Rogers Sugar Inc.

Good day, ladies and gentlemen. Welcome to Timber Creek Financial's third quarter earnings call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session for analysts. Analysts are asked to raise their hand to register for a question. As a reminder, today's call is being recorded. I would now like to turn the meeting over to Blair Tamblyn. Please go ahead.

Thank you, Operator. Good afternoon, everyone. Thanks for joining us to discuss the third quarter financial results. I'm joined, as usual, by Scott Rowland, CIO, Tracy Johnson, CFO, and Jeff McTate, Head of Canadian Originations and Global Syndications. Our Q3 results were highlighted by stable cash flows and dividends in spite of reduced transaction volume due to volatility in the commercial real estate markets. However, the latter part of Q3 and the first part of Q4 have seen stabilization in the commercial real estate environment generally. with a number of sectors showing signs of price stability and improvement. We're very pleased to report that in spite of overall market activity remaining muted, we have been increasing the overall portfolio of loan investments in each of the first three quarters of 2024. We remain optimistic that additional rate cuts will strengthen market conditions and drive increased financing opportunities, which our business supports. Looking forward, our expectation is that commercial real estate transaction volumes will continue to revert towards historical trends in 2025. With this backdrop, we reported solid financial results in Q3. Net investment income was $25.4 million. Q3 net income was $14.1 million. And we generated a distributable income of $0.18 per share and a payout ratio of 95%. At $8.42 per share, our current book value is well above the weighted average trading price in Q3. At the same time, our team is effectively managing the remaining exposure to stage loans. The improved environment will add a tailwind as we work to resolve these situations and redeploy this capital. Lastly, I will highlight that we continue to deliver on our core objective of generating attractive risk-adjusted yield. As rates decrease further, we expect to see a widening spread between our dividend yield and other fixed income alternatives, such as GICs, magnifying the appeal of TF relative to these options. Of note, the spread between the TF dividend and the tiered GOC yield, the benchmark we have historically used, is now approximately 5.3%. I'll ask Scott to take over for the portfolio review. Scott?

Thanks, Larry. Good afternoon. I'll comment on the portfolio metrics and the progress with Stage 2 and Stage 3 loans, and I'll ask Jeff to comment on the Originations activity and lending environments. Looking at the portfolio KPIs, most were stable relative to recent periods and consistent with historical averages. At quarter end, 83.2% of our investments were in cash flowing properties. Multi-residential real estate assets, apartment buildings, continue to comprise the largest portion of the portfolio at roughly 60%. I will note this is up from 52% in Q2 as new advances in Q3 were all in multi-residential real estate assets. The portfolio remains conservatively invested. First, mortgages represented 87.1% of the portfolio. As expected, we have seen this percentage trend upward towards 90%. Our weighted average LTV for Q3 is up slightly from Q2 to 63.8%. As the market stabilizes, we anticipate value growth. We expect LTVs on new originations to increase back to historical levels, which will bring this average higher in the coming quarters. The portfolio's weighted average interest rate, or WARE, was 9.3%, down from 9.8% in Q2 and 9.9% in Q3 last year. The decrease is reflective of higher interest rate loans have been repaying in this period, as well as the Bank of Canada's 75% policy rate decrease from June through to September of this year. Lastly, filling rate loans represented 86% of the portfolio at quarter end, the vast majority of which have rate floors. Half of these mortgages are now at their interest rate floors. In terms of the asset allocation by region, there were no other major shifts to highlight, with approximately 94% of the capital invested in Ontario, BC, Quebec, and Alberta, and focused on urban markets. From an asset management perspective, we continue to pursue resolution of our Stage 2 and Stage 3 loans. There's more detailed disclosure in our MD&A, so I will comment on the main developments in the period. There were no new stage loans added since Q2. However, there were movements within the stages. In Stage 2, the previously reported Calgary and Vancouver loans are stable, with no real material updates to discuss at this time. In terms of key developments on other assets, we have roughly $43 million of exposure on two loans related to industrial development sites in the GTA. As we disclosed in Q2, there was a dispute between the borrower and their general contractor due to cost overruns on a development that was unrelated to the Timber Creek loans. The issue has since been settled, and a new GC will be brought in to commence construction of an industrial building on our primary site. We expect to be repaid in full on both loans post the sale of the completed project. On this exposure, the first loan remains in Stage 2 as interest will be brought current by construction advances, while our second loan is moving to Stage 3 as interest will accrue and not be brought current until sales proceeds become available. During the quarter, we also had some smaller loans advance from Stage 2 to Stage 3. These include a $12 million loan on a residential development site in downtown Toronto. As we discussed in Q2, this is a very well-located site that the borrower has listed for sale. We signed a forbearance agreement with the borrower to allow the existing sales process to proceed as we believe it is the most efficient path to repayment. We are confident in the value of the underlying collateral and expect to see the asset under contract to sell by the end of Q4. We also moved the small $3 million loan to Stage 3. In this case, the borrower is working toward a purchase offer in the near term, which is also expected to close in Q4. Finally, I will highlight that $4.2 million of remaining exposure on condo inventory in Edmonton was transferred from Stage 3 to real estate inventory. This project is now nearly resolved, with full recovery of our remaining capital expected through sales of the final 13 units. As a final update, our retirement facility in Montreal that is in real estate held for sale is currently in active discussions to be sold. We are negotiating a PSA that would see full recovery of our exposure potentially before year end. We are fairly confident of this moving forward, but we do not have a firm deal at this time. In summary, we continue to make good headway on these loans and remain confident that they will be resolved in due course. We look forward to redeploying this capital into new loans in our core asset types, such as multi-residential and industrial, where we see positive long-term market drivers. On that note, I'll ask Jeff to comment on the transaction activity in the portfolio. Jeff.

