book value as of September 30, 2025, is $13.78 per share. We reported a distributable loss of $2 million, due primarily to taking ownership of our Raleigh multifamily property. Prior to net realized losses, DE was $12 million, or $0.18 per share. We paid a $0.25 cash dividend with respect to the third quarter. With that, I'd now like to turn the call over to Matt.

Speaker #4: We paid a $0.25 cash dividend with respect to the third quarter . With that , I'd now like to turn the call over to Matt .

Speaker #5: Thank you . Jack , and thank you , everyone , for joining us today . I'll begin with a brief update on the commercial real estate lending market .

Speaker #5: The number of real estate opportunities remains robust as we enter the 1.5 trillion wall of maturities over the next 18 months . The debt markets are liquid , with banks returning to the market while increasing their back .

Matt Salem: Thank you, Jack, and thank you, everyone, for joining us today. I'll begin with a brief update on the commercial real estate lending market. The number of real estate opportunities remains robust as we enter the $1.5 trillion wall of maturities over the next 18 months. The debt markets are liquid, with banks returning to the market while increasing their back leverage lending. Despite a tightening of whole loan spreads since the beginning of the year, with lower liability costs, we are still able to generate strong returns, and we believe that real estate credit offers attractive relative value. As lenders, we think about safety first, and the ability to lend on reset values well below replacement cost, combined with decreasing new supply, creates a unique credit environment with strong downside protection. Overall, sentiment for real estate is turning positive as investors recognize the lagging values and strengthening fundamentals.

Speaker #5: Leveraged lending . Despite a tightening of home loan spreads since the beginning of the year , with lower liability costs , we are still able to generate strong returns and we believe that real estate credit offers attractive relative value as lenders .

Speaker #5: We think about safety first and the ability to lend on reset values well below replacement cost . Combined with decreasing new supply creates a unique credit environment with strong downside protection .

Speaker #5: Overall sentiment for real estate is turning positive as investors recognize the lagging values and strengthening fundamentals . We've been actively lending into this opportunity in the fourth quarter .

Speaker #5: We expect over 400 million in originations and have already closed 110 million across the United States and Europe . In October , we closed our first real estate credit loan in Europe for Cref , secured by 92.5% occupied portfolio of 12 light industrial assets across Paris and Lyon , France .

Matt Salem: We've been actively lending into this opportunity. In the fourth quarter, we expect over $400 million in originations and have already closed $110 million across the U.S. and Europe. In October, we closed our first real estate credit loan in Europe for KKR Real Estate Finance Trust Inc., secured by a 92.5% occupied portfolio of 12 light industrial assets across Paris and Lyon, France. This transaction highlights the breadth of our platform and our ability to draw on KKR's global resources. Although this is KKR Real Estate Finance Trust Inc.'s first European loan, over the last couple of years, we have been strategically building our European real estate credit platform, establishing a dedicated team, and originating over $2.5 billion to date. Through our European real estate equity business, we have strong connectivity across markets, giving us unique insight and access to opportunities that align with our disciplined approach.

Speaker #5: This transaction highlights the breadth of our platform and ability to draw on KCRW's global Resources . Although this is Kyra's first European loan , over the last couple of years , we have been strategically building our European real estate credit platform , establishing a dedicated team and originating over $2.5 billion to date through our European real estate equity business .

Speaker #5: We have strong connectivity across markets , giving us unique insight and access to opportunities that align with our disciplined approach . Within our broader real estate credit platform .

Speaker #5: We have been actively investing across the risk reward spectrum . Our platform lends on behalf of bank insurance and transitional capital targeting , institutional sponsors and high quality real estate .

Matt Salem: Within our broader real estate credit platform, we have been actively investing across the risk-reward spectrum. Our platform lends on behalf of bank insurance and transitional capital, targeting institutional sponsors and high-quality real estate. Our CMBS team is one of the larger investors in investment grade and B pieces. Across our global team, we will invest approximately $10 billion in 2025. To support our investing activity, we built a dedicated asset management platform called K-Star, which now has over 70 professionals across loan asset management, underwriting, special servicing, and REO. K-Star manages a portfolio of over $37 billion loans and is named special servicer on $45 billion of CMBS. Moving next to our third quarter results, we reported distributable earnings of negative $0.03 per share, or distributable earnings excluding losses of $0.18 per share, compared to our $0.25 per share dividend.

Speaker #5: Our CMBS team is one of the larger investors in investment-grade and B pieces across our global team. We will invest approximately $10 billion in 2025 to support our investing activity.

Speaker #5: We built a dedicated asset management platform called CoStar , which now has over 70 professionals across loan asset management , underwriting , special servicing and REO .

Speaker #5: Kaysar manages a portfolio of over 37 billion in loans and is named Special servicer on 45 billion of CMBS . Moving next to our third quarter results , we reported distributable earnings of $0.03 per share or distributable earnings .

Speaker #5: Excluding losses of $0.18 per share, compared to our $0.25 per share dividend, we set our dividend at a level in which we believe we can cover distributable earnings prior to realized losses over the long term.

Matt Salem: We set our dividend at a level in which we believe we can cover distributable earnings prior to realized losses over the long term. We continue to see upside in our REO portfolio, where we are making progress. As we stabilize and sell those assets, we can repatriate that capital and reinvest into higher earning assets. Therefore, there's embedded earnings power of $0.13 per share per quarter that we will be able to unlock over time. Looking at risk rating, we downgraded Cambridge Life Science loan from risk rated 3 to 4 with increased CECL provisions due to the downgrade. Book value per share remained mostly unchanged at $13.78, a decrease of 0.4% quarter over quarter. We are proactively managing our current portfolio of $5.9 billion. We received repayments of $480 million this quarter.

Speaker #5: We continue to see upside in our portfolio where we are making progress and as we stabilize and sell those assets , we can repatriate that capital and reinvest it into higher earning assets .

Speaker #5: Therefore, there's embedded earnings power of $0.13 per share per quarter. That will be able to unlock over time. Looking at risk rating.

Speaker #5: We downgraded Cambridge Life Science loan from grade 3 to 4 with increased Cecil provisions due to the downgrade . Book value per share remained mostly unchanged at $13.78 , a decrease of 0.4% quarter over quarter .

