Q1 2026 KKR Real Estate Finance Trust Inc Earnings Call

April 23, 2026

Operator: Good morning and welcome to the KKR Real Estate Finance Trust Inc. Q1 2026 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jack Switala. Please go ahead.

Speaker #2: Should you need assistance, please signal a conference specialist by pressing the star key. Follow by zero. After today's presentation, there will be an opportunity to ask questions.

Speaker #2: To ask a question, you may press star, then one, on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded.

Speaker #2: I would now like to turn the conference over to Jack Switala. Please go ahead. Great, thanks, operator, and welcome to the KKR Real Estate Finance Trust earnings call for the first quarter of 2026.

Jack Switala: Great. Thanks, operator, and welcome to the KKR Real Estate Finance Trust Earnings Call for Q1 2026. 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 Decious. 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 #2: 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 Deshes.

Speaker #2: 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.

Speaker #2: 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.

Speaker #2: Please refer to our most recently filed 10-Q Q for cautionary factors related to these statements. Before I turn the call over to Matt, I will go through our results.

Speaker #2: For the first quarter of 2026, we reported a GAAP net loss of 62 million dollars or negative 96 cents per share. Book value, as of March 31st, 2026, is 11 dollars and 87 cents per share.

Jack Switala: For Q1 2026, we reported a GAAP net loss of $62 million or -$0.96 per share. Book value as of 31 March 2026, is $11.87 per share. We reported a distributable loss of $4 million, or -$0.06 per share. Distributable earnings before realized losses was $13 million, or $0.20 per share. Finally, we paid a $0.25 cash dividend in April with respect to Q1. With that, I'd now like to turn the call over to Matt.

Speaker #2: We reported a distributable loss of 4 million dollars or negative 6 cents per share. Distributable earnings before realized losses was 13 million dollars or 20 cents per share.

Speaker #2: Finally, we paid a 25-cent cash dividend in April with respect to the first quarter. With that, I'd now like to turn the call over to Matt.

Speaker #3: Thanks, Jack. Good morning, everyone, and thank you for joining us. As we outlined last quarter, 2026 represents a transition year for the company with the goal of narrowing the gap between share price and book value per share our focus is on two key priorities.

Matt Salem: Thanks, Jack. Good morning, everyone, and thank you for joining us. As we outlined last quarter, 2026 represents a transition year for the company. With the goal of narrowing the gap between share price and book value per share, our focus is on two key priorities. First, executing an aggressive resolution strategy across our watchlist assets and certain legacy office exposures, and second, positioning a portion of our REO portfolio for liquidity. We have significant liquidity sitting at $653 million today and extensive capabilities across KKR to execute both our asset management and REO strategies. Today, I want to provide additional detail on our progress against those objectives and what you should expect over the course of the year. This quarter, book value declined by 9% as we position our watchlist loans for resolution. Our action plan is designed to reposition the portfolio to optimize medium and long-term performance.

Speaker #3: First, executing an aggressive resolution strategy across our watchlist assets and certain legacy office exposures. And second, positioning a portion of our REO portfolio for liquidity.

Speaker #3: We have significant liquidity, sitting at 653 million today, and extensive capabilities across KKR to execute both our asset management and REO strategies. Today, I want to provide additional detail on our progress against those objectives and what you should expect over the course of the year.

Speaker #3: This quarter, book value declined by 9% as we position our watchlist loans for resolution. Our action plan is designed to reposition the portfolio to optimize medium and long-term performance.

Speaker #3: However, as we execute, we may choose to incur book value declines as we seek liquidity on legacy assets to create a higher quality portfolio.

Matt Salem: However, as we execute, we may choose to incur book value declines as we seek liquidity on legacy assets to create a higher quality portfolio. As we complete this transition, we see a clear path to redeploy capital into newer vintage, higher quality investments, which we believe will support a return to book value per share stability and over time, drive earnings and book value accretion. Overall, our specific goals for 2026, as outlined on page 8 of the supplemental, are to reduce our watchlist and legacy office exposure, rotate the portfolio into newer vintage, higher quality assets, and reduce our REO footprint. With that, I want to walk through our action plan for 2026 in further detail. First, reduce legacy office exposure from 21% to under 10%. We expect over half of this reduction to come from par repayments, with the remaining driven by resolution of our watchlist loans.

Speaker #3: As we complete this transition, we see a clear path to redeploy capital in a newer vintage higher quality investments which we believe will support a return to book value per share stability and over time drive earnings and book value accretion.

Speaker #3: Overall, our specific goals for 2026, as outlined on page 8 of the supplemental, are to reduce our watchlist and legacy office exposure, rotate the portfolio into newer vintage higher quality assets, and reduce our REO footprint.

Speaker #3: With that, I want to walk through our action plan for 2026 in further detail. First, reduce legacy office exposure from 21% to under 10%.

Speaker #3: We expect over half of this reduction to come from par repayments. With the remaining driven by resolution of our watchlist loans. We have already begun the action both prongs.

Matt Salem: We've already begun to action both prongs. Our largest office loan, a $225 million loan in Bellevue, was refinanced in Q1 at par with a CMBS single asset, single borrower transaction. The property securing our largest watchlist office loan is currently being marketed for sale. Second, we plan to resolve all of our current watchlist loans by year-end by positioning these assets for sale or modification, and accelerating their resolution. Third, address our life science exposure. Our goal is to have 100% of this exposure modified. We already have made progress here, having modified 19%, and when including our Cambridge asset this quarter, we have modified 30% of our life science exposure. We also took a material increase in reserves for our Seaport loan in anticipation of a potential modification. Finally, we are continuing to originate new investments as we reposition the portfolio.

Speaker #3: Our largest office loan at 225 million dollar loan in Bellevue was refinanced in the first quarter at par with a CMBS single asset single borrower transaction.

Speaker #3: And the property securing our largest watchlist office loan is currently being marketed for sale. Second, we plan to resolve all of our current watchlist loans by year-end by positioning these assets for sale or modification and accelerating their resolution.

Speaker #3: Third, address our life science exposure. Our goal is to have 100% of this exposure modified. We already have made progress here. Having modified 19% and when including our Cambridge asset this quarter, we have modified 30% of our life science exposure.

Speaker #3: We also took a material increase in reserves for our seaport loan in anticipation of a potential modification. Finally, we are continuing to originate new investments as we reposition the portfolio.