Thanks, Scott. While there have been some macro headwinds, as Blair previously mentioned, it's been a decent year to date for new investments given the circumstances. and we've been successful in building back the portfolio following several quarters of high repayments. In Q3, we advanced nearly $106 million in new mortgage investments and advances on existing mortgages, including six new loans, which were largely centered around low LTV multifamily investments. Total mortgage portfolio repayments in the quarter were $82.7 million, resulting in a turnover ratio of 8.4%. The net result is we grew the portfolio by about 14 million over Q2. Significantly, year-to-date, the portfolio has grown by more than 70 million. We believe the commercial real estate market likely reaches its bottom in Q4 2023 or Q1 2024. And we see a steady improvement in market conditions as we look forward. The Bank of Canada has lowered rates by 125 basis points this year. including a 50-bit reduction on October 23rd, and the trajectory for future rate cuts is clear. We are seeing this translate to increased confidence amongst buyers, a rise in activity across the market, and an expanding deal pipeline for Timber Creek. In short, we are poised for an improved Q4 2024 and next year of 2025. To better illustrate the types of opportunities we're seeing, we've highlighted a recent industrial transaction. This is a $23 million first mortgage commitment on a portfolio of four small bay industrial buildings located across Mississauga, Vaughan, and Oakville. In conjunction with the borrower's own significant cash equity upfront, our capital was required to facilitate the acquisition of the portfolio and execute on the renovation leasing strategy to optimize portfolio income and value. Overall, the subject is reflective of our typical industrial loan profile characterized by strong property fundamentals and attractive LTV with significant forward cash equity. In addition, borrowers are repeat client and an experienced operator who has successfully executed on other similar strategies in these same markets. Relative to other lenders, we win transactions like this because of our ability to execute on committed terms and timelines and the ability to provide working capital and flexibility to enable their strategic execution. I will now pass the call over to Tracy to review the financial highlights. Tracy?

