BrightSpire Capital, Inc.

Good day and welcome to the Bright Spire Capital Inc. fourth quarter and full year 2024 earnings call. All participants will be in a listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch tone phone. And to withdraw your question, please press star and then two. Please note that this event is being recorded. I would now like to turn the conference over to David Palame, general counsel. Please go ahead.

Good morning and welcome to Bright Spire Capital's fourth quarter and full year 2024 earnings conference call. We will refer to Bright Spire Capital as Bright Spire BRSP or the company throughout this call. Speaking on the call today are the company's chief executive officer, Mike Mazze, president and chief operating officer, Andy Witt and chief financial officer, Frank Saraseno. Before I hand the call over, please note that on this call, certain information presented contains forward looking statements. These statements, which are based on management's current expectations are subject to risks, uncertainties and assumptions. Potential risks and uncertainties could cause the company's business and financial results to differ materially. For a discussion of risks that could affect results, please see the risk factor section of our most recent 10 K. And other risk factors and forward looking statements in the company's current and periodic reports filed with the SEC from time to time. All information discussed on this call is as of today, February 19th, 2025, and the company does not intend and undertakes no duty to update for future events or circumstances. In addition, certain financial information presented on this call represents non-GAAP financial measures. The company's earnings release and supplemental presentation, which was released yesterday afternoon and is available on the company's website, presents reconciliations to the appropriate gap measures and an explanation of why the company believes such non-GAAP financial measures are useful to investors. Before I turn the call over to Mike, I will provide a brief recap on our results. The company reported fourth quarter GAAP net loss attributable to common stockholders of $19.7 million or 16 cents per share. Distributable earnings of 13.7 million or 11 cents per share and adjusted distributable earnings of 23.7 million or 18 cents per share. Current liquidity stands at $418 million, of which $253 million is unrestricted cash. The company also reported GAAP net book value of $8.08 per share and undepreciated book value of $8.89 per share as of December 31, 2024. Finally, during this call, management may refer to distributable earnings as DEE. With that, I would now like to turn

the call over to Mike. Thank

you, David. Welcome to our fourth quarter and full year 2024 earnings call. The fourth quarter capped off a very active year during which we made significant progress to strengthen the loan book by reducing our watch list and commencing new loan originations. Before I delve into this quarter's performance, I would like to briefly highlight the various dynamics affecting the lending markets. The commercial real estate debt markets have continued to improve. CLO issuance has steadily increased and AAA spreads have experienced a significant tightening of roughly 50 basis points during the quarter. In addition, bank warehouse lenders have continued to tighten their lending spreads, resulting in ROEs in line with targeted levels. Higher interest rates, along with a continued surge of insurance company annuity sales, have become main drivers behind this compression in credit spreads. Albeit more gradually, there is still room for further spread tightening. Allow me to remind you that in 2021, when the benchmark SOFR index was close to zero, CLO AAA spreads were 30 basis points tighter than today. And this was despite a market where there was a far greater supply of CLO securities. On the origination side, while there are billions of upcoming debt maturities that will drive an increase in refinancing demand, the amount of actionable transactions are facing some headwinds. The Fed has taken a pause in rate cuts with perhaps only one more cut later this year. Also of note, the 10-year treasury is about 65 basis points higher today than at the end of the third quarter. These higher rates are causing negative equity leverage for all types of investments, including real estate. All in, this has been a significant, but not unsurprising, shift in the interest rate environment in just one quarter. So while the tightening of credit spreads is a sure positive, all in lending rates remain elevated enough to keep any properties in the state of transaction limbo. However, on the fundamental side, these same factors also continue to put limits on new construction. This bodes well for new supply absorption, especially in multifamily, where higher mortgage rates and home prices are favoring renting versus buying. Therefore, top-line rent growth should become positive. Now turning to Brightspire, we went on offense during the quarter and continued to build our origination pipeline. To date, we have funded five new loans totaling $119 million with another $59 million in closing. Thus far, all of our new loan originations have been multifamily. However, we are actively quoting all property types with the exception of office. Despite the competitive market, our experienced team with strong industry relationships has enabled us to select our opportunities, often with repeat borrowers. For the year ahead, our primary focus is now pivoted to rebuilding our loan book and ultimately executing our fourth CLO. In addition, during the quarter, we continued to make meaningful progress on the resolution of watchlist loans. We made even further progress subsequent to quarter end. Specifically, this is regarding our largest loan, the San Jose Hotel, which comprises one-third of the year-end watchlist. This month, we received a summary judgment granting a dismissal of the borrower's attempted bankruptcy process. I would also like to add that on our St. Louis office equity investment, which was written down to zero, we have successfully negotiated a three-year maturity extension. While this will not impact earnings, we now have the time to potentially recoup some of our capital. As we continue to resolve watchlist loans, there will be an increased scenario in the short term. This segment of our assets will serve as one of our sources of capital for growth in our loan portfolio and earnings. Therefore, it goes without saying, we intend to make considerable progress on REO dispositions in 2025. Lastly, for the fourth quarter, we covered our dividend with an adjusted DE of 18 cents. I want to highlight again that when we resize our dividend, we anticipated a modest amount of negative coverage while we redeploy capital. Our plan is to reach sustained positive dividend coverage by turning over under earning assets and executing on REO sales. In closing, I want to thank our team and all of our clients and partners for this past year. This was a very active and productive fourth quarter and our momentum continues into 2025. Going forward, we are optimistic about our ability to grow the loan portfolio and earnings. With that, I will now turn the call over to our president, Andy Witt. Andy?

