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BRSP BrightSpire Capital

Participants
David Palamé General Counsel
Mike Mazzei President and Chief Executive Officer
Andy Witt Chief Operating Officer
Frank Saracino Chief Financial Officer
Matthew Howlett B.Riley
Tim Hayes BTIG
Steve Delaney JMP Securities
Call transcript
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Operator

Greetings. Welcome to the Colony Credit Real Estate Incorporated First Quarter 2021 Earnings Call. At this time all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. pleasure your my General David now Counsel. is to host, introduce Palamé, It you, Thank David.

begin. may You

David Palamé

and afternoon, first XXXX full Inc.'s Colony quarter year call. conference Good earnings to and welcome Credit Real Estate,

Estate, Real refer will as Credit the call. to throughout Credit Colony We Estate, or Credit Colony CLNC, Inc. Colony this company Real

Chief are Frank Witt; Andy and Financial Officer, Speaking today President Chief Officer, the on the Executive Operating and Saracino. company's call Officer, Mike Mazzei; Chief

information subject risks certain contains Before management's Potential that potential uncertainties cause the on business financial effect could These I are forward-looking and and the uncertainties call note with statements and the call, hand adverse of results statements. please current over, associated this expectations to assumptions. presented COVID-XX. differ based on to including heightened company's and and risks are risks, materially

For see update of periodic recent and please current the could the our circumstances. affect and time. company's XX, Risk forward-looking other All May a call results, future as most undertakes this risks the is SEC of factors information intend the duty on or does filed with discussed today, risk in XX-Q and no to to indicated section events discussion that statements reports not unless of Factors and company otherwise XXXX, time and for from

to Estate. now, turn Credit financial investors. company on Officer and available and why earnings The addition, are and supplemental of non-GAAP In is represents the call company's presentation, I this certain the appropriate Mike financial useful reconciliations Mike? like information release Real Chief to President and And company's the afternoon Colony measures Executive explanation would was an Mazzei, this of financial measures. website presented non-GAAP to measures GAAP call on over which such to believes presents released the

Mike Mazzei

joining team, us I the by Thank you, for behalf call. thank well wishing today. everyone and our like CLNC Welcome first to start earnings would you I of quarter On David. to

We we chapter productive about start in internalize company's had announced On are and terminate a Colony very new Colony management CLNC off external functions. transaction agreement for its Real we XXXX an our step, excited Estate. received of for incredibly and management that in to XX. on This the from on the support Capital was into X, completed April entered are CLNC Credit to shareholder. own CLNC continues agreement and this course The with team largest operating a manager embarking Colony allowing stage. is successfully management unlocked who has as Capital, it Capital recognition chart value this taking next team shareholders to our this has Colony And appreciative and the by April

and also time process. CLNC who board through members, We our focus have thank tremendous as we this worked invested

CLNC a Independent Cathy provide position XXXX. at announce will forward dedicated Ms. very considerably its will returns Additionally, the The company fully to will to we exclusively and employee Director, a base focus This several succeeds better public as has is of is the of being shareholders. shareholders provides return one feel on the well direction. CLNC increased CLNC on significantly as now basis as permanent as positioned of accretive self-managed the are Rice's company's points. managed the few and chairperson also and assumed guidance in managed internally today of The value that enhancement. CLNC the results tremendous structure internalization We The our to simply leadership. continued provides commercial organizational look structure board model. proud It least for internalized Rice, CLNC's a structure hundred be aligned equity by use mortgage important reduce benefits investments mid-teens. strategic provides earnings and and strongly Furthermore, this transparent target future in transaction shareholders. This that governance the loan be on internally REITs. over in expenses more certainty we public with with capital We equity a directors. control

Frank additional his CFO, the Saracino, details regarding in internalization will Our provide remarks.

last capital have we continued During fourth $X to XX transactions quarter, we new commencing loans. into this Since for mortgage rate billion. or in committed floating redeploy on steadily loans the of XXXX, quarter with approximately closed first have

a we have expanding of from our emerged are improvements seeing suburban competitive, economy, side are of we beyond funds. lending commercial lending seeing to cost markets on the lower reopening lending pandemic, has in we given financing As the And office. liability the Also the multifamily focus sheet begun from estate the U.S. improvements concurrently the of pricing become real while bit are stabilize. and balance the more resulting we and

now Turning financial key some to headlines.