Speaker #3: As a result of this activity, loans originated between 2024 and 2026 are expected to represent approximately 50% of the portfolio by year-end. This highlights the significant turnover into newer vintage assets which we believe will have improved earnings potential.

Matt Salem: As a result of this activity, loans originated between 2024 and 2026 are expected to represent approximately 50% of the portfolio by year-end. This highlights the significant turnover into newer vintage assets, which we believe will have improved earnings potential. Let me turn to liquidity and capital allocation, which is another priority for us as a management team for 2026. We announced a dividend reduction to $0.10 per share per quarter, payable on 15 July. This decision is not driven by liquidity constraints. In fact, as we look ahead through the year, we expect to have over $500 million of capital to invest, largely driven by over $2 billion of expected repayments in 2026. Rather, the dividend decision reflects a disciplined approach to capital allocation. At this stage, we see more attractive opportunities, including repurchasing our stock and funding new originations.

Speaker #3: Let me turn to liquidity and capital allocation, which is another priority for us as a management team for 2026. We announced a dividend reduction to $0.10 per share per quarter, payable on July 15th.

Speaker #3: This decision is not driven by liquidity constraints. In fact, we as we look ahead through the year, we expect to have over 500 million dollars of capital to invest largely driven by over 2 billion dollars of expected repayments in 2026.

Speaker #3: Rather, the dividend decision reflects a disciplined approach to capital allocation. At this stage, we see more attractive opportunities including repurchasing our stock and funding new originations.

Speaker #3: While we have ample liquidity to pay dividends at the current level, the new dividend level has the added benefit of being aligned with our expectations for distributable earnings per share before realized losses as we work through repositioning our portfolio.

Matt Salem: While we have ample liquidity to pay dividends at the current level, the new dividend level has the added benefit of being aligned with our expectations for distributable earnings per share before realized losses as we work through repositioning our portfolio. While we expect $0.40 per year of dividends to be covered by earnings excluding losses, quarterly results may vary in the near term, with earnings expected to trough in H2 2026 into H1 2027. Once we get through this period, we expect distributable earnings per share to increase. Regarding capital allocation, given our current trading levels relative to book value, we believe share repurchases represent an attractive opportunity to drive accretion to book value per share while also providing greater strategic flexibility.

Speaker #3: While we expect the $0.40 per year of dividends to be covered by earnings excluding losses, quarterly results may vary in the near term, with earnings expected to trough in the second half of 2026 into the first half of 2027.

Speaker #3: Once we get through this period, we expect distributable earnings per share to increase. Regarding capital allocation, given our current trading levels, relative to book value, we believe share repurchases represent an attractive opportunity to drive accretion to book value per share while also providing greater strategic flexibility.

Speaker #3: We were largely inactive with respect to share buybacks this past quarter due to trading restrictions while we were actively evaluating our dividend policy. With that process now complete and our dividend framework established, those constraints have been lifted.

Matt Salem: We were largely inactive with respect to share buybacks this past quarter due to trading restrictions while we were actively evaluating our dividend policy. With that process now complete and our dividend framework established, those constraints have been lifted. On 14 April, our board authorized a new $75 million share repurchase program, providing us with meaningful flexibility to deploy capital. As a management team, together with our board of directors, we have not taken this dividend decision lightly. Given where the stock is trading, we believe the dividend cut and meaningful share buybacks are in the best interest of shareholder value creation. With that, I will turn the call over to Patrick.

Speaker #3: On April 14th, our Board authorized a new $75 million share repurchase program, providing us with meaningful flexibility to deploy capital. As a management team, together with our Board of Directors, we have not taken this dividend decision lightly.

Speaker #3: But given where the stock is trading, we believe the dividend cut and meaningful share buybacks are in the best interest of shareholder value creation.

Speaker #3: With that, I will turn the call over to Patrick.

Speaker #2: Thanks, Matt. Good morning, everyone. Let me start with a few changes to the watchlist. This quarter, we downgraded our Philadelphia office assets with two smaller Texas multifamily loans from risk rated 3 to 4.

Patrick Mattson: Thanks, Matt. Good morning, everyone. Let me start with a few changes to the watchlist. This quarter, we downgraded our Philadelphia office assets, with two smaller Texas multifamily loans, from risk rated 3 to 4. As previously previewed on last quarter's earnings call, we also downgraded our Boston life science asset from risk rated 3 to 5. We upgraded our Cambridge life science from risk rated 5 to 3, following the loan restructuring. That includes new sponsor equity commitment and a loan paydown. As a result, we recorded CECL provisions of $74 million, bringing our total allowance to $260 million. These actions are part of our broader action plan to proactively reposition the portfolio. Turning next to our REO portfolio. We are actively managing these assets with a clear focus on monetization and value realization. To help frame it, we've grouped these assets into near, medium, and longer-term monetization buckets.

Speaker #2: As previously previewed on last quarter's earnings call, we also downgraded our Boston Life Science asset from risk rated 3 to 5. We upgraded our Cambridge Life Science from risk rated 5 to 3 following the loan restructuring that includes new sponsor equity commitment and a loan paydown.

Speaker #2: As a result, we recorded Cecil provisions of 74 million bringing our total allowance to 260 million. These actions are part of our broader action plan to proactively reposition the portfolio.

Speaker #2: Turning next to our REO portfolio. We are actively managing these assets with a clear focus on monetization, and value realization. To help frame it, we've grouped these assets into near, medium, and longer term monetization buckets.

Speaker #2: Starting with the near term bucket. West Hollywood Condos were units are currently listed and actively being marketed. With proceeds returning equity as closings occur.

Patrick Mattson: Starting with the near-term bucket. West Hollywood condos, where units are currently listed and actively being marketed, with proceeds returning equity as closings occur. Raleigh, North Carolina multifamily, where we're completing targeted upgrades to common areas and expect to list the asset for sale by year-end. Philadelphia office, where our business plan is largely complete. The asset is now approximately 85% leased, and we plan to sell the property this year. In the medium-term bucket, we have Mountain View, California office, where our platform, market positioning, and patience have driven meaningful value creation. As we announced in March, we signed a long-term, full property lease with OpenAI. We expect to bring this asset to market within the next 12 to 16 months as we complete the remaining work and the tenant takes occupancy.

