ACRES Commercial Realty Corp.

Good day, ladies and gentlemen, and welcome to the Q4 2018 Exantus Capital Corp. Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Andy Carr, Head of Investor Relations. Sir, you may begin.

Thank you, Haley. Good morning, everyone, and thank you for joining our call. Before we begin, I would like to remind everyone that certain statements made in the course of this call are based on historical information and may constitute forward-looking statements. When using this conference call, the words believes, anticipates, expects, and similar expressions are intended to identify forward-looking statements. Although the company believes that these forward-looking statements are based on reasonable assumptions, Such statements are based on management's current expectations and beliefs and are subject to a number of trends, risks, and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. These risks and uncertainties are discussed in the company's reports, followed with the SEC, including its reports on Forms 8K, 10Q, and 10K, and in particular, the risk factors section of our Form 10K. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The company undertakes no obligation to update any of these forward-looking statements. Furthermore, certain non-GAAP financial measures will be discussed on this conference call. Our presentation of this information is not intended to be considered in isolation or as a substitute to the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP financial measures to the most comparable measures prepared in accordance with the generally accepted accounting principles are contained in our earnings release for the past quarter. I will now turn it over to the Chairman of Exantus Capital Corp., Andrew Farkas, for opening remarks.

Thank you, Andy. Good morning, all. Thanks for joining the call. With me today are Bob Lieber, our Chief Executive Officer, Matt Stern, our President, Dave Bryant, our CFO, Paul Hewson, Head of Commercial Real Estate Lending, and Andy Carr, who just spoke to you, Head of Investor Relations, from whom, of course, you've already heard. I wanted to take a moment to review our progress in 2018 before handing the call back to management for a normal quarterly review. We had a great 2018. Last night, we reported $1.1 billion in new transitional commercial real estate loan origination and CMBS investment activity in 2018, which will drive core earnings growth for 2019. 2018 adjusted core earnings increased to 71 cents per share from negative 37 cents per share in 2017. The net growth of the company's core investment portfolio through 2018 caused core earnings to accelerate, which supported three consecutive quarterly dividend increases in 2018, from $0.05 per share at the beginning of the year to $0.175 per share paid for the fourth quarter. We're anticipating another increase in our dividend to $0.20 per share for the first quarter of 2019, which we will recommend to the Board for approval. We've largely completed the strategic plan that we first announced in November 2016. In May of 2018, we announced the rebranding of the company and presented the investment community with a company that is less complicated and has much more predictable earnings. I'm very pleased with the results of 2018 and the prospects for additional net investment portfolio growth and, in turn, core earnings growth. We look forward to reporting those results to you on future calls. With that, Bob, I'd like to turn it off to you. Bob is our CEO.

