KKR Real Estate Finance Trust Inc.

Good morning and welcome to the KKR Real Estate Finance Trust Incorporated Second Quarter 2025 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Jack Switala. Please go ahead.

Great. Thanks, Operator, and welcome to the KKR Real Estate Finance Trust earnings call for the second quarter of 2025. As the Operator mentioned, this is Jack Switala. This morning, I'm joined on the call by our CEO, Matt Salem, our President and COO, Patrick Mattson, and our CFO, Kendra Deschis. I'd like to remind everyone that we will refer to certain non-GAAP financial measures on the call, which are reconciled to GAAP figures in our earnings release and in the supplementary presentation, both of which are available on the investor relations portion of our website. This call will also contain certain forward-looking statements which do not guarantee future events or performance. Please refer to our most recently filed 10-Q for cautionary factors related to these statements. Before I turn the call over to Matt, I'll go through our results. For the second quarter of 2025, we reported a gap net loss of $35 million, or negative 53 cents per share. Book value per share as of June 30, 2025, is $13.84. We reported a distributable loss of $3 million due primarily to taking ownership of our West Hollywood property. Prior to realized losses, Distributable earnings was $16 million, or 24 cents per share. We paid a 25-cent cash dividend with respect to the second quarter. With that, I'd now like to turn the call over to Matt.

Thank you, Jack. Good morning, everyone, and thanks for joining our call today. Let's begin with an update on the real estate credit market. Transaction activity and loan demand has recovered from the volatility of the initial tariff announcement. and we are seeing significant opportunities within our loan pipeline, which continues to run near record levels. Competition has returned, and most lenders are active in the market. Despite the competitive environment, we believe the lending opportunity remains highly attractive, offering both absolute and relative value. Most of that is driven by the ability to lend on reset values well below replacement cost. Fundamentals remain healthy across most property types, and construction starts have decreased meaningfully, likely leading to stronger rental growth over the next few years. Commercial banks are increasing their participation while shifting some of their lending to loan-on-loan or other back-leveraged facilities, allowing KREF to borrow at attractive rates on a non-mark-to-market and match-term basis. Now turning to second quarter results, Originations in the quarter totaled $211 million, comprised of two loans secured by industrial and multifamily properties. We had two full repayments and six partial repayments, which totaled $450 million. We will continue to reinvest repayments and are projecting nearly $1 billion of incremental repayments over the second half of the year. Now that we have turned the investment pipeline on, We are focused on two newer areas. First, diversifying our portfolio geographically into Europe. And second, creating some more duration through CMBS investments. We have an active pipeline in the European loan market and anticipate new originations in the region by the end of this year. In addition, this quarter, we closed on a BP's investment where returns are very attractive. The pool consists of 34 low-leverage, fixed-rate first mortgage loans diversified across property types and geographies. We have a best-in-class team and a long track record of CMBS investing, including the ability to leverage our KSTAR platform, which is a rated special servicer. Turning to risk ratings, we downgraded a Boston Life Science asset from a four-rated loan to a five-rated loan and expect to extend the loan through February of 2026. We also downgraded our Chicago office loan from a three rated loan to a four rated loan due to continued market deterioration. As a reminder, this loan has already been modified twice with a reduction of loan balance by approximately 35% through 35 million of equity repayments and a $50 million hope note. Turning to our life science exposure, Our life science sector is 12% as of the second quarter, comprised of six assets located in the top two life science MSAs of Boston and South San Francisco. 60% is comprised of newly constructed and purpose-built properties that are targeting larger pharmaceutical tenants, which are less susceptible to some of the cyclical issues the sector is experiencing. As a reminder, we've added additional detail in our supplemental, which can be found on page 10. With that, I'll turn it over to Patrick.