Thanks, Jeff, and good afternoon, everyone. I'll start with the income statement highlights. Similar to Q2, the year-over-year income comparisons were impacted by lower average portfolio balances from the higher repayments we experienced at the end of 2023 and early this year. For context, the average net mortgage investment portfolio balance this quarter was $983 million, about 11% lower than $1.1 billion in Q3 of last year. We have also seen the weighted average interest rate contract as loans with higher rates have paid off in addition to the Bank of Canada interest rate cuts. Q3 net investment income on financial assets measured at amortized cost was $25.4 million, down from $30.3 million in the prior year. Q3 net income was $14.1 million compared to $16.5 million in Q3 of last year. And Q3 basic and diluted earning per share was $0.17 versus $0.20 and $0.19, respectively, in the prior year. While the lower portfolio balance impacted top-line income, interest expense on the credit facility also declined due to lower credit utilization, protecting our net income margins. Interest expense in the quarter was $5.7 million versus $7.3 million in the same period last year, a 22% decrease. We reported quarterly distributable income of $15 million or $0.18 per share versus $16.8 million and $0.20 per share in last year's Q3. The Q3 payout ratio on DI was 95%. On a year-to-date basis, the payout ratio is 91%. And we declared regular dividends of 14.3 million, or 17 cents per share, representing 102% payout ratio on earnings per share and 98.1% on a year-to-date basis. As we think about the outlook for DI, I would highlight that we would expect lender fee income to increase as we experience an uptick in transaction activity over the upcoming quarters. Looking quickly at the balance sheet. The value of the net mortgage portfolio excluding syndications was just under $1.02 billion at the end of the quarter, an increase of about $72 million from the end of 2023. At quarter end, we had roughly $97 million of net real estate, including real estate held for sale, now the collateral liability of $62 million, which is three senior living facilities acquired in August 2023 that Scott spoke about earlier. The balance of the credit facility for mortgage investments was $324 million at the end of Q3, up from $306 million at the end of Q2. We continue to have capacity to deploy new capital as activity in the commercial real estate market accelerates. I will now turn the call back to Scott for closing comments.

Thanks, Tracy. The past several quarters have played out largely as we expected, and the stage is now set for further recovery in real estate fundamentals and increased transaction activity. We were able to deploy a meaningful amount of capital in new investments during the first three quarters of 2024, and as you heard from us today, the market conditions support further growth in Q4 and 2025 as buyer confidence returns. It's worth highlighting what this changing landscape means for Timber Creek's portfolio in the coming quarters. The weighted average interest rate is expected to continue declining since most loans in the portfolio are floating rate. However, this decline will occur more gradually than the pace of rate cuts due to interest rate floor structures on many loans. From a distributable income perspective, this reduction will also be mitigated by lower interest expense costs on our leverage, which is also primarily floating rate. While wear will decline, we anticipate increased income as a result of several other factors. One, heightened transaction activity will lead to stronger fee income. Two, a return to a higher portfolio balance generates more overall income, and three, improved loan margins as we return to a more typical and higher loan-to-value environment with confidence of asset value growth in a strengthening market. Overall, this for us marks a return to normalcy, and our team is confident in the portfolio's growth for 2025. These improved market conditions will also accelerate the resolution of the remaining staged loans, and we look forward to recycling that capital into compelling investments that our pipeline is generating. That completes our prepared remarks. With that, we will open the call to questions.

We will now take any analyst questions. If you have a question, please click the raise hand button on the bottom right screen below. The first question will come from Stephen Boland. Stephen, your line is now open. Please go ahead.

Oh, wow. First in line. I hope you can hear me okay. Yeah. Okay, Stephen, thanks. Great. Just in terms of the growth and talking about getting back to historic levels, I mean, is this coming in direct to you? Is it coming through intermediaries like brokers, developers? Where are you seeing the most interest in terms of getting borrowers back in?

