First Eagle Alternative Capital BDC, Inc.

Good morning and welcome to First Eagle Alternative Capital BDC, Inc.' 's earnings conference call for its fourth fiscal quarter ended December 31, 2021. It is my pleasure to turn the call over to Sabrina Rosna Carlson of First Eagle Alternative Capital BDC, Inc. Ms. Rosna Carlson, you may begin.

Thank you, Operator. Good morning and thank you for joining us. Joining me on today's call are Chris Flynn, President of First Eagle Alternative Credit, Michelle Handy, Head of Portfolio and Underwriting for Direct Lending, and Jen Wilson, our Chief Accounting Officer and Treasurer. Before we begin, please note that statements made on this call may constitute forward-looking statements within the meaning of the Securities Act of 1933 as amended. Such statements reflect various assumptions by First Evil Alternative Capital BDC concerning anticipated results that are not guarantees of future performance and are subject to known and unknown uncertainties and other factors that could cause actual results to differ materially from such statements. The uncertainties and other factors are, in some ways, beyond management's control and include the factors included in the section entitled Risk Factors in our most recent annual report on Form 10-K. as updated by our quarterly report on Form 10Q and our periodic and other filings with the Securities and Exchange Commission. Although we believe that the assumptions on which any forward-looking statements are based on are reasonable, any of those assumptions could prove to be inaccurate and, as a result, the forward-looking statements based on those assumptions also could be incorrect. You should not place undue reliance on these forward-looking statements. First Eagle Alternative Capital BDC undertakes no duty to update any forward-looking statements made herein unless required by law. All forward-looking statements speak only as of the date of this call. Our earnings announcement and 10-K were released yesterday afternoon, copies of which can be found on our website, along with our Q4 earnings presentation that we may refer to during this call. A webcast replay of this call will be available until March 14, 2022, starting approximately two hours after we conclude this morning. To access the replay, please visit our website at www.feacbbc.com. With that, I'll turn the call over to Chris.