Speaker #2: Raleigh, North Carolina multifamily where we're completing targeted upgrades to common areas and expect to list the year-end. Philadelphia office where our business plan is largely complete the asset is now approximately 85% leased and we plan to sell the property this we have Mountain View, California office.

Speaker #2: Where our platform, market positioning, and patience have driven meaningful value creation. As we announced in March, we signed a long-term, full-property lease with OpenAI.

Speaker #2: We expect to bring this asset to market within the next 12 to 16 months as we complete the remaining work and the tenant takes occupancy.

Speaker #2: Portland redevelopment where we've executed on our plan in our near final entitlement on over 4 million square feet of mixed use space and expect to begin our monetization strategy over the course of the year.

Patrick Mattson: Portland redevelopment, where we've executed on our plan and are near final entitlement on over 4 million sq ft of mixed-use space. To begin our monetization strategy over the course of the year. Finally, in the longer-term bucket, Seattle Life Science, where our focus is on leasing and stabilizing the asset, and we expect to hold it longer given current market conditions. Boston Life Science, currently a risk-rated 5 loan, which we expect to transition to REO in Q2. This is expected to result in a realized loss of approximately $37 million, though we are adequately reserved as of Q1. Similar to Seattle, we plan to stabilize the asset and hold the property until market conditions improve.

Speaker #2: And finally, in the longer term bucket, Seattle Life Science where our focus is on leasing and stabilizing the asset and we expect to hold it longer given current market conditions.

Speaker #2: Boston Life Science is currently a risk-rated 5 loan, which we expect to transition to REO in the second quarter. This is expected to result in a realized loss of approximately $37 million, though we are adequately reserved as of the first quarter.

Speaker #2: Similar to Seattle, we plan to stabilize the asset and hold the property until market conditions improve. As we monetize these assets and redeploy the capital into new investments, we estimate the potential to generate more than 15 cents per share of incremental quarterly earnings over that being driven by our Mountain View REO asset.

Patrick Mattson: As we monetize these assets and redeploy the capital into new investments, we estimate the potential to generate more than 15 cents per share of incremental quarterly earnings over time. Nearly half of that, being driven by our Mountain View REO asset, reinforces our focus to convert these assets into liquidity and redeploy that capital into higher-earning opportunities. Turning to financing and liquidity. At quarter end, we had $653 million of liquidity, including $135 million of cash on hand and $500 million of undrawn capacity on our corporate revolver. Additionally, we had over $500 million of unencumbered assets on the balance sheet. Total financing availability was $7.2 billion, including $2.6 billion of undrawn capacity. Originations totaled $184 million for Q1, while repayments were $415 million, with approximately 75% of the repayments driven by legacy office.

Speaker #2: This reinforces our focus to convert these assets into liquidity and redeploy that capital into higher earning opportunities. Turning to financing and liquidity, a quarter-end we had 653 million of liquidity.

Speaker #2: Including 135 million of cash on hand and on our corporate revolver. Additionally, we had over 500 million of unencumbered assets on the balance sheet.

Speaker #2: Total financing availability was 7.2 billion including 2.6 billion of undrawn capacity. Originations totaled 184 million for the first quarter. While repayments were 415 million with approximately 75% of the repayments driven by legacy office.

Speaker #2: Looking ahead, in the first three weeks of the second quarter, we've already closed or circled over 400 million of new loans. We continue to benefit from our connectivity with KKR Capital Markets and 77% of our financing remains non-mark to market providing stability across market environments.

Patrick Mattson: Looking ahead, in the first three weeks of Q2, we've already closed or circled over $400 million of new loans. We continue to benefit from our connectivity with KKR Capital Markets, and 77% of our financing remains non-mark-to-market, providing stability across market environments. We believe we remain well-capitalized and positioned to manage the portfolio. Importantly, we have no final facility maturities until 2027 and no corporate debt due until 2030. Our debt-to-equity ratio was 2.2 times, and our total leverage was four times, consistent with our target range. As we move through this transition year, we believe we are well-positioned. Our focus remains on executing our resolution strategy and redeploying capital into high-quality opportunities, including share repurchases, with a clear path to improving and rebuilding earnings power. We believe the actions we're taking today position the company for long-term value creation.

Speaker #2: We believe we remain well capitalized and positioned to manage the portfolio. Importantly, we have no final facility maturities until 2027 and no corporate debt due until 2030.

Speaker #2: Our debt to equity ratio is 2.2 times and our total leverage was 4 times consistent with our target range. As we move through this transition year, we believe we are well positioned.

Speaker #2: Our focus remains on executing our resolution strategy and redeploying capital into high-quality opportunities, including share repurchases, with a clear path to improving and rebuilding earnings power.

Speaker #2: We believe the actions we're taking today position the company for long term value creation. With that, we're happy to take your questions.

Patrick Mattson: With that, we're happy to take your questions.

Speaker #1: We will now begin the question and answer session. To ask a question, you may press star then one on your touchstone telephone. If you're using a speakerphone, please pick up your handset before pressing the keys.

Operator 2: We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone telephone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. First question is from Thomas Catherwood, BTIG.

Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone telephone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. First question is from Thomas Catherwood, BTIG.

Speaker #1: To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. First question is from Tom Cutterwood, BTIG.

Speaker #3: Thank you and good morning everybody. maybe starting with the, the portfolio target of 50% newer vintage loans, by year-end. By our math, that implies something in the neighborhood of a billion to a billion two of origination activity over the coming quarters.

Thomas Catherwood: Thank you and good morning, everybody. Maybe starting with the portfolio target of 50% newer vintage loans by year-end. By our math, that implies something in the neighborhood of $1 billion to $1.2 billion of origination activity over the coming quarters. Are we in the ballpark with that?

Speaker #3: Are we in the ballpark with that?

Speaker #4: Hey Tom, thanks for the question. It's, it's Matt. I can, I can take that. Thanks for joining the call. that's, that's i-in certainly in the ballpark.

Patrick Mattson: Hey, Tom. Thanks for the question. It's Matt. I can take that. Thanks for joining the call. That's certainly in the ballpark of what we're looking at. Obviously, certainly will depend a little bit on the share buyback amount. That's a good projection for now.

Matt Salem: Hey, Tom. Thanks for the question. It's Matt. I can take that. Thanks for joining the call. That's certainly in the ballpark of what we're looking at. Obviously, certainly will depend a little bit on the share buyback amount. That's a good projection for now.