Thanks, Matt. Good morning, everyone. Let me begin with an update on our watch list, as well as progress on the REO assets. As we reported last quarter, we took title to the West Hollywood Multifamily Loan in April and recorded a loss to distributable earnings of $20 million, which was a slight improvement over our CECL reserve. We're progressing on our execution plan for a condo sellout and expect sales to commence in the third quarter. On the five-rated Raleigh multifamily, we are proceeding on an assignment in lieu of foreclosure and expect to complete the process in the third quarter, at which point we will convert our approximately $15 million CECL reserve to a realized loss. As of June 30th, this asset is 96% occupied and we will implement a small value-add program to enhance the value and reposition the property as market fundamentals continue to improve. Three updates on the REO side. First, Mountain View, California office. The market here has improved materially from our initial ownership from both the capital markets and tenant demand perspective. and we are actively responding to tenant requests for proposals. Given our asset offers tenants the ability to have a full campus setting, we continue to position leasing toward a single user. Next, in Portland, Oregon, during the quarter, we closed on the sale of a parcel, which will be developed as a multi-genre concert space, providing an entertainment venue to the site. Additionally, we're working toward the completion of the entitlement of four plus million square feet of mixed-use space, creating a path to opportunistically sell additional development parcels and repatriate capital. Finally, in Philadelphia, we completed the sale of the garage in 2Q to a private parking operator at a level slightly above our carry basis. The garage was a 13-story, 469 parking space facility amongst the larger Philadelphia REO portfolio. At the office property, we're continuing to focus on retaining tenants and increasing occupancy and remain open to selling the property on an appropriate basis. As a reminder, at just our basis in the REO assets, we could generate over $0.12 per share per quarter on distributor earnings as we effectuate our business plans, repatriate capital, and reinvest into performing loans. Our REO portfolio represents approximately $352 million of pro forma equity, or $5.34 per share, which is reflected on page 14 of our supplemental. Moving to share repurchases, we repurchased $20 million of KREF stock in the second quarter for a weighted average price of $9.21. Over the last three quarters, we have repurchased almost 40 million of common stock, representing approximately 25 cents of book value per share accretion. Since inception of our buyback plan, we have bought back $137 million of KREF common stock. We'll continue to evaluate the allocation of capital across both share buybacks and loan origination. Liquidity remains robust, and at quarter end, we had $757 million of liquidity available, including $108 million of cash on hand and $620 million of undrawn corporate revolver capacity. With the assistance of the KKR Capital Markets team, 78% of our financing remains fully non-mark-to-market. Overall, We are well positioned for the opportunity in front of us in 2025 and beyond. We've been making progress on our watch list and REO, as well as actively making new investments. We'll continue to be transparent and proactive in managing the portfolio to maximize shareholder value. Thank you for joining us today. With that, we are happy to take your questions.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Jade Rakhvani with KBW. Please go ahead.

Thank you very much. Can you talk about the level of ROEs that you're able to achieve in the market and give some color around loan spreads, all-in yields? That would be helpful considering the uptick in competition that we've seen this year.

Hey, Jade. It's Matt. Thanks for joining this morning, and thank you for the question. Yeah, so just in terms of what we're seeing in the market, which we made some comments on the call today, pipelines, as big as it's ever been, and we've set kind of two records in our own pipeline this year just in terms of the market opportunity, we're generally running over $30 billion a week just within our actionable pipeline. within our actual pipeline. That's US and Europe, and that's across all of our pools of capital. We have bank capital, insurance capital, and more transitional bridge type of capital that we lend for KREF. So pretty robust opportunity set, lots to look at. I'd say on the competitive side, definitely competitive. I think all the pools of capital are turned on. But it's led to spreads compressing back to where we were pre-tariff announcement. I would characterize the market for call it transitional lending. Stuff we're focused on anyway in the institutional segment of the market in the call it mid 200s. I'd say most of the stuff we're looking at is around the 265 or so area. So kind of basically back to where we were pre-tariff. You'll see this quarter we did close two deals that are on the tighter end of probably the tightest end, honestly, of where we see the transitional loan market right now. So we closed two deals this quarter in like the 240 area. That's about as tight as you can go. Now this goes back to, I think some of the comments we've made on previous calls where we're seeing a lot of opportunities to lend on what I think of as like mostly stabilized assets. These are, they're, One's an industrial portfolio that was scheduled to or slated to go for the single asset, single borrower market. Then the tariff announcement hit. We were able to pull that out and provide balance sheet financing, so pretty much stabilized, well-occupied industrial portfolio. And then the second one was, again, a mostly stabilized, very well-located institutional sponsor, multifamily property. So there's no real business plans here. And so when you start to get into these things that aren't even light transitional, it's in that 240, 250 area. We've always tried to play in the kind of higher quality section of the part of the market. And we're able to finance those really effectively as well. So when you think about these spreads, we're translating these into the similar ROEs and that call it on the tight end, we're probably in the mid 11s. and that ranges all the way out to the end of the 13th. So ROE is pretty similar to what we have seen really through most of our lending. I think these two deals we closed in a quarter are both in like the 12s. So certainly what we're targeting, but I'd say the fact patterns are more stabilized, a little bit more well-occupied assets.