Thank you, Mike. The focus of my prepared remarks will be primarily on events that occurred in the fourth quarter and subsequently. During the fourth quarter, we received 93 million in repayments across four loans. Subsequent to quarter end, we received repayments across six loans for a total of 100 million. In addition, we sold one REO office property for five million, resulting in total aggregate repayments and resolution proceeds of 198 million. New loan commitments during the quarter and subsequent to quarter end total 119 million across five new originations. In addition, we funded 16 million of future fundings during the fourth quarter. As of quarter end, future funding obligations stand at 106 million or 4% of outstanding commitments. And the loan portfolio consists of 76 investments with an average loan balance of 33 million. During the quarter, we remain focused on addressing and resolving watch list loans and REO. As a result of these efforts, the total number of watch loans on a net basis has been reduced to seven from nine loans last quarter, inclusive of one downgraded Las Vegas multifamily loan. Two loans were upgraded during the quarter as the outlook has improved. And in both cases, the borrower has committed additional funds in the form of additional reserves and or a loan pay down. The decision to upgrade the Las Vegas multifamily loan is based on improved operating performance at the property level and a forthcoming capital injection from the borrower. With respect to the upgraded Richardson Texas office loan, the borrower has made an additional capital commitment to the property, including a principal pay down. Rounding out the watch list removals, one Fort Worth, Texas multifamily loan was moved to REO during the reporting period. As mentioned previously, during the quarter, we downgraded a Las Vegas multifamily loan comprised of 240 units to a four as a result of increased uncertainty around the borrower's ability to capitalize operating shortfalls required to reach stabilization. As a quarter end, watch list exposure stands at 411 million in aggregate or 16% of the loan portfolio down from 456 million or 18% as of Q3 2024. The San Jose Hotel Loan accounts for one third of remaining aggregate watch list loan

balance.

As

for REO

updates, we completed the sale of the Oakland office property. Additionally, in mid-November, we foreclosed on a 354 unit Fort Worth, Texas multifamily loan. The plan is to execute a value add business plan, improve operations, achieve stabilization, and ultimately list the property for sale, similar to the plan executed on the Phoenix multifamily property. We have made substantial progress towards stabilization on the Phoenix multifamily property and recently engaged a national broker who will be marketing the property for sale imminently. In addition to the progress made both on the watch list and REO during the quarter and beyond, we have also reduced our office exposure. During the quarter, we received two partial pay downs for a total of 51 million, including 49 million on our largest office loan. Subsequent to quarter end, two office loans paid off for an additional 50 million. Since last reporting, we have reduced our office loan exposure by 100 million. With that, I will turn the call over to Frank Saraceno, our Chief Financial Officer, to

elaborate

on

the fourth quarter results. Frank?