first For we had of earnings $X.XX the share. quarter, adjusted distributable a

is Our million. X current liquidity $XXX May as of

second business earnings. approved This of savings achieved cost product to maintain as growth to directors dividend to liquidity has sufficient continued as effects the As our the the well believe from continue by the respect what we dividend, our we all $X.XX who be work execution have of plan with navigate the in quarter from pandemic. is impacted to in very increase COVID-XX, borrowers, been of of board an and lingering successful internalization our the share. we $X.XX most our resulted a With closely to through

The to the continue closely review on executing team make will our to dividend policy business stated progress as We CLNC continues plan. earnings increase.

begin we Since are provide like to we of operational recently earnings, have have now quarter, CLO. loans. dividend. thus existing $X initiated cash as internalization we continued will and the issuance the for in to transition we And deploy active would of returning to billion have in management have grow have process the and where go we I recap our sourced lending where now to Most new such, to complete fourth reinstated approximately as we second importantly, increased XXXX. The our planning are and CLNC. of to Now a we functions is and

we last allow deployment also look pandemic of to non-earning us put any will for us to to new remaining repatriate work further will remainder assets. or into loans. resolve step the capital the underperforming and XXXX, the For behind This

these our lead and of closing the year. Our our gap for Andy? the steps by and Witt. closing, In XXXX would also support like of Operating Officer, dividend. success to Andy share to now expansion this believe my again initiatives growth thank will our their past many event. partners lead like board book will earnings to transformative our these would CLNC for evidenced again current and value. to between CLNC We the their and around turn Colony further I price market members I call thank achievements Capital as commitment I this Chief over to

Andy Witt

everyone. afternoon focused sheet continuing remains the Thank to The you, company and on build earnings and Mike, balance good managing business. simplifying and the

CLNC and meaningfully today, business. Over the XXXX the course simplified has of through

we to The the now consolidated as are longer first overall the portion non-strategic separate are our no a portfolio legacy insignificant results assets is as quarter This portfolio. relative reporting of segment.

net and and The we've corporate. four, how eliminated estate the segment and mezzanine real now three, from reporting we the business. two, following other One, preferred senior real one CRE such presented to segments. reporting as of manage As our estate; the portfolio leased loans and comprised equity; reflect and the debt is and securities; view business realigned segments

build our of capital assets value preferred segment long-term million mezzanine excluding the comprised in of XX on to strategy portfolio. private this retention an segment. addition the CMBS XX% the We As earnings. for in interest assets in core of value is mission further comprised of other XXXX, book This end, to BP's net anticipate X% million cash approximately $XXX in due appreciation. portfolio and $X infrastructure is at-share value stable The investments cash provisions. the real loans senior segment of on potential positions we to this to our subject one reporting anticipate continue is activity resulting $XX XX company's as transaction or they this of in the of often estate related to at-share for $XX comprised quarter four towards portfolio. investments total the net generated majority balance actual real and capital of million company XX, a little our book securities leased to of aggregate segment flows the approximately sold a an of an to or and associated associated sheet, net of positions remaining net to are and XX flows the investment the bonds estate approximately the exposure value from of to leads portfolio of in aggregate or we segment the equity our $X with equity net company part The Net the lease this reducing provide aggregate and remain allocating risk CRE is of cash gain debt billion billion share Subsequent is which book remaining March of XX% of one credit as tenants. majority portfolio of critical portfolio. with includes the

by originating company investment mortgages credit evidenced Although real recent across estate investment holds primary of strategy as our activity. the first strategies, remains investments number a

the team million; with the loans During majority these acquisition investments XX all aggregate through $XXX first are has which and of commitment the originated mortgages, of first today, quarter senior an predictable and new of loan flows. of million. average our stated size blended cash our with $XX on of is unlevered portfolio current loan The toward X.X% book reorienting consistent financing approximately yield with an strategy the are

with in associated San It portfolio during is of geography which non-accrual California collateral We equity an the office million, carrying loans $XXX amount contributing diversify and investment loan portfolio add placed non-accrual was loan restructuring senior focus assets, and a Importantly, the that preferred associated comprised and repatriating are approximately share Hotels accounts note the which time of terms seven investments multi-family or million important first non-accrual for on to capital with value of anticipate earnings. size, properties. contains is remains certain to on $XXX status, quarter. of this not with five on the Jose,

filed quarter, the and hotel first During the closed Bankruptcy. the XX Chapter borrower

restructuring have into the We with support a agreement entered borrower.