Yeah, listen, that's a great question. And, you know, it's one of these things that can evolve and change year to year. I mean, I'd say we have strong relationships, certainly both on a direct and a brokered basis. And, you know, the market in Canada, I'd say, has become increasingly brokered over the last handful of years. Again, with new brokers coming to the market, that brokerage reality becomes more competitive. There are more guys out there representing direct borrowers' interest and trying to get the best financing structures available. That said, irrespective of whether it's a broker deal or not, you know, the focus that we have internally on the direct relationship side is critical even where and when it's brokered. And I can give you an example of a deal that we're looking at right now, a broker deal. We had a relationship with the board directly. We got to see the deal ahead of the brokered process. You know, the broker still ran the process. The broker still gets paid if we do the deal. But that direct relationship is bringing that deal to us and, again, a very competitively bid reality. So, you know, I'd say it's increasingly broker. It's probably 50-50 in terms of the flow that we see. But even when it is brokered, it's that direct relationship that we focus on trying to build. to ensure we get that last look or, you know, in the room for discussion to make sure that if there's a deal that we like that we want to do, we have the opportunity to do so.

I'm going to go to a couple of stage two and stage three loans, like the 55.9 and the 117. Obviously, you talked about that the properties are well collateralized and the lower LTVs. Could I just get an idea of, You know, counterparty risk in these situations, I mean, they're both pretty material. You know, can you talk a little bit about the counterparties in terms of are they developers, are they operators? Maybe you've given this detail out before. It's not my notes. I apologize if you have.

No, it's good. You may have given some details before, but in general, right, so some of those larger exposures are well-known exposures. um large developers and operators um sort of it depends on the project steve specifically um but deep experience um institutional quality um in general um i mean those are our general counterparties i mean jeff i don't know if you want to add i mean we're not from that perspective like these are these are large projects right so these aren't um It's not like it's somebody's single asset. We have confidence in our borrower's capabilities. The market has been tough on a lot of these real estate owners over the last couple of years, right, as interest rates hit highs and really sort of tapped into balance sheets. But I'll say from our perspective, and I'm thinking through these exposures primarily, I think, in the stage two loans that you're referring to, I look at that as after 24 months call out of headwinds here, right, with the high rates, there's been a lot more confidence coming back into the market on both the leasing front within their assets, as well as their balance sheets and just capabilities to handle debt service. And then finally, on the transaction side, as we've had, you know, one and a quarter points now of successive recumulative cuts, you start hearing more buyers coming to the market. We're hearing more sort of cap rates tightening, which is obviously very positive for values. So for us, we think, let's use a baseball analogy, which seems fitting given last night. I think we're probably in the sort of seventh inning on our staging loans. And we're looking forward to sort of the fall and certainly into the spring market of 2025. where we think buyers and sellers are matched and values, you start going to see acceleration to values, which is nothing but positive for our counterparties.

Yeah. And the only other comment I would add, just as it relates to the context of the sponsor, again, experienced operators, there's not counterparty risk from an operational perspective in our view. And the reality is, is where and when we're working with borrowers on resolving, you know, these stage type situations, In all cases, these counterparties are contributing economically to that solution. Otherwise, again, that's a different discussion for us. And fundamentally, the boards we're working with are both operationally strong, but have the capital strength to commit further capital to these projects to, you know, seek collective resolution. Yeah.

And the last one for me, in your disclosure, you mentioned that the higher yielding loans are being paid off. And I presume that obviously comes into your yield expectation going forward. How far along in that process is it? I mean, your portfolio turns over pretty quick. It's happened for a couple quarters. Should we expect this for the next two quarters, three, four quarters? You see this prepayment activity from the high-yielding loans.

It's a really good question. We saw a lot, obviously, I'm thinking back to Q4 of 2023 and Q1 especially. That was really the turning point where rates were high and the bond market had moved down quickly to sort of allow some refinancings. But we've seen that repayment activity slow down now, Stephen. And as we look into Q4, I can say we're forecasting a fairly normal period for repayments. And I think we're through the majority of that situation. And things will start to level off now. It would be our expectation.

But it was certainly meaningful earlier in the year. Yeah. All right, thanks, everyone. Yeah, thank you.

Next question comes from Jamie. Jamie, please go ahead.

Yeah, can you hear me okay?

Yeah, we can.

