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KKR Real Estate Finance Trust (KREF)

Participants
Michael Shapiro Investor Relations
Chris Lee Co-Chief Executive Officer
Matt Salem Co-Chief Executive Officer
Patrick Mattson Chief Operating Officer
Mostafa Nagaty Chief Financial Officer
Jade Rahmani KBW
Don Fandetti Wells Fargo
Charlie Arestia JP Morgan
Arren Cyganovich Citi
Call transcript
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Operator

Good morning, and welcome to the KKR Real Estate Finance Trust Inc. Fourth Quarter and Full Year 2019 Financial Results Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Michael Shapiro. ahead. go Please

Michael Shapiro

to call Welcome Real Finance Estate Thank the the fourth earnings for quarter Trust you. KKR XXXX.

our COO, As usual Lee Mattson; would of our measures Chris remind of call, refer our everyone our portion by Nagaty. that and like Patrick we to which financial I and am and joined the website. which Matt today release CFO, I Mostafa to will co-CEOs, Investor earnings available our supplementary reconciled the to non-GAAP certain both are on this presentation, are on in GAAP figures Relations Salem;

contain This cautionary call for our will do forward-looking also refer recently or most certain factors events related guarantee performance. to Please not future to XX-K which these filed statements, statements.

Chris, our recap Before provide I'll I turn results. a of the to over brief call

XXXX, million For core Net per was income GAAP our per $X.XX the diluted diluted net full $X.XX or or share. was year share. $XX.X million earnings $XX.X

diluted or as per core and quarter XX, or income $X.XX value per diluted net fourth XXXX, $XX.XX. was XXXX was December million earnings share per $X.XX GAAP the book For our $XX.X $XX.X share. of share was million Net

price $XX.XX, fourth yield $X.XX In respect February the with dividend the quarter. X%. on of the of closing January, Based of per XX dividend to reflects on annualized we a paid share an

I with over call that, would Chris. And now like the to to turn

Chris Lee

to we thank $X.X by And of another growth. for and while us execution billion senior grew XXXX, joining Good to strategy, XX our earnings for demonstrated Michael. record XXXX for rate year new XX% strong record was floating continuing across you our call. business loans. originations year-over-year from quarter you, XXXX morning. company. In a Thank our deliver successful fourth We

million. on experience by $XXX on execute strategy by to to our the in transitional larger most continue XX% increasing average to sponsors liquid size markets lending loan assets of We our

our XXXX a nearly We $X.X from two the grew of increase times billion, portfolio end of to XX% XXXX. at end and our portfolio the and a

our continue capacity of and $X.X Finally, to improve increasing billion total funding the our liabilities, as we cost by billion significantly to yearend. structure of $X.X

quickly Before market the each. I touch our let on progress the XXXX and have we made review backdrop, initiatives on me

investment to a preservation. capital was competitive since have continue parameters lending we initiative on investment with risk our went to been secure conservative we first the had strategy return environment, focused public. Our have Despite opportunities consistent we first same attractive able

and base Our awareness and expansion certainty record creativity, demonstrates client through originations pace our of flexibility brand our of execution.

Since Estate our losses integration loan and We are with platform seeing with loans Real KKR over impairments. or KKR with billion more have full benefits originated delinquencies, of the no the $X.X broadly. inception, of we

agreement. increasing were ways increase discussed included our the of our desire attractively lending leveraging capacity we capital non-mark-to-market and further markets from XXXX. out our XX% KKR financing full to our that secured non-mark-to-market the enhance seek our in to a XX% to able percentage we while to capital By lowering cost while non-mark-to-market priced sheet, of business, Second, including sources. outstanding financing platform, increasing balance creative firm's This million our $XXX is overall term financing the

our provide to we sources, especially revolver of as the have deliver funding have sources lowered our corporate non-mark-to-market our as cost-effective our to risk million of addition, diversifying we borrowing being $XXX In to By borrowers. solutions year-end. increased $XXX capacity profile financing, today. the financing to while subsequently increased And of liabilities it those able on that million

the improving our on shares focused prudently company the and we liquidity of growing and Lastly, accretively.