Speaker #4: of what we're looking at. you know, obviously certainly will depend a little bit on, on the share buyback amount, but, you know, that's, a good projection for now.

Speaker #3: Perfect. Perfect. And actually that bear point on the share buyback, and it's kind of the, the use of liquidity is something we're thinking of, you know, with leverage ticking up to, you know, kind of the top end of the range in Q1.

Thomas Catherwood: Perfect. Actually, fair point on the share buyback, and that's kind of the use of liquidity is something we're thinking of with leverage ticking up to the top end of the range in Q1. Will those originations and the $75 million allocation for buybacks be tied to REO asset sales? Are you comfortable using the liquidity on your balance sheet and then just back funding that as you sell assets?

Speaker #3: It will those originations and, you know, the 75 million dollar allocation for buybacks, will those be tied to REO asset sales or are you comfortable using the liquidity on your balance sheet and then just kind of back funding that as you sell assets?

Speaker #4: Yeah, I can start if Matt again. Let me start off, a little bit. I think most of that liquidity as we commented on, on the, prepared remarks is really coming from just natural loan, loan repayments.

Patrick Mattson: Yeah, I can start. It's Matt again. Let me start off a little bit. I think most of that liquidity, as we commented on the prepared remarks, is really coming from just natural loan repayments. Over the course of the year, we think we're going to have $2 billion of repayments. We had about $400 million or so in Q1, Q2. To be clear, it's always a little bit hard to predict these things quarter to quarter, but if we look at Q2 right now, and from what we can see, it could be close to half of that total repayment for the year could come through Q2. I'd say most of this liquidity that we're looking at, which translates into like $500 million of

Matt Salem: Yeah, I can start. It's Matt again. Let me start off a little bit. I think most of that liquidity, as we commented on the prepared remarks, is really coming from just natural loan repayments. Over the course of the year, we think we're going to have $2 billion of repayments. We had about $400 million or so in Q1, Q2. To be clear, it's always a little bit hard to predict these things quarter to quarter, but if we look at Q2 right now, and from what we can see, it could be close to half of that total repayment for the year could come through Q2. I'd say most of this liquidity that we're looking at, which translates into like $500 million of

Speaker #4: so over the course of the year, we think we're gonna have $2 billion of repayments. we got about $400 million or so in the first quarter.

Speaker #4: Second quarter, a-and to be clear, it's always a little bit hard to predict these things quarter to quarter, but, you know, we look at the second quarter right now and from what we can see, i you know, it could be close to half of that, total repayment for the year could come through the second quarter.

Speaker #4: So I'd say most of this liquidity that we're looking at, which translates into like $500 million, of, you know, investable capital if you will, and then, you know, we can talk about the sources to your point.

Matt Salem: Investable capital, if you will, and then we can talk about the sources to your point. It is really going to come from the just loan repayments and natural velocity within the loan portfolio.

Speaker #4: i-i-is really gonna come from that, from the just low repayments and, and, and natural velocity within the loan portfolio.

Speaker #3: Okay. So you don't need to line up the timing of REO sales in order to achieve that 50% new loan target?

Thomas Catherwood: Okay. You don't need to line up the timing of REO sales in order to achieve that 50% new loan target?

Speaker #4: No.

Matt Salem: No.

Speaker #3: Got it. Perfect. And then last one for me, on the watch list, there, you know, roughly six assets on there. When you, when you account for the Boston Life Science loan in two Q, or that it's gonna go REO, you obviously mentioned, Minneapolis, Minneapolis office is on the market.

Thomas Catherwood: Got it. Perfect. Last one for me. On the watchlist, roughly six assets on there when you account for the Boston life science loan in Q2 or that it's going to go REO. You obviously mentioned the Minneapolis office is on the market. For the remaining six, what are your expectations as far as the amount that are repaid versus those you expect to modify or bring on balance sheet?

Speaker #3: for the remaining six, what are your expectations as far as the amount that are repaid versus those you expect to modify or, or, or, or bring on balance sheet?

Speaker #4: Yeah, let me jump in again. M-maybe just looking on, you know, on page 12 here, y-you know, the goal is to try to monetize, you know, the, the vast majority of these.

Matt Salem: Yeah. Let me jump in again. Maybe just looking on page 12 here. The goal is to try to monetize the vast majority of these. I think on the life science piece of it, we mentioned we will be taking title to one of those over the course of time here. Outside of that, I think a lot of this will be some combination of modifications, note sales as well. I think the goal really is to clear all this up by the end of the year. Things like the multifamily component here, I'm sure we'll get questions on this later, so I can just address it now. These are just coming up on maturity, and these are in the process of getting sold. Sponsors out selling these assets.

Speaker #4: I think on the Life Science piece of it, you know, we mentioned we will be taking title to one of those over the course of time here.

Speaker #4: But, you know, outside of that, I think a lot of this will be, some combination of modifications, you know, note sales, a-as well, but I think the, the goal really is to clear all this up by, you know, by the end of the year.

Speaker #4: and, y-you know, things like the multifamily component here are, you know, I'm sure we'll get questions on this later, so I can just address it, address it now.

Speaker #4: These are just coming up on maturity, and these are in the process of getting sold, so, you know, sponsors out selling these assets. You know, we downgraded these just because the, you know, the sales price is going to be close to the debt, and we may take small losses or not on those loans.

Matt Salem: We downgraded these just because the sales price is going to be close to the debt, and we may take small losses or not on those loans. We want to make sure we identify those. We don't think that's really indicative of the rest of multifamily. We've always been on these calls saying there can be noise in multifamily, but we don't think there's material losses in the loan portfolio on the multifamily side. This is probably a good example of what we're looking at of, like, there's going to be a little bit of noise here. We could take small losses as they sell these assets into the market, and it trades right around the debt. Some of these will just be sales from sponsors, if you will.

Speaker #4: We wanna make sure we, you know, we identify those. We don't think that's really indicative of the rest of the multifamily. We've always been on these calls saying, you know, there can be noise in multifamily, but we don't think there's like material, you know, losses in that, in the loan portfolio on the multi, on the multifamily side.

Speaker #4: And this is probably a, a, a good example of what we're looking at of like, there's gonna be a little bit of noise here.

Speaker #4: We could take small losses as they sell these assets into the market and, you know, the trade's right around the debt. But, you know, some of these will just be sales from sponsors, if you will.