Thanks, Andrew, and good morning, everybody. As Andrew noted, 2018 was a great transition year for Xantus Capital, and we are very optimistic about the momentum that we've developed. Gross originations at $1.1 billion, and importantly, net capital deployment was close to $475 million for the full year in 2018, which is an increase of over 200% from 2017. For the fourth quarter of 2018, for the fourth quarter, gross originations were over $355 million, and net deployment for the quarter was over $125 million, or 68% higher than the fourth quarter of 2017. So the trend is very good. We've also significantly reduced the company's cost of capital by redeeming preferred shares, improving the terms on our warehouse facilities, and accessing the capital markets where appropriate. The results of these and other efforts have produced adjusted core earnings of 24 cents per share for the fourth quarter of 2018 when compared to a one cent loss in the fourth quarter of 2017. Net interest income has increased by 36% to 49 cents per share in the fourth quarter of 2008 compared to 36 cents per common share in the fourth quarter of 2017. We are still in the process of converting the proceeds from the strategic plan and loan payoffs into future income-producing credit investments. Our available liquidity for the company at year-end was $175 million. We believe that our ability to leverage the commercial real estate investment management and real estate services business with C3 Capital Partners will continue to be key value drivers for the growth of Exantus' investment portfolio in 2019, despite a competitive investing and lending environment. Additionally, we believe we are well positioned in the current interest rate environment to compete. When LIBOR rose in 2018, we benefited as a floating rate lender. Indeed, spreads have compressed in the market, but this has not meaningfully impacted our levered asset level weighted average yield because our reduced cost of funds and increases in LIBOR, which Matt will talk in more detail shortly. We've continued to make attractive investments and at the same time use loan payoffs and proceeds from the strategic plan to de-risk our portfolio. For example, concentration of retail assets in our loan portfolio is down from over 16% at June 30th, 2018 to under 7% at the end of 2018. While there's still attractive opportunities in retail lending, we continue to favor other asset categories like multifamily in this market. Turning to a review of our balance sheet, like most participants, we were impacted by the fourth quarter market volatility. Gap book value at year-end 2018 was $14.02 per share, down from $14.23 per share last quarter, resulting from a 28% reduction in the carrying values of our CMBS portfolio and the related swaps. The good news is at the end of February, the CMBS positions have already recovered more than half of these decreases, and we are still confident in the credit that we have underwritten. I'll provide more details on this in a moment. We believe these marks are a result of the capital market's volatility and not a function of any deterioration in the underlying real estate credit fundamentals, which we believe are still strong. In comparison, and to highlight both sides of this volatility, during the third quarter of 2018, we realized an eight-cent increase in book value per share due to the increased carrying values for market-to-market or CMBS and swap portfolios. So up in the third quarter, went a little down in the fourth quarter. And while market volatility can continue to lead to inter-quarter fluctuations in book value, we consider portfolio growth, originations, and quality asset management to be the main benchmarks by which we track our operational effectiveness. To that end, the payment of our 17.5 cent per share dividend in the fourth quarter was supported by net income of 23 cents per share, thereby partially offsetting the impact of book value from the market volatility. As mentioned on prior calls over the past year, we have been much more proactive in sharing our results and discussing examples with market participants. One of the topics frequently discussed has been book value and its components. And one item that has come clear to us is that market participants were not all aware of how GAAP accounting treats convertible stock and preferred shares on the balance sheet. And many adjustments have been made by the investment community in an attempt to control for this. Going forward, we will, of course, continue to report book value according to GAAP but you'll also hear us focus more on economic book value, which we believe provides a more accurate measure of the economic position of our common shareholders. Dave Bryant will give a little more detail about this in just a minute. Finally, as I mentioned on prior calls, we continue to evaluate our dividend policy as core earnings visibility improves, but as Andrew mentioned, we anticipate recommending a 20% dividend to the board for the first quarter dividend. Given the 300% dividend growth the company has experienced since the strategic plan was announced, and the prospects for the continued trajectory and core earnings from the deployment of capital into income and producing transitional loans in CMBS, we believe Exantis continues to present a very compelling investment opportunity. And with that, I'd like to turn the call over to Matt to discuss the portfolio.

Matt? Thank you, Bob, and good morning, everyone. I'd like to begin by taking a closer look at our fourth quarter origination activity. For the fourth quarter, the company originated 11 commercial real estate loans totaling $275 million, or an average commitment of $25 million, with a weighted average spread of 306 basis points over 30-day LIBOR. At December 31, 2018, our commercial real estate loan portfolio was comprised of $1.5 billion of floating-rate self-originated whole loans, a $19 million preferred equity position, and a $5 million fixed-rate mezzanine loan. Our portfolio grew by $55 million during the fourth quarter as new loan originations exceeded payoffs and paydowns. Our commercial real estate loan origination team continues to see quality lending opportunities resulting in a strong deal pipeline. New deal flow sourced as a result of our growing market presence combined with repeat lending opportunities arising from existing borrower relationships contributed to a 40-plus percent year-over-year increase in loan originations. with 2018 loan origination volume exceeding $860 million. This is the highest annual origination volume in Exantis' history. We remain optimistic about the multifamily space, which accounted for approximately 63% of our loan portfolio collateral at December 31, 2018, while our exposure to retail has decreased to less than 10%. our lending strategy remains focused on seeking the best risk-adjusted returns in markets around the United States that are experiencing growing demographics and the prospects for job creation. Despite a competitive lending environment in 2018, the weighted average unlevered yield of new loan originations increased 13 basis points to 5.84% in 2018 from 5.71% in 2017. We also financed our loan portfolio more efficiently in 2018, thereby reducing the average spread on our asset-level cost of funds by 52 basis points over the last 12 months. And as LIBOR rose throughout the year, it helped offset spread compression for market competition, and our levered returns improved. During the fourth quarter, we continued to diversify the company's asset base by investing in CMBS, where we see attractive investment opportunities that also offer duration. At December 31, 2018, our $466 million CMBS portfolio, at par, was comprised of $301 million of floating rate bonds and $165 million of fixed rate bonds, which we have substantially hedged. The weighted average life of our CMBS portfolio has increased to over four years at year-end 2018 as compared to approximately one year at year-end 2016. During the fourth quarter, we acquired $83 million in face amount of CMBS bonds. While we continue to selectively invest and remain focused on credit quality, we are also periodically presented with opportunities to sell positions and have done so opportunistically to realize gains on our CMBS investments and related swaps. We are very pleased with the $1.1 billion of total loan origination and CMBS acquisition volume in 2018, which exceeded our 2018 guidance of $1 billion provided in March 2018 during our fourth quarter of 2017 earnings call. We expect to see continued positive momentum in 2019 and anticipate that our total origination and investment volume will range between $850 million and $1 billion for the calendar year 2019. We believe this investment goal, as well as our plans to grow sustainable core earnings, are achievable, as our loan origination pipeline and loans currently in process are meaningfully more than where we were at this time last year. We look forward to discussing our progress with you in the quarters to come, and with that, I'd like to turn it over to Dave Bryant to discuss our financials. Dave?

