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spk06: Good morning, and thank you for joining the Lumen Finance Trust third quarter 2022 earnings call. Today's call is being recorded and will be available via webcast on the company's website. I would now like to turn the call over to Charles Duddy with Investor Relations at Lumen Investment Management. Please go ahead.
spk08: Thank you, and good morning, everyone. Thank you for joining our call to discuss Lumen Finance Trust third quarter 2022 financial results. With me on the call today are James Flynn, CEO, Michael Larson, President, and James Briggs, CFO. On Tuesday, we filed our 10Q with the SEC and issued a press release which provided details on our quarterly results. We also provided a supplemental earnings presentation which can be found at our website. Before handing the call over to Jim, I would like to remind everyone that certain statements made during the course of this call are not based on historical information and may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When using this conference, words such as outlook, evaluate, indicate, believes, will, anticipates, expects, intends, and other similar expressions are intended to identify forward-looking statements. Such forward-looking statements are subject to various risks and uncertainties. that could cause actual results to differ materially from those contained in the forward-looking statement. These risks and uncertainties are discussed in the company's reports filed with the FCC, including its reports on Form 8-K, 10-Q, and 10-K, and in particular, the risk factor section of our Form 10-K. It is not possible to predict or identify all such risks. 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. A presentation of this information is not intended to be considered in isolation, nor as a substitute to the financial information presented in accordance with GAAP. Reconciliations of these non-GAAP measures to the most comparable measures prepared in accordance with GAAP can be accessed through our filings with the SEC at www.sec.gov. So now I'll turn the call over to James Flynn. Please go ahead.
spk05: Thank you, Charlie. Good morning, everyone. Welcome to the Limited Finance Trust Earnings Call for the third quarter of 2022. Thank you for joining. I'd like to begin by addressing the current economic environment. The multifamily market has experienced a period of transition over the last few quarters as lenders and investors react to inflationary pressures, geopolitical risk, capital markets volatility, and higher interest rates. In theory, investment activity in the market has declined as asset buyers and sellers work towards reassessing financing costs and finding a new normal for levels of asset valuations and financing structures. Despite recessionary indicators increasing, the strong employment market remains supportive of continued rent growth for multifamily assets, although at a slower pace than we've seen over the previous two years. That being said, we continue to expect rents to outpace expenses and believe the credit quality of the middle market workforce housing asset class remains extremely attractive. While capital markets and rates remain challenging, the credit profile of the middle market housing market continues to be supported by favorable supply-demand dynamics, demographics, and long-term rent growth trends. and in our view, remaining an attractive investment opportunity for shareholders over the long term. Our multifamily investment portfolio has performed well, and while we did book an unrealized loss reserve against our sole office loan this quarter, which we'll discuss in more detail later during the call, the remainder of our book continues to demonstrate strong performance. More specifically, within the bridge lending market, lending standards have tightened and pricing on new loans has increased industry-wide over the last few quarters. Our manager is being more selective with regards to credit, and the average assets appraised to LTV on new loans being offered by our manager has decreased. Our manager is currently quoting new transactions at spreads well above 4%, whereas a year ago we were seeing loans price with spreads in the low to mid threes or lower. We would expect that the average spread on LFT's investment portfolio will continue to increase as the portfolio grows. With this backdrop, the broader capital markets have remained volatile and dislocated. Conditions in the CRE CLO market remain extremely challenging, and the market for new issuance is limited at this time. The last new issue CRE CLO to price in the market was in early October, with AAA spreads widening to SOFR plus 275. That's versus AAA spread of LIBOR plus 117 on LFT's existing CLO. Liquidity for the lower rated BBB bonds remains extremely limited, effectively reducing issuer advance rates. In order to continue our portfolio growth on a leveraged basis and fully deploy the capital we raised in Q1, we remain actively focused on executing a loan financing transaction to leverage newly originated loans from our manager. We have historically utilized the CRE-CLO market to finance our investments and continue to believe that long-term that market provides an attractive financing source due to favorable leverage as well as non-recourse, non-mark-to-market features. However, due to the dislocation just discussed, we have elected to continue the delay of our next CRE-CLO financing effort. We are prepared to execute a CLO quickly to the extent market conditions improve but we are also actively exploring alternative financing options, including note-on-note financing, A-note structures, and the Freddie Q program. Overall, it is clear that the cost of liabilities has increased, and the market spreads on assets are also increasing. We believe it likely that newly originated assets going forward will have wider spreads than existing assets in line with the increases in cost of financing. We've also seen increasing short-term interest rates, which over time will be a benefit to LFT. With regards to our dividend, we have previously declared a quarterly common dividend of 6 cents per share for the first three quarters of 2022. This level reflected resetting of our dividend, taking into account our Q1 capital raise and increased share count. In addition, this dividend reflected the anticipated drag on net income to common shareholders as we work to deploy the newly raised capital on a leveraged basis. We would expect our earnings to continue to be pressured in the current environment until such time as the capital markets normalize and we were able to execute an attractive loan financing transaction. In the meantime, we continue to focus on deploying our capital into commercial real estate debt investments with a focus on multifamily assets. Our manager is one of the nation's largest capital providers in the multifamily and seniors housing space, executing over $17 billion in total transaction volume last year, and servicing a $50 billion portfolio and employing over 600 employees in 30 offices nationwide. We believe that scale and expertise of this broad platform will continue to benefit the investors of LFT. With that, I'd like to turn the call over to Jim Briggs, who will provide details on our financial results. Jim?