Thanks, Sabrina. Good morning, and thank you for joining us on our earnings call. On today's call, I'll provide an overview of our fourth quarter results, some portfolio highlights, and Michelle will share some market perspectives. And then Jim will discuss the portfolio and financial results in more detail. Let's begin with our quarter results first. It was a productive quarter for the BDC, and we feel good about the balance sheet and are proactively taking actions to increase net investment income now. Current key initiatives include the following. Further reduce our cost of debt. Restructure the financing package inside of Logan. increase our portfolio allocation to higher-yielding ABL transactions, and then further increase our portfolio diversification and reduce exposure to the legacy concentrated positions. Now with a stable balance sheet, we can look forward to growing our net investment income, which we believe will assist the narrowing of the gap between our stock price and book value. The fourth quarter net invested income was slightly lower than expectations at $0.09 per share compared with our $0.10 per share dividend and this quarter of $0.11 per share in Q3. We continue to focus on expanding our portfolio investments through continued utilization of our leverage capacity. We concluded Q4 with consolidated leverage of 1.18 times, up from 1.13 times at the end of Q3. As you may recall, last quarter, we increased our target leverage ratio to 1.2 and 1.3 in light of our continued improvement in diversification and stabilization of our investment portfolio. We made significant progress in deploying capital with 53 million par in new investments made during the quarter. Despite the seasonality of origination activity in the first quarter typically being slow, we continue to believe we have the ability to move into our target leverage ratio of 1.2 to 1.3 this year based on the deal pipeline and current lending environment. During the quarter, we continued our progress of refinancing our balance sheet through a $42 million add-on offering of our 5% notes due in 2026 and the redemption of our 6 and 1-8 notes due in 2023. We ended the quarter with a net asset value of $6.34, down 2.5% on a quarter-over-quarter basis, however, on a year-over-year basis, net asset value was up 3%. During the quarter, we had a net realized gain of $3.1 million, or 10 cents a share. The gain realized was primarily comprised of the sale of our preferred stock in Science Building Solutions and the sale of our common stock in Urology Management Associates. The impact of this realized gain was offset by a change in unrealized depreciation, net of tax, of $7.8 million, or $0.26 per share. Over half of this write-down, or $0.14, was related to our non-income-producing second lien position in OEM and loadmaster. The remaining write-downs were not material on an individual investment basis and spread across a handful of names in the portfolio. As we communicated on our Q3 earnings call, we exited Igloo at the end of October. Our debt investment was repaid at par, and our equity position was acquired for cash with a one-year earn-out. EGLE was one of the two remaining legacy concentrated positions. It represented 5.5% of our portfolio as of September and was the largest single position prior to that redemption. Overall, the portfolio continues to perform well amid the continuing impact of the COVID-19 pandemic. Revenue and EBITDA levels and liquidity for the most COVID-impacted businesses in the portfolio continue to improve and, in many instances, have returned to or exceeded pre-COVID levels. Companies that have not fully rebounded continue to maintain good liquidity profile. There are no significant amendments to existing loans in Q4. We added two new names to non-accrual this quarter, Smart Tours and Orotech, with a combined par balance of $4.4 million. This represents less than 1% of the total portfolio based on fair value. With regard to Smart Tours, a provider of direct-to-consumer prepackaged international travel tours, primarily targeted at retirees and seniors, only the $1.4 million second lien pick-only loan was placed on non-accrual. As a reminder, we received the second lien loan as part of the restriction that took place at the end of 2020. The first lien loan continues to perform. While the pick-only loan was put on non-accrual, we still remain confident in the turnaround of this business despite the delayed recovery due to Omicron. Aerotech, a provider of digital transformation services and business solutions primarily to the U.S. federal healthcare agencies, underperformed and elected not to make its principal and interest payments in December 2021. We are pursuing strategic alternatives and expect to exit this $3.3 million position in the coming quarters. With regard to OEM, we held our first lien position at PAR, took a write-down on the second lien non-income producing position in Q4. Under the plasma therm transaction that we consummated at the end of 2020 to commercialize and distribute OEM's technology to the market, the principal consideration was in the form of deferred payments for several years. These payments are contingent on certain milestones, including manual annual payments for the first four years that will be used to service our debt and cover certain operating costs. OEM received its required minimum annual payment for 2021. First Eagle direct lending origination activity picked up in the fourth quarter, making 44 new investments across the entire platform, totaling over $1 billion in Q4 alone. It was a strong year for the industry, and it was no different for us, with a direct lending platform deploying approximately $2.4 billion in assets across 114 investment portfolios in 2021. The FCRD portfolio consisted – invested in $33.2 million, and 14 new portfolio investments in Q4 alone, and $172 million in 39 new investments for the full year. The pace of deployment not only speaks to the overall level of deal activity in the market, but also the power of being part of the First Eagle direct lending platform. FCRD was also made an additional $20.1 million of follow-on investments, including rollover and delay draw fundings during the quarter. We were able to monetize two non-income-producing equity positions, providing an additional $4.3 million in capital, which will be deployed into income-producing assets. Additionally, there were six debt pre-payments at par. Our direct lending pipeline remains strong, and the BDC continues to benefit from the First Eagle's approximately $5 billion direct lending platform. The growth of the platform allows the BDC to hold a more diversified portfolio with a number of positions up from 45 in Q1 of 2018 to 76 this quarter, while also allowing First Eagle to provide more capital to middle market companies. You may recall in early 2020, First Eagle's direct lending platform expanded its capacities to include asset-based lending. ABL is another incremental solution First Eagle can provide to sponsors and middle market companies in cases where a company needs liquidity but may not be able to utilize the traditional cash flow lending option. ABL deals generally also provide a higher yield relative to cash flow deals. We have found ABL deals spread to be anywhere from 150 to 300 basis points wider than the middle market cash flow deal. We've added two new ABL deals to the quarter this quarter, Own Yourself and XL Brands. While we are doing ABL deals for the direct lending platform, these are the first ABL deals for the BDC. They represent 5.6% of the portfolio on a fair value basis, and we plan to grow this allocation to approximately 15% over time as we get repaid on lower yielding assets. Own Yourself is a holding company for intellectual property companies that license the Jessica Simpson brand, which is a signature lifestyle concept inspired and designed in collaboration with Jessica Simpson. The company offers multiple product categories, including footwear, apparel, fragrance, fashion accessories, maternity apparel, girls' clothing, and home products. Capital provided by First Eagle supported Jessica Simpson and her mother, Tina Simpson, in buying back the company from Sequential Brands, which had acquired a majority stake in 2015. XL Brands is a brand management company engaged in the design, production, and marketing of apparel, jewelry, and other home goods and consumer products through interactive television, brick-and-mortar, and e-commerce channels. Capital provided by First Eagle supported the company and its operations and growth of the business. First Eagle's direct lending platform has remained robust, and we expect it to continue to provide us with attractive investment opportunities. We continue to be very selective about where we deploy capital and are mindful of the macro environment on our investment committee decisions. To that end, we have invited Michelle Handy, head of portfolio and underwriting of the direct lending platform, to provide a brief update on the market. Michelle?