Thank you, Matt. Good morning, everyone. Our GAAP net income, allocable to common shares for the three months and year-ended December 31, 2018, was $7.4 million, or 23 cents, and $7 million, or 22 cents, per share, respectively. Core earnings were $6.5 million, or 21 cents, per common share, and adjusted core earnings were $7.5 million, or 24 cents, per common share, for Q4 2018. For calendar year 2018, core earnings were $9.4 million, or 30 cents per common share, and adjusted core earnings were $22.3 million, or 71 cents per common share. GAAP net income for the three months ended December 31 includes several significant items. One, the most significant was the $1.4 million recovery of a corporate credit loan position previously held and a legacy APIDOS CLO, which of course was a non-core activity. Two, we also received $1.4 million in commercial real estate loan exit fees during the period due to increased loan payoffs, which have, based on our experience, tended to be seasonally higher in the last calendar quarter. And three, we realized an impairment of $932,000 on a legacy CMBS bond, which was recognized in Q4. The following adjustments were made to arrive at 2018 adjusted core earnings. A $7.5 million or $0.24 per share from our redemption of $115 million of Series B preferred stock, a $2.3 million or $0.07 per share from a loss on a CRE loan originated in 2013 and reserved for in 2016, another 0.9 million or 3 cents per share from the impairment when the CMBS bond acquired in 2007, which again occurred in Q4 of 18. And finally, we paid a 2.2 million or 3 cents per share legal charge, which was also accrued for in 2016. We view these items as non-recurring and or as out-of-period adjustments that affected our core earnings performance in 2018. When we view our adjusted core earnings in tandem with our dividend policy, the result supports our Q4 annualized dividend level. We saw a growth of $13.5 million, or approximately 32 percent, in our reported year-over-year net interest income for 2018 as compared to 2017. Three items are driving the increase in net interest income. First, the incremental asset growth in our core investment platform. The net growth in the bar value of the core earning assets was $475 million or 30% during 2018. Also, as of December 31st, 2018, it's worth noting that 91% of our $2 billion investment portfolio is comprised of floating rate commercial real estate debt investments. The second factor, in driving the increase in interest income is a 55 basis point reduction in the cost of our funds on asset related financing. And third is the net accretive benefit to our invested equity from rising LIBOR and our floating rate for real estate investments. A 94 basis point increase in LIBOR at December 31, 2018 over the same date in 2017 eclipsed the spread compression on all CRE assets of 84 basis points, resulting in a net 10 basis point improvement on the yield of our commercial real estate assets. As Matt discussed, we had strong CRE loan production during the fourth quarter. The loan mix was 53 percent multifamily, 23 percent office, and the balance from retail, self-storage, and mixed-use properties. In addition, we acquired 83 million of CMBS bonds, all of which were floating rate at a spread of LIBOR plus 2.29 percent. Bond mix was 59 percent agency and 41 percent non-agency. As is typical during the fourth quarter, we saw an uptick in CRE loan payoffs. Loan payoffs were 203 million with a spread of LIBOR plus 5.21 percent and an average life of 38 months. Notably, a strategic plan loan with a balance of $17 million paid off in full in Q4 with an exit fee of $510,000. Our positive net loan production was achieved after increased loan payout volume and is a credit to our CRE origination team. Gap of value was $1,402 per common share and includes two items which we wish to highlight for our common shareholders and the analyst community. First, as Bob referenced, our gap book value includes the remaining aggregate value of the equity conversion options when our convertible notes of 11 million were 35 cents per share at December 31st, 2018. This amount will be amortized to interest expense, will increase the liability balance of our convertible notes, and accordingly reduce gap book value over time, but has nothing to do with the company's operating performance. We believe the slow decline in book value is misleading. Second, the carrying amount of our Series C preferred stock of $116 million does not reflect the full obligation of $120 million, which is the balance on which we pay the preferred distributions and would be the amount due should we ever redeem that preferred stock. Adjusting for this $4 million difference, book value would be reduced by 13 cents per share at year-end 2018. We believe both of these accounting treatments mistake the economic position of the company. This period, in order to provide greater transparency, we are introducing a non-gap metric economic book value. As a brief background, Xanthus has been disclosing the adjustment related to the discount arising from the value of the equity option on our convertible note issuances and our quarterly earnings releases. In addition, some market participants have been taking into account the redemption price of our outstanding preferred stock for some time. We believe both items impact the economic value to common shareholders and decided to formally combine both adjustments into a single presentation in our earnings releases. So, our GAAP book value per share of 14.02, plus the two items discussed totaling 48 cents per share, yields economic book value of 13.54 per share at December 31st, 2018. As a point of comparison, the economic book value at December 31, 2017 was $13.63 per share, which reflects the relative book value stability we've managed for the company. Our GAAP debt-to-equity ratio rose to 2.8 times at year-end 2018, up from 1.7 times at December 31, 2017. The increase in leverage results from three factors. One, a net increase of $457 million in asset-level borrowings, which reflects our having been underlevered in 2017. Two, a decline in stockholders' equity of $118 million, $115 million of which is from the preferred stock redemptions. And three, a decline in corporate debt, primarily from the redemption of $70 million of 6% convertible notes. During 2018, we continued our efforts to improve our capital structure by redeeming $165 million of preferred stock that had a weighted average coupon of 8.25% and paying off the remaining $70 million of our 6% convertible notes that came due in 4Q 2018. And lastly, reducing our asset-level financing costs by amending the terms of our existing warehouse line and through attractive terms and flexibility of new warehouse facilities. With that, I'll turn the call back to Bob for some final comments.