spk00: Thank you, Jim, and good morning, everyone. On Tuesday evening, we filed our quarterly report on Form 10-Q and provided a supplemental investor presentation on our website, which we will be referencing during our remarks. Supplemental investor presentation has been uploaded to the webcast as well for your reference. On pages four through eight of the presentation, you will find key updates and an earnings summary for the quarter. The third quarter of 2022, we reported net income to common stockholders of approximately $315,000, or one cent per share. We also reported distributable earnings of approximately $1.7 million or 3 cents per share of common stock. This compares to distributable earnings of 2.2 million or 4 cents per share in the prior quarter. There are a few items I'd like to highlight with regards to our Q3 P&L. Beginning with net interest income, our Q3 net interest income was 5.5 million compared to 6.4 million in Q2 of 2022. Excluding the impact of exit and prepayment fees on loan payoffs, which are included in net interest income in our P&L, our interest income increased during the quarter by approximately 3.3 million, from 11.2 million in Q2 to 14.5 million in Q3. The low interest expense increased by approximately 3 million, from 4.7 million to 7.7 million, increasing net interest income by approximately 240,000. This increase was driven by rising LIBOR and SOFA rates, which are a tailwind for us. We did, however, experience a reduced level of loan payoffs during the quarter, which caused the reduction in exit fees and prepayment penalties earned relative to Q2. During Q3, we experienced 35 million of loan payoffs, which generated 291,000 of exit fees. This represents a 14% annual payoff rate which is a significant decrease relative to historical norms. In the prior quarter, we experienced 81 million of payoffs, which generated 691,000 of exit fees and 775,000 of prepayment penalties. For context, the total UPV of our payoffs during calendar year 2021 was 528 million, or an average of 132 million per quarter. We expect to continue to experience We expect to continue experiencing reduced payoff speeds over the coming quarters due to persistent interest rate volatility and economic uncertainty. The primary difference between our distributable and reported net income during Q3 was a $1.5 million unrealized provision for loan loss. This quarterly provision is related to a single $10.3 million loan that is collateralized by an office property in Chicago. This loan was originated in July of 2018 and is LFT's only office property investment. As of August 8th of this year, the loan was placed into maturity default. We entered into a forbearance agreement with the borrower extending the majority date to December of this year to allow the borrower more time to market and sell the property. Based on our view of the asset and current Chicago office market conditions, an additional reserve of $1.5 million was recorded for this impaired loan in The quarter ended September 30th, resulting in a total allowance for loan losses on our balance sheet of $1.9 million as of September 30th, again, solely related to this Chicago office loan. The loan is on non-accrual status as a result of the impaired loan classification. However, the bar continues to remain current on debt service payments. The office market in general has been negatively impacted due to COVID, and the Chicago office market in particular has been challenged. The office property collateralizing our loan has experienced recent and near-term vacancies, and the current Chicago office market is demonstrably soft, all of which negatively impacted valuations of the collateral. The loss provision that we've taken this quarter reflects all of these factors. We're working closely with the borrower to facilitate a potential asset sale during the fourth quarter and a repayment of our loan. If the borrower is unable to sell the asset By the extended December maturity date, we expect to take ownership via deed in lieu with the goal of maximizing value for LFT. The loan was purchased by LFT out of the CLO on August 2nd and is currently being held on LFT's balance sheet unlevered. As Jim mentioned in his opening remarks, the remainder of our loan portfolio continues to demonstrate strong performance, and other than the provision taken this quarter on the office loan, we have not taken any other loss provisions. Given the unrealized nature of the loss provision taken on the Chicago office loan, that provision is not reflected in our distributable earnings. Moving on to expenses, our total expenses were $2.7 million during Q3, which is largely in line with prior quarter's total of $2.8 million. As of September 30th, the company's total book equity was approximately $245 million. Total common book value was approximately $185 million, or $3.55 per share. As discussed in prior quarters, I would like to remind everyone that as a smaller reporting company as defined by the SEC, we have not yet adopted ASC 2016-13, commonly referred to as CECL or Current Expected Credit Losses, which is a comprehensive gap amendment of how to recognize credit losses on financial instruments. As a smaller reporting company, we are scheduled to implement CECL on January 1 of 2023. Until then, we continue to prepare our financial statements on an incurred loss model basis. We'll now turn the call over to Mike Larson, who will provide details on our portfolio composition and investment activity.