Speaker #5: We are proactively managing our current portfolio of 5.9 billion . We received repayments of $480 million this quarter . Year to date , we have received 1.1 billion in repayments and have originated 719 million , with 400 million of originations circled in the fourth quarter .

Matt Salem: Year to date, we have received $1.1 billion in repayments and have originated $719 million, with $400 million of origination circled in the fourth quarter. The underlying activity level remains strong, and we continue to see robust market activity. In 2026, we expect greater than $1.5 billion of repayments and expect to continue to match repayments with originations. With that, I'll turn it over to Patrick.

Speaker #5: Underlying activity levels remained strong, and we continue to see robust market activity in 2026. We expect greater than $1.5 billion of repayments and expect to continue to match repayments with originations.

Speaker #5: With that , I'll turn it over to Patrick . Thanks , Matt . Good morning everyone . Thanks to strong investor demand and close coordination with the KKR Capital Markets team , we successfully upsized our term loan B by 100 million to 650 million , which now has approximately six and a half .

Jack Switala: Thanks, Matt. Good morning, everyone. Thanks to strong investor demand and close coordination with the KKR Capital Markets team, we successfully upsized our term loan B by $100 million to $650 million, which now has approximately six and a half years remaining until its 2032 maturity. The loan repriced 75 basis points tighter, reducing the coupon to SOFR plus 250 basis points and locked in more efficient funding. During the quarter, we also upsized our corporate revolver to $700 million, up from $610 million at the beginning of the year. With continued momentum for repayments and the term loan B upsize, we ended the quarter with near record liquidity levels of $933 million, including over $200 million of cash plus our $700 million undrawn corporate revolver. Our overall financing availability sits at $7.7 billion, including $3.1 billion of undrawn capacity.

Speaker #6: Years remaining until its 2032 maturity . The loan repriced 75 basis points tighter , reducing the coupon to Sofr plus 250 basis points and locked in more efficient funding during the quarter .

Speaker #6: We also upsized our corporate revolver to 700 million , up from 610 million at the beginning of the year , with continued momentum for repayments and the term loan B upsized .

Speaker #6: We ended the quarter with near liquidity levels of 933 million , including over 200 million of cash plus plus our 700 million undrawn corporate revolver .

Speaker #6: Overall financing availability sits at 7.7 billion , including 3.1 billion of undrawn capacity . Importantly , 77% of our financing is non mark to market and has no final facility maturities until 2027 and the corporate debt due until 2030 .

Jack Switala: Importantly, 77% of our financing is non-marked to market, and KKR Real Estate Finance Trust Inc. has no final facility maturities until 2027 and no corporate debt due until 2030. In the quarter, we continued our share repurchases totaling $4 million, representing a weighted average price of $9.41. Year to date, we have repurchased $34 million for a weighted average price of $9.70, and since inception, we have repurchased over $140 million of common stock. We remain committed to deploying capital through buybacks as well as new investments. Overall, our liquidity position gives us meaningful flexibility to manage the portfolio, stay on offense, and take advantage of new opportunities. We're encouraged by the market backdrop and momentum we're seeing. Turning to our watch list, our current portfolio has a weighted average risk rating of 3.1 on a 5-point scale.

Speaker #6: In the quarter, we continued our share repurchases totaling 4 million shares, representing a weighted average price of $9.41 year to date. We have $34 million remaining for a weighted average price of $9.70.

Speaker #6: And since inception , we have repurchased over $140 million of common stock . We remain committed to deploying capital through buybacks , as well as new investments .

Speaker #6: Overall , our liquidity position gives us meaningful flexibility to manage the portfolio , stay on offense and take advantage of new opportunities . We're encouraged by the market backdrop and momentum .

Speaker #6: We're seeing . Turning to our watch list , our current portfolio has a weighted average risk rating of 3.1 on a five point scale .

Speaker #6: Our total Cecil Reserve at quarter end is 160 million , representing around 3% of the loan portfolio . Over 85% of loan portfolio is risk rated three or better , and as of the third quarter , our debt to equity ratio is 1.8 times and total leverage ratio is 3.6 times .

Jack Switala: Our total CECL reserve at quarter end is $160 million, representing around 3% of the loan portfolio. Over 85% of the loan portfolio is risk rated 3 or better, and as of the third quarter, our debt-to-equity ratio is 1.8 times and total leverage ratio is 3.6 times, consistent with our target range. Now turning to our OREO assets portfolio, we took title to the Raleigh multifamily loan, which was already appropriately reserved for, and therefore no additional impact on book value. Our business plan is to invest additional capital into the property to enhance the amenity base, improve operations, and reposition the asset for sale. On our Mountain View, California office, the market continues to heal, with leasing demand picking up. As mentioned last call, we're actively responding to tenant requests for proposals.

Speaker #6: Consistent with our target range. Now turning to our Rio portfolio. We took title to the Raleigh Multifamily Loan, which was already appropriately reserved for and therefore had no additional impact on book value.

Speaker #6: Our business plan is to invest additional capital into the property to enhance the amenity base , improve operations and reposition the asset for sale .

Speaker #6: On our Mountain View , California office , the market continues to heal with leasing demand picking up . And as mentioned , last call , we're actively responding to tenant requests for proposals given our asset offers to tenants , the ability to have a full campus setting and control their amenities and security perimeter .

Jack Switala: Given our asset offers to tenants the ability to have a full campus setting and control their amenities and security perimeter, we believe positioning for a single user is the optimal strategy. On our West Hollywood asset, we launched condo sales process last week and are focused on executing our sales strategy. Finally, on our Portland, Oregon redevelopment, our entitlement process is progressing, with final entitlements expected in the first half of 2026, giving us the ability to unlock value and return capital through parcel sales. In summary, we see significant opportunity ahead. Our origination pipeline continues to build. We remain focused on optimizing our OREO portfolio, working through the watch list, and redeploying capital efficiently as we position the business for its next phase of growth. Thank you for joining us today. Now, we're happy to take your questions.

Speaker #6: We believe positioning for a single user is the optimal strategy on our West Hollywood asset . We launched condo sales . We launched condo sale process last week and are focused on executing our sales strategy .