Thank you. You mentioned the $1 billion in repayments you expect in the second half. Can you talk about what kind of originations you expect in the second half and also any loans with upcoming maturities that could create some conversations on how those ultimately get paid off or if the plan is to extend?

Yeah, I guess a couple comments. We're still we're still trying to match the repayments with new originations. So if we got that billion dollars of repayments, which we think is, I think we say nearly a billion, if we got that, you would see us pretty actively originating to try to replace the vast majority of that. The only thing we're just mindful of is obviously watching the our large leverage ratio, we're right in line with where we want to be right now. And he's like, maybe at the site with the higher end, but, but certainly within the rank within a reasonable range. Um, and I don't think we have, you know, as we think about near term maturities, um, there's nothing currently, you know, on the, on the radar. We have one industrial property in, in New York that we're, you know, that we're watching, but outside of that, there's, there's really nothing else, uh, coming down that we're particularly watching closely.

Thank you very much.

Sure. The next question comes from Rick Shane with JPMorgan. Please go ahead.

Hey, guys. Thanks for taking my questions. And always tough to be after Jay because he asks great questions and covered a lot of what I was interested in. The thing I'd like to talk about is it sort of dovetails with the last topic you guys were on. 2026, you have $2 billion, $2 plus billion of maturities, 27, $2.7 billion. Obviously, those are pretty big walls. I think the conversation we just had was about near-term maturities. But as you really look into the heavy lift next year, Can you sort of give us a sense of maybe even sort of the pie chart of that $2 billion? Hey, we think 50% are going to pay off, 40% are going to extend, and 10% are going to be problematic. Can you give us some sense of how to think about that 2026 maturity wall?

Yeah, Rick, unfortunately, I don't think I'll be as precise as you're asking and predicting the future. A couple of comments I'd make. One, a lot of that's getting pulled forward. So when you think about like the billion that's coming down this, our expectation around a billion coming down in the second half of the year, that's all coming in before a maturity date. The market, I think these business plans are getting executed, completed, if you will, In many cases, people are pulling forward refinancing or beginning to sell assets. So when we think about the maturity wall, I think it's going to look a lot different at the end of this year. And then we start to think about the 27 maturity wall, I think a lot of that will get pulled forward into 26. People are just, the markets are active, there's financing availability, and people are taking advantage of that. I would say when you look at our pipeline, our pipeline is for new investments, a lot of it is refinance. And so it sponsors buying more time and creating more runway. Because if you think about it, if you own a multifamily property or industrial, you're watching these supply pipelines get absorbed. You're watching the supply starts drop dramatically, which they have done over the last handful of quarters, as well as the impact on some of these tariffs on new starts. And I think people are becoming very optimistic about what that can mean for rental increases and therefore enhanced property values. And so I'd say a lot of our pipeline right now is sponsors just, again, trying to buy the time so they can hold the assets for another two, three years and get into a window where the fundamentals are really in the landlord's favor. So I expect to see within our portfolio to translate that to our borrowers. I think a lot of people are pulling this financing forward, buying that time now. and they're going to hold these assets and wait it out. As it relates to credit issues, I think we're going to see less and less credit issues around maturities. We've already identified, I think, most of the issues. I'm not going to say there won't be more, but the maturity used to be like a rate reset, interest rate caps or things would cause some of the issues, or maybe you had an initial maturity date that caused issues. Just given where we are now in the cycle, I think a lot of the problems have reared their heads at this point in time. So it's kind of less about a date and more about what's going on, a particular property type or that specific asset. So I wouldn't expect... that to be a big catalyst for defaults at a maturity date? I think they could kind of come earlier or to do to something else happening like a tenant leaving or something like that.

No, look, it's a really interesting point about rate resets. You know, we think about this all the time in terms of consumer finance. At a certain point, consumers demonstrate an ability to absorb over time, have demonstrated an ability to absorb certain changes. given how long rates have been higher and the fact that basically everybody has been reset already, one, the business models have proven, the ones that survived have proven out, and also incrementally it's probably not any more costly. I am curious, you talk about refinance. Is that refinance bearable? for sponsors who are borrowing outside of your portfolio, or is that refinance of existing loans? And to the extent it's refinance of existing loans that you've made, can you help us just sort of understand the different criteria between a refinance versus an extension? Because as outsiders, I think we probably look at them the same way, but I think internally you probably have very different criteria. And it's perhaps a different signal.