spk10: Thank you, Jim. Jim touched on the broader economic conditions, which have continued to be volatile and uncertain. These market dynamics have caused us and our manager to take a more measured approach with regard to new originations, including reducing leverage and increasing spread expectations for new investments. Due to these conditions, new acquisition activity in the market has slowed, and the number of bridge opportunities that support current in-place costs of financing has declined significantly. That being said, we are continuing to evaluate new opportunities on a selective basis. At the same time, we've seen payoff speeds slow, reducing our capacity for new investments relative to previous quarters. We anticipate this trend continuing into 2023 while interest rate increases moderate and the general real estate markets reset to the new higher interest rate environment. During this quarter, LFT acquired five new investments from an affiliate of our manager with a total principal balance of $47 million. Four of these new investments were loans on multifamily properties, and one was secured by a senior's housing assets. I should note that we've seen increased opportunities in the seniors housing space and foresee additions of this asset class to our portfolio in the near term. As a reminder, our manager is one of the largest providers of capital to the seniors housing and healthcare space and therefore is well positioned to source and evaluate these opportunities. The new loans that were acquired this period were indexed to 30-day terms SOFR and had a weighted average spread of 397 basis points. This level represents a meaningful increase relative to the current portfolio weighted average spread of 335 basis points. The new acquisitions had a weighted average index rate floor of 75 basis points, which also represents an increase relative to the portfolio average floor of 26 basis points. We experienced $35 million in loan payoffs during the quarter, and at quarter end, our total loan portfolio outstanding principal balance was $1.04 billion. That represents a 1% increase in portfolio size quarter over quarter and a 30% increase relative to the third quarter of 2023. The overall portfolio consists of 70 loans with an average loan size of $15 million, providing for significant asset diversity. Portfolio at quarter end was 95% multifamily, a slight increase from 92% multifamily as of year end 2021. Our exposure to retail and office continues to remain very low. And due to our manager's strong focus on multifamily and seniors housing, we continue to anticipate the majority of our new investment activity will be related to these asset classes. Touching on interest rates, our investment return profile has strong positive correlation with rising interest rates. We have included a rate sensitivity table on page 11 of our supplemental earnings presentation. And overall, we expect LFT to meaningfully benefit from continued rise in short-term interest rates as the Fed battles inflationary pressures. Since quarter end, the one-month term SOFR rate has increased from 3.04% to 3.8% as of today, and the forward curve implies SOFR reaching over 5% by the spring. Holding all else equal, every 100 basis point increase in SOFR is expected to increase our annual P&L by 2.1 million, or 4 cents per share. We do anticipate a positive P&L impact from these factors over the coming quarters. And then finally, on the financing side, as of 9.30, our loan portfolio continues to be financed with one series CLO securitization, has a weighted average spread of 143 basis points over one month LIBOR, and an advance rate of 83.375%. The CLO has a reinvestment period running through December of 2023 that allows for principal proceeds from repayments of the assets to be reinvested in qualifying mortgage assets. We do not currently utilize repo or warehouse facility financing LFT and therefore are not subject to margin calls on any of our assets from repo or warehouse lenders. With that, I'll pass the call back to Jim.
spk05: Thank you, Mike. We look forward to updating you all on continued progress during this volatile market. With that, I would like to ask the operator to open and follow up to questions.