Thank you, Andy, and good morning, everyone. For the fourth quarter, we generated just a DE of 23.7 million or 18 cents per share. Fourth quarter DE was 13.7 million or 11 cents per share. DE includes a specific reserve on two loans of approximately 10 million dollars. Additionally, we reported total company gap net loss of 19.7 million or 16 cents per share. This reflects an increase in our seasonal reserves as well as impairment taken on REO assets. For the full year of 2024, we generated adjusted DE of 109.2 million or 84 cents per share, representing a return on undepreciated shareholders average equity of approximately 8.6%. Our dividend for the year of 72 cents was well covered at 1.17 times. Quarter over quarter, total company gap net book value decreased to 8.08 from 8.39 cents per share. Undepreciated book value decreased to 8.89 from 9.11 cents per share. The change is mainly driven by impairments taken on operating REO assets and an increase in our seasonal reserves. I would like to quickly bridge the fourth quarter adjusted to student learnings of 18 cents versus the 21 cents recorded in the third quarter. The change is primarily driven by lower interest rates, loan repayments and foreclosure and offset by lower borrowing costs and new originations. Looking at reserves during the fourth quarter, we recorded specific seats of reserves of approximately 10 million dollars. Primarily related to our taking ownership of the property underlying Fort with Texas multifamily loan that Andy mentioned. We also recorded the minimum specific reserve on an office loan that paid off in one queue. As both loans were resolved, we charged off their reserves. As a reminder, we include specific reserves and distributable earnings in the quarter that the reserve is recorded. This differs slightly to the peer group that will only do so when a loan is fully resolved and the loss is realized. Our general seats will provision stands at 166.1 million or 634 basis points on total loan commitments and increase of 10 million dollars in the prior quarter. The increase in the general seats was primarily driven by updated inputs on certain ones. Turning to our dividend and earnings from cash flow for the fourth quarter, we paid a dividend of 16 cents per share and had earnings from cash flow of 15 cents. Additionally, for the full year 2024, we reported cash GNA expense of approximately 35 million. This is a reduction in GNA from 2023 of 4 million or 10 percent. For 2025, we expect GNA to be flat to down versus 2024. Our debt to assets ratio is 65 percent and our total debt to equity ratio is 2.2 times flat to 3Q. No corporate debt or final facility maturities due until 2027. Our debt to equity ratio for only our senior loan portfolio is 3.5 times, an increase from 3.4 and 3Q. Lastly, as David mentioned, our liquidity as of today said that approximately 418 million dollars. This comprises 253 million if current cash as well as 165 billion under our credit facility. This concludes our prepared remarks and with that, let's open it up for questions. Operator.

Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchstone phone. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. In the interest of time, please limit yourself to one question and one follow-up. For additional questions, we ask that you please rejoin the queue. At this time, we will pause momentarily to assemble our roster.

And your first question today

will come from Steve Delaney with Citizens Bank. Please go ahead.

Hey, good morning, everyone. First, just want to applaud the proactive asset management in terms of moving into REO versus five rated loans. You know, there are 20 commercial mortgage rates. I think you're pretty unique in that group in terms of that strategy. And I think it certainly you've explained to us how that additional control allows you to resolve the real estate problem more quickly than just waiting for the borrower to try to figure it out. So props on that. Mike, also your outlook, you talked about CMBS. I suspect CLO spreads might have improved as CMBS spreads as well, or certainly the outlook for CLO is probably pretty viable right now. Do you expect you did a little bit of lending, you know, I think 111 million or whatever in the quarter. Should we expect that as we go the first half of 2025 that new lending, bridge lending might pick up with the expectation that you could get a fresh CLO off maybe by the middle of this year?

Hey, thanks, Steve. Hello to you. Our intention, as I said in the prepared remarks is to execute another CLO. That is going to be just part of the basic business plan. You're getting another seven or eight points of leverage in that market. And so that adds another couple of hundred basis points to your overall ROE at this point. So we absolutely have an intention to continue to do that. Having said that, as we said in the prepared remarks, the bank warehouse lenders, this is one of their best asset classes and they have been moving in commensurately with rates. There is a tremendous appetite, as I described in the prepared remarks for fixed income, whether it's floating rate or fixed rate for the various reasons I stated in that. And so while it's high yield is in a tenuous place and folks are questioning whether the high yield market in the corporate bond world can widen right now, we see a tremendous amount of appetite for fixed income investment. So that's driving spreads down. But fortunately, the banks have been moving with us. We've been maintaining ROE and the CLO above and beyond the warehouse line can give us an extra couple hundred basis points of lift. And so, yeah, we plan on doing that. I don't know if we'll get one off in the first half of the year, but certainly it is the goal for the second half. I think we'd have to put out, we'd have to put out another six or seven hundred million in new originations to get off another CLO in addition to the hundred, one hundred eighty eight million that we have closed or in closing.