Good. So just kind of following on that last question just around the Q4 specifically, look, obviously, you know, I hear your comments around the pipeline and some tailwinds around transaction activity. What's your visibility on the repayment activity? Like Q4 typically brings a seasonally higher level of repayments. So is the visibility on Q4 right now that you will at a higher level than season one.

Yeah, so I totally agree with you. Q4 is historically the highest quarter for repayments, right, on an annual basis. So I would expect Q4 to still have that as a realization. I'll say this, Jamie, it's actually lower right now than typical. So I'm kind of waiting to see what's going to happen here in the next few weeks because Q4 is Q4. But as of right now, I'll say our repayments are a little shallower than historical averages, and our funding rates are actually quite positive. Again, there's a lot of room here still in Q4, but that's sort of the projection.

Yeah, I understand. There's still two months to go here. A question on the weighted average interest rate, and I chatted a little bit already with Tracy on this, but just curious, where is the floor today on weighted average or floating rate loans, I should say? And then when it comes time to originate a new loan, Like, how does the floor on those new loans compare to the floor on, you know, floating rate loans you would have been writing a year ago or, let's say, in the higher interest rate environment?

Yeah.

Yep. I'll take the first part of that question. So right now, about 77% of the portfolio have floors. 50% of that are actually at their floors right now. And then the weighted average of all loans that have floors is about 8.23%. So a little bit to go there, obviously, but 50% are currently sitting at their floors. I'll turn it over to Scott for the second part.

Sure. And how the floors work, that's a bespoke negotiated item on New Heels. So for all of our loans are generally speaking, right, they're prime plus a margin to get to the loan coupon. So if we're in an environment, you know, borrowers will come to us. We negotiate new deals, our originations team. We might do basically the coupon, which is, you know, prime. We call that prime flat. That's the floor. We often negotiate some discounts of that. Is it prime minus a quarter, prime minus 50? minus 75, there's a little bit of a room of negotiation with clients. And that often depends on where we are just in the interest rate cycle. You know, if a borrower sees there's a 50 BIP rate reduction being called in six weeks, we obviously take a lot of pressure to negotiate that into that floor. So it's sort of an actively negotiated clause on every loan in new business. But on every loan, we attempt to get a floor.

Yeah, I mean, the only other comment I would add, right, it is somewhat dictated by the market and the willingness to compete. It somewhat drives the credit spread that you're going to charge as well, right? So you may charge an incremental credit spread if you're going to provide some floor relief. And certainly with 125 bits of reduction, our openness and willingness to accommodate you know, meaningful floor relief on our loans today is much less than it would have been 125 basis points ago. So, again, it is to Scott's point bespoke, but it can, you know, it is negotiated now in every deal and in a falling rate environment. You know, borrowers want to know what their optionality is. And frankly, there's fixed rate alternatives everywhere. out there that come into play as we think about what we want to do, um, and how we want to compete. But I think it is, um, you know, at this point in time, it plays in my mind also into the spread. We can charge incremental spread to, to, to offset in some cases. And, uh, uh, but yeah, bespoke by ideal.

Yeah. Understood. And, uh, as we're, as we're kind of moving to a more, let's say normal market, as you describe it, um, the ltv curve from what has been yeah maybe 70 percent like is that another to be able to to take like a 50 times like what's the what's the typical of course not it's obviously case by case but yeah i'll say there's two elements to that so one is it's just as you described which i think it describes in the in the my comments is yeah when ltv goes up or you take a little more risk because

I understand over the last couple of years, we've been very risk-off, right? As we saw sort of interest rates go up and a little more uncertainty in the market, we certainly pulled back on our risk profile. So as you look to increase risk profile, you're totally right. It's in that sort of 25 basis points to 50 basis points range. We're still lending consistently, and we're not talking extreme differences in risk. We're talking, yeah, if we lend another 5% LTV, we might pick up an extra quarter point, 50 basis points. The other reality for margin, you know, expansion and compression, as the total coupon was going up, eventually there's almost like there's only so much income and debt service that a property can hold. You start to see margin compression in those higher interest rate environments. As the prime gets lower and lower, we sort of have more of a floor rate, Jamie. And so you sit there and that starts to expand that margin and what the property can bear, right? So as we get, we saw this sort of, I go back to 2019 or 2020 when, you know, prime was super low. We would have had a much larger, you know, margin above, above prime, right? So there's kind of a, It's almost like a bit of a fixed component to pricing. So as we come down the curve here, we will be able to increase our risk a little bit as we get more confidence and value growth. That's a margin expansion and just the overall coupon stays relatively high.