Thanks, Chris, and good morning. In light of the recent public market volatility stemming from the Russia-Ukraine conflict, I wanted to proactively share our perspective on its impact on the BDC and private credit market. First, in short, the impact to the BDC should be limited. As you know, we invest primarily in U.S. businesses that have no direct exposure to Eastern European markets. However, geopolitical events such as these do cause market volatility resulting in fluctuations in the cost of capital. Additionally, inflation and ongoing supply chain disruption could be exacerbated. At FEAC, we typically invest in high free cash flow, low CapEx business models in certain industries, such as healthcare, technology, business services, and financial services. These industries tend to be less susceptible to certain inflationary factors, such as increases in raw material prices and supply chain disruption. Further, our borrowers are modestly levered, and as a result, increases in interest rates are likely to be less impactful. The biggest risk to our portfolio is potential wage increases, which we are closely monitoring. We feel our portfolio is well positioned with a primarily first lien investment mix and conservative leverage. Despite geopolitical environment, we have a positive outlook for the overall middle market lending environment. Origination activity remains robust, and deal quality remains high. Rising interest rate environments can be good for floating rate credit. There is price discovery in the market, and we anticipate spreads could widen. We will continue to closely monitor the economic environment and will remain disciplined in our investment approach. In summary, we believe that the investment environment remains favorable from a fundamental credit standpoint and that a conservative portfolio of floating rate Senior secured loans is a good, stable asset class during periods of public market volatility, especially when the volatility is not directly impacting the fundamentals of the underlying business.

Thank you, Michelle, for sharing those perspectives. Having a pulse on the current market environment to help us better understand opportunities and risks today is imperative. Ultimately, our goal is to continue to diversify our investment approach as we grow the BDC portfolio in 2022 and beyond. With that, I'll turn the call over to Jen.