primary maintain and of the liquidity Despite for earnings full our the and raising desire our shares were given without to stabilize an in company's While our S&P demand program we will pace entered grow able XXXX. in earlier repayments institutional through the into we any XXX. ATM year, deployment, further We shares. our to the to improve inclusion that recent were drive believe capital this, the to we the of addition able

X.X% ways the are as on accessible since focus goal historic been backdrop credit BBB, data our improve single-B to company X.X% indices continue or and lows broadest BB shareholders. X.X%, volume, at being remains for collected. yielding the with our to of trading to of are array will yields business. absolute favorable Corporate the respectively. We approximately Macroeconomic has and the near

is to This which with to asset yield and capital includes inflation, driving yield estate. classes thirst indexed real for

trends constructive and those We have individual real seen to is increased values. allocations estate and which estate institutional investors for from expect continue, real to

growth, In the profits in addition, technology in corporate are demand track by we with fundamentals for strong driven and job urbanization robust spending steady types the investment markets accelerating most trends, sector. attractive, healthy property

competition of of most concentrated we markets are the where is in on These markets lending economic the of Many economic leverage. benefits time. the current spend expansion of driving the this terms capital flows are where XX the top in our not competition also majority

risk very look to However, at are adjusted believe yield, we when we other proxies. our yield relative attractive returns we net delivering

As top advantage. asset robust a our markets a create and take public of capital global differentiated to access company we and capital can advantage pricing the an affiliate manager, to of a

capital liquid sponsors, defensive see preservation. in You'll while on in us focus maintaining continue to our and focus asset classes, markets top-tier on with investing

We brand, XXXX. and positioning, in about our opportunities continued team the investment growth are KREF competitive excited for

that, With Matt. turn to the I'll over call

Matt Salem

detail our good and start by morning I'll providing everyone. activity. on Chris, more investment Thanks

of average LTV XXXX, IRR And respectively. generate approximately of originated weighted we compared weighted a of and As had levered a to to loans spread billion in $X.X XX.X%. $X.X a basis, The X.X% we're XXXX. on Chris billion and in a mentioned loans XX% originated average XXXX

a origination are volume. of loans properties by office secured multifamily XXXX XX% and approximately While of property these mix the total types, represented

We on markets our top top XX% approximately continued our the liquid in most the and focus XX approximately in of originations with the MSAs XX% XX.

converting our our maintaining existing while relationships XXXX speaks volumes focus were existing also which drive and expand while partner our about originations to reputation repeat on borrowers, borrowers to to repeat of continues being to Approximately ones. reputation to team, new process our XX% responsive our Finally, client borrowers.

XXXX exciting real estate was year our an credit for platform.

we Butler, of investment our grew three promotions people the Managing of our including senior to Julia promotion and professionals, XX team members, to team celebrated Director. dedicated of As one the

on Turning IRR a this basis, the at for providing loans to respectively. of LIBOR minutes the LIBOR. loans average a me spend quarter. weighted X.X% fourth XX% have weighted quarter activity. highlight business The and $XXX let We some details floating order loans originated loans, six totally coupon senior are model, few to approximately on plus spot of LTV And levered conservative In the million. our and a differentiated XX.X% rate average underwritten additional these

fully housing sponsor building campus assets post over comprehensive property or substantially a college. has five more rent loan In October, $XX or was we Penn bank and historically million units repeat loan $XX it a and plans is been modernize made and The improvement billion. but occupied, The with portfolio a been never to operated. the to premium. renovation the drive investment borrower, acquire cap to XXX owned X,XXX a of consisting has The execute plan made a to market which State renovated from institutionally beds a State located than a student street across global