will the to capital the summary of will into asset the investments this company section redeploy contributing details XX-Q these Additional positions included to allow be specific in earnings. Form filing resolving company's

reduced increase dividends permit amendment borrowing sheet the On to amount and on million. of material $XXX and as as restrictions from network restricted the credit such to the internalization reduce part the of backs, remove facility available banks for the base value investments, amended of million aggregate maximum payments $XXX amount borrowing buy ability XXX% new commitments the we stock the lender to to of our covenants, balance increased liability tangible make side our we

with along extending amended In maturity repurchase addition, internalization and permit the company on six-master facilities four-master the the to covenant, the net tangible repurchase reduce facilities. worth

Lastly, from underlying our XXXX, billion continues to managed executed and CLO perform loan in at level. the October $X floors benefit LIBOR

ordinary CLO We continue to managing performance monitor the which the payoffs. course loan of includes

loans some opportunities. the of focus market are continues replace portfolio, issue In conditions. our in term planning CLO on on originated While and will the our the our newly while a prepayments relatively assuming summary, suitable we near second pipeline executing existing of CLO in originations to to building existing company new

first of support With over cash elaborate we growth, to our increasing the drive Frank remainder the assets the shareholders. turn in to the associated on with capital the to Chief redeploying to sheet Financial For repatriating Saracino I balance payments order on results. Officer, deploying call and anticipate to will non-accrual dividend quarter and that, year, earnings

Frank Saracino

everyone. Thank Andy, afternoon, good you, and

we our Before to XX-Q I results, tomorrow. discussing our that to expect want mention first quarter file

In or our asset-by-asset our which on provide available details quarter The first supplemental draw report, let's supplement to total website. and results. to common or to share does $X.XX turn your distributed Form of per loss CLNC million of $X.XX quarter to $XX.X net financial first our $XX.X our addition, like XX-Q. would that reported million company GAAP With is I learning’s XXXX as share. attention shareholders per continues to our attributable

GAAP contract The recording to in losses adjustments total and and one-time million as were and distributable loss gains fair our $XXX.X common cash other adjusted or earnings expense. and payment reflects a $X.XX million per realized transaction $XX charges, net of company $XX.X $XXX.X charges share. as management of attributable of million well shareholders value include million restructuring the Excluding to a restructuring terminate

$XX.XX per from During per the value from an made our change decreased share the is un-depreciated upfront book $XX.XX value quarter, with net decreased external cash to to to This first investment terminate due to GAAP book the $XX.XX manager. $XX.XX contract total share. primarily

million new or than result lower of quarter quarter sell XXXX results, a quarter or As mentioned resolution investment and portfolio, California is ramp Jose industrial in non-strategic per share. on timing came the XXXX that a our distributable the assets, non-accrual the hotel difference originations lease $X.XX our of earnings expected primarily placing San of our first legacy adjustable $XX.X of XQ fourth first net Andy earlier. of The loan

value this company's internalization number call, internalize achievement our management these key and we a from million, significantly realize internalization. ahead, will quarter of provide the full my of year the significant perhaps first benefits originations far external most is of expect the growth the ways. mentioned, the CLNC Mike of transaction We levels cash our as benefits as quarter meaningful recognize enhance of earnings and Looking of deploy operating completion the cost idle shareholder this point; believe with Which and to in next income to for we $XXX so manager loan function. brings from a me top the

to to reduce a company's expenses. and First, structure is general be considerably and to administrative earnings self-managed the expected a transition the accretive