Speaker #3: Got it. Got it. Appreciate those answers. Thanks, Matt.

Thomas Catherwood: Got it. Appreciate those answers. Thanks, Matt.

Speaker #4: Thank you.

Matt Salem: Thank you.

Speaker #1: Next question is from Chris Muller, Citizen Capital Markets.

Operator 2: Next question is from Chris Muller, Citizens JMP Securities.

Operator: Next question is from Chris Muller, Citizens JMP Securities.

Speaker #3: Hey guys. Thanks for taking the questions. so I just wanted to start with the dividend and just make sure I heard you guys right.

Chris Muller: Hey, guys. Thanks for taking the questions. I just wanted to start with the dividend and just make sure I heard you guys right. The new $0.10 dividend is well below the $0.20 ex losses you guys put up in the quarter. I also heard the comments on both the new buybacks and also near-term pressure as you guys get more aggressive on resolutions. I guess the question is, do you guys expect earnings ex losses to be around that $0.10 level, or does that just give you some optionality? I think I just missed that, what you guys said in the prepared remarks.

Speaker #3: So the new temp, 10 cent dividend is well below the 20 cents, ex-losses you guys put up in the quarter. I also heard the comments on both the new buybacks, and also near-term pressure as you guys get more aggressive on resolutions.

Speaker #3: So I guess the question is, do you guys expect earnings ex-losses to be around that 10 cent level? Or, or does that just give you some optionality?

Speaker #3: And I, I think I just missed that, what you guys said in the prepared remarks.

Speaker #4: Y-yeah. I-it's Matt. Let me jump in. We think, you know, earnings are gonna trough towards, back half of this year, you know, i-into, you know, into next year.

Matt Salem: Yeah. It's Matt, let me jump in. We think earnings are going to trough towards H2 of this year into next year. A lot of that we start to come out of it as we think about liquidating more of the REO portfolio, especially as you think about Mountain View, where we've obviously signed the lease there. That'll be positioned for liquidity over the next, call it 12 to 18 months. When you think about the light at the end of the tunnel, that's a little bit of the timing as to we can build back up earnings. When we mention the $0.10 here, part of this is just capital allocation, right? Like, think about where the stock trades today. We've got pretty good uses of capital right now in terms of just share repurchases.

Speaker #4: And a lot of that, we start to come out of it as we think about liquidity more of the REO portfolio, especially as you think about Mountain View, you know, where we've obviously signed the lease there.

Speaker #4: And, and that'll be positioned for liquidity over the next, call it, 12 to 18 months. So that's, you know, when you think about the light at the end of the tunnel, that's the, a little bit of the timing as to we can build back up, earnings.

Speaker #4: When we mentioned the 10 cents here, y-you know, part of this is just capital allocation, right? Like, looking about, thinking about where the stock trades today.

Speaker #4: You know, we've got pretty good uses of capital right now in terms of just share repurchases. So, you know, obviously it ties into some overall capital allocation discussions.

Matt Salem: Obviously it ties into some just overall capital allocation discussions. When we think about it just versus earnings, we expect to cover that on kind of an annualized intermediate basis. There certainly could be a little bit of noise in certain quarters where we're not fully covering that as we continue to push through and reposition the portfolio.

Speaker #4: But when we think about it, just versus earnings, we expect to cover that on, you know, kind of an annualized intermediate basis. But there certainly could be a little bit of noise in certain quarters where we're not fully covering that as we continue to push through and reposition the portfolio.

Speaker #3: Got it. And then I guess on the 42 million CMBS investment, was that a more attractive investment than deploying into bridge loans, or was it more just a place to park some cash until it can be redeployed?

Chris Muller: Got it. I guess on the $42 million CMBS investment, was that a more attractive investment than deploying into bridge loans, or was it more just a place to park some cash until it can be redeployed? Should we expect to see more of this going forward?

Speaker #3: And should we expect to see more of this going forward?

Speaker #4: Yeah. So we've been, that, that number sounds high. Let me double-check the, the amount. for the quarter, this we've been evaluating different options for portfolio diversification.

Matt Salem: Yeah. That number sounds fine. Let me double-check the amount for the quarter. We've been evaluating different options for portfolio diversification, whether that's expanding into Europe and leveraging the platform that KKR has built in that market or just duration as well, and just access to different investing markets like CMBS. From a relative value perspective, we thought that was a particularly unique opportunity for us. I think you're right in terms of the 42. I just want to double-check that. Yeah, we're evaluating everything on a relative value basis. The CMBS is providing a little bit duration. I think in this case, it was a little bit more single asset, single borrower, so solving more of the relative value component of it.

Speaker #4: Whether that's, you know, expanding into Europe and leveraging the platform that KKR has built, y-you know, in that market, or, you know, just duration.

Speaker #4: as well, and just access to, like, different, investing markets. y-you know, like CMBS. so from a relative value perspective, we thought that was a, you know, particularly unique, opportunity for us.

Speaker #4: And I think you're right in terms of the 42. I just want to double, double-check that. But yeah, I mean, we're evaluating everything on a relative value basis.

Speaker #4: The CMBS is providing a little bit duration. I think in this qu in this case, it was a little bit more single asset, single borrower, so solving more of the relative value component of it.

Speaker #3: Got it. Makes a lot of sense. And thanks for taking the questions.

Chris Muller: Got it. Makes a lot of sense, and thanks for taking the questions.

Speaker #1: Next question is from Jade Rahmani. KBW.

Operator 2: Next question is from Jade Rahmani, KBW.

Operator: Next question is from Jade Rahmani, KBW.

Speaker #5: Yes. have you seen any green shoots in leasing in life science?

Jade Rahmani: Yes. Have you seen any green shoots in leasing in life science?

Speaker #4: Hey, Jade. Thank you for joining today. We are—I think it's a little bit market dependent. They're all in a little bit different stages of recovery.

Matt Salem: Hey, Jade. Thank you for joining today. I think it's a little bit market dependent. They're all in a little bit different stages of recovery. I think in South San Francisco, you're seeing two things happening. One, you're seeing a revitalization of office, particularly as it relates to AI tenants and growth, which is creating tension in the overall market. As you well know, some of these assets, including some that we have, can be leased as office. There's some pretty tight pockets of office there. Then we're also starting to see life science companies turn back on as well. When we think about our other exposure, our larger exposure, it's in Boston. I'd say there, it's probably a little bit behind what we're seeing in South San Francisco. We are seeing tenants in the market.