spk06: Thank you. If you would like to signal with questions, please press star 1 on your touchtone telephone. If you're joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star one if you would like to signal with questions. And our first question will come from Crispin Love with Piper Sandler.
spk09: Thanks. Good morning. During the quarter, the asset sensitivity didn't shine through as you might expect just given the 100% floating rate portfolio and the net exposure that you point out on slide 11. Is the key driver there the prepay fees in the quarter given the decrease or Is there anything else at play there, such as a lag in how assets might reprice relative to the liabilities?
spk05: So, you know, most of our – I mean, our loans are floating, as you point out. Most have caps in place or all have caps in place of varying lengths in time. That's on the borrower side, on the interest rate side. So existing assets – you know, the only impact, you know, the impact is with the rate change, right? The spreads are going to remain constant. We're not disposing of assets off of our balance sheet. So there's not necessarily, you know, we're holding those to maturity. So there isn't any sort of pricing differential that occurs with the existing assets. So it really is the runoff as loans pay off, which I think we mentioned is, you know, has been slower and we anticipate it being slower in the coming quarters than what we've seen over the past couple of years. But we do see, you know, and the impact of that slowdown in payoffs reduces exit fees as these loans are all typically structured with exit fees. So there is, you know, some negativity from an earnings standpoint in that we're not getting exit fees as quickly as we have in the past. But from a performance or other impact, it's relatively muted. And I should point out, there's capital that is currently very imminently going to be deployed into new assets, but we've had some payoffs that weren't immediately reinvested. So there was some drag from that excess capital. Okay, great, thanks Jim.
spk09: And then Jim, you mentioned the exit fees in the quarter. I think I missed the exact number. It was somewhere between 300 and 400,000, is that right? Yeah, the exit fees for the quarter, Crispin, were 291,000 on 35 million of payoffs.
spk00: Okay, okay, perfect.
spk09: And then just one last question for me. Just looking at your 10Q, there was a decent move in risk ratings from the grade 2 to grade 3 credit bucket. Can you speak to some of the key drivers there? And just more broadly, how do you view the credit quality in your book, especially as we're entering a recessionary environment? It seems like it's pretty good other than that one loan that you discussed, but just curious on that move in credit buckets.
spk05: Yeah, I mean, like we discussed, I mean, on the multifamily side, we feel pretty good about the portfolio as a whole. The kind of, I'll call it the broad risk rating change is really reflective of the market. And while the business plans have largely been consistent with what sponsors thought they could achieve on the rental growth side, we see inflationary pressures on the expense side and just as you point out general, you know, uncertainty and, and some recessionary trends overall. Um, so, you know, we think that just, just from a, if you were to kind of just put a broad risk rating on the market, that, that has changed. If you, if you think about the asset class in our portfolio, we feel, you know, comfortable in the performance, but, um, you know, with, with this increase in rates and, um, inflation pressures, among all the other things that we've talked about, we just feel that from a prudent standpoint and looking at it, that there's greater risk today than there was three quarters ago or four quarters ago. And that's really reflective in the ratings. And what we haven't seen in the capital markets and overall, and I think until we do, we'll have some open questions, is really the decrease in volatility, right? So each week, each month, we've been waiting for not so much all rates have to go down or spreads have to go down, although, you know, that could be a positive. It's the volatility. And, you know, because of that, that's really the primary driver of those ratings. You know, with higher rates, you know, exits on loans are – tighter than they were with lower rates. And that part of it is really, you know, just a math function. But there's, you know, relatively good sponsors and good capital ahead of good equity in our portfolio. And, you know, we think it's performing well on a relative basis, certainly to other asset classes and to our peers.
spk01: Thanks, Jim. That all makes sense to me, and I appreciate you taking my question.
spk09: Thank you, Chris.
spk06: And our next question will come from Christopher Nolan with Ladenburg-Fallman.
spk01: And again, Christopher Nolan, your line is open.
spk06: Please go ahead.
spk03: Can you hear me now?
spk06: We can. Thank you.
spk03: Yes. Hi, Chris. Hi. For the CLO financing, is there any sort of reset or changes in the advance rates that would happen over time, or is it sort of stable once it's set?
spk05: Yeah, there's no change to advance rates. Of the existing CLO, there's no change. There's a, you know, eventually after the reinvestment period, as loans pay off, you know, you have your typical structure of, you know, buying down senior bonds, but that's usually when those get called. Okay. further into the future, but no change during this.