charges Excluding totally to or to termination we share. approximately per generating anticipate million per one-time savings payable of $XX million operating $X.XX approximately the $XX year, $XXX.X to cost million, $X.XX manager

management shareholder said, and believe will the team, CLNC's exclusively the focus as to providing model the this structure newly which team CLNC. we transaction our also dedicated internalized focus creates certainty leadership for continuity All organizational along lead that economics it on of that existing with dedicated to value. greater transparent offers base, a addition will In a from as employee more well

that authorize highlight on is to front. last the Board am important Directors After the has second quarter. increase pleased dividend quarter, reinitiating dividend our substantial I of Another the the

provides increase is the dividend from cost XXth. conditions emerged we And June dividend Given to The XXth declared July our internalization we of share. improved per second dividend from as payable an of as ability $X.XX pandemic per of quarter's quarter shareholders our share earnings distributable and savings in outlook, expanding competence economic represents last from continue generate Board's the to the on of to a and record financial position, XX% operating evidence This improve. XXXX. second performance, business for quarter the further of growth $X.XX of

continue will we our evaluate mentioned, dividend Mike As to quarterly.

our $X.X total to XX, at-share assets Moving as stood sheet; approximately March balance at XXXX. billion our of

compared time fourth is This and XX% of at debt-to-equity end net first to was the was the ratio quarter. ratio debt-to-assets the X.X quarter. Our relatively unchanged

approximately $XXX million In cash availability between addition, bank at hand credit our and liquidity our on stands under facility.

Turning to risk ranking.

the end Our overall compared the of quarter. quarter fourth risk first to ranking slightly at the improved

is Our first quarter quarter. prior compared as the risk to X.X at the ranking of X.X end

for the call and prior up quarter, first our open against was our $X.X compared a And driven concludes slight that, This reserved questions. the approximately at the to million with million by primarily as $XX.X our end prepared difference is the CECL of X.X% Operator? increase This of represents let's quarter. is origination. remarks. Finally, The new provision approximately loans.

Operator

Thank you.

conducting session. you. [Operator Instructions] We will question-and-answer a Thank now be

proceed B.Riley. your Howlett question. Our question with comes from with Please first Matthew

Matthew Howlett

taking Hi. a taken my could now run Thanks back. minutes you few company you're just Mike, you've back, it and sort for everyone. congratulations. that the taken question to now this going Thanks of more company, you've spent

a talked create little little how It's vision forward for about shareholder going – employees and You a you're vision bit it's bit the yours the going value. company about you – the – more to your unlocking talk value.

what bit is? long-term – few a just a plan more talk Just little minutes just about the

Mike Mazzei

working you, Look welcome welcome coverage with and forward Matt, universe. our you. – to Thank to

is answer. – vision long the can So vision the a be

you of where Let kind right giving by are summary we now. me a start of

mentioned as of like working than more we're growth. the had is out point to are, to we're We've going in identified And Frank, be originated we in of of a probably sometime it we that then We're us the what CLO earnings done, adding part our process cash trough for The mentioned are our trough we because well. we've right? the earnings. to in starting the in billion largely we and liquidity, of early terms so We're assets earnings or has about internalization of trough $X Why remarks, ever trough? We've going pull peak second focusing is that to a originate assets spoke down. loans. terms assets to and impacted we COVID underperforming we're third and where So be have will the quarter. economics starting this non-earning had, that that And due we've going to in I these now my on assets.

So are out. right feel on terms coming we like earnings we of of trough why where and the that's now and we're in

In disappoint becoming we simple. best-in-class to – this pear kind the set. We the in balance to hate mortgage commercial transition want company of just this to it’s and terms we and of vision, what consider REIT I you our sheet a

Now, forward. play, going signed it our I'm or wit we I want balance don't How earnings. the not obviously balance to to insult predictable by leaving commercial is evolve more mortgage pure think we're for involved this accomplish goal. XXXX a going this fully going into what on has sheet of want predictable to We grow anybody and to with in to sheet out. as have tell and them you the earnings to our we This things credit – team eight do month management trying best-in-class, this

also ROA into we've the our to improve this of largely is the mostly to doing asset entails continuing bridge been asset and base the have rotate loans. as really mortgage rotation and We base first

there. get prepared And We of – to the remarks, in a best pure how and this we the mortgage some commercial best-in-class, of what? to we kind So that at. mortgages and commercial play that's be we We've first and now among balance billion so we're how the types mortgage. want into pure REIT far, we looking play selective continue done cash the the into expand and now deploy to evolve $X to property sheet a mezz alluded continue