Great. Thanks, Chris, and good morning, everyone. First, I'd like to start off with some investment and portfolio highlights. As Chris mentioned, we had an active quarter with 14 new and several follow-on investments totaling $53.3 million at a blended yield of 7%. Additionally, we had six notable realizations through the repayments of our first lean positions in Igloo, Urology Management Associates, Alpine SG, Excel Brands, and Trace3. and our subordinated debt position in C&K Markets, which generated $50.8 million in cash proceeds. Additionally, we sold our Series A Preferred Equity in Science Building Solutions and our Common Equity in Urology Management Associates, generating an additional $4.3 million of cash proceeds. As of December 31st, our portfolio was valued at $392.1 million, down slightly from $402 million at the end of Q3. It was invested 76% in first lien senior secured debt and 19% in the Logan JV. As a reminder, the Logan JV is 99% invested in first lien assets. The remaining 5% of the BDC's portfolio was held in second lien debt and other non-income producing and equity holdings, including our restructured equity-like second lien investment in OEM. The weighted average yield on the debt and income producing portfolio was based on cost and including Logan, with 6.5% in Q4. This was down slightly from the prior quarter, primarily driven by the repayment of our investment in Igloo, which paid interest at 11.5%, and a subsequent redeployment into lower-yielding assets. As Chris noted, we placed two additional investments, Orotech and the second lean pick position of SmartTours, on non-approval during Q4. Total non-accruals as a percentage of our portfolio at fair value and at cost were 2.3% and 4.4% respectively. Now I'd like to address the financials for the fourth quarter. During Q4, we recognized $8.1 million of investment income, primarily from interest and dividends. Interest income decreased approximately $249,000 from Q3 to $6 million from Q4. The decrease was primarily driven by the repayment of IGLU, which I just previously discussed, and the redeployment of the proceeds into lower-yielding assets. Included in the $6 million is $367,000 related to accelerated amortization of OID. Dividend income from the Logan JV was relatively flat quarter of a quarter at $1.7 million, and other income of $355,000 was relatively flat as well. Total expenses for the quarter were $5.3 million, up slightly from Q3. The biggest driver of the increase was a $152,000 increase in interest and fees on borrowing during the quarter. This was primarily due to carrying the additional add-on of our 2026 notes that we held for a 30-day period before we were able to redeem our 2023 notes. With respect to other items below the net investment income line, the company had a net realized gain for Q4 of $3.1 million. This included gains on the disposition of our Series A preferred stock and science building solutions and common stock of urology management assets, as well as a loss on the extinguishment of debt in connection with the redemption of our 2023 notes. From a leverage perspective, we ended Q4 with a debt-to-equity ratio of 1.18 times. We had ample borrowing capacity on our credit facility to continue to grow and increase leverage towards our target of 1.2 to 1.3 times. In November, we closed on a $42.6 million public debt offering add-on to our 5% notes due 2026. The new bonds were issued at a price of 101% of the aggregate principal amount of the notes issued, resulting in a yield to maturity of approximately 4.75%. Proceeds from the issuance, in addition to funds from our revolving credit facility, were used to redeem our 6% and then 8% 2023 bonds at par. The refinancing resulted in the loss on the extinguishment of debt equal to the difference between the amount we paid to redeem the bonds, which is par, and the carrying value of the bonds, which includes the impact of the unamortized deferred financing costs of the bonds. With the redemption of the 2023 bonds, we were able to reduce our weighted average cost of debt to 4.19% as of December 31st. This is a 39 basis point decrease from September 30th and 126 basis point decrease from December 31st, 2020. We continue to evaluate opportunities to further reduce our cost of financing. With that, I'd like to turn the call back over to Chris.

Thanks, Jen. Overall, this is another productive quarter for the BDC. We further reduced our cost of debt liabilities We are seeking to work with our joint venture partner and the Logan Joint Venture to restructure the existing financing. We look to increase our portfolio allocation to higher-yielding ABL transactions and further increase portfolio diversification and reduce exposure to legacy concentrated investments. I'd now like to turn the call back to the operator to open it up for questions. Operator?

Thank you. Thank you. And ladies and gentlemen, if you have a question, please press star 1 on your telephone. To withdraw the question, press the pound or hash key. Once again, that is star one if you have a question. One moment while we compile the Q&A roster. Our first question is from Lee Cooperman with Omega Family Office. Your line is open.