spk03: Okay, and given the prospect of, you know, it seems like a slower investment environment, you guys are being much more cautious. Any possibility of doing a share buyback?
spk04: You know, I think we've talked about this in the past.
spk05: I mean, the board and us as managers have talked about a number of different ways that we can invest you know, continue to support the shareholders and the stock price through, you know, trying to increase the trading value relative to book. That's certainly one of them. But I'll also, one of the options, but I'll also point out, you know, one of the challenges that we face and what we've really been focused on is actually increasing our float and increasing the, you know, the shareholder base. And, you know, while that has, positive impacts on, as you described, it also has other impacts. And so, you know, it's something that certainly we've talked about, but not anything that, you know, we've made a decision or expecting at any time in the near future.
spk03: Okay. That's it for me.
spk01: Thank you.
spk06: And our next question will come from Jason Stewart with Jones Trading.
spk04: Hey, guys. This is Matthew on for Jason this morning. Are you guys talking at all about preferred share buyback?
spk05: We have not looked at the – currently, I think we've said in the – if you look at where that rates are today, it's sub-8%. cost of capital, so it would be challenging to replace it with something cheaper today. I think the prior question on the common is probably if you're just looking at the cost of each and no other factors, I think common would be more bang for your buck than the preferred.
spk04: Gotcha. And then could you talk a little bit more about the lag in pricing of loans versus liabilities?
spk05: Yeah, I mean, look, liabilities change, you know, well, the spreads are set, but rates change immediately, right? So every time there's a change in rates, that impacts, you know, both the asset side and the liability side. But on the spread side, you know, the portfolio is, you know, is seasoned. And so spreads on loans have generally moved a bit slower, Frank, over the past really, really regular way, but also in this environment. So, you know, in order for us to replace the whole portfolio at current spreads, you need the whole portfolio to roll off. It's really just a matter of, you know, rates change immediately and the portfolio can only change as you have repayments. And given the anticipated slower repayment rate in the coming quarters, you know, that will further kind of exacerbate that transition.
spk04: Gotcha. And then could you provide a view on where you think the terminal Fed funds rate tops at?
spk05: I think if we had this call at a different week or month over the past three or four I'd probably have a different answer but the signs of somewhere around five percent in the short term meaning next year seems to be seems to be the current goal and what what the expectation is that seems logical to me and that's kind of what we're assuming whether it creeps down a little bit from there I think depends on a lot of other factors, including just the general state of the economy, what we see in the inflation numbers as the tightening that's gone on over the past couple of quarters actually makes its way all the way into the numbers. I think we'll have an impact on where that ends up. But I do think we're going to hit five. But I think it's very possible that it comes back a little bit into the fours and probably stays around there for at least the next four or five, six quarters. Again, I think it's heavily dependent on the data that comes in around inflation and some of the other economic indicators. And mostly the economists and the predictions have been wrong. and what those numbers are going to show the past several readings. So I think we need to see the numbers come in somewhere where they're expected over a couple of periods, and then we can feel comfortable that the projections, even only a few quarters out on rates, are more accurate than they have been over the last few quarters.
spk01: Gotcha. Thanks for taking the questions. And our next question will come from Stephen Laws with Raymond James. Again, Stephen Laws, your line is open. Please go ahead with your questions. Again, Stephen Laws, your line is open. Please proceed with your questions.
spk06: And once again, if you would like to signal with questions, please press star one on your touchtone telephone. Again, star one if you would like to signal with questions. And our next question will come from Matthew Howlett with B. Reilly.
spk07: Thanks. Good morning, everybody. Sort of a two-part question. First on, you know, look for dividend coverage with core distributable EPS. Do you think you still can achieve that? You know, on that part, I mean, you look at the, you know, the financing alternatives that you outlined, the three sort of buckets. What can we sort of, we look at what kind of incremental portfolio growth do you think you could achieve if you're successful? ROEs, you know, those things.
spk01: Sure.