Notably, certainty meet to team, and competence won of our an execution familiarity ability timeline. and deal we this our given expedited borrower's with the

of property to bring the complete take comprehensive to million sponsor and existing by a we California. buildings property below-market made strong intends existing including to vacancy Second, The $XXX in area advantage existing A two in office properties market the or loan. November, repeat a an to re-leasing renovation loan five renewal of to sponsor airport lease-up to the had complex, tenants refinance We standard, Class Irvine, submarket. the secured

restructuring market X.X Finally, XX led December, by global three over XX are The million a grade The XX $XXX group first in grocery-anchored net group rated is another investment acquire to our a lending properties $XX we made in billion square sponsor across feet sponsor leased nearly investment properties an by to grocer. years with states. million triple loan to extending bank combined retail loan totally supported in hyper after additional loan Post year cash an that the three sponsor's a one an approximately of deal initial loans plan closed We sponsorship totaling a an The includes place investment structure million. found tenant leases. period. business cap. strong subset amortized have the by and compelling the $XXX with giving quarter grade we the flow end,

multifamily $XX in property made ground Of a A New note, a unit the York. of facilitate construction XXX million mezzanine Class luxury we Westbury, loan to up

one We have who was repeat market this an proof-of-concept cautious have its has – sponsor to of to a been for rentals. been previous homes X,XXX on been over to sponsor year end construction on The a historically repeat opportunity communities loans, experience our sponsor, lend an while current has showed its intends supply plus built luxury market multifamily on during and history imbalance demand XX that developer the XX loans. across capitalize we

with next the million In few which pipeline months. forward addition, remains within $XXX of expected loans close under are approximately to our exclusivity, strong

are these customary always, closing As subject to conditions.

previewed, repayments the during fourth As increased we had quarter.

of $X.X quarter, repayments or $XXX XX% During received our of XXXX. approximately funded as we year beginning of total to roughly the portfolio the the billion of for approximately million bringing repayments

to loan approximately million Subsequent quarter of company received repayments. the end, $XXX

XXXX expect are is and While for whole period a a slower we repayments predict, traditionally in for a quarter pace we as saw XXXX. would repayments the of similar as first repayments to difficult

these of As our allowing while the terms prior transitional and plans, have amortization year nature initial times OID to wider are generate typically repaid of the sponsors reminder, to higher business accelerate maturity IRRs. a loans us at three given they

senior another of XXX% obligations. multifamily portfolio December are portfolio, our types. loans office loans almost in totaled billion across million performing. invested future approximately to $X.X exclusively Turning comprise and geographically the is XX% loans portfolio of and and with property Notably the is The funding XX, and as our of of both balance diversified $XXX

our a portfolio have in and expectations activity return. our meet of positioned to and volume summary, origination credit, terms In we defensively continues

over Now the I Patrick. call will turn to

Patrick Mattson

morning good and everyone. Matt, you, Thank

X.X the has point X.X totaled line XQ. with rating scale, portfolio of end a billion weighted in $X.X a the quarter end rating five Our of a risk at risk average which at the of on

no risk portfolio was improved. the invested the LIBOR-based the rate of loan XX.X% loans. experienced assets in quarter, During of a one rating, rating deterioration floating in while

rate XX% floor declining benefit a provide a which protections and representing early have average environment. prepayment LIBOR of we principal As are a in originations, previously, Notably, portfolio. LIBOR XXXX on certain business the outstanding weighted approximately discussed both plans income sponsor X.X%, amount stages our of interest had of net and in the floors an

the floor, to us allowing declining Conversely, in benefit of of from liabilities our approximately thus Additionally, financing LIBOR floor a a a at none portfolio environment. half decreased almost least costs X.X%. of has rate have

Turning to our liabilities.

financing, most are non-mark-to-market. from our optimizing to in continue notably sources We make progress that