And I would say to this point in the market, you haven't necessarily seen that sort of market spread increase tied to these falling rates, to your point. But I think with this last cut and potentially another one to come, I think you're going to start seeing, and we're certainly expecting to see, the ability to drive some incremental margin above prime. And again, ideally, yes, holding floors aligned with those sufficient coupons that align with the credit profile of the deal.

And that's kind of a market experience for us, sort of transitional bridge lenders. It's sort of a baseline level of a coupon that we expect to receive.

Yeah. Okay, that's good. And on that, or just still in this conversation of yields, you talked about lender fees potentially increasing. And I just wanted to clarify, are you talking about lender fees increasing just on an absolute dollar basis because of the volumes, or are you talking about being able to take a higher rate than... than perhaps what we've seen in recent quarters. Like, is this something we can go back to maybe, like, beyond, like, 1.5%? Like, we've seen some quarters where it's in the twos, but we haven't seen that for a while.

Yeah, no, I think I would view it more as a fee percentage stays somewhat consistent and is more driven off of volume. So as there's more transactions in the market, we'll see more churn in the book, more activity. So I just think it's basically – I think our overall – Portfolio growth grows a little bit, but there's more churn underlying that as well as activity returns to the market.

Okay. Great. That's it for me. Thank you. Thanks.

Thank you. The next question comes from Graham. Graham, your line is open. Please go ahead.

Graham? You'll just need to unmute yourself. Graham? Okay.

Okay, Graham, I don't think we can hear you at this time, so just opening up the floor to any other questions. As a reminder, you can just click raise hand and we can open your line.

You know, maybe while we're waiting for a minute, I'll give just one further update while I'm thinking about it, and maybe I'm trying to anticipate Graham's question. One thing I'd just like to talk about briefly is just the inventory, the land inventory and the inventory held for sale. which is about $97 million. And just wanted to give everyone sort of an update on that. There's sort of three projects in that that we're feeling very good about. With the retirement in Montreal, which is the majority of that position, we think we can be off of that. Ideally, we're going to be under contract to sell that asset in the next few weeks. We have an LOI. We're negotiating terms, and we feel quite good about that. There's another sort of larger... land in Ontario, a development land in Ontario that we have received full entitlement for, and it is part of the settlement boundary in the town that it's in. So we're looking to be able to put that up for sale in early 2025. And then we commented as well that remaining sort of condo inventory in Edmonton, we're down to just a few units now and feel very good about our ability just to continue to see that sell to completion. So we're on track, I think, for resolving the sale of the entirety of our inventory positions in 2025 and feel pretty good about that. Did Graham get an opportunity to come back?

I think I'm here. Can you hear me?

Nice, yes. I stalled effectively.

Great.

Graham, nice to hear from you.

Yeah, nice to be unmuted. I think it was probably my fault. I apologize. You're just over a billion in size now for your portfolio. I think you previously peaked around or recently peaked around 1.2 to 1.3 back in 2022. So is that a reasonable target for you to try to get the portfolio back towards? Do you have the debt capacity to do so? And if so, how long would you anticipate it would take to get back to that size?

That is the objective. I think a combination of the market coming back and us having more of a normalized investment appetite, I think that is our objective, Graham, is to get back to that size. If I had to think of timing, it's probably 12 to 18 months to get back to that size. I think we're going to see some meaningful upward movement in 2025.