Thanks, Dave. As Andrew mentioned at the beginning of the call, we've made a lot of progress during 2018. Just to highlight, we've substantially completed our strategic plan, we've reduced our cost of capital, We've grown adjusted core earnings from a negative 37 cents in 2017 to a positive 71 cents in 2018. We've increased the dividend by 300 percent from 20 cents a year to 20 cents a quarter expected in the first quarter of 2019. Our net capital deployment is up over 200 percent year over year. We've continued to diversify and de-risk our portfolio and extend portfolio duration, and economic book value has remained relatively stable. We have over 175 million of available capital, and we're optimistic about the opportunities in front of us. Thank you for your time here today. And listening, I would be happy to open the phone to any questions. Operator?

Thank you very much. Ladies and gentlemen, at this time, if you do would like to ask a question, please press the star, then 1 on your touch-tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. To prevent any background noise, we ask that you please place your line muted once your question has been stated. Our first question comes from Steve Delaney of JMP Securities. Your line is now open.

Thanks. Good morning, everyone, and congratulations on a strong close to last year. A lot of noise in December, obviously. I wanted to start with asking about the legacy CMBS, the three-cent impairment there. Was that also due to spread widening, or was this more of a fundamental credit-driven type of a write-down? Thanks.

In that case, Steve, it was a legacy bond that we owned that one asset that remained. People responsible for the trust had provided guidance on what valuation was, and that's what informed the mark. And they sold that one last asset at less than was anticipated, and that's what gave rise to it. Yeah, so that was not a mark-to-market concept.

So that's pretty much done, and I'm guessing that's not included in the $0.28 bond. general CMVS fair value decline and the estimated 50% recovery. This is completely separate from those numbers, is that correct?

That's right, Steve.

That's right. Okay, thanks. And we noticed you are carrying a general loan loss reserve, $1.4 million. Is that something, I can't recall whether that was legacy back from RSO or is that something that C3 put in place just as sort of a buffer or a cushion? And is that something that we should expect to see you grow as we move through 2019 ahead of the CECL accounting policy coming into effect in 2020? Thanks.

The company has always had a reserve policy, but you are correct that since T3 took over the management agreement, we have altered that policy over time. But you'll see that rise because it's largely correlated to a percentage of the portfolio itself. And so as a result, as the aggregate investment portfolio rises, you would see that tick up.