As of seven options Chris period by which for matching increased features mentioned, approximately $X.X structure, with $XXX a in our pro overall out our we million years time. the a preserves billion initial lending the the included term non-mark-to-market financing term which paydown capacity extension XXXX, underlying an leverage of rata longest asset and new agreement

corporate $XX million to bringing million. Additionally, the size to upsized we end, finally, quarter to by increased we our total revolving capacity And $XXX million. credit additional this revolver $XXX subsequent facility of an

of All to sheet. optimize our continue initiatives these balance

XXXX. XX% As compared non-mark-to-market XX% in in financing of of were XXXX to our year-end, secured and XX%

funding various these of an non-mark-to-market, We for the lending markets to a us term, secure and we a as to non-recourse quality note capital delivering compete highest market better cost credits attractive asset We're attractive will and allows of and financing to company. continue still of the look continue the source at financing. KREF. all matched will for sources options opportunities to evaluate options, The return

structure more and from to our our In and risk liquidity liability on balance addition, perspective sheet. is mark-to-market manage improves the a durable ability

at advance As non-mark-to-market XX% financings, been rates. loans we've to we have finance grown willing our low the

of year-end, times leverage and ratio ratio debt-to-equity or respectively. total and our X.X times X.X As

KREF. and It was strong a another growing quarter for it post with We year pipeline. record originations

creating performing differentiated continue progress make efficient is to financing. Our we significant and portfolio

touch briefly your efforts. open the it call CECL our on to Mostafa over we I’ll for implementation turn Before to questions,

Mostafa Nagaty

losses standard CECL effective the on companies Thanks, current January everyone. us for Patrick and public expected good or credit XXXX. morning X, The and was similar-sized

CECL adoption financial Our XX-K provides statements. of our the one expected impact on day

Two most model model our Let the a conditions. data; of minute loans quick focus our a from default me it were not loans expected approach. subset that in with We trip historical market on did approach evaluated a markets. spend on utilize larger flow a considering economic represents license combined closely that varying weighted probability using measure and cash CECL fit

XX adjustment reserve $X.X share approximately we day day one per loan XX-K, record our book million in expect approximately or disclosed reserve per to a CECL by of unfunded is our points which earnings. of of represents $X.XX January CECL with points debt or million reducing quarter, December attributed value our share, CECL XXXX million $XX.X as basis the $X.XX to billion one as X, commitments. our $XX.X adjust of aggregate of through basis first on balance and billion we principal adjustment outstanding will XX, $X reserve the commitments total XX starting XXXX. loan of the $X.X approximately

again Thank joining now, to questions. for your you today we’re take us and happy

Operator

Instructions] comes [Operator The from question go of KBW. first today Rahmani Jade ahead. Please

Jade Rahmani

an much. discuss incremental set is the dividend seeing and are levered the very you environment? level if you current Thank you whether Can you at returns feel appropriate for

Matt Salem

they levered as one. returns were changed much say, take year. Matt. in it’s I’ll the over The hasn’t would similar environment few the quarters. Jade market that last a today. Thanks call context joining are say for Hey last, I

you put an if they're advance against our think We've lower bit of a IRRS lower. this some loans. rate look quarter, initial advance little I slightly at rate, those

over So as just underwritten an financing we my efficient IRR put perspective, go those on up bit time lower, a sense them. but little they're is could more from

prepayments. we're say that IRRS, underwritten is the through on our would thing seeing out-performance other predominantly I

seeing or dates. So as prepaying, typically a extended we initial X.X an to what to initial loans, but are modeling underwriting years is out in these we're fully transitional lighter years maturity, two typically or the are those we're versus maturity these

higher than underwriting. or higher than in we're Our slightly IRRS are slightly actually coming

repayments dividend of the And we we're the near in covered think, originations the timing that we three where Last a the lot out good of I the in was In lower quarters, a little of course feel set, was over well. we place floors year put as a terms second versus four quarter. in it year that is to about of benefiting due more and last really quarter term. one from the lot obviously bit

really And term so And near the good as good it's said feel I output adjusted where the of generate an we about of in it. I we think in risk can what though, like we think returns. past