Yeah. So you were two and a two point five billion at year end. Twenty twenty four in terms of your portfolio. Is there it sounds like there's enough activity going on in the core local markets with, you know. Investors theory equity coming into market new projects starting any any. Goal or expectation for how much you believe your portfolio might grow in twenty twenty five. I'm speaking about the bridge to two point five billion bridge on portfolio.

Yeah, we need we need to originate one billion of loans based on our anticipated three payoffs that we have. But we absolutely need to do one billion or greater in new loans and get that portfolio while in excess of three billion in order to sustain and potentially grow, grow the dividend. But right now, as I said in the prepared remarks, we're seeing a ton of business and you've heard this on other calls. How much of that is actionable is questionable because rates of where they are new acquisitions while they were up, sales were up, you know, twenty five percent about two thousand twenty four over two thousand twenty three. Twenty three was like a ten year low. And so with the ten year treasury still above four and a half percent new acquisition financing all in cost is negative leverage to cap rates. So that's been a slowdown. And then on the refinancing side, we're seeing a lot of bridge to bridge more than we've ever seen before, which makes total sense based on where borrowers are today. We're seeing a lot of activity from construction lending where we're looking for construction loan takeouts, where borrowers are trying to get out of recourse at minimum and potentially paying down the loan. But out of the billions we're seeing that hit the pipeline, once you do a preliminary review, the amount that actually makes it to underwriting and quoting is a fraction of that. So we're still seeing a lot of transactions stuck in what I would call interest rate limbo. What I think will happen this year, and this was not part of your question, but what I think will happen this year is you'll see more lenders pushing borrowers to sell properties and you're seeing some of that in our own portfolio. We have a property that we did not mention in the prepared remarks that's on the watch list, a multifamily property in Denver. It's under PSA. We don't care because PSAs can fall apart, but it's under PSA and we're going to do we're going to do financing for that buyer. And that's just another example where I think you're going to see more of lenders pushing owners toward the market for transaction sales. It's going to be very lender driven market because right now the math isn't really working for the amount of properties that need refinancing. But having to get back to your question, we need to put out over a billion dollars in new loans this year, including the almost 200 million that we've earmarked already.

That's great. We want to get that

portfolio. We want to get that portfolio as close between have done as possible.

Got it. That's great macro color. Thank you so much. Mike.

Thanks. Your next question today will come from Jason Weaver with Jones trading. Please go ahead.

Hey, good morning. Thanks for taking my question. Frank, I believe you mentioned about the general C. So reserve increasing due to inputs on certain loans. Is any of that due to first of all, can you elaborate on that? And is any of that due to what we're seeing on the West Coast? Some signs of deteriorating rent growth.

Yeah, I think that we look at we're going to see a lot of the movement is around our risk right for our risk. Bring five loans as we're seeing activity and moving around there. The rest kind of spread across the portfolio, but nothing specific regarding the West Coast.

That's fair. Okay. Second of all, the San Jose Hotel, I did hear the comments and the prepared remarks about there. Can you talk a little bit about what you see as the path forward on resolving that?

All we can really say about that is that we are pleased that that we are out of the bankruptcy court and that that was actually appealed and again dismissed in bankruptcy. So we're happy about that to be out of a bankruptcy process for a lender is a good thing. Outside of that, I'd be hesitant to make any more comments about that because of the state of affairs at the loan. Other than to say it is one third of our watch list and it is of a significant focus of ours. And if just looking at that loan coupled with the Denver multifamily loan that's under PSA, I'm going to you know, that's that's a soft PSA. We're not we're not excited about it until it closes. But if we remove those two assets from the watch list, our watch list is going to be about 10% of our loan book. So we would see a dramatic drop in the watch list. So we are obviously very focused on the San Jose Hotel, but I'm really hesitant to say more than that given the state of affairs that we're in in that process.

Understood. Thanks for that color.

And your next question today will come from Tom Catharwood with BTIG. Please go ahead.

Excellent. Thank you and good morning everybody. Mike, we're starting with you. We'd appreciate your comments about originations and kind of targeting a billion this year to get ahead of repayments. Obviously it takes time to rebuild that origination pipeline. You've obviously been active for Q thus far in one queue. But how long do you think it takes to get back to kind of a steady state run rate on the origination side? I think it's fully understanding, as you said, that it is not a normal originations markets and it's hard to track down deals and all. But in general, what are your expectations for getting fully up and running on an origination basis?