Speaker #6: Finally, on our Portland, Oregon, redevelopment, our entitlement process is progressing, with final entitlements expected in the first half of 2026. This gives us the ability to unlock value and return capital through partial sales.

Speaker #6: In summary , we see significant opportunity ahead origination pipeline continues to build . We remain focused on optimizing our REO portfolio , working through the watch list and redeploying capital efficiently as we position the business for its next phase of growth .

Speaker #6: Thank you for joining us today . Now we're happy to take your questions .

Speaker #3: Thank you . We will now begin the question and answer session to ask a question . You may press star then one on your touchtone phone .

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speaker phone, please pick up your handset 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. At this time, we will pause momentarily to assemble our roster. Your first question today will come from Tom Catherwood with BTIG. Please go ahead.

Speaker #3: If you are using a speakerphone , please pick up your handset 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 .

Speaker #3: At this time we will pause momentarily to assemble our roster . And your first question today will come from Tom Catherwood . Btig , please go ahead .

Speaker #7: Thank you . And good morning , everybody . Maybe Matt or Patrick , help us triangulate something here . So there's kind of two ways to view the lower leverage and higher liquidity that you had going into the end of the third quarter .

[Analyst 1]: Thank you, and good morning, everybody. Maybe Matt or Patrick, help us triangulate something here. There are kind of two ways to view the lower leverage and higher liquidity that you had going into the end of the third quarter. One is like a defensive positioning to bolster the company against headwinds, or the second one is really a timing issue where if a couple of originations had closed a week or so earlier, it might look very different from the level of the distance between repayments and originations, and it might be a very different story. Which is the case here? Is this just timing, or could we see further deleveraging and further liquidity building as we get through the rest of this year?

Speaker #7: One is like a defensive positioning to kind of bolster the company against headwinds . Or the second one is really a timing issue where if a couple of originations had closed a week or so earlier , it might look very different from , you know , the level of the distance between repayments and originations .

Speaker #7: And it might be a very different story, which is the case here. Is this just timing, or could we see further deleveraging and further liquidity building as we get through the rest of this year?

Speaker #4: Hey Tom it's Jack . Give us a give us just a minute here . We're just having some technical difficulties . We'll be right back to you .

Jack Switala: Hey, Tom, it's Jack. Give us just a minute here. We're just having some technical difficulties. We'll be right back to you. Okay, just give us about two minutes here. We're redialing in, and folks should join shortly. Thank you.

Speaker #4: Okay . So just give us about two minutes here . We're redialing in , and folks should join shortly . Thank you .

Speaker #3: Pardon me . Ladies and gentlemen , please stand by as we reconnect . Thank you for your patience . Pardon me . This is the conference operator of reconnect .

Operator: Pardon me, ladies and gentlemen, please stand by as we reconnect. Thank you for your patience. Pardon me, this is the conference operator. I've reconnected the speaker lines. Please proceed.

Speaker #3: The speaker lines , please proceed .

Speaker #5: Okay . Thank you . Tom , can you hear me now ? It's Matt .

Speaker #8: Yes , I can .

Speaker #5: Okay , thanks . Sorry about that . Everyone . We are down in our Dallas office and had a new system here . And just had some technical difficulties , but I think we're working now , so we'll jump back in and appreciate everyone joining Tom , thank you for the question .

Matt Salem: Okay. Thank you. Tom, can you hear me now? It's Matt.

Jack Switala: Yes, I can.

Matt Salem: Okay. Thanks. Sorry about that, everyone. We are down in our Dallas office and had a new system here and just had some technical difficulties, but I think we're working now. We'll jump back in and appreciate everyone joining. Tom, thank you for the question. You know, it's really the latter, I'd say. It's just a timing issue, and it's really related to two things. I'd say the first one, just when you think about repayments, one of our repayments this quarter just happened to be a larger repayment. It was actually the largest loan in our portfolio repaid. It was a multifamily property just outside of Washington, DC, that got taken out by the agencies on a refinance. That is a relatively large, just single repayment.

Speaker #5: You know , it's really the latter . I'd say it's just a timing issue . And it's really related to two things . I'd say the first one , just when you think about repayments , one of our repayments , this quarter just happened to be a larger repayment .

Speaker #5: It was actually the largest loan in our portfolio , repaid . It was a multifamily property just outside of Washington , D.C. that got taken out by the agencies on a refinance .

Speaker #5: And so that is a relatively large , you know , single repayment . And then secondly , when you think about our originations this quarter , I think we mentioned this in the prepared remarks .

Matt Salem: Secondly, when you think about our originations this quarter, and I think we mentioned this in the prepared remarks, a bunch of our originations just happened to be in Europe. Those take a little bit longer to close. The closing timelines are somewhat elongated in Europe versus the U.S. That's why you see the bigger pipeline, I think, in the fourth quarter and a little bit of the slower originations and closings, I'd say, in the third quarter. It's just timing. We haven't really changed our strategy at all and certainly expect to continue to invest and originate in line with our repayments. Right now, we're at the lower end of our leverage ratio, so we've got the ability to kind of take that up and grow the portfolio back to where we were before.

Speaker #5: But our just happen to be in Europe and and those take a little bit longer to close . Just the closing timelines are are somewhat along in Europe versus versus the US .

Speaker #5: And so that's why you see the bigger pipeline I think in the fourth quarter and a little bit of the slower , you know , originations in closings , I'd say in the third quarter .

Speaker #5: So just timing; we haven't really changed our strategy at all. And we certainly expect to continue to invest and originate in line with our repayments.

Speaker #5: And you know , right now we're at the lower end of our of our leverage ratio . So we've got the ability to kind of take that up and grow the portfolio back to to where we were before .

Speaker #7: That's perfect. And maybe just following up on that and thinking of the cadence of earnings, you talk about the lag between receiving repayments and putting that capital back to work.

[Analyst 1]: That's perfect. Maybe just following up on that and thinking of the cadence of earnings, you talk about the lag between receiving repayments and putting that capital back to work. You also mentioned, I think it was greater than $1.5 billion of repayments that you're expecting in 2026. Could that lag take us lower from an earnings front for a longer period of time just while you put that capital back to work, or are there some other levers you can pull to boost distributable earnings as you're repatriating and redeploying capital?