Jade Rahmani

give you is on the sales magnitude percentage overall A-note B-notes? of that the portfolio Or been statistic Can of us that the Okay. completed? quantify have maybe

Patrick Mattson

that’s Jade morning Yes Patrick. good it's simple.

the we don't So have any in B-notes portfolio.

senior so we've loan in A-note. that's of the Page XX an is supplement. You'll see The where interest, sold

synonymous every mortgage retained time think I we here. But a a sold mortgage, retained we've mez with of we used reality, A-note the sort not that first in position. term we a B-note, but

of one grow our it's grow to portfolio. the So portion we can the small overall financing think continue that we a strategy as

Jade Rahmani

target for a that? there Is mix

Patrick Mattson

Not a target. set

Jade Rahmani

Okay.

debt-to-equity, four of about times? terms willing to range? the lever total you In is all-in up to Are what

Patrick Mattson

think, three financing times. I depending we've on talked of as our for about source been to it's it, four

at financing, think I a put those clearly facilities we in on as the on four non-mark-to-market we've have more level. definitely It's available times market. gravitated

us, that's for get a little into the a definitely for higher think, bit higher right threes, like us the seems range I this but incrementally possibility. So to

Jade Rahmani

repayments? to loan portfolio you CLOs, other case series investment duration multifamily. the the classes to willing if the allocation this the even strategies, I Just was on add that to asset broadly some you impact noted view your deals could other mitigate Mac wondering acquire considering of mez to turning quarter. whether are help from multifamily, toward and constructive Any securities, CMBS could touch Freddie you

Matt Salem

would some one acquire other now during the CMBS would then But subsequently But it's quarter securities. not thing Jade, considering we we're is I did we're right Hey, and sell open-minded certainly Matt. say seriously to note I any. strategies.

themes, between about and cash new a investment replacement your think Then that interim loan of originations. question the was and more cash replacement was repayments really I that asking less.

it's And – investment so replacement we It's, of didn't it ramped more a we not us. up use and any a it, fold It's the in down. on strategy interim. long-term leverage for not cash

Jade Rahmani

of could of able more through win a through being retain plans loan, you think a in Okay. allow potentially business to the for come of the and recapture be to there longer that some to conceived strategy those securitization, or is terms to of as business either loans repayment business replacement And restructuring you fruition?

Matt Salem

think meetings It through you front we do management quarterly is that's we a two proactively about. And would tell client, retain thinking some of really also we coming market return our refinance a how way better service can or how some obviously we our very, our I where year we something And about today's we this for loan, footed. environment versus of better these asset and very given we we're our client? do where ago. for a perhaps better loans but finance today given ourselves, return the can create

say easy front, this very, their can a point. thinking But business at So that we longer over or period very I on active. of we're capture ways would time. obviously about And nothing obvious there's

Jade Rahmani

for Thanks questions. taking the

Operator

Laws Raymond comes question Next Stephen James. from of

Unidentified Analyst

Good is loans looking [ph] morning. which And XX loans I portfolio retail XX, and loan just two in the Page coupons. on you at any condo XX might details have Tanner remaining that maturity? as for was they as be the or Steven. they are there, on supplement. resi you've got near pretty terms give Can on above us maturity. having updates and average you on This conversations borrowers color the with to those But short

Chris Lee

that the this on Steven, loan, for will we taken Hey, be Yes, sale. expect out retail is Chris.

a And condo a perspective, tests. as the a loan on but a that coupon higher performing. that very the have loan extension made loan it. foot So basis loan as coming We low has has is retail was that loan-per-square it's as from then given cost loan loan, final but well up towards probably maturity, it on a to

extended. it deliver to loan So we've been seen that has that and and continue

we we very these a see are little a assets. basis a and basis what is that's protected those have structure. higher So story touch, lot But bit you'll on low when I we have, the also, loans think of we two. have And that these in have