Yeah, that's a good question. I'd say the vast majority of the refinancings that we're seeing are, they would be new credits for us, new assets for us. So we do very little of like kind of refinancing our assets. our own portfolio. Obviously, to your point, like we do modifications, we do extensions. You know, there are isolated cases where we kind of provide a new, what we think of as a new loan, because it's new terms. You have a new five-year term. We have like refresh on all the reserves and structure, et cetera. So that has happened in the past, but it's It's very isolated. I mean, these are really just new opportunities coming into our pipeline.

Okay, perfect. Thank you for clarifying, and I apologize for taking so much time. Thank you, guys.

Thanks, Rick.

The next question comes from Steve Delaney with Citizens J&P Securities. Please go ahead.

Thanks. Good morning, everyone. First, let me applaud the buyback. I think it's a great allocation of capital, even though it is – Obviously, you'd like to pay offense more than defense, but as a representative of the shareholders, I say thank you. I assume it will probably continue if the stock stays down here under 70% a book. Matt, just looking at the portfolio, you're now $5.8 billion, about 20% off the recent high of, I guess, a year and a half ago, a little over $7 billion. When you look at the capital base today, you look at the opportunity. As we're updating models and we're thinking out to the end of 2026 or so, is it realistic to think that the loan portfolio could grow back to something close to that $7 billion figure? Or given the buybacks and given the other allocations, is that unrealistic? I guess I'm just asking if you guys have a a target level for where your loan portfolio could stabilize in the current environment? Thank you.

Good morning, Steve. It's Patrick. That's a good question. I guess a couple of things I'd comment on there. I think one, we don't think about it in terms of a target that way. We think about it in terms of allocating capital and thinking about it in terms of our leverage levels. And so, if you look at, you know, what's happened since we've been at that peak level, a couple of things here. One, I think the mix will change slightly over the course of, you know, the next couple of quarters. We mentioned the CMBS investment we made. Obviously, that's capital that you can sort of gross up what the loan equivalent would be, but we allocate capital towards CMBS. then the loan portfolio is not going to be at a peak level. You mentioned the buybacks. Clearly, as we remove equity from the company, that's not available to grow the loan portfolio. So we'll see some shrinkage from that. The other area, though, on the flip side, we do have equity that is, in effect, trapped in some of our REO assets. And as we work through those business plans, as we return that capital back, then there's an opportunity for us to, you know, redeploy that into new loans. And so you could see some, you know, growth there. But, you know, all of that will just be constrained by what our total equity is and, you know, what our target leverage level is. I would just lastly comment that, you know, as you look at it on a spot moment, Matt alluded to that we're right in our target leverage level. For the year, we're probably just off from a redeployment of repayments. We're about $50 million less of originations relative to the repayments that we've received. That's just quarter to quarter. There's going to be some fluctuations. The pipeline, as Matt mentioned, is pretty active. So we've got quite a bit that's in closing now. And so as we look toward the back half of the year, you know, we would certainly expect that we're to close that gap and probably see, you know, a slightly higher level from where we are today. Hopefully that addresses what you were asking.

Yeah, that's very helpful. Thanks. And I totally get the, from your view, it's an allocation of capital. It's not a particular dollar level of a portfolio given other places you're allocating capital. I'm just curious on the B pieces. Do you view that as somewhat opportunistic given some market disruption, or do you see that as a core piece of the pie, you know, the investment pie going forward for KREF?

Thanks, Steve. I can jump in there. It's Matt.

Yeah, hey, Matt.

I think we'd like it to be, to grow it and it, you know, to be a more consistent piece of our investing, we've got a pretty strong position in that market. You know, we've been very large participants in that space, really going back to when risk retention started in CMBS in 2017. In fact, You know, we were the first investor ever to acquire a conduit piece that was subject to risk retention, so negotiated all the precedent documents with the banks to kind of set that program up. And since then, we've been the largest investor in risk retention across our various pools of capital. So we've got a really strong position there, and so I think we'd like to continue to be active in the market. That market tends to be a little bit more consistent from an opportunity set as well in terms of just given the risk retention, it's not as volatile from a return perspective as what we've seen in other markets. So we're hoping that continues and we can continue to kind of participate. Of course, every investment we make, we're making relative value decisions. So for that to change, we'd obviously react to that. But we're hoping that just given the way that market operates that we're it'll be, we can be consistent there.