Speaker #7: And also , you mentioned I think it was greater than , you know , 1.5 billion of repayments that you're that you're expecting in 2026 .

Speaker #7: Could that lag take us lower from an earnings front for a longer period of time, just while you put that capital back to work? Or are there some other levers you can pull to boost distributable earnings as you're repatriating and redeploying capital?

Speaker #5: No , I wouldn't look at it like we're always behind . I think some some like this quarter , obviously we got a little behind .

Speaker #5: And again , just kind of do the timing of those closings . But I think other quarters will be ahead . You you can see us getting ahead of it a little bit .

Matt Salem: No, I wouldn't look at it like we're always behind. I think some quarter like this quarter, obviously, we got a little behind. Again, just kind of due to the timing of those closings, but I think other quarters will be ahead. You can see us getting ahead of it a little bit. You can't time the repayments, right? You can't necessarily time the closing dates of your origination. There's just a little bit of ebb and flow that happens naturally in the business. I wouldn't necessarily model anything like we're always waiting for a repayment to come in before we originate, and so we're 45 days behind. I think there's just a little bit of give and take in the overall investing profile.

Speaker #5: So you can't time the repayments, right? And you can't necessarily time the closing dates of your transactions. So there's just a little bit of ebb and flow that happens naturally in the business.

Speaker #5: But I wouldn't necessarily model anything like we're always waiting for a repayment to come in before we originate . And so we're 45 days behind .

Speaker #5: I think there's , you know , there's just a little bit of give and take in the overall investing profile .

Speaker #7: Understood . And then last one for me , we've had a number of lab space owners this past quarter that have noted kind of an early stage rebound in demand from smaller life science tenants looking for space kind of following a upturn in VC funding over the past 12 months .

[Analyst 1]: Understood. Last one for me, we've had a number of lab space owners this past quarter that have noted kind of an early-stage rebound in demand from smaller life science tenants looking for space, kind of following an upturn in VC funding over the past 12 months. In terms of the four assets in your life science loan portfolio that remain three-rated, how are they proceeding on their business plans, and are you starting to see that at least early-stage recovery in tenant demand?

Speaker #7: In terms of the the four assets in your life science loan portfolio that remain three rated , how are they proceeding on their business plans , and are you starting to see that at least early stage recovery in tenant demand ?

Speaker #5: Yeah , I think we're starting to see green shoots . And from the sponsors . Right . And some of the commentary about about leasing and , you know , I'd say we've got honestly a little bit of a mix most of our assets that we've lent on are are more , you know , the tenants are going to be larger .

Matt Salem: Yeah, I think we're starting to see green shoots from the sponsors, right, and some of the commentary about leasing. I'd say we've got, honestly, a little bit of a mix. Most of our assets that we've lent on are more, you know, the tenants are going to be larger pharma companies and not necessarily some of the smaller VC-funded ventures. We are starting to see a little bit of pickup in that sector. We're long-term. We're pretty positive on that sector. I certainly understand it can be cyclical both from a capital perspective and certainly some of the things you see going on at the NIH and things like that. I'd say over the medium to long term, we're still pretty positive on the overall sector.

Speaker #5: Pharma companies and not necessarily , you know , some of the smaller , you know , VC funded ventures . But we are starting to see a little bit pick up in that , you know , in that sector .

Speaker #5: And again , we're we're long term like we're pretty positive on that , on that sector and certainly understand , you know , it can be cyclical both from a capital perspective and certainly some of the things you see going on at the NIH and things like that .

Speaker #5: But I'd say over the medium to long term , I'd say we're still pretty positive on the on the overall sector .

Speaker #7: Got it . Appreciate all the answers . Thanks , everyone .

Speaker #5: Thank you . .

Speaker #3: And your next question today will come from Jade Rahmani with KBW . Please go ahead .

[Analyst 1]: Got it. Appreciate all the answers. Thanks, everyone.

Matt Salem: Thank you.

Speaker #9: Thank you very much . I wanted to follow up on Tom's question . Can you give an update as to the state of dialogue with the sponsors across the life science deals ?

Operator: Your next question today will come from Jade Rahmani with KBW. Please go ahead.

[Analyst 2]: Thank you very much. I wanted to follow up on Tom's question. Can you give an update as to the state of dialogue with the sponsors across the life science fields? On Cambridge, if you could touch on what drove the downgrade.

Speaker #9: And then on Cambridge , if you could touch on what drove the downgrade ?

Speaker #5: Yeah , I'd say really the the let's go . Starting with the with the last question . What drove the downgrade was we've entered negotiations and modification negotiations with that with that sponsor .

Matt Salem: Yeah, I'd say really, let's go starting with the last question. What drove the downgrade was we've entered negotiations and modification negotiations with that sponsor. It was really as it related to those discussions. I think on the other, the three-way rated loans, Jade, there's no other really discussions happening outside just the normal course. We're getting leasing updates and any property-level financial updates. Really no other kind of detailed conversations happening at this point in time.

Speaker #5: And so , you know , it was really as it related to to those discussions . And then , you know , I think on the other , you know , the three rated loans , Jade , you know , there's no other really discussions happening outside , just the normal , you know , just the normal course we're getting leasing updates and you know , any you know , any property level financial updates .

Speaker #5: But you know, really, no other detailed conversations are happening at this point in time.

Speaker #9: Thank you . And then broader speaking , broadly speaking , have you done an NPV analysis comparing the cost and benefit of weighting on these deals , as well as any other , you know , sub deals versus selling down the exposure ?

[Analyst 2]: Thank you. Broadly speaking, have you done an NPV analysis comparing the cost and benefit of waiting on these deals, as well as any other sub-performing deals versus selling down the exposure, taking that capital, and reinvesting in the current uptick in deal flow that we're seeing? That would drive stronger distributable earnings and eventually dividend growth more near term than perhaps the market expects. How do you view the trade-offs versus waiting, since I think that the life science recovery is quite nascent at this point? For at least that sector, it's probably going to be a while before these buildings get to stabilized occupancy.

Speaker #9: Taking that capital and you know , reinvesting in the current uptick in deal flow that we're seeing which that would , you know , drive stronger distributable earnings and eventually , you know , dividend growth more near term than perhaps the market expects .