spk05: On the latter, you know, it certainly is a question of leverage, right? And so the first thing is, are transactions going to get done? And then what is the leverage point? I think the leverage point will be perhaps a bit lower than, you know, what we've seen in the past. We mentioned how BBBs have been really pressured. It's hard to say whether that's a, you know, I wouldn't think that's a long-term, you know, permanent financing change in the market. But right now I would expect, you know, leverage to be not in the low 80s, but probably somewhere in the 70s if you were to get a transaction done. But that would, you know, that could still, you know, if we levered, call it 100 million of capital, you know, you're still, that's, you know, four, call it four to 450 of assets at the lower end. I think the returns on those, you know, again, there's a reason why we've waited. We think that you know, using or having unlevered loans and waiting for some stability in the capital markets has made more sense. So we would still look to see for, look to execute a transaction with kind of a double digit, a double digit gross return. And, you know, in terms of which of those, all of those options, including the, you know, we do have, you know, reasonable confidence that the CLO market returns at some point in the future. The question is, is that in Q1, Q2, Q3? You know, we think it's an attractive financing source that's generally had good support from the investor base. I think it's – I don't think it's being treated – I don't think CLOs are being treated in a different way than, you know, other securitized products. I think it's just a general slowdown in – in the overall capital markets activity.
spk07: I hear you correctly. If you leverage $100 million into something like a 10% gross, are you implying that the earnings accretion could be something like $0.04 or $0.05 a quarter from a successful transaction?
spk01: Let me just think about the four or five cents.
spk05: I think the way to look at it is we can lever that $100 million. If you do the math, we think, yes, we can get a high single or double-digit return on that $100 million versus an unlevered return of call it 8%, and if we can get double-digit, you know, you can run the map and say, okay, that's what the impact is to the shareholders. I want to put out specific guidance on EPS because obviously that's dependent on us being able to execute a transaction, which, you know, while we believe we'll be able to execute a transaction, the timing of which is a bit unknown at this point. But I think it's $100 million to leverage to $300 to $400 million at a double-digit yield versus unlevered loans at, you know, so for plus 350 to 450.
spk07: Gotcha. No, we can do the math, and that's compelling. That's why sort of my, you know, it goes to my next question. I mean, in terms of, you know, dividend coverage, I mean, you get that with the sensitivities you pointed out, you could pick up, you know, 4 cents or 8 cents. you know, on the interest and then, you know, with the capital employment? I mean, it seems like there's, you know, there's minus types of dividend coverage. Are we thinking about the wrong way?
spk05: No, I think, look, I think that we're certainly looking and continuing to look at, you know, the earnings quality and earnings growth. I think if you look at SOFR, that's had a, you know, set aside the impact on the asset at the asset level from an earnings level, that's had a meaningful and will continue to have a meaningful impact On our bottom line and our in our ability to to cover our dividend as we move forward so that's a you know again cleansing out any impact that it has on the overall economic environment assuming that You know things remain reasonably stable and in multifamily that that higher sulfur is it is a you know positive to the earnings and in our ability to you know cover our dividend from a core standpoint and if we can if we can execute a capital markets transaction that adds a little bit more i think that's even better obviously just last one for me senior housing i mean just in terms of you know senior housing versus multi-family you still feel that that asset class is as solid as you know what you see the multi-family you've done in multi-family thank you for taking my questions yeah sure i mean senior housing again we have you know we're we're one of the largest senior housing lenders in the in the country um at the manager level. What we've seen is high quality assets on the senior side. They're looking to truly transition to permanent financing typically or often in the FHA space. And they have kind of long lead times and a little bit of a longer story, but strong sponsors acquiring assets and building their portfolios and you know, attractive leverage points and, frankly, good spreads. I mean, we just see the opportunity there, you know, being pretty solid. Obviously, we love multifamily, but the market in terms of bridge lending and, you know, growing rents and, you know, the rehab nature of our kind of existing portfolio in the last couple of years is changing. It's not gone away. It's just in the midst of a change. And there are fewer attractive investments from our standpoint than there were a year ago. And that's just, you know, a fact. And so as we've identified new assets, it's not that we're not looking at multifamily. We certainly are. But I think that we've, from our standpoint, we've seen more attractive investments on the seniors housing side than we've seen over the past couple of years. And we think that, you know, that provides a benefit to the LFT shareholders.
spk01: Thank you.
spk06: And at this time, there are no further questions. I'll turn the conference back over to you.
spk05: Okay, great. Thank you, everyone, for joining. We look forward to speaking to you next quarter. And hopefully we'll have, you know, some stability in the market. So we'll talk then. Thanks all.
spk06: Thank you. And that does conclude today's conference. We do thank you for your participation. Have an excellent day.
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