Okay. And would you, do you see the return, the ROE on that CMBSC piece book? Do you look at that as being incremental to shareholders versus if you had a hundred percent bridge loan portfolio? So in other words, is that a, on a dollar of capital invested, do you see that as an incrementally higher ROE contributing to what a KREF shareholder receives than if you weren't in that business?

Yeah, it kind of depends on which kind of loans you're comparing it against. It tends to be slightly higher than what we're doing on the loan side from a total return or IRR perspective. Yes. So there is a slightly more return. I would say that's nice, not necessarily why we're doing it. I think we're doing it more for the fact that we do think there's good risk reward in the sector. Number two, it's a diversifier for us. And number three, I think the duration component is important. And you see this in our peers as well. I think the industry's evolving a little bit in terms of trying to create a little bit more duration, which I think does a number of things, but just from a risk management perspective, it just helps us. If you think about our loan portfolio as being kind of shorter duration, three-ish year loans, we're not having to recycle the entire portfolio every three years. And kind of subject to some of the cyclicality of markets, et cetera. So I think it kind of takes a little bit more of that vintage risk out of the portfolio. So that's another reason. I'd say one of the primary reasons why we decided to enter that space.

Thank you both for the comments this morning.

Thanks, Steve.

The next question comes from John Nicodemus with BTIG. Please go ahead.

Hi. Good morning, everyone. I wanted to start with a two-part question on your life science loans. First, obviously, the Boston loan was downgraded for the second straight quarter here. I was curious what a potential plan for resolution could look like there. I know, Matt, you mentioned the extension. I was just curious if it could be something like what we saw with the San Carlos modification a few quarters ago. Then second, of your other five life science loans, I know they're all three-rated. How do you feel about where those stand and their ability to stay off the watch list in the coming quarters?

Thanks. Thanks, John. Appreciate the question. Thanks again for joining the call. I would say on the Boston asset, I don't think we have the answer there yet. We're still working through a number of different options and in discussions with the borrower, which is kind of leading to this to this extension, so let us come back on that one, and in the next earnings call, we hope to kind of give everybody an update on how that may proceed. It's obviously kind of live discussions happening right now. You know, on the rest of the live science, a couple things. One, we've obviously modified one of them, and as you mentioned, and then A few of those, which I made the remarks on the call as well, three of them in particular, are really new assets, purpose-built. They were originally construction loans, and those are effectively largely delivered at this point in time. And so I think we still feel good about those. They're in great locations. They are very strong real estate companies. Um, and we've got, um, you know, for the most part, some pretty good sponsors, um, within that. So. I think if, if obviously it's a very challenging market, although we're starting to see a little bit of green shoots, it's early still. Um, but we are starting to see a little bit of the tenants returning to returning to the market, picking up, um, in some of these sectors, some of these sub markets. Um, and so obviously we want that to continue. But for right now, I think we're rated appropriately, and we'll just have to see what happens as time progresses here in terms of our sponsors' plans with those particular assets. But it's very good real estate, very well located, and again, for the most part, pretty strong sponsors there. One thing that people haven't asked yet, but perhaps there's a corollary here, certainly we're hoping so, On the office side, we're seeing a lot more liquidity in that sector. Now, there's still a bifurcation in terms of quality. All the liquidity is coming back to the higher quality assets first, and tenants are returning to the market. There's real leases getting done, and Patrick alluded or mentioned this in his remarks in terms of some of the stuff we're seeing in Mountain View, which is completely changed from when we took title to that asset. So these markets can change and tenants can come back, supply is dropping off. And so we feel like if we're in really high quality real estate, that over time, these asset values can recover. So that's a little bit of how we're thinking about just the overall portfolio, specifically on the REO and some of these life science assets as well.

Great. Thanks so much, Matt, and appreciate the added detail on the office sector. That's great to hear. And then other one from me, one of the notable developments this year has been the move by some of your peers into the own net lease space. I know you've mentioned diversifying into more European loans, obviously the CNBSB pieces. Just curious to hear your team's thoughts on, you know, more commercial mortgage REITs owning net lease real estate, and if that's something that you would ever consider in the KREF vehicle. Thanks.