Speaker #9: You know , how do you view the trade offs versus waiting since I think that the life science recovery is quite nascent at this point .

Speaker #9: So for at least that sector, it's probably going to be a while before, you know, these buildings get to stabilized occupancy.

Speaker #5: Yeah , it's a great question . And it's something that I'd say we look at every quarter . It's something that we certainly discuss with the , you know , with the board in terms of portfolio positioning and , and , you know , specifically as it relates , obviously , to the Rio , which is directly impacting our earnings .

Matt Salem: Yeah, it's a great question. It's something that I'd say we look at every quarter. It's something that we certainly discuss with the board in terms of portfolio positioning. Specifically, Jade, as it relates, obviously, to the OREO, which is directly impacting our earnings. As we liquidate that, obviously, we can redeploy that capital and increase our earnings, which we talked about on the last few calls. It's something we're consistently looking at. When you look at where we've decided to hold things, and I'm talking more about the OREO because that's really the biggest impact right now, it's really around quality. We feel like we've got quality real estate, and our job as fiduciaries is to maximize the outcome there. If we've got a great asset, we think it's going to lease over time, and we'll be able to optimize the value.

Speaker #5: And as we look . Liquidate that , obviously we can we can redeploy that capital and increase our and increase our earnings , which we talked about on the last few calls .

Speaker #5: And so it's something we're we're consistently looking at , you know , when you when you look at where we've decided to hold things and I'm talking more about the Rio because that's really the , the the biggest impact right now .

Speaker #5: It's really around quality . And we feel like we've got quality real estate and our job as fiduciaries is to maximize the outcome .

Speaker #5: There . And if we've got a great asset , we think it's going to lease over time . And , you know , we'll be able to to optimize the value .

Speaker #5: But we definitely look at NPVs, and we look at what that IRR is. And is it better to sell today versus, you know, redeploy capital now versus holding out?

Matt Salem: We definitely look at NPVs, and we look at what's that IRR, and is it better to sell today versus redeploy capital now versus holding out? I'd say we're pretty, I think we've been right to kind of be patient. Certainly, when you think about things like our office in Silicon Valley, that market's come back significantly, and we're seeing real leasing demand in that market. To be patient, wait, quality asset, let's get a tenant, and then we can evaluate liquidity options. I think that strategy will work out over time. We have to continuously evaluate this because I know that we can't, we don't have forever, we need to execute, and we need to repatriate some of this capital.

Speaker #5: But so far I'd say we're pretty I think we've we've been right to kind of be patient . And certainly when you think about things like like our , you know , our office in Silicon Valley , you know , that markets come back significantly and we're seeing real leasing demand in that market .

Speaker #5: So to be patient wait quality asset . Let's get a tenant . And then we can we can evaluate liquidity options I think that strategy has will work out over time .

Speaker #5: But we have to continuously evaluate this because you know I know that you know , we can't we don't have forever that , you know , we need to execute and we need to repatriate some of this capital .

Speaker #9: Thanks very much .

Speaker #5: Thank you . Jane .

Speaker #3: And your next question today will come from Rick Shane with J.P. Morgan. Please go ahead.

[Analyst 2]: Thanks very much.

Speaker #10: Hey , guys . Thanks for taking my question . Looking back , last quarter , there was commentary about $1 billion of repayments in the second half .

Matt Salem: Thank you, Jade.

Operator: Your next question today will come from Rick Shane with JPMorgan. Please go ahead.

[Analyst 3]: Hey, guys. Thanks for taking my question. Looking back last quarter, there was commentary about $1 billion of repayments in the second half. It seems like you're on track with that. I think the implication, at least the way we interpreted it, was that that capital would be redeployed and suggested sort of, again, not we didn't fully assume this, but targeting towards that $1 billion in reinvestment. Should the way we think about this be there's a one-quarter lag? You get the repayment in Q1, you're able to redeploy it in Q2, you get repayments in Q2 that are redeployed in Q3. Should we see this as sort of the $1 billion of repayments in the second half of this year manifesting into Q4 and Q1 originations of close to $1 billion?

Speaker #10: It seems like you're on track with that . And I think the implication , at least the way we interpreted it , was that that capital would be redeployed and suggested sort of , again , not we didn't fully assume this , but targeting towards that billion dollars and reinvestment , should the way we think about this be , there's a one quarter lag .

Speaker #10: You get the repayment and quarter one , you're able to redeploy it . In quarter two , you get repayments in quarter two that are redeployed in quarter three .

Speaker #10: Should we see this as sort of the billion dollars of repayments in the second half of this year , manifesting into Q4 and Q1 originations close to $1 billion .

Speaker #6: Hey , Rick , it's Patrick . Good morning . Yeah , thanks for that . That question , I think Matt was sort of referencing a little bit earlier .

Speaker #6: I think the goal is to sort of match up the repayments , minimize some of the timing that happens between repayment and origination , that always when we snap the line at quarter end , that always won't sort of match up .

Patrick Mattson: Hey, Rick. It's Patrick. Good morning. Thanks for that question. I think as Matt was referencing a little bit earlier, the goal is to sort of match up the repayments, minimize some of the timing that happens between repayment and origination. That always, when we snap the line at quarter end, won't sort of match up. We think over time, there's going to be some quarters where we get a little bit ahead of that. If you think about our liquidity position today, we certainly have ample capital to be able to do that. There are going to be some quarters where we're ahead of it. Maybe there's some quarters that we're behind it. On balance, we should think about as we're getting those repayments, they're going to be matched.

Speaker #6: But we think over time there's going to be some quarters where we get a little bit ahead of that . And if you think about our liquidity position today , we certainly have ample capital to be able to do that .

Speaker #6: And so, there are going to be some quarters where we're ahead of it. Maybe there are some quarters that we're behind it, but on balance, we should think about, as we're getting those repayments, they're going to be matched.

Speaker #6: And our goal effectively is to minimize some of that . Some of that drag , because ultimately we want to optimize what we can return to shareholders in terms of earnings .

Patrick Mattson: Our goal effectively is to minimize some of that drag because ultimately, we want to optimize what we can return to shareholders in terms of earnings.

Speaker #10: Got it . Yeah I mean , I think the thing that's that confuses me about it is I understand that , you know , the difference between a deal closing on September 30th and October 1st , from your perspective , it's a day from an accounting perspective .