I we've looked Maybe is for our of $XX-ish of second early CLO been for multifamily we would acquisition of We XXXX. changer few call assets we non-earning of and on XX% out as really where on off another around. can the is average the game the up game assets in an is and borrowers example It's the we a loan Fairmont, will are that changer said great to tee the loans, One, execute very want and of its loans current probably simply then get what very, done. financings. again, and non-request the mentioned get could that And that what bench field think that. couple a, hopefully ways. boost one done the revenue of around were – CLNC a million. and the we're it QX. turning has non-accrual, and mid-summer now cents. again, that earnings late off maneuver And in financed really a also size again, I pulling QX in the We XX-plus I asset into And in balance the to producing San Jose bankruptcy financing loans do to

the completed. would capital to those invest by in and towers – substantially. a the working we at assets that debt to new earning closely borrower. monetizing turn them successfully that we're looking monetization we Plaza just asset process hotel is being if and non-earning the another simply get if instance loans. And then now that in in that the They're financed, means and of hotel unlock on again and Century the pay Plaza. so that into right that And then some of into lot. And for ability for sold, it'll way. down we're us example that do monetize. could Century And the is a sell of assets value are repatriating may way trying condo it An be to we those with And an And asset

as you is into side, full you last a also that then on cash it. So you're unlock or to earning defend this say understand on, sit long. non-earning, should I able the into the And And no assets you one, cash longer visibility these new into cash need, any of that balance you invest really more are you or step assets? you you're the turning what once need then turning counts it dealing assets game with cash need that result you with cash assets, to don't to gives it and

cash, so the and of longer cash. sitting us And confidence it of more get an to no we're on operating much idle gives level to down too

around to million it you million, asset liquidity, of on again or XX.X let's the that's that you $XXX cash, I'll $XX a what things in the close put if is because Century of you've like spending it And a – finance on over got – it's billion the plus liquidity. summer. we at market another you we're and undrawn and unbridle $XXX that, you is $X.XX. rate these a several at $XX And looking three you're value. at We $XXX that then happen $X.XX, now million, and like a you know Fairmont, the going protected. of Right what's we're to Jose couple sitting say, get need $XXX and want $XXX that it’s our and in itself you're And good of million outstanding, plus to San if spend million in down of course it. as say so million can math at rest looking earning spend, operate we've so and Plaza, that And probably got company, about dollars. And advance basic know the math can we get in with XX% then million with assets then that which part the million $XXX two, bucket quarter cash of you on And we'll $XX million When CLOs got revolver. something that encumbered. now, and and soon you close cash got as it of call million the plus cash XX produce $XXX which maybe

and for And in a want doing I'm we pure pure balance we our set. sheet; in being among what to be sorry transition that is best-in-class so summarize longwinded, we play. peer want the We to are are to to how this last non-earning our is it the earnings. – roadmap, most turn them, to will there? get portion lock earning monetize now. doing get need again We them We're the of of just assets and these and to we We

Matthew Howlett

I really returns, the have fully the is platform, mentioned turned some it not you've highest that to they one appreciate today And of the don't ROI the management it. sector? company, reason to ramped any going heavier highly with but own own the is And is this The progress. to top you're making portfolio want to and yourself, way shareholders great mid-teams company company to origination is you think the you not I get but will structured efficient. be there when in

Andy Witt

with in And lot We getting next return we've only but it capital close governance, earnings, does – is internalization be it XXXX, these book with of terms our this COVID assets running peer that now market getting within and think rest path group dividend now, nothing. goal defend you earnings, up between sitting at which working on the important in quarters we peer value in look company GAAP any absolutely our the higher When the And including group. Not shareholders. gone to transparent. to a down. through book to between mid-teens the and raising a shooting of our right the assets the a of add a is to seeing We're assets, yes, value. some makes for We're value market We're governance, balance that the of the on sheet on are had. and the our we're more falls difficult ROE closing toward ROE. and that. lot streamlines But cash, the we GAAP improves think