I think it'll take us the full year to do that. And I think part of the reason for that is what I said earlier. A lot of this, I think, is going to be lender driven. I think a lot of our peers in the marketplace, whether they be banks or non-banks, have for the period of the past two years, positioning themselves on an asset management basis to work with borrowers and get loans in better spots. I think borrowers are beginning to have the key. Light at the end of the tunnel feels like it is fading. The hope on lowering the cost of interest rate caps, that hope is subsiding. So borrowers are unable to go back to their limitings and continue to tap them for money on an endless basis for interest rate reserves and things like that. So I think this is the year, and speaking to all the brokers at the NBA, we were getting a lot of nodding heads across the table from us when we spoke about how lenders are going to be more active. And be the source of transaction sales in this market. And this isn't at gunpoint, but this is borrowers somewhat capitulating, given the fatigue they've had and the rate environment that we're in. And the lenders are in a position to finally start really pushing assets toward REO, which you see we are doing ourselves. So I think it's very hard to project how a market like that is going to behave. Like I said, if you interview the businesses across our peer group, they're all saying we're seeing billions of dollars of product. If we told you the numbers that you're seeing, you'd have to do a triple take at how big those numbers are. But in terms of actionable loans that could actually work, where you can quote and then potentially win, they are a fraction of what's out there. So we still need a re-calibration of the market. And again, I think that is going to be partly lender driven and borrower fatigue driven. And I think that's going to be a slow grind over the course of the year, but it's going to pick up. That's why I think it'll take us about a year to get to that stabilized number, which is why when we talk about our dividend coverage, we explain that we expect some modest negative coverage while we rebuild the book.

Got it. Appreciate those thoughts, Mike. And then last one for me, maybe Andy, in terms of the REO portfolio, other than the Phoenix multifamily asset, which sounds like you have it in a really good spot, which of your remaining assets are the most actionable in the near term? And do you think there's a likelihood of further impairments as you look to sell those assets?

Thanks for the question. I mean, when we move an asset to REO, we have a view towards ultimately resolving that asset. And so we've got a couple of properties in Texas that are multifamily. We plan to execute a value add plan very similar to what we did in Phoenix, and we actually think those are a lighter lift, but it will take time for us to stabilize those assets and get them in a position for sale. But that's something we're obviously very focused on. We continue to hold our Long Island City office assets, which we're evaluating and working on regularly. And then obviously during the quarter, we had the resolution of the Oakland office assets. So that's an example of us moving to liquidate those, resolve them, bring that capital back on balance sheet for redeployment and earning assets.

And then on the Long Island City assets, we're getting, you know, listen, we've, it's been a couple of years now, a year and a half plus, probably two, where we've been trying to lease those assets. We had a lot of interest from single users, and we took a lot of time on that. Unfortunately, that did not work. There is a lot of inquiry given that the New York City market is tightening up, and that Third Avenue in New York City a year ago was considered Queens West. Now Third Avenue is getting tight, certainly for better building. So we think that'll trickle over to Long Island City. Having said that, back to Andy's point, and back to what we said in the prepared remarks, executing on the REO is a big focus this year, is a source of capital. And at this point in time, we're not going to wait that much longer on the Long Island City assets. We will at some point, unfortunately, Fisher cut bait, because we want to use those proceeds to build a loan book. So we are going to be very active in focusing on resolving REO all throughout the year, especially given the fact that we think some more stuff will move on to REO. I'm not going to name specific loans in the watch list, but things will move on to REO from risk rated five, and we're going to be very focused on moving those assets.

Got it. That's all for me. Thanks, everyone.

Again, if you have a question, please press star and then one. And your next question today will come from Randy Binner with B. Riley. Please go ahead.

Hey, thanks. Good morning. Most of mine were as an answer, but I guess, you know, so this has been helpful in thinking through, you know, origination and in that billion dollar goal is, you know, I think it's for 2025. And, you know, would be would be constructive, of course. I was wondering if you could maybe help define that a little bit more from like a pipeline perspective. So, you know, geography property type. I mean, I might even you've explained the market overall quite a bit here and understood on that. But just kind of from a pipeline perspective, you know, what are the building blocks that would that would are the waypoints that get you to the billion of origination?