Speaker #4: I think in South San Francisco, you're seeing two things happening. One, you're seeing a revitalization of office. particularly as it relates to AI tenants and growth, which is creating tension in the overall market and as, as you well know, some of these assets i-including, you know, some that we have, can be leased as office.

Speaker #4: so there's some pretty tight pockets of office there. and then we're also starting to see, you know, life science companies turn back on as well.

Speaker #4: When we think about our other exposure, our larger exposure, it's, you know, in, in, in Boston, and I'd say there, it's probably a little bit behind, what we're seeing in, in South San Francisco.

Speaker #4: But we are seeing tenants in the market. Most of the assets that we have there are oriented to big pharma. And there are tenants in the market today, like, actively engaged, you know, trying to lease space, including, you know, one of the assets that we have.

Matt Salem: Most of the assets that we have there are oriented to Big Pharma, and there are tenants in the market today actively engaged, trying to lease space, including one of the assets that we have. We are seeing tenants starting to come back, but it still feels early, but at least you're having some sense of recovery starting.

Speaker #4: So, we are seeing tenants starting to come back, but it's still feels y-you know, early and, and but at least you're having some sense of re of recovery starting.

Speaker #3: And in terms of your REO expectations, from your standpoint today, is it your view that there'll be just one additional life science REO?

Jade Rahmani: In terms of your REO expectations, from your standpoint today, is it your view that there'll be just one additional life science REO?

Speaker #4: Th-that's that's the current expectation, yes.

Matt Salem: That's the current expectation, yes.

Speaker #3: And then can you discuss some of your approach to credit risk management? Because I have seen migration from risk three loans to five as maturity approaches, and, you know, usually what we see is a risk creator, a risk four, then to a risk five.

Jade Rahmani: Can you discuss some of your approach to credit risk management? Because I have seen migration from risk 3 loans to 5 as maturity approaches, and usually what we see is a risk 3 to a risk 4, then to a risk 5. The skipping ahead makes me a little worried about the risk 3 loans in the portfolio. I know it's multifamily and you don't expect material losses there, but just generally speaking, how are you thinking about that?

Speaker #3: So the skipping ahead, you know, makes me a little worried about the risk three loans in the portfolio. I know it's multifamily, and you don't expect material losses there.

Speaker #3: But just generally speaking, you know, how are you thinking about that?

Speaker #4: Yeah. No, that's a great question. I-I would say the normal progression for us, and obviously the peers as well, as you go, three, four, five.

Matt Salem: Yeah. No, that's a great question. I would say the normal progression for us, and obviously the peers as well, is you go 3, 4, 5. I'd say in the vast majority of cases, that's what's happened. By the way, we do analysis every quarter evaluating, okay, what's happened with our 4 loans? It's obviously a dynamic number, but up to this point, roughly half have gone to 5 and half have gone to 3, which is, I think, what a 4 is supposed to be, right? It's not just an indicator that it goes to 5. Obviously, depending on the property type, it may be more heavily weighted to that over time. In terms of, I think we've had a couple go from 3 to 5.

Speaker #4: And, I'd say in the vast majority of cases, that's, you know, that's what's happened. And by the way, you know, we do analysis every quarter, evaluating, okay, what's happened with our four loans.

Speaker #4: And that's obviously a dynamic number, but, you know, up to this point, roughly half have gone to five and half have gone to three, which is, I think, what a four is supposed to be, right?

Speaker #4: It's not just an indicator that it goes to five. Obviously, depending on the property type, it may be more heavily weighted to that over time.

Speaker #4: But, y-you know, in terms of I think we've had a couple go from, from, from three to five. The only one we had this quarter was really the, the life science deal, which we flagged last quarter as, you know, going to get, you know, going to get downgraded, depending on what these modification discussions look like.

Matt Salem: The only one we had this quarter was really the life science deal, which we flagged last quarter as going to get downgraded, depending on what these modification discussions look like. It would be a four or a five. We weren't exactly sure at the time. We went ahead and moved it over to a five. I'd say it's unusual. The multifamilies we put into the four bucket, just because, one, it's not material, we don't think, and two, we're not exactly sure what's going to happen now as these sales processes play out.

Speaker #4: It would be a four or a five. We weren't exactly sure at the time. And, and, and we had, you know, went ahead and moved it over to, to a five.

Speaker #4: So, I'd say it's unusual. The multifamilies, we put into the four bucket just because, one, it's not material, we don't think, and, two, we're not exactly sure what's, you know, what's gonna happen now as these sales processes.

Speaker #4: play out. But I-I think you're right in the sense that the vast majority of time, you're gonna have these natural you know, linear progressions.

Matt Salem: I think you're right in the sense that vast majority of time, you're going to have these natural linear progressions, but sometimes there's jump risk around a maturity date or around a modification discussion, and we obviously need to just reflect our best case scenario at the time, or best guess at the time.

Speaker #4: But sometimes there's jump risk around a maturity date or around a m-modification discussion. And, you know, we, we obviously need to just reflect, you know, our best case, scenario at the time.

Speaker #4: Or best guess at the time.

Speaker #3: Thank you. And then on the Minneapolis office, it's a risk five loan, so I believe there should be something around a 23% loss assumption there, reserves that you currently have.

Jade Rahmani: Thank you. Then on the Minneapolis office, it's a risk five loan, so I believe there should be something around 23% loss assumption there, reserves that you currently have. I think that your slides show that the price per square foot at your basis is 182. That's before CECL. If we stress that for a 25% severity assumption, I'm just curious if you think that is where the market is or if, based on the sale process, there might be some further loss.

Speaker #3: And I think that your slides show that the price per square foot at your basis is 182. but that's before Cecil. So, you know, if we stress that for a 25% severity assumption, I'm just curious if you think that is where the market is or if, you know, based on the sale process, there might be some further loss.

Speaker #2: Jade, good morning. It's Patrick. I'll take that one. So, yeah, I think the, the number you're kind of backing into is, is a blend.

Patrick Mattson: Jade, good morning. It's Patrick. I'll take that one. Yeah, I think the number you're kind of backing into is a blend, is an average. Obviously, as we've seen in the office segment, some of those loss numbers have been higher than average, right? If you think about what's also in that bucket, we've got multifamily as an example. It's just a proxy. Clearly, that's an asset that we've been working for some time here, and we think it's appropriately reserved for. The number that you're quoting is just an average.