Matthew Howlett

appreciate I up look covering end I'll to really and it. appreciate really story. forward here, but the I

Andy Witt

Thank you. asking Thank question. for you the

Operator

Thank you.

your Please next Hayes question. comes Our question Tim with BTIG. from with proceed

Tim Hayes

Hey, Mike, know $X.XX focuses dividend, doing but quarter, to decision better decision, feel good increase in the I evening question how quarters I want guys. and well. of My and a next just a it here. to you're to first the get around for think to about Board Hope couple this it's

but the quarters? going or this trough to $X.XX Board expect be to dividend you a distributable distributable over – the of dividend quarter this that that of is into benchmark dividend number? I said growing coming move earnings that on then the to kind some is of the be earnings, the basis is kind you $X.XX – to there? happen And covering So share, that going is per I adjusted the adjusted second expecting earnings is Is know for know of forward? that reported the there quarterly you best forward, expect move you all, distributable of guys adjusted kind it

Andy Witt

and were that are of look with coming originations and cash earmarked growing cash with that I able Tim. and the again to basis you, when – we also that'll you increase And online, to no out earnings. then this There's as hello, at before, we on Thank continue it a that that into and as closing pay deploy cash. million And then is, call out laid of I expected $XXX over these cash. the capital, extra with quarters, out the not cash deploying to looking and we've as could this already coming get which earnings $X.XX, it next that in really the earlier up XXX, cover but $X.XX we balances $X.XX provide, of that we're only to math

do. that absorbed vetted and in that But we The ROE the will trough quarters. CLO think So got the things a feel we'd like is assets quarter. the basic. up. on the We the have we are enhances fully in that We've coming now. place math Hopefully we're pretty get like pointing internalization to over

We this some accruals to had quarter adjustment. that in upfront for that take have well we as to make compensation

the roadmap up. So out I trough this cash cash, non-earning of think mainly think for I is it and you how kind and may I of is on matter quarter we gave as a just a get we this executing the I It's those is think assets. covered said, of on

Tim Hayes

Right.

sense. makes That Okay.

So of yes, you time you I couple in just quarters, you of it will kind saw resetting past as questions. as we kind trend make and seeing gradually I but just expect the with the where shakes that the stabilized correctly. about dividend guys do from just based of increase deployed of that earnings like waiting out versus progress the dividend. is is and that over you saw and sure guess of want this, fair I'm make on to capital dumb thinking some then initiative, more It's hear kind to it We

Andy Witt

look, to that's not to wants clear be nobody our Well, backwards, intention. so go

the our grow So took the is earnings. we to we going backwards. path think, I we're go confident I that as we're This And earnings, not to I've do to job to that we said, grow that And that think earnings. feel dividend. steps as is grow going increase

for that We dollar making penny, will do that, will but want we in to overstep. I can't but be for dollar, plan be will We terms penny think of that be don't sure will same it path. be do on that I cautious don't it the say

we board, want backwards. this a is we the not is we're future. think do that we expectation when in dividend a do going will And certain in assess think make I with to trough again, my earnings. see I that So But the growth

Tim Hayes

certainly that based pipeline. that, couple mentioned as appreciate and kind then on expanding comment that. of And outside loans scope just office Thanks the largely mortgage in it about little a expanding the past question like earlier But the made you of first been bit. you're the multifamily space well. you focusing sounds on and can quarters, you've Yes, another – suburban of And Mike.

you or you in scope? of construction would expanding can a Is So pipeline sense little two mezz on Is talk Are willing helpful? willing some lending level and color to to type? quarter transition? do be kind what it enhanced ago? Are this do about structure? you're stuff? you it of So kind of that you any were the more bit a it Is asset than

Mike Mazzei

to execute, want another mortgages, in we be we even want in first I as CLO the the we after that can summer. loans substantially think do do construction first, I but one said, to also Well,

think substantially assets that look the first. I like will So

will terms we in of Secondly, property other expand types.