First, one of the building blocks is the source of capital, which we have ample amount of just based on the amount of cash we have on the balance sheet and looking at running a cash minimum of seventy five to one hundred million. We have ample cash on the balance sheet. Plus, when you look at recoveries in our REO and under levered assets, for instance, we've said before the San Jose Hotel, financing is a very modest amount of financing versus the loan amount. So movement on that asset will release a lot of capital. So we have at least a couple hundred plus million dollars of potential capital. There are some potential uses of capital that we may plan for during the course of the year. I want to point you out to the fact that on the watch list in risk rated for category, there are two loans, office loans that are in .O.s. And if any of those watch list fours go nonperforming and we have to pull them out of a .L.O., that takes the amount the face amount of the loan has to come out of the .L.O. But in terms of building building the book, I mean, I'll go back to the points. We'll do a loan anytime, anywhere. There's a price pretty much pretty much for everything. Yeah, we're very wary about insurance costs in Florida. We're very wary about the tax bases in cities like like Chicago. But there are price points everywhere that will do loans. I'm noticing some of our brethren are doing bigger loans. We might consider perhaps that these better debt yields and certainly what we had in twenty one and twenty two, we might venture into loans that are greater than seventy five million. We would prefer to keep the loan book average loan size sub 50 at 35. I think it's 35 today. So we're still looking for the twenty five to fifty million dollar loans. The market is very competitive for the amount of loans out there. We think that there we are very pleased for competitors who are out in the market when we were not there in two thousand twenty four and had very good pricing and hats off to them for that. The playing field is level in two thousand and twenty five and it is very competitive and there is still a dearth of product versus the amount of credit availability that's out there for the reasons I've stated. So very hard to sit here and predict what we're going to get. I do think overall the conditions are poised for more spread tightening. As I said in the prepared remarks, .L.O. spreads with thirty basis points tighter. When we did our .L.O. in two thousand and twenty one, I think we executed that like a triple A of one fifteen and the and the .O.s were coming once a week. So so we have a lot less supply. I'm very constructive on spreads. The banks have been very helpful. But in terms of making a prediction about what we would do and it's very hard right now, given where product is coming from, we do still expect to get a lot of loans coming out of construction and some even pre-teaser loans. We'll do those loans bridge to bridge is something that bridge lenders typically don't want to do. But there are some very good stories behind the bridge to bridge deals that are out there now and we will look at them, especially if there's a little bit of cash going into a deal at these debt levels, we would consider looking at bridge to bridge. Other than that, it's very hard to very hard to predict given how competitive the environment is.

All right, that's helpful. Appreciate the color. Your next question today will come from Guarav Mehta with

Alliance Global Partners. Please go ahead.

Yeah, thank you. Good morning. I wanted to follow up on your comments around loan originations and just to clarify the billion dollar number, that's a gross number, not a net number, net of repayments expected in 25, right?

The answer is all these puffs. I mean, we are going to put out as much money as we possibly can. We have enough capital to put out well over a billion dollars in new loans and we're going to do anything that we believe is actionable and fits the book. It's very hard to sit here and tell you that what we're going to do. I'll tell you what we need to do. We need to do a billion dollars on a net basis to keep the dividend where we want to keep it. We have no intention of moving that dividend. We intend on covering the dividend and that's what it's going to take. The market's going to bear what the market's going to bear. I do think that it's going to be a little bit more of a slow grind because I think as the year moves on, you're going to see more activity toward the second half of the year as rates stay higher, borrowers run out of gas and lenders are going to push borrowers to the sales market. So I think it's off to a start. Everyone is pounding their chest about how asset sales were up 22% from 2023. Again, I'll emphasize that 2023 was a 10-year low in asset sales. So what we need to do is we need to grow the book by a net billion dollars. We need to get the book to $3.5 billion. We have enough capital to do that. We're quoting every day. We're quoting every property type except for office. We've made good headway in the office portfolio where it's dropped by $100 million to $700 million. We need to make more headway in the office portfolio before we start quoting office loans, which could very happen in the latter part of the year. But right now we're quoting every property type and we have ample capital to put out more than a billion dollars.

Okay, thank you. That's all I have. That concludes our question and answer session. I would like to turn the

conference back over to Mike Mazze for any closing remarks.

Well, thank you all for joining us today. We're very excited about the year. We started 2024 and for most of the year we were in asset management mode and we emerged from that mode in the fourth quarter. We're very happy to be starting off 2025, whereas as I said in the remarks, we are pivoting toward new origination, focus, and executing a new CLO. So we're very excited about the coming year. And again, we thank you for joining us today.

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