Speaker #2: It is an average. Obviously, as we've seen in the office segment, some of those loss numbers have been higher than average, right? If you think about what's also in that bucket, we've got, you know, multifamily, as an example.

Speaker #2: So, it's just a proxy. clearly, that's, that's an asset that, we've been working, for, for some time here. And we think it's appropriately reserved for.

Speaker #2: but the number that you're quoting is, is just an average.

Speaker #3: Okay. Thanks a lot.

Jade Rahmani: Okay. Thanks a lot.

Speaker #5: Again, if you have a question, please press star, then one. Next question, it's from Gabe Podgy, Raymond James.

Operator 2: Again, if you have a question, please press star, then one. Next question is from Gabriel Poggi, Raymond James.

Operator: Again, if you have a question, please press star, then one. Next question is from Gabriel Poggi, Raymond James.

Speaker #4: A-and good morning, guys. I've got a couple questions. on capital allocation, capital management, as you guys, you know, think about the buyback versus making new loans to kind of keep a DE run rate going, how do you manage that relative to leverage?

Gabriel Poggi: Hey. Good morning, guys. I've got a couple questions. On capital allocation, capital management, as you guys think about the buyback versus making new loans to kind of keep a DE run rate going. How do you manage that relative to leverage? If your total capital right now to equity is around 4x and your leverage to common is 5x plus, how much of that buyback? How do you think about leverage relative to that buyback? That's question one.

Gabe Poggi: Hey. Good morning, guys. I've got a couple questions. On capital allocation, capital management, as you guys think about the buyback versus making new loans to kind of keep a DE run rate going. How do you manage that relative to leverage? If your total capital right now to equity is around 4x and your leverage to common is 5x plus, how much of that buyback? How do you think about leverage relative to that buyback? That's question one.

Speaker #4: Right? If your total capital right now to equity's a-around 4X, and your leverage to common's 5X plus, how much of that leverage relative to that buyback?

Speaker #4: That's question one.

Speaker #6: Hey, Gabe. Yeah, it's Matt. Let me let me start out and try to answer that. I would say w-we're not changing our leverage targets.

Matt Salem: Hey, AP, that's Matt. Let me start out and try to answer that. I would say we're not changing our leverage targets. I think that's the first thing we're kind of solving for, right? We want to kind of stay in that 3.5 to 4 times range. I think we ended this quarter around 4 at the higher end of our range. If we didn't originate any loans, we could bring that leverage way down because we have so many repayments coming in. We have a lot of flexibility on that, but that's probably the first thing we're solving for, which is like, okay, let's make sure we stay kind of leverage neutral, if you will. Then we're looking at excess capital beyond that. Then we're trying to think about, okay, what's the appropriate amount of share buybacks first?

Speaker #6: I think that's the first thing we're kind of solving for, right? We wanna kind of stay in that 3.5 to 4 times range. So I think we ended this quarter around 4 at the higher end of our range.

Speaker #6: You know, if we didn't originate, you know, any loans or, you know, we could bring that leverage way down, because we have so many repayments coming in.

Speaker #6: So we have a we have a lot of flexibility on that, but that's probably the first thing we're solving for, which is like, okay, let's make sure we stay kind of leverage neutral, if you will.

Speaker #6: and then we're looking at excess capital, you know, beyond that. and then we're trying to think about, okay, what's the appropriate amount of share buybacks first?

Speaker #6: I would say just given what the stock price trades, you know, h-how much should we be buying back? The board authorized 75 million. You could put that in context.

Matt Salem: I would say, just given where the stock price trades, how much should we be buying back? The board authorized $75 million. You put that in context, that's a lot of firepower. We have a lot of liquidity. We have $500 million of liquidity. What are we going to do with it? $75 million we authorized for buybacks, and that's roughly 25% of the public float. It's a lot of buyback. That's probably what we're looking at next. Then we have excess capital, right? That's like, okay, what else should we be doing and thinking about? That's why we obviously want to think about the ongoing business, supporting a dividend and not shrinking the company too much. That's where the final piece of it, I think, comes in, which is the loan origination side.

Speaker #6: That-that's a lot of firepower. right? We have a lot of credit. We have 500 million dollars of liquidity. So what are we gonna do with it?

Speaker #6: 75 million, we authorize for buybacks. I mean, that's a roughly 25% of the public float. Right? So the it's a lot of buyback. so that's probably what we're looking at next.

Speaker #6: And then we have excess capital, right? And then it's like, okay, what else can should we be doing and thinking about? and that's why we obviously wanna think about the ongoing business, supporting a dividend, and not striking the company too much.

Speaker #6: and that's where the, the final piece of it, I think, comes in, which is the, the loan origination side. So h-hopefully, that gives you some, some context and kind of how we're you know, from a decision tree perspective, going through it.

Matt Salem: Hopefully that gives you some context and kind of how we're from a decision tree perspective, going through it.

Speaker #3: Yeah. No, tha-that's helpful. Thanks, Matt. second question is, is there any contemplation from KKR, the manager, during this transition period, regarding, fee cut, fee waiver, just as you guys get from point A to point B, call it, you know, mid-2027?

Gabriel Poggi: Yeah, no, that's helpful. Thanks, Matt. Second question is there any contemplation from KKR, the manager, during this transition period, regarding a fee cut, fee waiver, just as you guys get from point A to point B, call it mid-2027?

Gabe Poggi: Yeah, no, that's helpful. Thanks, Matt. Second question is there any contemplation from KKR, the manager, during this transition period, regarding a fee cut, fee waiver, just as you guys get from point A to point B, call it mid-2027?

Matt Salem: Yeah, thanks. Listen, I think we're evaluating everything. All options, I think, are on the table, at the KKR level as manager, at the KKR level as the largest shareholder in this company, and then obviously the KREF level and the board. We're looking at a number of different options.

Speaker #6: yeah, thanks. listen, I think of the we're evaluating you know, everything. all, all, all options, I think, o-o-on the. Able, at the KKR level as manager, at the KKR level as a largest shareholder, in this company, and then obviously the KRF level and the and the board.

Speaker #6: so w you know, I wouldn't, you know, we're, we're looking at a number of different obviously, a number of different options.