[Analyst 3]: Got it. Yeah. I mean, I think the thing that confuses me about it is I understand that, you know, the difference between a deal closing on September 30 and October 1, from your perspective, it's a day. From an accounting perspective, it's very different. You know, you've talked about $400 million of originations this quarter. I think what surprises me is given the lag in Q3 originations, again, not a big deal, but that Q4 pipeline doesn't look bigger given that sort of timing issue. I think that's what's confusing people a little bit here today.

Speaker #10: It's very different . You know , you've talked about 400 million of originations this quarter . I think what surprises me is , given the lag in three Q originations , again , not a big deal , but that that Q4 pipeline doesn't look bigger , given that sort of timing issue , I think that's what's confusing people a little bit here today .

Speaker #6: Understood . Thanks . Yeah , I think look , as we think about the fourth quarter , obviously a lot of that will be front ended in the quarter in terms of the originations .

Patrick Mattson: Understood. Thanks. Yeah. I think, look, as we think about the fourth quarter, obviously, a lot of that will be front-ended in the quarter in terms of the originations. The year is not out. The pipelines are still very active. I think we've been focused on being disciplined around deployment, focused on diversity. When you look at these asset sizes, they'll reflect that. Obviously, Matt mentioned some of the activity that we have in Europe. As I said, our goal is to continue to deploy capital. I suspect that if things continue to proceed as they are, going into year-end and into first quarter, we're going to continue to see build for that origination pipeline. We know what we have a good idea of what we expect to come forth in the next two quarters. I think we're preparing to match that up and to close some of that gap.

Speaker #6: The year is not out . The pipelines are still , very active . I think we've been focused on being , you know , disciplined around deployment , focused on diversity .

Speaker #6: So when you look at these , you know , these asset sizes , they'll reflect that . Obviously Matt mentioned some of the activity that we have , you know , in Europe .

Speaker #6: But you know , as I said , our goal is to continue to deploy capital . I suspect that if things continue to proceed as they that they are going into year end and into first quarter , we're continuing to see build for that origination .

Speaker #6: You know , pipeline . And , you know , we know what we have a good idea of what we expect to , you know , to to come forth in the next two quarters .

Speaker #6: And I think we're preparing to , you know , to match that up and , and to , you know , to close some of that gap .

Speaker #10: Got it . Okay . Thank you . And then the other question is this . And you know , James touched on this and but if we look at the current ROE it's about half of what you need to support the dividend as it exists today .

[Analyst 3]: Got it. Okay. Thank you. The other question is this, and, you know, Jade's touched on this, but if we look at the current ROE, it's about half of what you need to support the dividend as it exists today. Obviously, moving, resolving challenged properties and challenged loans is the key to that. Realistically, how long do you think it takes for you to be able to double that ROE to put yourself in a position where, again, there are all these different earnings metrics, but at the end of the day, this really is an NII issue. How long do you think it really takes to get there?

Speaker #10: Obviously moving resolving challenged properties and challenged loans is the key to that . Realistically , how long do you think it takes for you to be able to double that ROE to put yourself in a position where and again , there are all these different earnings metrics , but at the end of the day , this really is an NII issue .

Speaker #10: How long do you think it really takes to get there?

Speaker #5: Yeah , I can jump in there . Rick . It's a good question and certainly something we think about a lot . In my mind , we kind of bucket the the REO into into three timelines .

Patrick Mattson: Yeah, I can jump in there, Rick. It's a good question and certainly something we think about a lot. In my mind, we kind of bucket the OREO into kind of three timelines. One is like, you know, near term, 12 to 18 months. You know, medium term, maybe that's 24 or so months, 24 to 36 months, and then longer term. I'd say about half of that, we think we can get back in the near term. That's concentrated on things like our Portland, Oregon asset, which we should be fully entitled to then the market with next year on an individual parcel basis. The West Hollywood condo, which Patrick mentioned, we're in the market now live selling, selling or offering units there.

Speaker #5: One is like near-term 12 to 18 months medium term . Maybe that's 24 or so months , 24 to 36 months . And then longer term and I'd say about about half of that , we think we can get back in the near term .

Speaker #5: And that's concentrated on things like our Portland , Oregon asset , which we should be fully entitled in the market with next , next year on a individual parcel basis .

Speaker #5: The West Hollywood condo , which Patrick mentioned , we're in the market now , live selling , selling our offering units there , the Raleigh , North Carolina multifamily deal , which is largely stabilized , and we're doing a little bit of value add there .

Speaker #5: But but can can execute on that in a short amount of time . And then the Philadelphia office , which , you know , there's kind of 1 or 2 leases outstanding that we're that we're working on .

Patrick Mattson: The Raleigh, North Carolina multifamily deal, which is largely stabilized, and we're doing a little bit of value add there, but can kind of execute on that in a short amount of time. The Philadelphia office, which, there's kind of one or two leases outstanding that we're working on and then effectively sell that as well. If you group those together, that's really the short term. Again, it's about half of that number. We can get that back more quickly. I'd say in that medium-term bucket is the Mountain View asset. As I mentioned to Jade, we're making good progress. The market is really coming back there, and we're kind of actively engaged there with tenants.

Speaker #5: And then effectively sell that as well . So if you put those together , that's really the short term . And again , it's about half of that number .

Speaker #5: So we can we can get that back more quickly . I'd say in that medium term bucket is the mountain view asset . As I mentioned to Jade , we're making , good progress .

Speaker #5: The market is is is really coming back there . And we're actively engaged there with with tenants . So I put that more in the in the medium term .

Speaker #5: Although you know we could have something happen there shorter than that . But then there would be a business plan to execute . You know , if we were able to sign a lease , there in terms of just tenant tenant improvements and CapEx , etc.

Patrick Mattson: I put that more in the medium term, although we could have something happen there shorter than that, but then there'd be a business plan to execute if we were able to sign a lease there in terms of just tenant improvements and CapEx, etc. Lastly, I kind of put the Seattle, Washington life science, and just given where life science is, we'll see that market could come back quickly. Just given where we're seeing there, we did execute a pretty important lease on that asset. We're pretty happy about that, but it could take longer to fully stabilize that asset.