And, Steve, we have not finalized our analysis of the impact of CECL, but we would expect the number to grow as a result of that. as it would in next year, in 2020 and going forward. And, of course, any catch-up adjustment that will be made will be a balance sheet entry and not impact earnings.

Exactly, because non-cash, obviously, wouldn't fit with core. And is there that 1.4, I'm just curious if there's any kind of percentage of principal that you're trying to work towards?

So, Steve, if you take a look at the – we haven't filed our K yet, but if you look at the third quarter queue, you'll notice that we have categories of risk ratings. And when you look at risk rating three and risk rating four, that's how we've developed our general reserve. Risk rating three is a 1.5% reserve, meaning any loans in that bucket get 1.5% of their principal balance reserved for. Yep. In category four, it's 5% because it's gotten progressively worse. And then aside from that, we have a category five. Those are specifically impaired loans, so we look to establish a reserve on a loan-by-loan basis if anything falls into that category.

Great. Well, that's great detail. I appreciate the comments from all of you. Thanks.

Thanks, Steve.

Thank you. Thank you. Our next question comes from Ben Zucker of VTIG. Your line is now open.

Good morning, and thanks for taking my questions, and I'd like to echo congrats on a very successful 2018. Thanks, Ben. Thank you. I just wanted to talk about actually repayments quickly. Looking at your earnings release, 2018 originations are like half of your year-end 18 loan portfolio. So I don't want to put words in your mouth, but it really feels like repayment should be slowing down here in 2019. Is that a fair characterization?

I just want to make sure we understand your first comment, meaning that originations for the year were about half?

Yeah, is that right? Am I seeing like originations around $850, $860 million, which is about half of the carrying value of the year?

That's correct. Yeah, that's correct. I do think, I think we mentioned on the third quarter call that 2018 repayments were a bit elevated. I think that's the product of the timing of the origination of some of the predecessor years when the origination volume for the company had ticked up. Obviously, you can have people pay off a little bit sooner or extend. It's difficult to predict with precision, but we would expect the number to be a bit lower in 2019. Okay.

Okay. That's definitely helpful. And I guess following up on that, on the production side, you gave guidance of, I think, $850 million to $1 billion for 2019. Did that include CMBS as well, or was that just CRE loan originations?

Yes, that was the combination of our loan investments as well as CMBS.

Okay. And from a timing and deployment perspective, should we assume that the December volatility might, you know, exacerbate the normal seasonal 1Q slowdown, or would you still expect that you had pretty steady flow throughout that period?

The loan pipeline still looks strong right now. It's difficult to predict with precision exactly what will close before the end of the month relative to what will fall in the beginning of 2Q, but the pipeline is still in decent shape, as we've mentioned.

That's helpful, Matt. And then just kind of turning to the expense side of things, you guys were running on that fixed management fee agreement in 2018, correct?

That's correct.

So starting now, we go to the 1.5% on equity, I'm assuming. Is there anything that's going into that equity besides common and preferred stock?

No, that's the calculation. So you would see starting in the first quarter, you'll see that run as a percentage of equity as would typically be the case.

Great. Well, I guess if my math looks right on the surface, that should be a nice little drop in the management fees then. And did you guys have any kind of like G&A or operating expense targets for this year, for 2019? I can't remember when you were going through your investor day deck.

Sure. I would say that our expectation of following being done with the strategic plan and normal operational activity, which certainly we would hope to achieve this year, you'll see guidance in the investor presentation. We'll be updating that shortly, I would say, in the coming weeks. But I think the guidance that is provided in the existing deck is consistent.

That's very helpful. Thanks, Matt, for taking all my questions. And congrats again, guys. Thank you, Ben.

Thank you. Our next question comes from Stephen Laws of Raymond James. Your line is now open.

Hi, good morning. Following up on a couple of these topics from Ben and Steve, I guess CMBS growth a little higher in the fourth quarter. Was that opportunistic given wider spreads in December? If so, have you continued acquiring those assets here in January and February, or have spreads tightened back up to to shift your focus on a relative attractiveness back to loans here in the first quarter.

I think there was origination activity on the buying side or investment activity earlier in the quarter as well. You're correct that there were a few bonds when spreads moved out that we ended up in committee on and ended up buying some, but I think it was relatively spread out across the quarter. I don't know that I can give specific guidance right now on 1Q activity, but as mentioned in our comments, spreads have come in maybe 50%, 60% since last year. since December, and we continue to look at opportunities to invest.