Thank you, ma'am. Appreciate it. Let me say what I've said before. Very few managers have stood behind their product in the way that you guys have. But honestly, very few managers have done the poor job you or your predecessors have done, and I realize you're in a fix-it-up mode. We went public in 2010 at $13. We had an underwriting offering in 2012 at $14.09. In 2013, we saw more stock at $14.62. And basically, we know where we are today, $4.45. And I want to tell you that the market, I think, is quadrupled in that same period of time. Our stock is selling at 71% of book value, which is a result of a poultry sale. 6% return on equity. So now for the questions after the statement. Given the way you want to run the business, what is a realistic return on equity expectation, and when can it likely be achieved? I'm going to give you all my questions in one shot, number one. Number two, is the manager, First Eagle, willing to do the right thing for shareholders and merge the company and forego the manager consent payments? We are simply in irrelevancy with a market cap of $335 million. Nobody's interested in us except me and a few other people. When are we likely to see a dividend increase, which is what will be necessary to get the stock to get closer to book value? And you've addressed loan quality, and I guess, well, we've had a couple of non-accruals. It's less than 1% of the portfolio, so I assume you're comfortable with your loan quality. I'll answer the fourth question myself. That's it, Chris.

Perfect. Hey, Lee, thanks. I appreciate the question. Let me walk you through my observations and maybe give you a sense of why I'm actually optimistic. First, as it relates to the 9 cents versus the 10 cents, this is basically a rounding miss. If we had another $80,000 of income, we would have earned a 10 cents on the earnings release. I can assure you I would have not personally bought shares in December if I was worried that we weren't going to cover the 10 cents. Second, as it relates to the NAV decrease, the majority of that was related to two securities that were already not earning, so it's not affecting my earnings potential because we currently earn zero on them already. I know we talked on OEM a bit in the script, but I'll provide a bit more color. This is our first year of our partnership with PlasmaTherm. The first year had some growing pains, and now those have been resolved, and we feel good about our prospects in 2022. With that said, we can't ignore the fact that 2021 was behind expectations, hence the mark down on the balance sheet. Now, next, if you look at the two non-accruals, the first is SmartTours. As a reminder, this is the investment restructured as part of COVID. The management team has done an excellent job navigating a very difficult travel market, and while bookings were rebounding nicely there, there was a step back with Omnicron, and now we have the Russian invasion of Ukraine. We're still very optimistic about this investment in the long run, but the rebound given the above will be delayed for a period of time. As for Orotech, This is an investment that struggled since close, and we're looking to exit as soon as possible. The reason I highlight this now is with our new portfolio guidelines, this investment capital at risk for FCRD is $3.3 million, and putting in a non-accrual is not a material hit to our earnings. Under the past strategy, this could have been a $25 or $30 million investment, which has likely resulted in significant pressure on our dividends. My point is now that we have an asset side of the balance sheet properly set, and we can manage a diversified portfolio much easier given the risk, and the portfolio is much lower. Highly diversified, 95% per sling. Which brings me back to the first comments I made in the earnings call. We're finally in a position to go on the offense and work to increase NII. We've already redone our bond deal. That is substantial savings. We're actively moving to reduce cost debt in both the FCRD balance sheet and the Logan Joint Venture. Prior to the Russian invasion, my expectations that the debt reductions that I just referenced would have increased NII between 20% and 30%. My hope was to have this done prior to the call today, but market factors have delayed that. To the extent we're able to execute, we will be back in front of our investors with updated guidance. We recognize the status quo is not an option, and I've said at the start, I'm optimistic we can actually start to see growth in our portfolio and growth in NII.

I guess the question is, what is a realistic return on equity for the shareholders that based upon how you want to run the company.

Yeah, if I can get the balance sheet done, Lee, I think I can increase NII by 20% to 30%. So I'm at $0.10 today, and that would move it to $12 to $13.

And what's the timetable for that?

I just need the markets to stabilize. I wish I could tell you the date. As soon as I know, we will tell you. We will 8K it, and we'll come back and provide new guidance.