been $XXX we'll use, do into We high a and of We've to that. suburban areas portion $XXX the office other be balance hotel, markets the to at we of markets. million office country call do and thought it, where to there we will will yes, sheet expand million even growth capital of transactions. And what to mezz sticking continue

we do so lay be the can mezz And be that senior and where senior terms those off it but the we size. of transactions defend we will senior, a could in definitely

mezz that. with in there we've instance, Century big and scope were too we $XX and we size is so where we are which for some mezz working other just that of terms – done all million. construction between $XX well. done mezz might We've do And – multifamily loans may out before very that million we behind some – and Plaza, Is is

mezz are very, them very, I very the something we if worked that we we the record on property to to to are it possible There one are of we've handful do we the would some very be that good. Is with construction? that past. had some are a say definitely with with selectively. going again And would yes, expand So, going developers developers in types. would consider the of worked in those past us track today came focus given we've and we've

Tim Hayes

for just a was, more don't what if the the or comment costs your like, you funding more basis and CLO, obviously what And of was CRE, it. was bit, coming I kind you the kind one you're for it Got me, down around know of from that if mentioned Okay. then providers. repo – your mentioned seeing

If you comment repo you seeing if rates that your if around and could any provide on down just bit costs there's little are been more color movement a and well. as advance come

Mike Mazzei

Yes.

getting been have step coming have the the aggressive. market very banks been So lock with

to that. do have look beyond You

on on If the for XX bank and executing you're you're line a few days years. a on CLO XX for you're CLO, that days,

looking been certain certain pools are the collateral it focused is that and collateral a And do CLO, will market And issuers stable. we definitely is to with So that issuer. on better. through market really has

so, And in probably July. sometime that we're targeting

but much dropping absolutely rate, they’ve cents that rates warehouse advanced have been can few the They've modestly, of change, in but a advance interest advance in been rate. be been market and the they've further. drop rate now slightly will will there rate on rates increasing between upside hopefully, and been share they've coming, facilities much – so, banks banks conditions then the tightening. preferred And increase the been been advance per but Both execution, than increasing the they've

Tim Hayes

going queue. back Thanks color. hop Mike. I'm helpful to in That's the

Operator

Thank you. Instructions] [Operator

Please question comes Steve next Delaney JMP with Our Securities. your with question. from proceed

Steve Delaney

you hello the huge that and congrats glad Yes, and to to on internalization. team a step, Mike in That's position. have so the you

a wouldn't existing stuffs had the had or everything I clear So covered. lot it CLOs? whether have Is just you CLOs. – two? question one – two I been of about a On

Mike Mazzei

second. referring fault And we billion. my that's XXXX But we for one, I'm was teeing-up. second we $X my are Yes, outstanding done because to that in a are one remarks, – in have our

Steve Delaney

that are up. teeing You

Mike Mazzei

then We are that the at be July agencies with the could rate the deal. hopefully of now July another right And end end trend up we'll teeing given it deal, of year, call rating and with the that that one on. look and the banks, a at the we're process

Steve Delaney

Yes.

Mike Mazzei

loaded. teed The is pretty for substantially up one and that's July locked

Steve Delaney

done? the is old replenishment Then CLO, call is any Is it static great. in let's that that or the now one that Great, – there

Mike Mazzei

Yes, Andy, you to do want static. maybe Andy of cover for that not That's – us. can some

Andy Witt

Yes.

CLOX through October replace to ability the of in have we XXXX. collateral So,

Steve Delaney

Yes.

Andy Witt

replacing collateral we off. as we [indiscernible]. And pay are loans So are

Steve Delaney

Good.

aggregation deals one, seen right? Okay, banks. work on new you've thanks. recently And the I couple is with a mean, got deal, the of the to I've

that pay work got a get of something But the not collateral I've activities? execution that that period are probably that is couple you periods. your size you sort that's for re-starting the to of might to is whether in seen know this of ramp-up I or the You $X billion specified. have you because $XXX lending to want, whatever. for you since

Frank Saracino

I that limited the there ramp that can. we might best go some because we'll looking we get but, think specified want we to more up, a think, to would And in keep really think we're I execution be – pool. I of

So, market have when you're of but taking a execution. rather we'd we smaller risk a ramp are little aggregating bit more, up better and

Steve Delaney

Super. and to I appreciate forward look Thank talking color soon. the you.