Okay. Yeah, that's reasonable. It looks like your allowance for credit loss overall came down a little bit quarter to quarter. Is that due to that condo inventory that you moved from your mortgage portfolio into, I guess, what you call investment properties?

Yeah. So, yeah, it was the condo that was moved to inventory. So it largely just moved out of where it was in stage three historically.

Okay, understood. And then my last one would just be the provision for credit losses, $250,000 in the quarter. Any puts and takes there that you would call out? Because there did seem to be some movement of loans from stage two to stage three. How much provisioning did that drive?

No, it's more just mathematically in the model, and we've covered – you know, we've talked about this a little bit before. You're forced to take both the principal – plus a forward-looking interest component. So as you kind of continue to have these stages in there, you're adding on this compounding of interest. So that's really just what it is, but no change in terms of underlying valuations or anything thereon.

Okay, so the movement higher in Stage 3 in the quarter didn't really drive much on the provisioning side?

Correct. Yeah, value literally is moving from one column to another, but the math, whether it's in stage two or stage three in the model is the same.

Okay. That's it for me. Thank you. Thank you.

And it looks like we have another question from Stephen. Stephen, your line is open. Please go ahead.

Just one more. When you talk about optimism in the market, probably after several years, that tends to drive in or bring in more competition. I know you're pretty insulated because of your relationships, but have you started to see a little bit more interest or even other lenders going after some of your brokers that you deal with? Is there a threat of more competition coming into the market here in your segment?

I mean, I'll let Jeff answer in a second, too, but I'll take a first crack at it. I mean, it is Canada, so the lending universe does tend to be a little tighter. And I would say it's sort of the usual drummers. The interesting thing is, as the market, you know, got a little softer on transaction activity, it's almost tougher, right? Like, there's still the amount of capital chasing a smaller subset of deals. So... there will be new competition i'm sure and you know the banks will sharpen their pencils and and you know everyone wants to be aggressive but i i'm actually just in general more optimistic and more looking forward to a a broader um transactional environment i think there's just um that much more opportunity and and we feel good about you know our position in the market and to your point our relationships that i think will win our fair share And just that larger opportunity is actually more excited about that than I think I am about the fear of new entrants. But Jeff, do you want to add anything to that?

Yeah, I mean, I don't have much to add. I think those are fair points. Like, you know, to Scott's point where it's been largely renewal opportunities and a slower transaction reality. The domestic lenders have been here. They're still here. They, you know, they have allocations they want to deploy. It hasn't been a competitive reality over these past few years. And, you know, so a return to a normalized transaction environment, I think, will increase opportunities. Again, you know, you see entrants leave the market. It's normally more like foreign lenders, banks, like companies and other such groups, like you know, German LIFCOs or U.S. LIFCOs in particular, again, not direct competitors in our space, I would say, right? They tend to be more in the institutional large loan space. Canada is a big geography. It's not a huge market. You know, you aren't going to get the big, you know, private equity money chasing the types of opportunities that we're looking for outside of the players that are already here. And sure, there may be a new player that crops up here and there at some future point, but we think the increased transaction opportunity will more than offset that. And again, similar competitive reality to what we're already facing.

Hey Steve, it's Blair. I'll just add a quick point there. I've been quiet. I'm not in the office. I don't know what my connections are like, but it's, you know, this more normalized environment that Scott and Jeff are both speaking to is really where, you know, we excel, right? We're, you know, speed of execution and the ability to understand the transaction, the underlying real estate, um, and help out sponsors. I mean, that's what we're great at. So banks are great for lots of things, but they're not great at that, nor do they really even try to do that. So they're happy with getting exposure to what we do through providing us with a meaningful credit facility. So we very much embrace the improvement and the fundamentals.

That's great. Thank you.

If there are no other questions, I'll now turn the meeting back to Blair for closing remarks.

Great. Thanks, Operator. Yeah, so thanks again, everyone, as usual, for taking some time to hear the update. And we'll look forward to connecting in another quarter. If anything comes up in the interim, you know where to find us. Have a good afternoon.