Speaker #5: , and then lastly , you know , I kind of put the the Seattle , Washington life science and just given where life science is , we'll see that market could come back quickly .

Speaker #5: But just given where we're seeing there, we did execute a pretty important lease on that asset, so we're pretty happy about that.

Speaker #5: But, you know, it could take longer to fully stabilize that asset.

Speaker #10: Got it . Hey , Matt . Patrick , I really always appreciate your willingness to try to dimensionalize the answers to these tough questions .

[Analyst 3]: Got it. Hey, Matt, Patrick, I really always appreciate your willingness to try to dimensionalize the answers to these tough questions, and I appreciate it a great deal. Thank you, guys.

Speaker #10: And I appreciate it a great deal . Thank you guys .

Speaker #5: Sure . Thank you .

Speaker #3: And your next question today will come from Chris Muller with Citizens. Please go ahead.

Speaker #11: Hey guys . Thanks for taking the questions . So it's nice to see you guys branching out into Europe . Can you contrast some of the EU loans versus US loans ?

Patrick Mattson: Sure, thank you.

Operator: Your next question today will come from Chris Miller with Citizens JMP. Please go ahead.

[Analyst 4]: Hey, guys. Thanks for taking the questions. It's nice to see you guys branching out into Europe. Can you contrast some of the EU loans versus U.S. loans? I guess what I'm looking for is, are terms similar? Returns similar? Any color here would be very helpful.

Speaker #11: I guess what I'm looking for is are terms similar return similar . Any color here would be very helpful .

Speaker #5: Sure . Yeah . Thank you for the question . Let's start with kind of how they're similar . And then we can think about how they're different .

Speaker #5: I'd say from a quality of real estate perspective, from a sponsorship perspective, it's the same program we're running in the United States.

Matt Salem: Sure. Yeah. Thank you for the question. Let's start with kind of how they're similar, and then we can think about how they're different. I'd say from a quality of real estate perspective, from a sponsorship perspective, it's the same program we're running, you know, in the U.S. This is institutional quality real estate and sponsorship. In fact, a lot of the clients we lend to in Europe are the exact same clients we're lending to in the U.S., so it's nice to have that, you know, global connectivity there. I'd say the opportunity set there is a little bit different than what we're seeing in the U.S. The loan sizes tend to be a little bit bigger. There tend to be more portfolios, you know, where we're, and then also, I would say, multi-jurisdictional is an opportunity as well. It's a heavily banked market.

Speaker #5: This is institutional quality real estate . And and sponsorship . And in fact , a lot of the clients we lend to in Europe are the exact same clients we're lending to in the US .

Speaker #5: And so it's nice to have that global connectivity there . I'd say the opportunity set there is a little bit different than what we're seeing in the US .

Speaker #5: The loan sizes tend to be a little bit bigger. There tend to be more portfolios where we're... and then also I would say multi-jurisdictional is an opportunity as well.

Speaker #5: It's a heavily banked market . So contrast think about Europe as like 80% of that market is is banks . Whereas in the US it's around 40% .

Matt Salem: Contrast, think about Europe as like 80% of that market is banks, whereas in the U.S., it's around 40%. The back leverage there, structurally, I think, is a little bit more advanced, you know, in our favor than what we're seeing in the U.S. From a whole loan perspective, spread-wise, now you're talking about different base rates, right, obviously, between the UK and EU. I'd say overall, spreads on whole loan and then the ability to back leverage and generate ROE are largely in line with the U.S. From a relative value perspective, I think it's pretty balanced right now. Although we've been lending there for a few years now, it has not always been like that. I'd say two years ago, we probably saw a lot more opportunities and relative value in Europe versus the U.S. Now, as the U.S.

Speaker #5: And the back leverage there structurally I think is a little bit more advanced in our favor than what we're seeing in the US .

Speaker #5: From a whole loan perspective . Spread wise . Now you're talking about different base rates . Obviously , between the UK and EU , but I'd say overall spreads on whole loan and and then the ability to back leverage and generate ROE are largely in line with the US from a relative value perspective .

Speaker #5: I think it's pretty balanced right now . Although we've been lending there for a few years now . It has not always been like that .

Speaker #5: I'd say two years ago we probably saw a lot more opportunities and relative value in Europe versus the US and but now as the US activity has picked up materially , it's probably a little bit a little bit more balanced .

Speaker #5: So but ultimately I think the rows are really about the same between the US and Europe right now . And that's on a US on a , on a hedged US dollar basis .

Matt Salem: activity has picked up materially, it's probably a little bit more balanced. Ultimately, I think the ROEs are really about the same, you know, between the U.S. and Europe right now. That's on a U.S., you know, on a hedge U.S. dollar basis.

Speaker #11: Got it . That's all very helpful . And I guess on the Long Island multifamily loan , you guys originated this quarter . Is this ground up construction .

[Analyst 4]: Got it. That's all very helpful. I guess on the Long Island multifamily loan you guys originated this quarter, is this ground-up construction? Are you guys looking at heavier transitional projects now, or was this more of a one-off type loan?

Speaker #11: And then are you guys looking at heavier transitional projects now , or was this more of a one off type loan .

Speaker #5: It is ground up . Yes . It's ground up construction to a repeat sponsor who we've lent to a couple times now on construction , on construction projects .

Matt Salem: It is ground-up. Yes, it's a ground-up construction to a repeat sponsor who we've lent to a couple of times now on construction projects. We know them well, and we think they do a great job and build a really high-end product. It's great to be able to sign that one up again with a repeat sponsor there. I don't think we've really changed the DNA of what we want to do. We've always had a small percentage of construction in the portfolio, and we'll continue to do that. We think there's some relative value in that sector. The bulk of the opportunity of what we're seeing right now is what I still refer to as almost stabilized versus transitional lending. I still think that the market is really the opportunity around the market is really around stretch seniors, where it's like a 70% LTV, mostly leased assets.

Speaker #5: So it's we know them well and we think they do a great job and build a build a really high end product . So it's great to be able to sign that one up .

Speaker #5: You know , with the , you know , with the repeat sponsor there . I don't think we've really changed the DNA of , of of what we want to do .

Speaker #5: We've always had a small percentage of . Construction in the portfolio and and we'll continue to do that . We think there's some some relative value in that , in that sector .