Frank Saracino

Steve. you, Thank

Operator

Thank you.

question proceed comes Tim Our from with BTIG. question. with Hayes next your Please

Tim Hayes

here. quick just another Hey, up

loss that quarter, a there were gain on second with transaction? that in sold Just material or was securities CMBS the associated the

Mike Mazzei

you to do take Frank, want that?

Frank Saracino

one can I and a would gain a Yes, a on loss take qualify either slight There not there that. was material. was Yes, as one But gain. on I other. the

Tim Hayes

where broadly, out, these high just you maybe few Okay. long to candidates have And core to know mentioned City. versus highlighted. kind quarters. be assets do liquidation and you there much as prune more we're the level, haul. portfolio over work this talked the is you the some few pruning but makes try how of I Got left? are of do portfolio there we've it. in kind may highlighted for others just you've a any want you of And think Mike, that curious that sense you just further, about core mentioned to, point Century – And it I’m the we assets Are you that you specific one to this troubled a past

Mike Mazzei

that is deal, as actually in there, asset. San to just the Plaza, continue an I'm do that what And asset not the Century Fairmont we hold have of asset. just we non-earning anything we're assets. and to may assets It Fairmont looking an come our Dockland, going that liquidate to just reporting Dublin out mainly say bankruptcy. see the San that development are identify that's the what Jose let may be needs to Jose. and we me not you'll But

we to earnings. it need back get So to

So trying that's Those that focused that biggest convert the we're We're to necessarily asset. an not trying just it, three eye on on. example to an of we're something it liquidate earning. but keep to into are

Tim Hayes

I maybe have any guess, the – maybe Jose of I those, court And the Berkeley and we have about Fairmont City the right the handed where ones other in Long Hotel, might Are San more been then court Island some the did in past. office now. Right. asset only the – there's is talked one that

mentioned? near-term be rather for expect So, resolution any or to more that any of assets just some around there clarity kind the asset. some timelines I of deadlines Or of might kind you do

Mike Mazzei

condos, And some paid in the been in There I condos But of have commitments on to that the have it there going has speculate. on the Century I hotel that as want down Well, condo aren't are I right outstanding do said the my don't $XX in the until closed for the that. the in on XXXX. market. portion where can't are know market. that later loan to I have that hotels hotel deal, they completed speak towers tower now Plaza remarks, on the modestly borrower the but million. get

has And which at its San level. works a unlike hotel. just that Century an to destination Plaza, the and And all go mentioned hotel to opportunity through the at have then going convention could at to we're Jose way a you there's Fairmont So where potentially tennis level hotel, And we'll that's the get done facility, they and property different something on as which And property center enormous be just being to we'll, observing. and assets. like watching monetize. resort, people it considered situation, hotel out other a are that's an want the

the Dublin for that in and getting at think then is up island if convention the its through, anchor in of in of will. still And tenant asset. lightened come on because Fairmont we of And has work that's hope entitlements a type COVID that mostly asset, But relatively site. kind for as both quickly more, property, one Jose to quickly we're with. borrower that's side. on It's bankruptcy on the a the the development. the workers the little group the securing developer just land, [ph], where austerity And the that working asset way possible involved. the bit understands prospects enhance it San is an turned best waiting type is to of squishy are because judge office too the we for is of the development working that still is it as equity and terms that so there, for why is back on office And residential you through will

that has got a So more bit there. uncertainty one little

we have others The think a short-term timeline. of more

Tim Hayes

Thanks helpful again questions for color. taking That's there. Got it. my

Mike Mazzei

Thank you.

Operator

over floor No I further time. management to turn back this the would to like comments. questions closing at any for

Mike Mazzei

you and Well today's quarter in look call earnings for joining updating call. to support on second We August. Thank thank you. early our you for forward on us your

Operator

This conference. concludes today's

lines participation. this your Have Thank may disconnect time. You you your for a at wonderful evening.