I think you're running out of time, basically. Lee, I –

I don't disagree with your statement. We're running as fast as we can. The good news is, for once, as I said up front, we're on the offense now. The balance sheet is set. We can reduce our cost of liabilities, and we can now start focusing on growing the NII, which should move the stock price closer to the book value.

Gotcha. Well, I'm rooting for you. You know that.

I'm rooting for it, too. We're the two largest shareholders, Lee, so we're 100% aligned. All right.

Good luck. Thank you. Thank you, sir.

Thank you. Our next question comes from Paul Johnson with KBW. Your line is open.

Yes, good morning, guys. Thanks for taking my questions. On the ABL segment that we talked about this morning, I'm just curious, where is that being sourced from in the First Eagle platform? Is it going to have any sort of particular focus? It sounds like the first deals you did were more retail focused. Is that going to be what we can kind of expect from those deals? And also, what sort of yields could we expect to see from that?

Yeah, thanks. No, I appreciate the question. We did a team list out in July of 2020. Larry Klatt and Lisa Gallietta, both of them have been in the industry for a number of years. I've known them both personally and professionally. have attempted to have them as part of the platform for a few times just in order to get a transaction done. But we're super happy to have them here on board. So it's just an added team as part of the direct lending platform. The first two transactions we put in are retail, but they have the ability to do non-retail deals as well. So I wouldn't expect necessarily it to be concentrated there. Regardless of the sector that they invest in, it is a collateral-based loan, meaning that we're only going in on a balance sheet where we can carve out specific collateral. So while there might be a slight higher probability of default, your loss given default on any of these investments should be de minimis. Average spreads range on these investments from anywhere as low as, you know, LIBOR plus 600 to 650 to as wide as 800 to 850. We're just now starting to lay gates. Like I said, I think we have about 5% of the book in ABL right now. Our goal is to move that to 15% over time. Great.

I appreciate that. That's really good color. Kind of a segue from there, the pipeline that you guys are looking at today, I mean, I think the portfolio yield today is 6.5%. I know you've just done a few investments quarter to date this quarter around the same yield. I mean, do you have a general idea of what sort of your pipeline is and sense of the yield on those assets?

Yeah, I think the pipeline yield is, I'd say right now it's flat. I think there's a little price discovery going on. And just given the volatility in the market, too early to tell what the new level will be. I can assure you it's not going to be lower. If anything, it will be higher. The last couple term sheet we've put out, we've tried to move price, you know, maybe 50 basis points. We'll see if that lands. But I'd describe the pricing environment as stable, consistent with what we've done in the past, with potentially some upside to the extensive continued volatility in the market.

Okay. Thanks for that. And then on the JV, the Logan JV, I believe the cost of funding within that JV is L plus 2.5. Correct me if I'm wrong there. I mean, I know you said you're working on potentially refinancing the debt within there. I mean, where do you think it is? Could that realistically be brought down incrementally? And then also with the JV itself, I think, I believe the leverage was around one and a half or one six times. I mean, could that be increased? You know, what's happening with the capital there? Are you guys reinvesting within the JV? Do you intend to grow the JV anymore or just anything? Tell her there. It would be great.

Yeah, no, it's a great question. I appreciate it. I'm probably not in a position right now, given that we're pursuing a few different activities, to point in the exact direction that we're going. I'll just say that we have the ability to both lower cost and increase leverage to the extent we think it's prudent, and that will be a key driver. And to the reference I made to Lee's question, if we're able to execute what we think we want to execute, you can see that nice pop in NII, like I said, performance in that 20% to 30% increase range.

Okay. And one or two more. On OEM group, the right down there, was that the bigger – it sounds like that was the main driver of depreciation, or correct me if I'm wrong. And then just an update on that company. I know that's been a company that's been marked down every other quarter or so. Is that being impacted by the semiconductor supply chain issues that globally we're facing at the moment?