Sure, John. Well, I think it's a positive that the market's evolving. And so I like to see the peers adding new investments, new types of investments to their portfolio. And we obviously made remarks already around, you know, how that helps the duration. These assets can fund differently as well. So I just think it's going to create, at the end of the day, a more robust industry and maybe more shareholders attracted to the market. So I think it's real positive. For us in the net lease, we've done it in other parts of our real estate business. So it's certainly a sector. We have a couple teams that do it today. It's a sector that we're very familiar with. I'd say we're still evaluating whether we think it makes sense for KRF. And so we'll kind of keep everyone posted on that. There's nothing, I would say, imminent there, but it's certainly on a list of things when we talk to our board about possibilities of expanding our portfolio. So I think we'll continue to look at it, but certainly nothing in the near-term horizon.

Great. Thanks so much, Matt. Appreciate the answers.

Thank you.

Again, if you have a question, please press star, then 1. And we have a follow-up from Rick Shane with JP Morgan. Please go ahead.

Hey, guys. Excuse me. Hey, guys. Thanks for taking my second question. Very quick. On the $400 million REO portfolio, We had a question. What's sort of the timeline to repatriating that capital back into loans?

Yeah, maybe I could just go one by one, if that's helpful. And if you have the supplemental open, it's on page 14. But it just gives some context. So Mountain View, again, that's a campus location. office building or property, and there we want to be patient, and we really are targeting a single user. The real estate's somewhat, it's high-quality real estate. There's other competitors in the market. There's obviously vacancy in the market that we're competing against there, but I'd say we're on the short list for tenants that want high-quality in Mountain View and We've seen that leasing pick up substantially, as we've mentioned. And because we're a campus offering, there's a little bit of uniqueness to that, where obviously the amenity package, the security, et cetera, could be very attractive for a tenant. Most of our competitors are multi-tenant buildings. So we stand out a little bit in that regard. In terms of timing, Again, we need to be patient here. The market is coming back. There's real activity. So we're actively working on RFPs for tenants, but I think we're willing to wait to get the right deal with the right tenant. So that one's a little bit of an unknown. On West Hollywood, we will be in market selling shortly within the third quarter. And that's condo sales, so that will start coming out over the course of the next year or so. We'll start whittling down at that as we sell condo units. On Portland, again, a little bit similar story from Hollywood where we've been working in the background on this redevelopment and entitlement for some time now, and we're getting to the stage where we should be able to sell condos. sell lots for development, predominantly multifamily development. We're very excited about that project. But over the course of next year, we are hoping that we can begin to kind of sell lots and repatriate some of that capital. But again, it likely will not be a wholesale. One sale will likely be individual parcels that we sell to developers there. On Seattle, I'd probably put this a little bit more in the Mountain View camp, where If you recall, we've signed kind of an anchor tenant there in the life science space, which we think is going to really help drive future leasing. But this is a multi-tenant asset, and I'd say the leasing here is not as robust as we're seeing in Mountain View. So this will take a little bit more time. But again, still probably TBD on this one to see how the market recovers. But of all these assets, that's probably the one that has the longest tail. And then the Philadelphia asset, it's mostly stabilized, office building. There's a couple of leases that we're working on there. And if we could hit a couple of those, that would be more of a short-term sale over the course of the next year or so. We'll see kind of what the market is doing. And then finally, the Raleigh multifamily property. That will likely be a short-term hold. It's well-occupied. As we mentioned, we'll probably do a slight value-add business plan. Supply is coming down in that market as well. So we kind of like the setup there. So think about that as a, I don't know, as a 12- or 18-month hold. It won't be a long-term hold, but I think we'd like to get a little bit further down the road and put a little money into it, and then try to exit that. So, you know, kind of when you think through all this stuff, you're getting a few of these back in relatively short order, like a couple within, a few of them within the next year to 18 months. And then, in my mind, it kind of comes down to Mountain View and, you know, what's the success we have there? It's a big asset. And, you know, can we execute there in a short amount of time? And certainly like what we're seeing in that market right now.

It's an incredibly helpful answer. Thank you so much.

Thanks for the question.

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

Great. Thanks, Operator, and thanks, everyone, for joining us today. You can reach out to me or the team here if you have any questions. Take care.

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