Unidentified Analyst

color. for Thanks Great. the

Operator

Don next [Operator Instructions] Fargo. Fandetti comes question The of from Wells

Don Fandetti

who a And Matt is bidders quick were little had the of there Can pools just might a question are if loan, than Hi Chris, capital sort what construction construction your your on or you be. to willing at other and you bit what competition more about if loan. you of steady talk little bit aggressive of given IRRs little even are and just loan retail outlook? normal, sort looks like a though look those economic a the get a lower

Chris Lee

just on the not that Yes, process. in out widely I guess loan was limited touching brokerage through construction that competition a basically was

to luxury have We street multifamily. multifamily, sponsor down lent of on construction product similar takeout this type the basically a a

a So the us very market sponsor on well and a was competitive good type had dynamic went We we to plan. a experience good because knew experience had had already favorable with of the us. similar with there business and they the very

pretty So perspective. I other they the in a one on think senior we were in we the brought or bank process. from these that of there mez is But folks commercial were And a at against case up as two provide competitive to a other strong advantage piece. loans particular that financing traditional lot a construction with

sure on particular and getting are of that really if the leaning so to lower leverage macro – relates a view I'm our of you it’s I us risk think, that it just really have As reflection the a returns a or lot aggressive, they profile. not deals are the are And vis-à-vis environment. reflection structure, in necessarily of returns, highlighted the

kind it. that's – what we about how of think that's think I

Don Fandetti

you Thank

Operator

Arestia Morgan. comes from of The next JP question Charlie

Charlie Arestia

just lower to positioned interest neutral Slide on higher Rick rate you are was at It Hey, guys good table rates. to like slightly Charlie for for flat today. looking looks being negative of morning. predominantly rates I XX. This kind sensitivity on your is on

ones. So positioning floors to off are those just curious LIBOR on the get as your what roll especially vintage thoughts there,

Patrick Mattson

focused LIBOR about, that say would to months. morning. in that the I here Obviously putting we I Charlie. up was tight ticking what very were were created about floors XX more really think, I'll Patrick. in LIBOR It's Good the as one. positioning take market. and it's war Hi spot last we've less

did and in little on in off fact, and competitive spread. And was In there's early in what here. sometimes can of a when trade bit XXXX well spread, very the floor get you between what obviously you floors get a the can market we

seeing currently that the the see floors you Chart So of and we're in very the can XX. clearly of benefit obviously

set And given so do us any have well, floor. that our decline will in very not liabilities a will, rates up

benefit we'll there. So

Clearly our asset increase the bit a would chart on in the floors. here see can as spreads nearly sort higher – we our costs as because you more quickly given and environment rate of won't as well. flat it obviously It's those liability

to So that lot it's get of our in put place rate clearly originations. floors this a of floors were in environment. demonstration ability A we XXXX the our through

got embedded in So a lot protection, of the have those in the call floors early they're plan. business loans or

so at to through we'll to expect that at through off year. roll And re-set this and will Obviously those they will floors both And point spreads. on portion a point. benefit continue some we of good

Charlie Arestia

Got it. Okay.

kind of So couple rate a a function result portfolio over interest forward. of more the of looking than call outlook the last a it rather kind the of quarters it's of

Patrick Mattson

definitely. Yes,

Charlie Arestia

Okay. very much. Thanks

Patrick Mattson

You're welcome.

Operator

Cyganovich Citi. Arren of comes from question Next

Arren Cyganovich

give Thanks. valuations change of And I in what much multifamily you're just loan seeing there's property been on you not update an in us and your wondering or was if whether New there? terms York portfolio?