Gabriel Poggi: Yeah, I asked that just in the context of very obviously getting from point A to point B, knowing KKR is a large shareholder and thinking about just kind of getting more oomph to the bottom line during the transition. There was nothing pointed in that question, just so you guys know. Last question is there any more detail you can provide around the Mountain View lease? Just any term details, things of that nature to give folks some granularity on how you're thinking about the potential value there as you think about monetization over the next 12 to 18 months?

Gabe Poggi: Yeah, I asked that just in the context of very obviously getting from point A to point B, knowing KKR is a large shareholder and thinking about just kind of getting more oomph to the bottom line during the transition. There was nothing pointed in that question, just so you guys know. Last question is there any more detail you can provide around the Mountain View lease? Just any term details, things of that nature to give folks some granularity on how you're thinking about the potential value there as you think about monetization over the next 12 to 18 months?

Speaker #3: Yeah. And I and I asked that and, you know, just in the context of, right, obviously getting from point A to point B, knowing KKR's a large shareholder and, thinking about just kind of getting, you know, more oomph to the bottom line during the transition.

Speaker #3: There was nothing pointed in that question just so you guys know. last question is, is there any more detail you can provide around the Mountain View lease?

Speaker #3: And just any, any term details, things of that nature to give folks, some granularity on, on how you're thinking about the, the potential value there as you think about modernization over the next 12 to 18 months?

Matt Salem: Yeah. We're subject to a pretty tight NDA. So we'd love to provide more, but obviously we have a contractual agreement with our tenant. What I can say is it's a long-term lease that we think will trade like a net lease. We can effectively sell it to net lease type of buyers, right? On a long-term-

Speaker #6: C yeah. we're subject to a pretty a pretty tight NDA. so we'd love to provide more, but obviously, we have a contractual agreement with, with our tenant.

Speaker #6: w-what I can say is it-it's a long-term lease that we think will trade like a net lease, and so we can effectively sell it to net lease type of buyers, right, o-on a long-term lease.

Gabriel Poggi: Yes

Gabe Poggi: Yes

Matt Salem: ... lease basis. That's really what we're looking at. We think that. Let's just take a step back, right? Where the stock is trading today, there's a lot of uncertainty in the world, clearly. It's hard to project forward what happens, whether it's with the war in Iran and oil prices and inflation, whether it's AI and impact on jobs or growth or GDP. There's just a lot out there, right? I would say right now. When we look at book value, I think you saw it this quarter, unfortunately, and we're willing to pay some bid offer to find liquidity to clean up the portfolio. It is putting pressure on book value. Like we said, we've got a little bit of ways to go here.

Speaker #3: Yes.

Speaker #6: On a long-term lease basis. So that-that's really what we're looking at. We think that let's just take a step back, right? I mean, where the stock is trading y-you know, today, there's a lot of uncertainty i-in the world, clearly.

Speaker #6: and so it's hard to, like, project kind of project forward, you know, what happens whether it's in with the war in Iran and oil prices and inflation, whether it's you know, AI and, y-you know, impact on jobs or growth or GDP.

Speaker #6: so there's just a lot out there, right? I would say right now, but when we look at you know, book value, and we're willing to, I think you saw it this quarter, you know, unfortunately, and, you know, we're willing to pay some bid offer to find liquidity to clean up the portfolio.

Speaker #6: It is putting pressure on book value, a-and like we said, we're gonna we've got a little bit of ways to go here. We're gonna choose to, to do that going forward to get to a spot where we can you know, where we can feel good about it and have a, a, a portfolio that's earning well and, and give the all clear.

Matt Salem: We're going to choose to do that going forward to get to a spot where we can feel good about it, have a portfolio that's earning well, and give the all clear. It's not like we're sitting here and looking at this portfolio and our book value and saying, "Oh, we can get down to a single digit type of book value per share." We're not exactly sure what the market's pricing, and that doesn't include back to this discussion around $350 where we think we've got a big gain in that asset, right? We marked that down significantly. Now we have a tenant. We've got a good lease. It's a long-term lease. We feel like we can sell that and liquidate that asset over time, and that'll be accretive to book value. We can actually start building this back up a little bit.

Speaker #6: But, like, when we're it's not like we're sitting here and, like, looking at this portfolio and, and our book value and saying, "Oh, this is gonna we can get down to, like, a single-digit type of book value per share." So, like, we're not exactly sure what the market's pricing, and that doesn't include, like, back to this discussion around 350 Ls, where we think we've got a big gain in that asset, right?

Speaker #6: you know, we've marked that down significantly. Now we have a tenant. We've got a good lease. It's a long-term lease. We feel like we can sell that and liquidate that.

Speaker #6: a-asset over time and, and, and that'll be a creative to book value. So we can actually start building this back up a little bit.

Matt Salem: Then, of course, with share buybacks, we can do the same. That's a little bit of how we're thinking about it. I know we've been pressed on this a number of times on Mountain View's timing. Listen, we'll sell this as soon as we feel like we can optimize value. We're giving the 12 to 18 months because that's kind of the stabilized moment. If we have options before that, of course, we'll look at those very, very carefully. We want to be, I think, conservative and judicious as we think about the timing and what's realistic.

Speaker #6: And then, of course, with share buybacks, we can do the same. so that's a little bit of how we're thinking about it. And I know we've been pressed on this a number of times on, on Mountain View is, you know, timing.

Speaker #6: Listen, we'll sell this as soon as we feel like we can, you know, optimize value. But we're giving the 12 to 18 months 'cause that's kind of the stabilized moment.

Speaker #6: And if we have options before that, w-w you know, of course, we'll, we'll look at those very, very carefully. But we wanna be, you know, I think, conservative and judicious as we think about the timing and, and, and, and what's realistic.

Gabriel Poggi: Thanks, Matt. That's helpful.

Gabe Poggi: Thanks, Matt. That's helpful.

Speaker #3: Thanks, Matt. That's helpful.

Operator 2: This concludes our question and answer session. I would like to turn the conference back over to Jack Switala for any closing remarks.

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

Speaker #1: This concludes our question and answer session. I would like to turn the conference back over to Jack Switala for any closing remarks.

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

Speaker #4: Well, great. Thanks, operator, and thanks, every-everyone for joining today. please reach out to me or the team here if you have any more questions.

Speaker #4: Take care.

Operator 2: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

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

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