Great. Along those lines, new loans had a returns look today versus November as the dislocation lightened competition. What type of impact did December or late 4Q volatility have on what you're seeing in the competitive landscape for new CRE loans?

I mean, I think the volatility was much more pronounced in bonds than it was in loans. There was, I'd say, fourth quarter, if anything, there was a pause in spread tightening as opposed to any real meaningful spread widening. I think spreads have kind of stabilized within a band, you know, over the course of the last, you know, eight, ten weeks.

Great. That's helpful. And Dave, I wanted to follow up with you. Your comments talked about leverage at 2.8. Where do you see that running? Where is a comfortable target? I know you mentioned you do still have some capital available for investment that you guys highlighted in prepared remarks, but can you talk about your leverage targets and where you see that moving to over the year?

So we do have some more room to move leverage marginally higher I think it's fair to say that we were underleveraged in 2017. We're approaching a more reasonable level now and have some room in 2019. We're well within any leverage constraints that our warehouse facilities would call for. We're not constrained by that. It's more of a question of being comfortable with the risk that we're taking, but we do have some room to move. Now, obviously, as we do more CLOs, they tend to get us a little bit higher leverage. So that is obviously something that we look to do as we want to match fund our assets with our debt.

Great. I appreciate the color there on leverage. And then lastly, You know, you guys have accomplished quite a bit with the legacy assets, you know, looking at this table, you know, from 480 million identified to 30. Can you talk about that remaining 30? What's the timeline of addressing that? Are these assets that are left going to be more difficult? You know, or can you maybe talk about the timeline of how the remaining legacy assets will wind down?

Yes, there are just a couple assets that remain, a couple commercial real estate loans, and then some cash and legacy liabilities associated with one of the operating businesses. But we would anticipate that they'll play themselves out during 2019. It's a little challenging to speak with specifics there, but we would expect them to play themselves out this year.

Well, that's helpful. So that will be addressed this year most likely. So that's great. Well, I appreciate you taking my questions. Thank you very much. Thanks, Steve. Thank you.

Thank you. Our next question comes from Jade Romani of KVW. Your line is now open.

Good morning. This is actually Ryan Thomas of the One4J. Thanks for taking the questions. Hi, Ryan. Hi. Looking at the anticipated dividend of $0.20 for 1Q, which equates to about looks like a 7.5% return on economic book value. So just wondering if you could remind us what stabilized post expense ROEs you're targeting when you expect to hit those levels and perhaps how we should expect the dividend to trend throughout the year in 2019.

I guess it's difficult to give specific guidance on exactly where the dividend will go, but I think the earnings power of the business, we tried to depict that. I believe it's on page 12 of our investor presentation. Hopefully that will provide some visibility. Obviously we'll update that when we put out our new investor deck. But we think core earnings will substantially inform directionally where we go with the dividend. And at least relative to book value, we would anticipate the company, once fully deployed, to be able to be upwardly mobile.

And just to add to Matt's comment, and we do have capital availability to continue to grow our investment portfolio here for 2019.

Okay. And given the historical participation you've had in the CLO market, we're just wondering if you can give us some commentary on the current state of that execution, if it's still attractive, and how competition for these CLO-eligible loans has trended post-year, you know, after this volatility has kind of played out?

I mean, I think CLO continues to be, you know, an efficient way to match funds or, you know, our assets and liabilities. I mean, I think, you know, spreads have have moved around a little bit. I think spreads have widened more dramatically on managed deals than on static deals. I think that the dramatic tightening of CLO liabilities over the course of 2018 did lead to spread tightening on the origination side. That has largely dissipated. So I don't really think that CLO, where CLO spreads are today meaningfully impacts where origination spreads are in today's market.

Great. Thanks for taking the questions. Thank you.

Thank you. At this time, I am showing no further questions. I would like to turn the call back over to Bob Lieber for closing remarks.

Thank you all for joining us today and learning more. We intend to be out talking more to the market as we go through the investor conference upcoming here. We appreciate your interest in your questions. Don't hesitate to call. Andrew, would you like to have any closing comments?

No, I think that's it. I want to congratulate management for yet another excellent performance, and I'd like to thank our shareholders for your continued support.

Thank you, everybody.

ladies and gentlemen thank you for your participation in today's conference this concludes the program you may now disconnect have a great day