Chris Lee

about vacancy that do principal plans. some taking business business aggressive we focused the of Arren, number $XXX plans exposure across to of or rated New it's generally were very years, units, any five tracking of rating We've so million actually exposed the have destabilizing also the very this market weren't prudent leverage terms been We adjustments. portfolio is X.X. a of been for on Hey, in the risk advantage prudent of and adjustments very CapEx very, multifamily across York average We've in multifamily levels of are loans, balance across the – terms Chris. a

any to So regulation. been rent we to not has by really that portfolio impacted the changes have

a of has That York We New actually are think we're the environment as tracking around capital being said, opportunities there it. markets shifted interesting lot residential.

our So there. be five we we positioned. across active well loans will we're like But feel continue very to

think point our LTV is five our is XX%. last across I loans average weighted

good have come in. we they still So as what they're we feel about at as looking and opportunities they,

Arren Cyganovich

then much you article weakness exposure was really thanks. some hospitality, don't looks have of you in York? There strength And to but day New in loan City Brooklyn. the hotel of like other in on New have, Okay, the the journal an one York do kind highlighting in the market. Any comment hotels

Chris Lee

the When Chris. take in in in the And we been really things. growth this New two city. that's actually wage I'll absolutely New the then York, expense underwrote City increases. some was felt that’s excess the a we labor the hotel there's in than market in been There just market. mostly been and deal property it's RevPAR Yes, driven combination been equilibrium focused broadly, then and more taxes, lot in weakness pressure market. that. on pressure One Brooklyn, by of like put more some Manhattan really the supplied, being Brooklyn by has seen on is York of much And driven actually

have seen there. much not we So weakness

taking was faith going or renovation brand kind that that terms I loan where the the of hotel, was going. leap thing We new had loan weren't of stabilized. income us a property in It the other or was for had we the of effectively already been massive think was that is renovated. a on

at So that yield also is replacement our that quite our basis. And It's loan relative a very below to is actually costs. basis attractive stable.

hospitality you we good economic We outlined. in you're the pressure super think there in of continued a seen some – be the there's be So Manhattan. issues York environment market, I I given in feel aggressive indicating what why there. especially is us will think But New haven't even stable

Operator

is The Rahmani question Jade from of a next follow-up KBW.

Jade Rahmani

earnings you quantify quarter unusual impact any from much. should projections? If fees there's quarter? this remove from we that in Thanks sequential in very early Could prepayment the anything

Patrick Mattson

again. Patrick it's Jade, Sure

was So quarter the repayment as saw for in large a expected prepayment had quarter. of this about The we you that fourth fairly magnitude fees quarter. $X.XXX in

income we and we you'll short while business anticipated. that kind get that loans transitional in focus as on do that sometimes so about And think have tend these regular prepaid somewhat periodic income is plans of as earlier to than lighter

Jade Rahmani

retrenchment through that. office And back where co-working you've the going any which that places other in like the the is pull growth impact co-working, other active ask seeing to wanted players has for Thanks been Are impacting are the WeWork market about on market? seen the office you any from and of if Atlanta, markets?

Chris Lee

Jade it’s Chris.

in have portfolio co-working and side. very is leasing our we across not office X% on been know you our as conservative our exposure We business. have We had the co-working than exposure less of do

think understand co-working from market having of terms time well. part a of we healthy a And for it actually we think in a smaller are active an solution for over So office perspective. the the in not We've is quite we seen office major impact in markets tenants. better that we

had you demand robust the market out have given less for broader about have major tenant there their might think – down some you we to office just slow still But that growth. an impact of some clearly As issues space. had the that's they think tenants that

tenants. in So because we're actually important not office these to But the as co-working we exposure place an think it's of to will time portfolio. continue growing over significant cater a we market it smaller focused have because have on to part ability in landlord's don't direct our that

Jade Rahmani

Thanks comment. Okay. the for

Operator

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

Michael Shapiro

feel free to out. Thank day. Have you everybody for questions, great there's reach joining follow-up us If any this a morning. please

Operator

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

disconnect. now may You