Speaker #5: The bulk of the opportunity of what we're seeing right now is what I still refer to as , like almost stabilized versus transitional lending .

Speaker #5: I still think that there's like stretched . The market is really the opportunity around the market is really around stretched seniors where it's like a 70% LTV , mostly leased assets and and so that's where we've been participating .

Speaker #5: We think that's where there's the most relative value . We'll look at projects that have , you know , that have a larger business plan , but just from a relative value perspective .

Matt Salem: That's where we've been participating. We think that's where there's the most relative value. We'll look at projects that have a larger business plan. Just from a relative value perspective, again, it seems like the kind of almost stabilized lending just offers a better investment right now.

Speaker #5: Again , like it seems like , you know , the kind of almost stabilized lending is , is , you know , just offers a better , a better investment right now .

Speaker #11: Got it. That's all very helpful. Thanks for taking the questions.

Speaker #3: And your next question today is a follow up from Jade Rahmani of CCB . Please go ahead .

[Analyst 4]: Got it. That's all very helpful. Thanks for taking the questions.

Speaker #9: I wanted to ask about the platform . Overall , I know you mentioned you're in Dallas with CoStar and you all have a servicing operation quite substantial .

Operator: Your next question today is a follow-up from Jade Rahmani of KBW. Please go ahead.

[Analyst 2]: I wanted to ask about the platform overall. I know you mentioned you're in Dallas with K-Star, and you all have a servicing operation quite substantial. You buy B pieces. A nice complement to that could be the CMBS conduit business, which is capital light. I think the securitization outlook seems quite healthy given that the regional banks still continue to pull back. Any interest in that? Another follow-up would just be on the special situation side, if you see any opportunities to combine with another either public or privately held mortgage REIT. I think scale is a huge differentiator across the real estate landscape. We see huge premiums between market cap ranges in all real estate sectors. I think it's clear that having gone through this cycle, there's also a big differentiator in the commercial mortgage REIT space.

Speaker #9: You buy BPC , so a nice compliment to that could be the CMBS conduit business , which is Capital Light . And you know , I think the securitization outlook seems quite healthy , given that the regional banks still continue to pull back any interest in that .

Speaker #9: And then another follow up would just be on the special situation side . If you see any opportunities to combine with . A another , either public or privately held , mortgage REIT , you know , I think scale is a huge differentiator across the real estate landscape .

Speaker #9: You know , we see huge premiums between market cap ranges and all real estate sectors . And I think it's clear that having , you know , gone through this cycle , there's also a big differentiator in the commercial mortgage REIT space .

Speaker #9: So , you know , you could combine stock for stock or Nav for Nav transaction gain scale . And that probably would help , you know , with consistency of dividends .

[Analyst 2]: You could combine stock for stock or NAV for NAV transaction, gain scale, and that probably would help with consistency of dividend. Could you just respond to those two items? Thanks very much.

Speaker #9: So could you just respond to those two items . Thanks very much .

Speaker #5: Sure . Thank you again for the question . First , on the on the CMB side , you know , it's something we've we've looked at .

Matt Salem: Sure, Jade. Thank you again for the question. First, on the CMBS side, it's something we've looked at. We have the expertise, I think, in-house to do that, whether it's from the credit or the origination side, or some of us have backgrounds in that business and capital markets. I'd say right now, no real plans to begin a CMBS originations business. The one thing that is a real consideration for us is it doesn't really overlap with our client base for the most part. I think about, we're lending in major markets to institutional sponsors, and that tends to be a more diverse set of borrowers and markets. We'd have to probably change a little bit of the way we're oriented. I'm just not sure that's in our kind of credit DNA to do that. We'll continue to evaluate it as the market evolves.

Speaker #5: We we have the expertise , I think in house to do that , whether it's from the credit or the origination side or some of us have backgrounds in that business and capital markets .

Speaker #5: I'd say right now no real plans to , to to begin a CMBS originations business . I think one thing that we is a real consideration for us is it doesn't really overlap with our client base for for the most part , you know , think about , you know , lending in major markets to institutional sponsors .

Speaker #5: And that tends to be a more diverse set of borrowers and markets. So we'd have to probably change a little bit of the way we're oriented.

Speaker #5: And I'm just not sure that's in our that's in our kind of credit DNA to , to do that . But we'll continue to , to evaluate it as I think as the market evolves on the M&A question , I would say we continue to , you know , look at opportunities as they arise .

Matt Salem: On the M&A question, I would say we continue to look at opportunities as they arise. I think there'll be consolidation in the industry over time. We'd like to grow, not for the sake of scale for scale's sake, but to have a more liquid stock, as you mentioned. I think we would be able to attract more shareholders and create a better cost of capital. As we've discussed, we want to try to do things that also give us the ability to diversify our portfolio and moving into Europe is one of those things, but also potentially adding duration to the portfolio. We're going to continue to evaluate opportunities that are on the table. There's nothing we're looking at currently.

Speaker #5: I think they'll be consolidation in the industry over time . We'd like to grow , not not for the sake of , you know , of scale , for scale sake , but to have a more liquid stock as as you mentioned , I think would be able to attract more , more shareholders and , and create a better , a better cost of capital .

Speaker #5: And as we've discussed , you know , we want to try to do things that also give us the ability to diversify our portfolio and moving into Europe is one of those things , but also , you know , potentially adding duration to the portfolio .

Speaker #5: So we're going to continue to evaluate , opportunities that are on the table . But , you know , there's nothing , you know , we're looking at currently .

Speaker #9: Thanks very much .

Speaker #5: Thank you Jane .

Speaker #3: Concludes our question-and-answer session. I would like to turn the conference back over to Jack Switala for any closing remarks.

[Analyst 4]: Thanks very much.

Matt Salem: Thank you, Jade.

Speaker #4: Well , great . Thanks . Operator . Thanks , everyone , for joining today . Please reach out to me or the team here if you have any questions .

Operator: Concludes our question and ends our session. I would like to turn the conference back over to Jack Switala for any closing remarks.

Speaker #4: Take care .

Jack Switala: Great. Thanks, operator. Thanks, everyone, for joining today. Please reach out to me or the team here if you have any questions. Take care.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.