Yeah, so just as a reminder, OEM has been an investment in our portfolio since 2010. We've owned the entire capital structure, the debt, and the equity for a significant period of time. We finally positioned the business in such a way where we could develop a technology and some – excuse me – engineering capabilities that we think are marketable. Just given the size of the investment, we were not comfortable making the investment to develop a sales force ourselves, so we obviously partnered with PlasmaTherm, which specializes in distribution. These are two private companies. I'm probably not going to go into too much detail about on what the issues were. I think, as I said in my comments, we categorized it simply as just growing pains as working with two businesses together for the first year. We do believe those pains have been resolved, and we're optimistic for 2022. But reflected in the markdown, and you're right, it was the largest markdown in the book. Again, it's not income earnings, so it's not going to hurt my NII. It was really just a reflection that 2021 was softer than we originally underwrote. But again, we think those issues are behind us, and we look forward to a good 2022 on that name. Okay, I appreciate that.

Last question, and forgive me if you already mentioned this on the call, I just didn't catch it, but for your current share repurchase program, I think you bought back some shares this quarter. What sort of capacity do you guys have remaining under that program?

Yeah, we do have a program in place. I'll defer to Jen to walk through. Is that all right, Jen?

Yeah, no, that's fine. So we're authorized for $10 million through December 31st. We had just implemented our 10B5, so we had repurchased approximately $152,000. So I would say that we have about $9.5 million. We've been out in the market since then. We will continue with our 10B51 plan, but we've got plenty of capacity under our authorized repurchase plan right now.

Okay. Appreciate that. That's all the questions for me today. Thanks. Thank you, sir.

Thank you. And as a reminder, if you have a question, please press star 1 to get in the queue. Our next question is from Matt Jadon with Raymond James. Please go ahead.

Hey, all. Morning, and appreciate you taking my questions. Chris, I think you said you expect to exit a non-accrual in one queue. Should we expect any, you know, modest markdown versus the 1231 mark?

If you're referencing, yeah, yeah, there could be a further markdown on that position, yes. Got it. Just to be clear, though, I just want to clarify, I mean, it's a very small position, so even if there is a further markdown, it's not going to have a material move to our book value. Fair enough.

Maybe following up on Paul's question on the ABL opportunity, do you have a longer-term target of what you think, you know, the ABL opportunity could represent as a percent of the total portfolio of?

Our target right now is 15%. We may move that to 20% depending on how the portfolio performs and where we sit with our lenders and our ability to grow the borrowing base. Got it.

Last one for me on leverage. So I think as we sat in 3Q, Chris, you said you expected to hit that 1.2 low end of the target range by 4Q. So a little short this quarter, was that just a function of unexpected repays flowing through and then As a secondary question, where in 2022 would you expect to get into that low end of the target range?

Yeah, Eagle was a very sizable position. It came in late in the quarter. I think it was, what, 31? It's 5.5% of the book, so that came back late, so we would have missed our guidance by a small amount. Our pipeline is robust. Like I said, last year we did over $2.4 billion in origination. If I have a pressure point, it's not on the pipeline. It's more just in getting the balance sheet right for us to leg into that leverage. So I'd like to push through that 1.2 and 1.3 as soon as we can. Q1 has been a bit slow, obviously, right now with some uncertainty in the market. There's a lot of price discovery, so I'd say there's a pause on new business. But we anticipate that to stabilize, and we anticipate to be writing new loans here in the near term. And, like I said, we'll be in that 1.2 to 1.3 in short order. Got it. That's it for me. I appreciate the time this morning. Thank you, sir.

Thank you. And I'm not showing any further questions in the queue.

Perfect. Well, thank you, Operator. We appreciate the support of our shareholders and look forward to providing you with an update in the spring for our Q1 2022 results. Feel free to reach out to Jen or myself if you have any additional questions before then.

Thank you, ladies and gentlemen. With that, we conclude today's program. Thank you for your participation, and you may now disconnect.